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HomeMy WebLinkAboutRESO NO. TPFA 95-1t RESOLUTION NO. TPFA 95-1 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TUSTIN PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $46,0009000 AGGREGATE PRINCIPAL AMOUNT OF TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS (TUSTIN RANCH), SERIES A, APPROVING THE EXECUTION AND DELIVERY OF AN INDENTURE AND BOND PURCHASE AGREEMENTS AND THE PREPARATION OF AN OFFICIAL STATEMENT AND OTHER MATTERS RELATED THERETO WHEREAS, pursuant to an Indenture of Trust, dated as of August 1, 1986 (the "85-1 Indenture"), by and between the City of Tustin (the "City") and Citibank, N. A., as trustee, the City issued City of Tustin Assessment District No. 85-1 Improvement Bonds (the "85-1 Bonds") in the original principal amount of $50,650,000; WHEREAS, pursuant to an Indenture of Trust, dated as of September 1, 1988 (the "86-2 Indenture"), by and between the City and Citibank, N. A., as trustee, the City issued City of Tustin Assessment District No. 86-2 Limited Obligation Improvement Bonds (the "86-2 Bonds") in the original principal amount of $81,400,000; WHEREAS, the City has determined that certain savings and efficiencies may be obtained by refunding the outstanding $14,490,000 aggregate principal amount of 85-1 Bonds that have been converted to a fixed interest rate pursuant to the 85-1 Indenture and the outstanding $35,910,000 aggregate principal amount of 86-2 Bonds that have been converted to a fixed interest rate pursuant to the 86-2 Indenture (collectively, the "Prior Bonds"); WHEREAS, in order to provide a portion of the moneys required to refund the Prior Bonds, the City has authorized the issuance of the City of Tustin Limited Obligation Improvement Bonds, Reassessment District No. 95-1 (Tustin Ranch) (the "Assessment Bon(&"), in an aggregate principal amount of $46,000,000; WHEREAS, the Tustin Public Financing Authority (the "Authority") was established for the purpose, among others, of providing for the refinancing of public capital improvements of any local agency, including the City, through the purchase by the Authority of obligations of such local agency pursuant to a bond purchase agreement; WHEREAS, the Authority desires to assist the City in refinancing the public improvements financed with the Prior Bonds by purchasing the Assessment Bonds from the City; WHEREAS, in order to provide the funds necessary to purchase the Assessment Bonds from the City, the Authority desires to authorize the issuance of the Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series A (the `Bonds"), in an aggregate principal amount of not to exceed $46,000,000; WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority proposes to enter into an Indenture of Trust with State Street Bank and Trust Company of California, N.A., as trustee (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Indenture'); WHEREAS, the Authority proposes to purchase the Assessment Bonds pursuant to a Bond Purchase Agreement between the City and the Authority (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "City Purchase Agreement"); WHEREAS, the Authority has found and determined that the purchase of the Assessment Bonds by the Authority will result in substantial public benefits, namely, the interest savings with respect to the Assessment Bonds to be achieved by reason of the credit rating to be assigned to the Bonds; WHEREAS, PaineWebber Incorporated (the "Underwriter") has presented the Authority with a proposal, in the form of a Bond Purchase Agreement, to purchase the Bonds from the Authority (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Authority Purchase Agreement"); WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Indenture; (b) the City Purchase Agreement; (c) the Authority Purchase Agreement; and (d) the Preliminary Official Statement to be used in connection with the offering and sale of the Bonds (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Preliminary Official Statement'); and WHEREAS, the Authority desires to proceed to issue and sell the Bonds and to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Tustin Public Financing Authority as follows: Section 1. Subject to the provisions of Section 2 hereof, the issuance of the Bonds, in the aggregate principal amount of not to exceed $46,000,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, is hereby authorized and approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be issued in the form, and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution. Section 2. The Indenture, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Chairperson of the Board of Directors, or such other member of the Board of Directors as the Chairperson may designate, the Executive Director of the Authority, the Assistant Executive Director of the Authority and the Treasurer of the Authority (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the Authority, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions and omissions as the 2 Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not authorize an aggregate principal amount of Bonds in excess of $46,000,000, shall not result in a final maturity date of the Bonds later than September 2, 2013 and shall not result in a true interest cost on the Bonds in excess of 7.0%. Section 3. The City Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Authority, to execute and deliver the City Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the City Purchase Agreement by such Authorized Officer. Section 4. The Authority Purchase Agreement , in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Authority, to execute and deliver the Authority Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Authority Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriter's discount (not including any original issue discount) from the principal amount of the Bonds in excess of .25% of the aggregate principal amount of the Bonds, plus expenses of not to exceed $60,000. Section 5. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Authority, to certify to the Underwriter that the Preliminary Official Statement has been "deemed final" for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission. Section 6. The preparation and delivery of a final Official Statement (the "Official Statement"), and its use in connection with the offering and sale of the Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and directed to execute the final Official Statement and any amendment or supplement thereto, for and in the name of the Authority. Section 7. The Authorized Officers are hereby authorized and directed to investigate, or cause to be investigated, the availability and economic viability of bond insurance for the Bonds and, if such insurance is determined to be cost effective, to select a bond insurer and to negotiate the terms of such bond insurance. Section 8. The Authorized Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the issuance of the Bonds and 3 the transactions contemplated by the Indenture, the City Purchase Agreement, the Authority Purchase Agreement, the Official Statement and this Resolution. Section 9. All actions heretofore taken by the officers and employees of the Authority with respect to the issuance and sale of the Bonds, or in connection with or related to any of the agreements or documents referenced herein, are hereby approved, confirmed and ratified. Section 10. This Resolution shall take effect immediately upon its adoption. APPROVED and ADOPTED by the Board of Directors of the Tustin Public Financing Authority on November 20, 1995. ATTEST: 4 It T STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss I, Pamela Stoker, Secretary of the Tustin Public Financing Authority hereby certify that the foregoing is a full, true and correct copy of a Resolution duly adopted at a meeting of the Board of Directors of said Authority duly and regularly held on November 20, 1995, of which meeting all of the members of said Board of Directors had due notice and at which a majority thereof were present; and that at said meeting said Resolution was adopted by the following vote: AM: DIRECTORS: Potts, Worley, Doyle, Saltarelli, Thomas NOES: DIRECTORS: None ABSENT: DIRECTORS: None An agenda of said meeting was posted at least 72 hours before said meeting at 300 Centennial Way, Tustin, California, a location freely accessible to members of the public, and a brief general description of said Resolution appeared on said agenda. I further certify that I have carefully compared the same with the original minutes of said meeting on file and of record in my office; that the foregoing Resolution is a full, true and correct copy of the original Resolution adopted at said meeting and entered in said minutes; and that said Resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. Dated: November 20 1995 f 6. BOND PURCHASE AGREEMENT by and between the CITY OF TUSTIN and the TUSTIN PUBLIC FINANCING AUTHORITY Dated as of .1995 t N TABLE OF CONTENTS Section1. Definitions............................................................................................................. 2 Section 2. Purchase and Sale of Assessment Bonds............................................................... 2 Section 3. Representations and Warranties of the City .......................................................... 3 Section 4. Conditions to the Obligations of the Authority ..................................................... 4 Section5. Expenses................................................................................................................ 9 Section6. Indemnification...................................................................................................... 9 Section 7. Benefits; Survival.................................................................................................. 9 Section8. Counterparts.........................................................................................................10 Section9. Governing Law....................................................................................................10 EXHIBIT A — Maturity Schedule.........................................................................................A-1 BOND PURCHASE AGREEMENT THIS BOND PURCHASE AGREEMENT, is entered into as of , 1995, by and between the Tustin Public Financing Authority (the "Authority") and the City of Tustin (the t.Cin,,,) 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 California Government Code (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 or refinancing for public capital improvements of local agencies within the State of California (the "State"); WHEREAS, pursuant to an Indenture of Trust, dated as of August 1, 1986 (the "85-1 Indenture"), by and between the City and Citibank, N. A., as trustee, the City issued City of Tustin Assessment District No. 85-1 Improvement Bonds (the "85-1 Bonds") in the original principal amount of $50,650,000; WHEREAS, pursuant to an Indenture of Trust, dated as of September 1, 1988 (the "86-2 Indenture"), by and between the City and Citibank, N. A., as trustee, the City issued City of Tustin Assessment District No. 86-2 Limited Obligation Improvement Bonds (the "86-2 Bonds") in the original principal amount of $81,400,000; WHEREAS, the City has determined that certain savings and efficiencies may be obtained by refunding the outstanding $ aggregate principal amount of 85-1 Bonds that have been converted to a fixed interest rate pursuant to the 85-1 Indenture and the outstanding $ aggregate principal amount of 86-2 Bonds that have been converted to a fixed interest rate pursuant to the 86-2 Indenture (collectively, the "Prior Bonds"); WHEREAS, in order to provide a portion of the moneys required to refund the Prior Bonds, the City has authorized the issuance, pursuant to a Fiscal Agent Agreement, dated as of , 1995 (the "Fiscal Agent Agreement"), by and between the City and State Street Bank and Trust Company of California, N.A., as fiscal agent (the Fiscal Agent'), of the City of Tustin Limited Obligation Improvement Bonds, Reassessment District No. 95-1 (Tustin Ranch) (the "Assessment Bonds"), in the aggregate principal amount of $ ; WHEREAS, the Authority desires to assist the City in refinancing the public improvements financed with the Prior Bonds by purchasing the Assessment Bonds from the City; WHEREAS, in order to provide the funds necessary to purchase the Assessment Bonds from the City, the Authority has authorized the issuance, pursuant to an Indenture of Trust, dated as of , 1995 (the "Indenture"), by and between the Authority and State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), of the Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series A (the "Authority Bonds"), in the aggregate principal amount of $ ; WHEREAS, the Authority and the City have found and determined that the sale of the Assessment Bonds to the Authority will result in substantial public benefits to the City, namely, the interest savings with respect to the Assessment Bonds to be achieved by reason of the credit rating to be assigned to the Authority Bonds; and WHEREAS, the Authority and the City desire to enter into this Agreement providing for the sale of the Assessment Bonds by the City to the Authority and containing the other agreements herein set forth; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the Authority and the City agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Fiscal Agent Agreement. Section 2. Purchase and Sale of Assessment Bonds, (a) Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the City hereby agrees to sell to the Authority, and the Authority hereby agrees to purchase from the City, all (but not less than all) of the $ aggregate principal amount of the Assessment Bonds. The Assessment Bonds will mature on the dates and in the amounts and will bear interest at the rates shown in Exhibit A hereto. (b) The Assessment Bonds and interest thereon will be payable from annual assessments levied and collected in accordance with the Fiscal Agent Agreement and the proceedings relating thereto. The Assessment Bonds shall be substantially in the form described in, and shall be executed, delivered and secured under and pursuant to, and shall be payable and subject to redemption as provided in, the Fiscal Agent Agreement. The proceeds of the Assessment Bonds will be used by the City to (i) refund the Prior Bonds pursuant to an Escrow Agreement (95-1), dated as of . 1995 (the "Escrow Agreement"), by and between the City and State Street Bank and Trust Company, N.A., as escrow bank (the "Escrow Bank"), and (ii) fund the Reserve Fund established under the Fiscal Agent Agreement. The Fiscal Agent Agreement, the Escrow Agreement and this Bond Purchase Agreement are collectively referred to as the "Legal Documents". (c) The City hereby ratifies, confirms and approves the Preliminary Official Statement of the Authority, dated . 1995, relating to the Bonds, which contains certain information about the City, the City's Reassessment District No. 95-1 (Tustin Ranch) (the "District"), the Fiscal Agent Agreement and the Assessment Bonds (which, together with the cover page and all appendices thereto, is referred to herein as the "Preliminary Official Statement"), which Preliminary Official Statement the City deemed final and so certified 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 information permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to assist the Authority in the preparation of a final official statement (the "Official Statement"), consisting of the Preliminary Official Statement, with such changes as may be made thereto with the approval of the Authority, the City and PaineWebber Incorporated, as underwriter of the Authority Bonds (the "Underwriter"), so that the Authority may deliver or cause to be delivered to the Underwriter, no later than the earlier of the day prior to the Closing Date (as hereinafter defined) or seven business days after the date the Underwriter agrees to purchase the Authority Bonds, copies of the Official Statement in such reasonable quantity as the Underwriter shall request. The City hereby approves of the use and distribution by the Underwriter of the Official Statement in connection with the offer and sale of the Authority Bonds. (d) The aggregate purchase price for the Assessment Bonds shall be $ , which shall be payable solely from proceeds of sale of the Authority Bonds. (e) At 8:00 a.m., California time, on . 1995, or at such other time or on such other date as the Authority, the City and the Underwriter may mutually agree upon (the "Closing Date"), at the offices of Jones Hall Hill & White, A Professional Law Corporation, in -2- San Francisco, California, the City will deliver or cause to be delivered to the Authority, the Assessment Bonds in the form of a separate single fully registered certificate (which may be typewritten) for each maturity date, registered in the name of the Trustee, as assignee of the Authority, duly executed and authenticated, and the other documents mentioned herein. The Authority will accept such delivery and pay the purchase price of the Assessment Bonds as provided in subparagraph (d) above in immediately available funds (such delivery and payment being herein referred to as the "Closing"). Section 3. Reuresentations and Warranties of the C*M The City represents and warrants to the Authority that: (a) The City is a municipal corporation and political subdivision, duly organized and existing under the laws of the State, and has, and on the Closing Date will have, full legal right, power and authority (i) to enter into the Legal Documents, (ii) to adopt Resolution No._, Resolution No._ and Resolution No._ relating to the Assessment Bonds (collectively, the "Resolutions"), (iii) to issue, sell and deliver the Assessment Bonds to the Authority as provided herein, and (iv) to carry out and consummate the transactions contemplated by the Legal Documents, the Resolutions and the Official Statement; (b) The City has complied, and will on the Closing Date be in compliance in all respects, with the Resolutions; (c) By official action of the City, the City has duly adopted the Resolutions, has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations contained in, the Legal Documents and the Assessment Bonds, and has duly authorized and approved the consummation by it of all other transactions contemplated by the Official Statement; (d) The execution and delivery of this the Legal Documents and the Assessment Bonds and the adoption of the Resolutions, and compliance with the provisions of each thereof, and the carrying out and consummation of the transactions contemplated by the Official Statement, will not conflict with or constitute a breach of or a default under any applicable law or administrative regulation of the State or the United States, or any applicable judgment, decree, agreement or other instrument to which the City is a party or is otherwise subject; (e) At the time of the City's execution hereof and at all times subsequent thereto up to and including the Closing Date, with respect to information describing the City, the Legal Documents, the Resolutions, the District and the proceedings conducted by the City relating thereto, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (f) Except as described in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending or, to the knowledge of the City, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City or the titles of its members and officers to their respective offices, (ii) enjoin or restrain the issuance, sale and delivery of the Assessment Bonds, the levy and receipt of the assessments which secure the Assessment Bonds, or the pledge thereof, (iii) in any way question or affect any of the rights, powers, duties or obligations of the City with respect to the moneys pledged or to be pledged to pay the principal of, premium, if any, or interest on the Assessment Bonds, or (iv) in any way question or affect any authority for the issuance of the Assessment Bonds, or the validity or enforceability of the Assessment Bonds, the Legal Documents or the proceedings relating thereto; -3- (g) The City will furnish such information, execute such instruments and take such other action in cooperation with the Authority as the Authority may reasonably request to qualify the Authority 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 Authority may designate, and will assist, if necessary therefor, in the continuance of such qualifications in effect as long as required for the distribution of the Authority Bonds; provided, however, that the City shall not be required to qualify as a foreign corporation or to file any general consent to service of process under the laws of any state; and (h) Any certificate signed by any official of the City authorized to do so shall be deemed a representation and warranty by the City as to the statements made therein. Section 4. Conditions to the Obligations of the AuthorilL The Authority has entered into this Bond Purchase Agreement in reliance upon the representations, warranties and agreements of the City contained herein and to be contained in the documents and instruments to be delivered on the Closing Date, and upon the performance by the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Authority's obligations under this Agreement to purchase, to accept delivery of and to pay for the Assessment Bonds shall be subject to the performance by the City of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, and shall also be subject to the following conditions: (a) The representations and warranties of the City contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date; (b) On the Closing Date, the Legal Documents shall be in full force and effect and shall not have been amended, modified or supplemented, and the Official Statement shall not have been amended, modified or supplemented, except in either case as may have been agreed to by both the Authority and the Underwriter, (c) As of the Closing Date, all official action of the City relating to the District, the Assessment Bonds and the refunding of the Prior Bonds shall be in full force and effect, and there shall have been taken all such actions as, in the opinion of Jones Hall Hill & White, A Professional Law Corporation, bond counsel (`Bond Counsel'), shall be necessary or appropriate in connection therewith, with the issuance of the Authority Bonds and the Assessment Bonds, and with the transactions contemplated by the Legal Documents, all as described in the Official Statement; (d) Between the date hereof and the Closing Date, the market price or marketability, at the initial offering price or prices set forth in the Official Statement, of the Authority Bonds shall not have been materially adversely affected, in the reasonable judgment of the Underwriter, by reason of any of the following: (i) an amendment to the Constitution of the United States or the constitution of the State shall have been past or legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or recommended for passage by the President of the United States, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Chairman or ranking minority member of the Committee of Ways and Means of the House of Representatives or the Chairman or ranking minority member of the Committee on Finance of the Senate, or a decision rendered by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, or an order, ruling, regulation (final, temporary or proposed) or press release issued or made (A) by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by the owners of the Authority Bonds, (B) by or on behalf of the State or the California Franchise Tax Board, with the purpose or effect, directly or indirectly, of imposing California personal income taxation upon such interest as would be received by the owners of the Authority Bonds, or (C) by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or by or on behalf of the State or the California Franchise Tax Board, with the purpose or effect, directly or indirectly, of changing the federal or State income tax rates, respectively; (ii) the declaration of war or engagement in major military hostilities by the United States or the occurrences of any other national emergency or calamity relating to the effective operation of the government of the United States; (iii) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange; (iv) the imposition by the New York Stock Exchange or other national securities exchange or any governmental authority, of any material restrictions not now in force with respect to the Authority Bonds or obligations of the general character of the Bonds, or the material increase of any such restrictions now in force; (v) an amendment to the Constitution of the United States or the constitution of the State shall have been past or legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or recommended for passage by the President of the United States, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed) or press release issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Authority Bonds, or the Authority Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement or the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended, or that the execution, offering or sale of obligations of the general character of the Authority Bonds, or of the Authority Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement, otherwise is or would be in violation of the federal securities laws as amended and then in effect; (vi) the withdrawal or downgrading of any rating of the Authority Bonds by a national rating agency; (vii) any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (e) On the Closing Date, the Authority Bonds shall have been issued and delivered to the Underwriter and all of the conditions to closing contained in the [Purchase Contract], dated .1995 (the "Purchase Contract"), by and between the Authority and the Underwriter shall have either been satisfied or waived. 511 (f) At or prior to the Closing Date, the Authority and the Underwriter shall have received the following documents, in each case satisfactory in form and substance to the Authority and the Underwriter: (i) Two copies of the Legal 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 Authority and the Underwriter; (ii) The approving opinion, dated the Closing Date and addressed to the City, of Bond Counsel approving, without qualification, the validity of the Assessment Bonds, and a letter of such counsel, dated the Closing Date and addressed to the Authority and the Underwriter to the effect that such opinion may be relied upon by the Authority and the Underwriter to the same extent as if such opinion were addressed to it; (iii) Copies of the Resolutions, certified by the City Clerk; (iv) The opinion of the City Attorney, dated the Closing Date and addressed to the Authority and the Underwriter, to the effect that (A) the City is a municipal corporation and political subdivision, duly organized and existing under the laws of the State, (B) the Resolutions were duly adopted at meetings of the City Council which were called and held -pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, (C) to the best knowledge of such counsel after reasonable investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the City, to restrain or enjoin the collection of assessments under the Resolutions and the Fiscal Agent Agreement or in any way contesting or affecting the validity of the Assessment Bonds or the Legal Documents, (D) the execution and delivery of the Legal Documents[ and the Official Statement], the adoption of the Resolutions, and compliance by the City with the provisions of the foregoing, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, (E) [the Official Statement has been duly authorized, executed and delivered, and ]the Legal Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City enforceable in accordance with their respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought, (F) except as described in the Official Statement, no authorization, approval, consent, or other order of the State or any other governmental authority or agency within the State having jurisdiction over the City is required for the valid authorization, execution, delivery and performance by the City of the Legal Documents or the Official Statement or for the adoption of the Resolutions which has not been obtained, and (G) the information contained in the Official Statement describing the City, the Legal Documents, the Resolutions, the District and the proceedings conducted by the City relating thereto (except for any financial or statistical data or forecasts, estimates, projections, assumptions or expressions of opinion, as to which no opinion need be expressed), as of the date hereof and the Closing Date, does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance under which they were made, not misleading; -6- (v) The opinion, dated the Closing Date and addressed to the City, the Underwriter and the Authority of counsel to the Fiscal Agent, to the effect that (A) the Fiscal Agent has been duly organized and is in good standing as a [national banking association] under the laws of the [United States], having full power and authority to enter into and to perform its duties as Fiscal Agent under the Fiscal Agent Agreement, (B) the Fiscal Agent has duly authorized, executed and delivered the Fiscal Agent Agreement, (C) the Fiscal Agent Agreement constitutes the legally valid and binding agreement of the Fiscal Agent, enforceable against the Fiscal Agent in accordance with its terms, (D) the Assessment Bonds have been validly authenticated and delivered by the Fiscal Agent, (E) no authorization, approval, consent, or other order of any other governmental authority or agency having jurisdiction over the Fiscal Agent is required for the valid authorization, execution, delivery and performance by the Fiscal Agent of the Fiscal Agent Agreement, and (F) the execution and delivery of the Fiscal Agent Agreement and compliance by the Fiscal Agent with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the Fiscal Agent a breach or default under any agreement or other instrument to which the Fiscal Agent is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Fiscal Agent is subject; (vi) A certificate, dated the Closing Date, signed by a duly authorized official of the City, in form and substance satisfactory to the Authority and the Underwriter, to the effect that the representations and warranties of the City contained in this Bond 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; (vii) A certificate, dated the date of Closing, signed by a duly authorized official of the Fiscal Agent, satisfactory in form and substance to the Authority and the Underwriter, to the effect that (A) the Fiscal Agent is a [national banking association] duly organized and validly existing and in good standing 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 Fiscal Agent Agreement, (B) the Fiscal Agent is duly authorized to enter into the Fiscal Agent Agreement and to authenticate the Assessment Bonds, (C) the Assessment Bonds have been duly authenticated by the Fiscal Agent, (D) the execution and delivery of the Fiscal Agent Agreement and compliance with the provisions on the Fiscal Agent'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, bond, note, resolution, agreement or other instrument to which the Fiscal Agent is a party or is otherwise subject, 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 Fiscal Agent pursuant to the lien created by the Fiscal Agent Agreement 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 Fiscal Agent Agreement, and (E) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body pending against the Fiscal Agent, nor, to the best of its knowledge, is any such action or other proceeding threatened against the Fiscal Agent, affecting the existence of the Fiscal Agent, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the execution and delivery of the Assessment Bonds or the collection of the assessments securing the Assessment Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Fiscal Agent Agreement, or contesting the powers of the Fiscal Agent or its authority to enter into, adopt or perform its obligations under the Fiscal Agent Agreement; Ire (viii) A certificate, dated the date of Closing, signed by a duly authorized official of the Escrow Bank, satisfactory in form and substance to the Authority and the Underwriter, to the effect that (A) the Escrow 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 Escrow Agreement, (B) the Escrow Bank is duly authorized to enter into the Escrow Agreement, (C) the execution and delivery of the Escrow Agreement and compliance with the provisions on the Escrow 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, bond, note, resolution, agreement or other instrument to which the Escrow Bank is a party or is otherwise subject, 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 Escrow Bank pursuant to the lien created by the Escrow Agreement 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 Escrow Agreement, and (D) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body pending against the Escrow Bank, nor, to the best of its knowledge, is any such action or other proceeding threatened against the Escrow Bank, affecting the existence of the Escrow Bank, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the execution and delivery of the Escrow Agreement, or in any way contesting or affecting the validity or enforceability of the Escrow Agreement, or contesting the powers of the Escrow Bank or its authority to enter into, adopt or perform its obligations under the Escrow Agreement; (ix) Two certified copies of the general resolution of the Fiscal Agent authorizing the execution and delivery of the Fiscal Agent Agreement by the Fiscal Agent; (x) Two certified copies of the general resolution of the Escrow Bank authorizing the execution and delivery of the Escrow Agreement by the Escrow Bank; (xi) A letter addressed to the City, the Underwriter and the Authority, dated the date of the Closing, from . Certified Public Accountants, verifying the accuracy of the mathematical computations concerning the adequacy of the maturing principal amounts of and interest earned on the government obligations, together with other escrowed moneys, to be deposited with the Escrow Bank under the Escrow Agreement to pay when due at the stated maturity or call for redemption the principal of and interest and premium, if any, on the Prior Bonds; and (xii) Such additional legal opinions, certificates, proceedings, instruments or evidences thereof and other documents as the Authority, the Underwriter or Bond Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the representations of the City herein and of the statements and information contained in the Official Statement, and the due performance or satisfaction by the Fiscal Agent and the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by any of them in connection with the transactions contemplated hereby and by the Legal Documents. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Authority, but the approval of the Authority shall not be unreasonably withheld. Receipt of, and payment -8- for, the Assessment Bonds shall constitute evidence of the satisfactory nature of such as to the Authority. The performance of any and all obligations of the City hereunder and the performance of any and all conditions contained herein for the benefit of the Authority may be waived by the Authority in its sole discretion. If the City shall be unable to satisfy the conditions to the obligations of the Authority to purchase, accept delivery of and pay for the Assessment Bonds contained in this Bond Purchase Agreement, or if the obligations of the Authority to purchase, accept delivery of and pay for the Assessment Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate, and neither the Authority nor the City shall be under further obligation hereunder, except that the respective obligations of the City and the Authority set forth in Section 5 and Section 6 hereof shall continue in full force and effect. Section 5. Expenses, The Authority shall be under no obligation to pay, and the City shall pay (a) the cost of the preparation of the Authority Bonds, (b) the fees and disbursements of Bond Counsel, (c) the fees and disbursements of accountants, advisers and of any other experts or consultants retained by the City, and (d) any other expenses incident to the performance of the City's obligations hereunder. Section 6. Indemnification. To the extent permitted by law, the City shall indemnify and hold harmless the Authority, and its officers, directors, employees and agents, against any and all losses, claims, damages, liabilities, costs and expenses (including without limitation fees and disbursements of counsel and other expenses) incurred by them or any of them in connection with investigating or defending any loss, claim, damages, liability or any suit, action or proceeding, joint or several, to which they or any of them may become subject, insofar as such losses, claims, damages, liabilities, costs and expenses (or any suit, action or proceeding in respect thereof) arise out of or are based upon the issuance and sale of the Assessment Bonds by the City or any untrue statement or alleged untrue statement of a material fact contained in the Official Statement or in any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact relating to the City, the Legal Documents, the Resolutions, the District or the proceedings conducted by the City relating thereto, which is required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. This indemnity shall be in addition to any liability which the City may otherwise have. Additionally, to the extent permitted by law, the City shall indemnify and hold harmless the Authority against any and all losses, claims, damages, liabilities, costs and expenses (including without limitation fees and disbursements of counsel and other expenses) incurred by it in connection with its indemnification of the Trustee in accordance with the Indenture. Section 7. Benefits: Survival. This Bond Purchase Agreement is made solely for the benefit of the City, the Authority and the Underwriter, and no other person shall acquire or have any right hereunder or by virtue hereof. All of the City's representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect regardless of (a) any investigations made by or on behalf of the Authority, or (b) delivery of and payment for the Assessment Bonds pursuant to this Agreement. The agreements contained in this Section and in Section 6 shall survive any termination of this Bond Purchase Agreement. Section 8. Counteruarts, This Bond 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. -9- Section 9. Governing Law. The validity, interpretation and performance of this Bond Purchase Agreement shall be governed by the laws of the State. -ia IN WITNESS WHEREOF, the Authority and the City have each caused this Bond Purchase Agreement to be executed by their duly authorized officers all as of the date first above written. TUSTIN PUBLIC FINANCING AUTHORITY CITY OF TUSTIN By -11- EXHIBIT A Maturity Date Principal Interest Maturity Date Principal Interest (September 2) Amt Rate (September 2) Amt $= $37,829,000 TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS (Tustin Ranch) Series A BOND PURCHASE AGREEMENT 1995 City of Tustin 300 Centennial Way Tustin, California 92680 Tustin Public Financing Authority c/o City of Tustin 300 Centennial Way Tustin, California 92680 Ladies and Gentlemen: PaineWebber Incorporated (the "Underwriter") offers to enter into this Purchase Agreement with the Tustin Public Financing Authority (the "Authority") with regard to the purchase and sale of the Bonds described herein, which will be binding upon the Authority and the Underwriter upon the Authority's acceptance hereof. All capitalized terms not otherwise defined herein shall have the meanings prescribed in the Indenture of Trust (defined below). 1. Purchase. Sale and Delivery of the Bonds. (a) Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, including the simultaneous purchase of the Local Obligations by the Authority pursuant to a separate bond purchase agreement pertaining thereto, the Underwriter hereby agrees to purchase from the Authority and the Authority agrees to sell to the Underwriter all (but not less than all) of the Authority's $37,892,000 aggregate principal amount of Revenue Bonds, Series A (the "Bonds"), at the aggregate purchase price of $ (being the principal amount of the Bonds plus accrued interest from , 1995 until the Closing Date, less an Underwriter's discount of $ and less original issue discount of $ ). The Bonds will have the maturities and shall bear interest as set forth in "Exhibit All hereto. The Bonds will be subject to redemption and such other terms as set forth in the Indenture of Trust (defined below), and shall be issued in book -entry only form. SF2-37734.1 4OMS7.SS4-11/12/95 (b) The Bonds shall be issued and secured under the provisions of a resolution (the "Resolution") adopted by the Authority authorizing the issuance of the Bonds, and an Indenture of Trust, by and between the Authority and State Street Bank and Trust Company of California, N.A. (the "Trustee"), dated as of , 1995, relating to the Bonds (the "Indenture"), and shall be as described in the Indenture. The Authority is purchasing the Local Obligations from the City and selling the Bonds to the Underwriter as authorized by the Marks -Roos Local Bond Pooling Act of 1985, constituting Section 6584 gt sea. of the California Government Code (the "JPA Act"). The City has approved and issued the Local Obligations pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (the "Refunding Law"), and a Fiscal Agent Agreement, by and between the City and State Street Bank and Trust Company of California, N.A. (the "Fiscal Agent"), dated as of , 1995, relating to the Local Obligations (the "Fiscal Agent Agreement"). The Local Obligations are described in "Exhibit B" hereto. The proceeds of the Bonds shall be applied (i) to establish the Reserve Fund (as defined and described in the Indenture and (ii) to purchase the Local Obligations. The proceeds of the Local Obligations shall be applied (iii) to refund certain obligations of the City (the "Refunded Bonds") as described in the Official Statement, and (iv) to pay the cost of issuing the Local Obligations and the Bonds. (c) The Underwriter agrees to offer all the Bonds to the public initially at the prices (or yields) set forth on the cover pages of the Official Statement of the Authority pertaining to the Bonds, dated , 1995 (the Official Statement, together with all appendices thereto, and with such changes therein and supplements thereto as are consented to in writing by the Authority and the Underwriter, are herein called the "Official Statement"). Subsequent to the initial public offering of the Bonds, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. "Public Offering" shall include an offering to a representative number of institutional investors or registered investment companies, regardless of the number of such investors to which the Bonds are sold. (d) The Authority shall deliver to the Underwriter ten (10) copies of the Official Statement manually executed on behalf of the Authority by the President of the Authority. The Authority shall also deliver a sufficient number of copies of the Official Statement to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending on the End Date (defined below). The Authority shall deliver these copies to the Underwriter within seven (7) business days after the sF2-37734.1 2 40879-57344-11/12195 execution of this Purchase Agreement and in sufficient time to accompany or precede any sales confirmation that requests payment from any customer of the Underwriter. The Underwriter shall inform the Authority in writing of the End Date, and covenants to file the Official Statement with a nationally recognized municipal securities information repository ("NRMSIR") on a timely basis. "End Date" as used herein is that date which is the earlier of: (a) ninety (90) days after the end of the underwriting period (as defined in SEC Rule 15c2-12 adopted by the Securities and Exchange Commission on June 28, 1989 ("Rule 15c2-1211); or available from days after the ends. (b) the time when the Official Statement becomes a NRMSIR, but in no event less than twenty-five (25) underwriting period (as defined in Rule 15c2-12) Pursuant to a resolution of the Authority adopted on 1995, the Authority has authorized the use of the Official Statement in connection with the public offering of the Bonds. The Authority also has consented to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement of the Authority dated , 1995, relating to the Bonds in connection with the public offering of the Bonds (which, together with all appendices thereto, is herein called the "Preliminary Official Statement"). An authorized officer of the Authority and of the City have certified to the Underwriter on behalf of the Authority and the City that such Preliminary Official Statement was deemed to be final as of its date for purposes of Rule 15c2-12, with the exception of certain final pricing and related information referred to in Rule 15c2-12. The Underwriter has distributed a single copy of each Preliminary Official Statement to potential customers on request. (e) At 9:00 A.M., California time, on , 1995, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the City, the Authority and the Underwriter (the "Closing Date"), the Authority will deliver (i) the Bonds to The Depository Trust Company ("DTC") in New York, New York, and (ii) the closing documents hereinafter mentioned at the offices of Jones Hall Hill & White, A Professional Corporation, San Francisco, California ("Bond Counsel"), or such other place to be mutually agreed upon by the City, the Authority and the Underwriter, and the City shall deliver the Local Obligations to the Authority at the office of Bond Counsel. The Authority will accept such delivery from the City, and the Underwriter, subject to the provisions of this Purchase Agreement, will accept such delivery from the Authority. The Underwriter will pay the purchase price of the Bonds as set forth in Section 1(a) hereof by wire transfer of immediately available funds, which payment will satisfy the Authority's obligation to pay the purchase sF2-37734.1 3 4M79 -57 -M -11/12M price of the Local Obligations to the City pursuant to Section 1(a) hereof. The date of this payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing Date." 2. Representations Warranties and Covenants of the Authority. The Authority represents, warrants and covenants to the City and the Underwriter that: (a) The Authority is a joint powers authority, duly organized and existing under the laws of the State, including the Joint Exercise of Powers Act (Section 6500 gt =. of the California Government Code), with full right, power and authority to adopt, enter into, execute and deliver this Purchase Contract and to perform its obligations thereunder. (b) By all necessary official action, the Authority has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in this Purchase Contract, and has approved the use by the Underwriter of the Preliminary Official Statement and the Official Statement and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, this Purchase Agreement and the Indenture will constitute the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors rights generally. The Authority has complied, and will at the Closing be in compliance in all respects, with the terms of this Purchase Agreement. (c) The Preliminary Official Statement provided to the Underwriter has been deemed final by the Authority, as required by Rule 15c2-12. As of the date thereof and at all times subsequent thereto up to and including the End Date, the information contained in the Official Statement was and will be complete. The information contained in the Official Statement is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Until the End Date, if any event shall occur of which the Authority is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements contained in the Official Statement, in light of the circumstances existing at such time, not misleading, 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 sae -37734.1 4 4M79-57-SS4-1tnan5 Statement necessary, in the Underwriter's opinion, so that the statements therein as so supplemented will not be misleading in the light of the circumstances existing at such time; (e) After the Closing and until the End Date (i) the Authority will not adopt any amendment of or supplement to the Official Statement to which the Underwriter shall object in writing or which shall be disapproved by counsel for the Underwriter, and (ii) if any event relating to or affecting the Authority shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to an initial purchaser of the Bonds, the Authority will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the Bonds, not misleading. The costs of preparing any necessary amendment or supplement to the Official Statement shall be borne by the City and the Authority. For the purposes of this section the Authority will furnish such information with respect to itself as the Underwriter may from time to time request. (f) At the time of the Closing, there shall not have been any material adverse changes in the financial condition of the Authority. (g) As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any indenture, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority is a party or 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 event of default under any such instrument which breach, default or event could have an adverse effect on the Authority's ability to perform its obligations under this Purchase Agreement; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of this Purchase Agreement and the Indenture and compliance by the Authority with the provisions thereof and hereof do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, indenture, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which SF2-37734.1 5 40679-57-SS4-11/12/95 the Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as provided in this Purchase Agreement. (h) (1) 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, government agency, public board or body, pending, or to the best knowledge of the Authority threatened against the Authority: (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii)- affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in anyway contesting or affecting the validity of this Purchase Agreement, the Indenture, the Bonds and such other documents requested to be issued by the Authority in connection with the issuance of the Bonds (collectively, the "Authority Documents") or the consummation of the transactions on the part of the Authority contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue and sell the Bonds and to pledge the payments on the Local Obligations for repayment thereof; (iii) which may result in any material adverse change relating to the financial condition of the Authority; (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 required to be stated therein or necessary to make the statements therein, in light of all the circumstances under which they were made, not misleading; or (v) challenging the ability of the Authority to sell the Bonds to the Underwriter, or to purchase the Local Obligations from the City. (2) To the best knowledge of the Authority, there is no basis for any action, suit, proceeding, inquiry or M-37734.1 6 4OMS7ss4-11/12195 investigation of the nature described in clauses (i) through (v) above. (i) All authorizations, approvals, licenses, permits, consents and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Authority of its obligations in connection with, the Authority Documents have been duly obtained or made, except as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds. (j) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter 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; provided, however, the Authority shall not be required to register as a dealer or a broker of securities or consent to the jurisdiction of any State of the United States, other than the State of California; (k) Any certificate signed by any authorized officer of the Authority and delivered to the Underwriter shall be deemed to be a representation and warranty by the Authority to the Underwriter as to the statements made therein. (1) As of the time of acceptance hereof and as of the Closing Date, except as otherwise disclosed in the Official Statement, the Authority has complied with the filing requirements of Section 6503.5 of the Joint Exercise of Powers Act. (m) The Authority is not in default, nor has been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the Authority or with respect to an obligation guaranteed by the Authority as guarantor. 3. Representations Warranties and Agreements of the City. The City hereby represents and warrants to and agrees with the Authority and the Underwriter that: (a) The City is a California general law city, duly organized and validly existing pursuant to the Constitution and laws of the State of California; (b) The City has, and at the Closing Date will have, full legal right, power and authority (i) to execute, deliver and perform its obligations under the Fiscal Agent Agreement and this Purchase Agreement and to carry out all transactions contemplated hereby and thereby, (ii) to adopt the resolutions and enter into the Fiscal Agent Agreement and the other authorizing SF2-37734.1 7 40679-57ss4-11/12/95 documents necessary for the issuance of the Local Obligations, (iii) to issue, sell and deliver the Local Obligations to the Authority as provided herein, and (iv) to carry out, give effect to and consummate the transactions contemplated by this Purchase Agreement, the Fiscal Agent Agreement and the Local Obligations and any other applicable agreements relating to the issuance of the Local Obligations, (collectively, the "City Documents"); (c) The City is, and at the Closing Date will be, in compliance, in all respects, with the City Documents; (d) The City Council has duly and validly approved the City Documents the execution and delivery of the Local Obligations and the City Documents, and the performance by the City of its obligations contained therein, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by each of said documents; (e) The City is not, and at the Closing Date will not be, in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the City under the Local Obligations or the other City Documents; (f) The execution and delivery of the Local Obligations and the other City Documents or any other applicable agreements and the other instruments contemplated by any of such documents to which the City is a party, and compliance with the provisions thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound; (g) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute conditions precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the Local Obligations, or any other applicable agreements, have been obtained and are in full force and effect; (h) The Local Obligations and other applicable agreements conform as to form and tenor to the descriptions thereof SF2-37734.1 8 40M57 -M-11/1285 contained in the Preliminary Official Statement, and which will be contained in the Official Statement as of the Closing Date, and when delivered to and paid for by the Authority on the Closing Date as provided herein, the Local Obligations will be validly issued and outstanding; (i) The reassessments constituting the security for the Local Obligations have been duly and lawfully levied under and pursuant to the Refunding Law and such reassessments constitute valid and legally binding liens on the properties on which they have been levied; (j) Other than as described in the Official Statement, there are no outstanding assessment liens against any of the properties within the Reassessment District No. 95-1 (the "Reassessment District") which are senior to the reassessment liens ref erred to in paragraph ( i) hereof, and the City has no present intention of conducting further proceedings leading to the levying of additional assessments against any of the properties within the Reassessment District except as described in the Preliminary Official Statement; (k) The Preliminary Official Statement provided to the Underwriter has been deemed final by the City, as required by Rule 15c2-12. As of the date thereof and at all times subsequent thereto up to and including the End Date, the information contained in the Official Statement was and will be complete. The information contained in the Official Statement is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (1) Until the End Date, if any event shall occur of which the City is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements contained in the Official Statement, in light of the circumstances existing at such time, not misleading, the City 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 opinion, so that the statements therein as so supplemented will not be misleading in the light of the circumstances existing at such time; (m) After the Closing and until the End Date (i) the City will not adopt any amendment of or supplement to the Official Statement to which the Underwriter shall object in writing or which shall be disapproved by counsel for the Underwriter, and (ii) if any event relating to or affecting the City shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of SF2-37734.1 9 40679-57-SS4-11/12/95 the circumstances existing at the time it is delivered to an initial purchaser of the Bonds, the City will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the Bonds, not misleading. The costs of preparing any necessary amendment or supplement to the Official Statement shall be borne by the City and the Authority. For the purposes of this section the City will furnish such information with respect to itself as the Underwriter may from time to time request. (n) The Fiscal Agent Agreement and all other documents providing for the issuance of the Local Obligations will create a valid pledge of, lien upon and security interest in the unpaid reassessments in the Reassessment District and the interest thereon and the moneys in all funds and accounts established pursuant to therein, including the investments thereof, subject in all cases to the provisions permitting the application thereof for the purposes and on the terms and conditions set forth therein; (o) No action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending, or threatened in any way, affecting the existence of the City or the titles of its officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or delivery of the Local Obligations, the application of the proceeds thereof, or the collection or application of reassessments pledged or to be pledged to pay the principal of and interest in the Local Obligations, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Local Obligations and other City Documents, or any other applicable agreements, or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the powers of the City or its authority with respect to the Local Obligations and other City Documents, or any other applicable agreements, or any action of the City contemplated by any of said documents, or which would adversely affect the exemption of interest paid on the Local Obligations from federal income taxation or California personal income taxation, nor to the knowledge of the City is there any basis therefor; (p) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter 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; provided, however, the City shall not be required to sF2-37734.1 10 40879-57ss4-11/12195 register as a dealer or a broker of securities or consent to the jurisdiction of any State of the United States, other than the State of California; (q) Any certificate signed by any authorized official of the City authorized to do so shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein; (r) During the period from the date hereof until the Closing Date, the City agrees to furnish the Underwriter with copies of any documents it files with any regulatory authority which are requested by the Underwriter; (s) The City will agree to notify the Underwriter prior to any reapportionment of reassessments to the end that they will be approved only if security is not reduced or impaired; (t) The City is not in default, nor has the City been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the City or with respect to an obligation guaranteed by the City as guarantor. (u) The City will undertake, pursuant to the Fiscal Agent Agreement and the Continuing Disclosure Agreement, to provide certain annual financial information and information about the property in the Reassessment District, together with notices of the occurrence of certain events, if material. A copy of the Continuing Disclosure Agreement is set forth in Appendix F of the Preliminary Official Statement and will also be set forth in the Official Statement, and the specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Continuing Disclosure Agreement. 4. Conditions to the Obligations of the Underwriter. 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 representations and warranties on the part of the City and Authority contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City and Authority and other persons and entities made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City and the Authority of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions: (a) At the Closing Date, the Indenture and any other applicable agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and the Local Obligations and with the transactions sF2•37134.1 11 4W7947 -SM -11/12M5 contemplated thereby and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate; (b) At the Closing Date, the Official Statement shall be in form and substance satisfactory to the Underwriter, the Authority and the City; (c) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Authority terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (1) Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation has been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest as would be received by the holders of the Bonds or the Local Obligations; (2) Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that the Bonds or the Local Obligations, obligations of the general character of the Bonds or the Local Obligations, including any or all underlying arrangements, are not exempt from registration under of other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds or the Local Obligations, or of the Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities laws as amended and then in effect; sa2-37734.1 12 40879-57ss4-11/12195 (3) A general suspension of trading in securities on the New York Stock Exchange, or a general banking moratorium declared by Federal, State of New York or State of California officials authorized to do so, or a war, outbreak or escalation of hostilities, or other national calamity; (4) The withdrawal or downgrading of any rating of any securities of the City or the Authority by a national rating agency; (5) Any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the Authority, its property, income or securities (or interest thereon), the validity or enforceability of the reassessments or the ability of the City to issue the Local Obligations or the Authority to issue the Bonds as contemplated by the Indenture and the Official Statement; (6) Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or the Official Statement, or results in the Preliminary Official Statement or the Official Statement containing any untrue statement of a material fact or omitting 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; (7) The entry of an order by a court of competent jurisdiction which enjoins or restrains the City from issuing permits, licenses or entitlements within the City or which order, in the reasonable opinion of the Underwriter, otherwise materially and adversely affects the proposed developments within the City; (8) Any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; (9) Additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriter's ability to market the Bonds; or (10) The United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of M -tea 13 4M79 -574%U -11/12M hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the United States, being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds. (d) On or prior to the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter, or shall have waived the receipt of such documents as a condition to the Underwriter's purchase of the Bonds: (1) The Official Statement, executed on behalf of the Authority and the City; (2 ) A fully executed copy of the Indenture and the Fiscal Agent Agreement; (3) An approving opinion of Bond Counsel dated the date of the Closing and substantially in the form included as APPENDIX E, to the Official Statement, together with a letter from such counsel, dated the date of the Closing Date and addressed to the Underwriter, to the effect that the foregoing opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it. (4) A supplemental opinion of Bond Counsel, dated as of the Closing Date and addressed to the Underwriter, in form and substance satisfactory to the Underwriter and its counsel, to the effect that: (a) The Authority has full power and authority to execute, deliver and perform the Authority Documents, and the same has been duly authorized, executed and delivered by the Authority and constitute the binding agreement of the Authority, are in full force and effect as of the Closing Date, and are enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. (b) The City has full power and authority to execute, deliver and perform the City Documents, and the same have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding obligations of the City, are in full force and effect as of the Closing Date, and are enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. sF2-37734.1 14 40979-57-S34.11/12/95 (c) The statements contained in the Official Statement on the cover page and under the captions "INTRODUCTION," "THE REFUNDING PLAN," "THE SERIES A BONDS," "SECURITY FOR THE SERIES A BONDS," "CONCLUDING INFORMATION - Tax Matters," "CONCLUDING INFORMATION - No Litigation" and "APPENDICES B and E" insofar as such statements purport to summarize certain provisions relating to the Bonds, the Indenture, the Local Obligations, the pledge of the Revenues, the Refunding Law, the Joint Exercise of Powers Act, the JPA Act or state and federal tax law, fairly and accurately summarize the information presented therein; provided that Bond Counsel need not express any opinion with respect to any financial or statistical information contained therein. (d) 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. (e) The Refunded Bonds are deemed to be paid and are no longer Outstanding within the meaning and with the effect expressed in the documents relating to the issuance thereof, and the assessments securing the Refunded Bonds have been superseded and supplanted by the reassessments security the Local Obligations, as provided for in the Refunding Law. (f) The Local Obligations representing the unpaid assessments were validly issued under the provisions of the Refunding Law and the Fiscal Agent Agreement; (g) The Local Obligations constitute valid and binding limited obligations of the City, payable solely from the proceeds of the unpaid reassessments, subject to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar law affecting creditor's rights, to the application of equitable principles and to the exercise of judicial discretion and appropriate cases and to - the limitations on legal remedies against general law cities in the State of California; and (h) Interest on the Local Obligations is excluded from gross income for federal income tax purposes, is exempt from California personal income taxes and is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. (5) An opinion, dated as of the Closing Date and addressed to the Underwriter, of counsel to the Authority, in form and substance acceptable to the Underwriter and its counsel, to the effect that: (i) the Authority is a joint powers authority, duly organized and validly existing pursuant to the laws of the State of California (including the Joint Exercise of Powers sF2-37734.1 15 4M79 -57-,v4-11/12/95 Act) with full legal right, power and authority to issue the Bonds and purchase the Local Obligations and to perform all of its obligations under this Purchase Agreement, the Bonds the Authority Documents; (ii) the preparation and distribution of the Preliminary Official Statement and the Official Statement and this Purchase Agreement have been duly approved by the Authority; (iii) this Purchase Agreement, the Bonds and all other Authority Documents constitute the legal, valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; (iv) no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened in any way affecting the existence of the Authority or the titles of its officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds or the application of the proceeds thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, this Purchase Agreement or any other Authority Document or any action of the Authority contemplated by any of said documents, or in any way contesting the purchase of the Local Obligations or the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the powers of the Authority or its authority with respect to this Purchase Agreement or any other applicable agreement, or any action on the part of the Authority contemplated by any of said documents, nor is there any basis therefor; (v) the Authority is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America,. or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the Authority under the Bonds, this Purchase Agreement or any other Authority Document as the case may be; (vi) the execution and delivery of the Bonds, this Purchase Agreement or any other applicable agreements and the other instruments contemplated by any of such documents to which the Authority is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or SP2-37734.1 16 4M79-57-Ss4-11/12/" regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound; (vii) all approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Authority of its obligations hereunder, or under the Bonds or any other Authority Document, have been obtained and are in full force and effect; and (viii) as of the Closing Date, the information contained in the Official Statement under the captions "INTRODUCTION," "THE AUTHORITY" and "CONCLUDING INFORMATION - No Litigation," (excluding therefrom statistical and financial data) is true and correct and such information does not contain any untrue statement of a material fact required to be stated in the Official Statement or omit to state any fact necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect; (6) An opinion, dated as of the Closing Date and addressed to the Underwriter, of the City Attorney of the City, in form and substance acceptable to the Underwriter and its counsel, to the effect that: (i) the City is a general law city, duly organized and validly existing pursuant to the Constitution and the laws of the State of California with full legal right, power and authority to issue the Local Obligations and to perform all of its obligations under this Purchase Agreement, the Fiscal Agent Agreement, the Local Obligations and all other applicable agreements; (ii) the preparation and distribution of the Preliminary Official Statement and the Official Statement and this Purchase Agreement have been duly approved by the City; (iii) this Purchase Agreement, the Local Obligations and all other City Documents constitute the legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; (iv) no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, SF2-3'n34.1 17 40679-57-SS4-11112195 regulatory agency, public board or body is pending or threatened in any way affecting the existence of the City or the titles of its officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Fiscal Agent Agreement, Local Obligations or the application of the proceeds thereof, or the collection or application of the assessments to pay the principal of and interest on the Local Obligations, or in any way contesting or affecting the validity or enforceability of the Fiscal Agent Agreement, the Local Obligations, this Purchase Agreement or any other City Document or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the powers of the City or its authority with respect to this Purchase Agreement or any other applicable agreement, or any action on the part of the City contemplated by any of said documents, nor is there any basis therefor; (v) the City is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the City under the Fiscal Agent Agreement, the Local Obligations, this Purchase Agreement or any other City Document as the case may be; (vi) the execution and delivery of the Fiscal Agent Agreement, the Local Obligations, this Purchase Agreement or any other applicable agreements and the other instruments contemplated by any of such documents to which the City is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound; (vii) all approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the Local Obligations or any other applicable agreements, have been obtained and are in full force and effect; and SF2-37734.1 is 40979-5784-11112/95 (viii) as of the Closing Date, the information contained in the Official Statement under the captions "INTRODUCTION," "THE REFUNDING PLAN," "CONSOLIDATED REASSESSMENT DISTRICT NO. 95-1," "THE CITY" and "CONCLUDING INFORMATION - No Litigation," (excluding therefrom statistical and financial data) is true and correct and such information does not contain any untrue statement of a material fact required to be stated in the Official Statement or omit to state any fact necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect; (7) An opinion of Orrick, Herrington & Sutcliffe, counsel for the Underwriter, dated as of the Closing Date and addressed to the Underwriter, in a form and substance satisfactory to the Underwriter; provided, that in rendering such opinion, such counsel may rely on the opinions of Bond Counsel, the City Attorney and counsel to the Authority; (8) A certificate, dated as of the Closing Date and signed by a duly authorized official of the Authority, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds, and certifying that (i) the representations and warranties of the Authority contained herein 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; (ii) no event has occurred since the date of the Official Statement affecting the Authority which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect, and the Bonds and other applicable agreements conform as to form and tenor to the descriptions thereof contained in the Indenture and the Official Statement; (iii) the Authority has complied with all the agreements and has satisfied all the conditions on its part to be performed or satisfied under this Purchase Agreement at and prior to the Closing Date; and (iv) as of the Closing Date, the information contained in the Official Statement under the captions "INTRODUCTION" and "THE AUTHORITY" is true and correct and such information does not contain any untrue statement of a material fact required to be stated in the Official Statement or omit to state any fact necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect; (9) A certificate, dated as of the Closing Date and signed by a duly authorized official of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the official Statement in connection with the offering and sale of the Bonds, and certifying the (i) the representations and warranties of the City contained herein 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; (ii) no event has occurred since the date of the Official SF2-37734.1 19 40979-57SS4-11/12/95 Statement affecting the City which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect, and the Local Obligations and other applicable agreements conform as to form and tenor to the descriptions thereof contained in the Official Statement; (iii) the City has complied with all the agreements and has satisfied all the conditions on its part to be performed or satisfied under this Purchase Agreement at and prior to the Closing Date; and (iv) as of the Closing Date, the information contained in the Official Statement under the captions "INTRODUCTION," THE "REFUNDING PLAN," "REASSESSMENT DISTRICT NO. 95-1," "THE CITY" and "APPENDIX C" (excluding therefrom statistical and financial data) is true and correct and such information does not contain any untrue statement of a material fact required to be stated in the Official Statement or omit to state any fact necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect; (10) A certificate dated the Closing Date and addressed to the Underwriter, from Muni Financial Services, Inc. in substantially the form attached hereto as "Exhibit C"; (11) Two counterpart originals or copies certified by an authorized officer of the Authority of a transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds and the Local Obligations; (12) The opinion of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter, in form and substance acceptable to counsel for the Underwriter substantially to the following effect: (i) The Trustee is a duly organized and validly existing under the laws of (ii) The Trustee has duly authorized the execution and delivery of the Indenture and the Escrow Agreement. (iii) The Indenture and the Escrow Agreement have been duly entered into and delivered by the Trustee and assuming due, valid and binding authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligations of the Trustee enforceable against the Trustee in accordance with their respecting terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally, or by general principles of equity. (iv) acceptance by duties and obligations under the Indenture and and compliance with provisions thereof will the Trustee of the the Escrow Agreement not conflict with or sF2-37734.1 20 40879-57-S54-11112/95 constitute a breach of or default under any law or administrative regulation to which the Trustee is subject. (v) All approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter which would constitute a condition precedent to the performance by the Trustee of its duties and obligations under the Indenture or the Escrow Agreement have been obtained and are in full force and effect. (13 ) A Certificate of the Trustee, dated the Closing Date, addressed to the Underwriter, in form and substance acceptable to counsel for the Underwriter to the following effect: (i) The Trustee is duly organized and existing as a in good standing under the laws of having the full power and authority to accept and perform its duties under the Indenture and the Escrow Agreement; (ii) Subject to the provisions of the Indenture, the Trustee will apply the proceeds from the Bonds to the purposes specified in the Indenture; and (iii) Within the scope of its trust obligations under the Indenture, the Trustee agrees to cooperate with the Underwriter and its counsel, at the expense of the Underwriter, in endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the Trustee will not be required to executed a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction in which it is not now so subject. (14) Evidence as of the Closing Date satisfactory to the Underwriter that the Bonds have received, at a minimum, a rating of " " from Moody's Investors Service (the "Rating Agency") (or such other equivalent rating as the Rating Agency shall issue), and that such ratings have not been revoked or downgraded. (15) Receipt of the verification report of Grant Thornton, dated the Closing Date, and in form and substance acceptable to the Underwriter and Counsel to the Underwriter; (16 ) The No -Arbitrage or Tax Certif icate of the Authority and the City in form and substance acceptable to the Bond Counsel; (17) Evidence that the federal tax information Form 8038-G with respect to the Bonds and the Local Obligations has been prepared for filing and mailed; SF2-37134.1 21 40879-57-SS4-11/12/95 (18) Evidence that the Authority has purchased, simultaneously with the delivery of the Bonds, the Local Obligations; and (19) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Official Statement, of the Authority's and the City's representations and warranties contained herein and the due performance or satisfaction by the City and the Authority at or prior to the Closing Date of all agreements then to be performed and all conditions then to be satisfied by the City and the Authority in connection with the transactions contemplated hereby and by the Official Statement and the Indenture. If any of the conditions to the obligations of the Underwriter contained in this section or elsewhere in this Purchase Agreement shall not have been satisfied when and as required herein, all obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time prior to, the Closing Date by written notice to the Authority and the City. 5. Expenses. (a) The Underwriter shall be under no obligation to pay, and the Authority and the City shall pay or cause to be paid out of the proceeds of the Local Obligations, all expenses incident to the performance of the City's and the Authority's obligations hereunder, including but not limited to: the cost of printing and delivering the Bonds to the Underwriter and the Local Obligations to the Authority; the cost of preparation, printing (and/or word processing and reproduction), distribution and delivery of the resolutions, and the cost of printing (and/or word processing and reproduction), distribution and delivery of the Preliminary Official Statement and the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; the fees and expenses in connection with obtaining a delinquency report and statement of direct and overlapping bonded debt from California Municipal Statistics, Inc.; and the fees and disbursements of the Trustee for the Bonds, the Bond Counsel, any accountants, financial advisors or other engineers or experts or consultants the City or the Authority have retained in connection with the Bonds and the Local Obligations and any out-of-pocket disbursements of the City or the Authority to be paid from the proceeds of the Local Obligations. All out-of-pocket expenses of the Underwriter and the fees and disbursements of Counsel to the Underwriter shall be paid by the Underwriter. (b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, provided that the City and the Authority shall not have defaulted in the performance of their obligations under this Purchase Agreement, the City and Authority SF2-37734.1 22 40679-57.ss4-11/12N5 shall be under no obligation to pay, and the Underwriter shall pay, the cost of preparation of any "blue sky" or legal investment memoranda and this Purchase Agreement, expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses. 6. Indemnifications. (a) The City and Authority hereby indemnify and hold harmless to the fullest extent permitted by California or other applicable law, the Underwriter, its officers, directors, employees and agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended (each an "Indemnified Person") , from and against any and all claims, damages, losses, liabilities, costs or expenses which any Indemnified Person may incur or which may be claimed against any Indemnified Person by any person or entity by reason of any untrue or misleading statement of any material fact relating to the City or the Authority or omission or misleading statement of any material fact relating to the City or the Authority or the omission or alleged omission to state therein a material fact relating to the City or the Authority necessary to make such statements in the Preliminary Official Statement and the Official Statement, in the light of the circumstances under which, and as of the date when, they were made, not misleading; provided, however, that the City shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or a material fact contained in the Official Statement, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact necessary to make the statement therein not misleading, made therein in reliance upon and in conformity with written information furnished to the City or the Authority by the Underwriter specifically for use in connection with the preparation thereof. This indemnity agreement shall not be construed as a limitation on any other liability which the City may otherwise have to any Indemnified Person provided that in no event shall the City or the Authority be obligated for double indemnification. (b) Each Indemnified Person shall, within ten (10) days after the receipt of notice of the commencement of any action against it in respect of which indemnification may be sought on account of any indemnification agreement contained herein, give written notice of the commencement thereof to the party against whom indemnification is sought hereunder, but the omission so as to notify the indemnifying party of any such action shall not relieve the indemnifying party from any liability which it or they may have to such Indemnified Person otherwise than on account of such sF2-37734.1 23 40979-57-%S4-11/12AS indemnification agreement. In case such notice of any such action shall be so given, the indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume the defense of the action, in which event the defense shall be conducted by counsel chosen by such indemnifying party and reasonably satisfactory to the Indemnified Person (or Indemnified Persons, if more than one) who shall be defended (or defendants) in the action, and the Indemnified Person (or Indemnified Persons, if more than one) shall bear the fees and expenses of any additional counsel retained by it or them; but, if the indemnifying party shall elect not to assume the defense of the action, the indemnifying party will reimburse the Indemnified Person (or Indemnified Persons, if more than one) for the reasonable fees and expenses of any counsel retained by the Indemnified Person (or Indemnified Persons, if more than one). No party from whom indemnification is sought shall be obligated to pay the fees or expenses of more than one counsel for all Indemnified Persons in any single action or series of related actions, unless, in the good faith judgment of such counsel, such conflicts or potential conflicts of interest exist among such Indemnified Persons as to render representation of all such Indemnified Persons by the same counsel undesirable. It is understood, however, that an indemnifying party will not be liable for the legal fees and disbursements of any Indemnified Person if the Indemnified person agrees to settle and settles any claims, action or proceeding in respect of which indemnification is- sought without the prior written consent of such indemnifying party, which consent will not be unreasonably withheld. (c) The City or the Authority shall also reimburse the Underwriter and its officers, directors, employees and agents for all reasonable expenses incurred by it, including compensation for witnesses' time and the fees and expenses of separate counsel, in connection with the Underwriter being compelled to appear as a witness in any action or proceeding brought against the City or the Authority or in connection with the Bonds or the Local Obligations, whether or not the Underwriter is named in such action or proceedings. (d) The indemnities and obligations of the City and the Authority contained in this Section 6 shall survive the termination of this Purchase Agreement. 7. Undertakings of the Authority and the City. The Authority and the City agree, at their expense, to make available to the Underwriter sufficient copies of their audited financial statements, if any, certified assessment revenue projections, certified copies of the tax reports relating to the annual levy of the reassessments, a certification of the annual collections of the reassessments, resolutions of the City Council with respect to the Local Obligations, the Preliminary Official Statement and the Official Statement and any amendments or supplements thereto and other documents related to the Bonds or the Local Authority and pertaining to the City, to the extent such documents are publicly srn-37734.1 24 4OM57-SS4-11/12M available, as may reasonably be required from time to time for the prompt and efficient performance by the Underwriter of its obligations hereunder (except for all or any portions of any such documents which, by contract, are not subject to disclosure). S. Notices. Any notices, requests, directions, instruments or other communications required or permitted to be given hereunder shall be in writing and shall be given when delivered., against a receipt, or mailed certified or registered, postage prepaid, to the City, the Authority and the Underwriter at the respective addresses below. If to the City: City of Tustin 300 Centennial Way Tustin, California 92680 Attention: Finance Director If to the Authority: Tustin Public Financing Authority c/o City of Tustin 300 Centennial Way Tustin, California 92680 Attention: Finance Director If to the Underwriter: PaineWebber Incorporated 725 South Figueroa Street, 41st Floor Los Angeles, California 90017 Attention: Municipal Finance Department provided, however, that all such notices, requests or other communications may be made by telephone and promptly confirmed by writing. The City, the Authority and the Underwriter may, by notice given as aforesaid, specify a different address for any such notices, requests or other communications. 9. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. 10. _Survival of Representation and Warranties. The representations and warranties of the Authority and the City set forth 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 sF2-37734.1 25 40679-57-Ss4-11/12 S investigations) concerning such representations and statements of the Authority and the City and regardless of delivery of and payment for the Bonds the Local Authority. 11. Effective. 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 City and shall be valid and enforceable as of the time of such acceptance. 12. ADAlicable Law; Nonassignability. This Purchase Agreement shall be governed by the laws of the State of California. This Purchase Agreement shall not be assigned by the Authority or the City. 13. Execution of Counterparts. This Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same. 14. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by the Authority and the sale of the Local Obligations by the City and represents the entire agreement of the parties as to the subject matter herein. 15. Partial Unenforceability. Any provision of this Purchase Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Purchase Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. SP2-37/34.1 26 40979-S7-SS4-11/12/93 16. Capitalized Terms. Terms with initial capital letters not otherwise defined herein shall have the meanings assigned to them in the Indenture. Very truly yours, PAINEWEBBER INCORPORATED By: Title: CITY OF TUSTIN By: Mayor By: City Clerk TUSTIN PUBLIC FINANCING AUTHORITY By: President By: Secretary sF2-377M.1 27 4M79-37-&%-11/12/95 Maturity (September 2) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 EXHIBIT A Maturity Schedule for Series A Bonds Principal Interest Price or Amount Rate Yield Mandatory Sinking Fund Redemptions for Terms Bonds of 2013 2006 2007 2008 2009 2010 2011 2012 2013 (maturity) Total Principal - $ SF2-37734.1 A-1 40679-57-&%-11/12195 EXHIBIT B molmoMad• •: •� sF2-37734.1 B-1 40979-37534-I 1/12/95 PaineWebber Incorporated 725 S. Figueroa Street, 41st Floor Los Angeles, California 90017 Ladies and Gentlemen: I, the undersigned authorized principal of Muni Financial Services, Inc. (the "Assessment Consultant"), hereby certify as follows: (To Come) Capitalized terms used in this Certificate which are not otherwise defined shall have the meaning ascribed thereto in the Official Statement. Dated: CLOSING DATE, 1995 MUNI FINANCIAL SERVICES, INC. By: (Name) (Title) M-37734.1 C-1 40879-57ss4-11/12195 PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER _, 1995 In the opinion of Jona Hall Hill & White, A Professional Lw Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing Lw, i on the Series A Bonds is excluded from gross income for Waal income tax purposes and such interest it not an item of tax preference for purposes of the federal ahemative minimum tax imposed on individuals and corporations, although for the Purpose of the alternative minimum tax imposed on certain corporations, such interest is taker into account in datutnu . g certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "TAX MATTERS' herein. NEW ISSUE - B -ENTRY ONLY RATING: Mood 's to come (See "RATINGS'herein.; Dated: Date of Delivery TUSTIN PU BLIC ffl7 MG AUTHORITY REVENUE BONDS (Tustin Bch) Dare~ September 2, = shown on the inside front cover The 537,829,000* Tustin Public Financing Authority Revenue Bonds (Tustin Ranch), Series A (the "Series A Bonds") are being issued by the Tustin Public Finaming Authority (the "Authority") pursuant to an Indenture of Trust, dated as of 1995 (the "Indenture"), between the Authority and State Street Bank and Test Company of California, N.A., as trustee (the "Trustee"), and�be secured as described hretein. The Bond: ars being issued to � certain limited obligation improvement bonds (the "Assessment Bonds (95-1)") of Reassessment District No. 95-1 (the "Reassessment District") of the City of Tustin (the "City"). The Assessment Bonds (95-1) are: being issued by the City pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (the "Act") and further pursuant to a Fiscal Aunt Agrsemrerrt, dated as of 1, 1995, between the City and State Sued bank and Trust Company of California, N.A., as fiscal agent (the "Fiscal Agent"), and will be secured by certain unpaid reassessments levied by the City pursuant to the Act. Sec description under "THE REFUNDING PLAN" herein. The Series A Bonds will be issued in book form, initially registered in the Dame of Cede & Co., New York, New York, as nominee of The Depository True Company ( DTC'), New York, New York. Interest on the Series A Bonds, payable at the rates set forth below, will be payable on September 2 and March 2 of each year, commencing Marsh 2, 1996. Purchasen will not receive certificatesg their interest in the Series A Bonds. Individual purchases will be in principal amounts of 55,000 or in any integral multiple of $5,O�yments of principal and interest will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Series A Bonds. The Series A Bonds will mature on September 2 in the years and in the amounts as shown on the Maturity Schedule set forth on the inside front cover hereof. The Serio A Bonds are subject to redemption prior to maturity as set forth herein. Sec "THE SERIES A BONDS - Redemption of the Series A Bonds" herein. The Series A Bonds ars limited obligations of the Authority. The Serio A Bonds are payable solely from Revenues of the Authority, consisting rip mu�ly of payments roodvod by t#te Authtority from the City in connection with the Assessment Bonds (95-1), which payments are secured by herr: of tread rassessmer►ts as more fully described herein. Payments under the Assessment Bonds (95-1) are calculated to be sufficient to peanut the Authority w pay the principal of, premium, if any, and interest on the Series A Bonds when due. The City has determined that it will not obligate itself to advance funds Som its treasury w cover any delinquency on the reassessments or payments on the Aasessment Bonds (95-1). THE SERIES A BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE SERIES A BONDS. The Authority is considering applying for an insurance policy to insure payment of all or a part of the principal of and interest on the Series A Bonds. As of this date, no decision has been made on whether to apply, and no company has provided a commitment to issue such a policy Furthermore, there can be no assurance that, if the Authority did decide to apply for insurance, such insurance would be available or cost effective. This cover page contains information for reference only. It is not a summary of this issue. Investors must rad the entire Official Statement, including the section entitled SPECIAL RISK FACTORS", for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in making an informed investment decision about the Series A Bonds. The Series A Bonds are: offered, when, as and if issued and accepted by the Underwriter, subject to approval as to their validity by Jones Hall Hill do White, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by its counsel, Orrick, Herrington dt Sutcliffe, San Francisco, California, and for the Authority and the City by Rourke, Woodruff dt Spradlin, a Professional Corporation, Orange, California. It is anticipated that the Series A Bonds will be available for delivery in book -entry form in New York, New York, on or about December _, 1995. Dated November .199: PaineWebber Incorporated * Preliminary. subject to change (Inside Cover) MATURITY SCREDULE $37,829,000* TUSTIN PUBLIC FINANCING AUTHORITY REVENUE BONDS (Tustin Ranch) Series A $ Serial Bonds Maturity Principal Interest (,622teaber 2) Amount Rate Yield 1997 1998 1999 2000 2001 2002 2003 2004 2005 $ Term Bonds due September 2, 2013 Price: % TUSTIN PUBLIC FINANCING AUTHORITY and CITY OF TUSTIN (Orange County, California) MEMBERS OF THE AUTHORITY COMMISSION AND CITY COUNCIL Jim Potts, Chair/Mayor Tracy A. Worley, Vice Chair/Mayor Pro Tem Thomas R. Saltarelli, Commissioner/Councilmember Mike Doyle, Commissioner/Councilmember Jeffery M. Thomas, Commissioner/Councilmember AUTHORITY OFFICERS AND CITY STAFF William A. Huston, President/City Manager Ronald A. Nault, Authority Treasurer/City Finance Director Pamela Stoker, Authority Secretary/City Clerk Tim Serlet, City Public Works Director PROFESSIONAL SERVICES Bond Counsel Jones Hall Hill & White, A Professional Law Corporation San Francisco, California City Attorney Rourke, Woodruff & Spradlin, A Professional Corporation orange, California Financial Advisor Bartle Wells Associates San Francisco, California Assessment Engineer Muni Financial Services, Inc. San Francisco, California Trustee State Street Bank and Trust Company of Los Angeles, California Verification Agent Grant Thorton Minneapolis, Minnesota California, N.A. M -MSU 40MR-M-11n095 No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Authority or the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Series A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtain from the Authority, the City, and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of such by the Authority or the City. The information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, the Reassessment District, or the property owner since the date hereof. The discussion and information herein relating to the Series A Bonds, the Reassessment District, the Authority, and the City do not purport to be comprehensive or definitive. All references to the Series A Bonds are qualified in their entirety by reference to the Indenture setting forth the terms and descriptions thereof. The summaries and references to any code, act, resolution or the Indenture and to other statutes and documents in this Official Statement do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to each statute and document. IN CONNECTION WITH THIS BOND UNDERWRITING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A BONDS DESCRIBED HEREIN AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Series A Bonds have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon an exception from the registration requirement contained in said Securities Act of 1933. The Series A Bonds have not been registered or qualified under the securities laws of any State. m.0..3 ON"#- 4M&11a7As INSERT LOCATION MAP a -msis MWP§657404-1 MMS F INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . 1 THEREFUNDING PLAN . . . . . . . . . . . . . . . . . . . . . 4 ESTIMATED SOURCES AND USES . . . . . . . . . . . . . . . . . 7 Series A Bonds . . . . . . . . . . . . . . . . . . . . . 7 Assessment Bonds (95-1) . . . . . . . . . . . . . . . . 7 THE SERIES A BONDS . . . . . .8 Description of the Series A Bonds 8 Redemption of the Series A Bonds . . . . . . . . . . . . 8 Transfer and Exchange of Series A Bonds . . . . . . . . 10 Book Entry System . . . . . . . . . . . . . . . . . . . 11 Additional Authority Bonds . . . . . . . . . . . . . . . 13 Debt Service Schedule . . . . . . . . . . . . . . . . . 14 SECURITY FOR THE SERIES A BONDS . . . . . . . . . . . . . . . 15 General . . . . . . . . . . . . . . . . . . . . . . . . 15 Payments of Assessment Bonds (95-1) . . . . . . . . . . 16 Additional Assessment Bonds . . . . . . . . . . . . . . 18 Reserve Account . . . . . . . . . . . . . . . . . . 18 Covenant for Superior Court Foreclosure . . . . . . . . 19 Priority of Lien . . . . . . . . . . . . . . . . . . . . 19 BONDINSURANCE . . . . . . . . . . . . . . . . . . . . . . . 21 METHOD OF REASSESSMENT . . . . . . . . . . . . . . . . . . . 21 THE REASSESSMENT DISTRICT . . . . . . . . . . . . . . . . . . 21 General . .. . . . . . . . . . . . . . . . . . . 21 Status of Public Improvements . . . . . . . . . . . . . 21 Location and Terrain of the Reassessment District . . . 22 Land Uses and Development Status . . . . . . . . . . . . 22 Largest Landowners by Reassessment Amount . . . . . . . 24 Debt Service Coverage . . . . . . . . . . . . . . . . . 26 Delinquency History . . . . . . . . . . . . . . . . . 26 Estimated Value -to -Lien Ratios . . . . . . . . . . . . . 27 Estimated Direct and Overlapping Debt . . . . . . . . . 29 SPECIAL RISK FACTORS . . . . .31 The Series A Bonds are Limited Obligations of the Authority . . . . . . . . . . . . . . . . . . . . . 31 The Reassessments are Not Personal Obligations of the Property Owners . . . . . . . . . . . . . . . . . . 31 The Assessment Bonds (95-1) are Limited Obligations of the City . . . . . . . . . . . . . . . . . . . . . 32 Bankruptcy and Foreclosure Delays . . . . . . . . 32 Existence of Undeveloped Property . . . . . . . . 34 Price Realized Upon Foreclosure . . . . . . . . . . . . 34 V24MLS i .WW57-W&11W1" Uncertainties of Future Development . . . . . . . . . . 35 Direct and Overlapping Indebtedness . . . . . . . . . . 36 Earthquakes . . . . . . . . . . . . . . . . . . . . . . 36 Drought Conditions . . . . . . . . . . . . . . . . . . . 36 Land Values . . . . . . . . . . . . . . . . . . . . . . 37 Hazardous Substances . . . . . . . . . . . . . . . . . . 37 Endangered and Threatened Species . . . . . . . . 38 Cumulative Burden of Parity Taxes, Special Assessments and Development Costs . . . . . . . . . . . . . . . 38 Loss of Tax Exemption . . . . . . . . . . . . . . . . . 39 Orange County Bankruptcy . . . . . . . . . . . . . . . . 39 Delays in Remittances . . . . . . . . . . . . . . . . . 45 THE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . 45 THE CITY . . . . . . . . . . . . . . . . . . . . . . . . . . 45 CONCLUDING INFORMATION . . . . . . . . . . . . . . . . . . . 46 Underwriting . . . . . . . . . . . . . . . . . . . . . . 46 Legal Opinion . . . . . . . . . . . . . . . . . . . . . 46 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 46 No Litigation . . . . . . . . . . . . . . . . . . . . . 47 Rating . . . . . . . . . . . . . . . . . . . . . . . 47 Financial Advisor . . . . . . . . . . . . . . . . . . . 47 Verification of Mathematical Computations . . . . . . . 48 Continuing Disclosure . . . . . . . . . . . . . . . . . 48 Miscellaneous . . . . . . . . . . . . . . . . . . . . . 49 APPENDIX A - Reassessment Diagram APPENDIX B - Summary of Indenture and Fiscal Agent Agreement APPENDIX C - The City of Tustin APPENDIX D - Insurance Policy Specimen APPENDIX E - Forms of Bond Counsel Opinions APPENDIX F - Continuing Disclosure Agreement svt-aost.s i i 4DM57-SS4-11 9995 $37,829,000* TUSTIN PUBLIC FINANCING AUTHORITY itEOENUB BONDS (Tustin Ranch) series A INTRODUCTION This Official Statement, including the cover, inside cover, the table of contents and the Appendices, is provided to furnish information in connection with the sale by the Tustin Public Financing Authority (the "Authority") of its $37,829,000* aggregate principal amount of Revenue Bonds (Tustin Ranch), Series A (the "Series A Bonds"). The Series A Bonds will be issued by the Authority pursuant to an Indenture of Trust, dated as of , 1995 (the "Indenture"), between the Authority and State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"). The proceeds from the sale of the Series A Bonds will be used principally to purchase certain limited obligation improvement bonds of Reassessment District No. 95-1 [the "Assessment Bonds (95-1)"] of the City of Tustin (the "City"). The Assessment Bonds (95-1) are being issued by the City pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (the "Act") and further pursuant to a Fiscal Agent Agreement, dated as of , 1995 (the "Fiscal Agent Agreement"), between the City and State Street Bank and Trust Company of California, N.A., as fiscal agent (the "Fiscal Agent"), and will be secured by certain unpaid reassessments levied by the City pursuant to the Act. The proceeds from the sale of the Assessment Bonds (95-1) will be used principally to refund the outstanding fixed rate improvement bonds (the "Prior Fixed Rate Bonds") of the City's previously -formed Assessment District No. 85-1 and Assessment District No. 86-2 (the "Prior Districts"). See "THE REFUNDING PLAN" herein. Together, the Prior Districts include the entire area of a mixed-use development project of the Irvine Company known as the "Tustin Ranch". The City is located in central Orange County, about 40 miles southeast of Los Angeles and 80 miles north of San Diego. The City spans approximately 11.2 square miles and adjoins the cities of Irvine, Orange and Santa Ana, as well as unincorporated areas of the County of Orange. As of January 1, 1995, the City's current population was estimated at 62,500, representing an approximate 4.5% increase from January, 1994. * Preliminary, subject to change sn aaox.� 1 4WW57ss4.11M7M Reassessment District No. 95-1 (Tustin Ranch) (the "Reassessment District") is bounded generally by the Santa Ana Freeway (Interstate 5), Browning Avenue and Tustin Ranch Road, Santiago Canyon Road, and Jamboree Road. See "Appendix_A - Reassessment Diagram" herein. In legal proceedings concluded in 1986, the City established Assessment District No. 85-1 ("A.D. 85-1"), then comprised of 19 assessed parcels covering a total area of approximately 522 acres. A.D. 85-1 is bounded by the Santa Ana Freeway (Interstate 5), Browning Avenue, Irvine Boulevard and Jamboree Road. Within A.D. 85-1, approximately 52 acres is occupied by the Tustin Autocenter; 120 acres is either occupied by or designated for the Tustin Market Place and Tustin Ranch Plaza, retail shopping centers, and other commercial and retail development; and the remaining 350 acres are either occupied by or designated for residential development. In August, 1986, the City issued $50,650,000 principal amount of variable rate improvement bonds for A.D. 85-1, and proceeds of the issue have been used to fund the design and construction of public improvements within A.D. 85-1, including streets and other traffic access and control facilities, drainage facilities, and utility improvements. The planned improvements are substantially completed. As of March, 1994, there were approximately 1,315 assessed parcels from the original 19 parcels. In legal proceedings concluded in 1988, the City established Assessment District No. 86-2 ("A.D. 86-2"), then comprised of 56 assessed parcels covering a total area of approximately 2,260 acres, 1,440 of which are within the City boundary and the remaining portion of which are located primarily in an unincorporated area of the County (to the northeast of the City), with a small portion of A.D. 86-2 falling within the southeastern border of the City of Orange. A.D. 86-2 is bounded by Irvine Boulevard, Tustin Ranch Road, Santiago Canyon Road, and Jamboree Road. As to the portion of A.D. 86-2 within the City, approximately 30 acres are either occupied by or designated for commercial and retail development; 150 acres are occupied by the Tustin Ranch Golf Club; 670 acres are either occupied by or designated for residential development; and the balance to various other uses. In September, 1988, the City issued $81,400,000 principal amount of variable rate improvement bonds for A.D. 86-2, and proceeds of the issue have been used to fund the design and construction of public improvements within A.D. 86-2 of a similar nature to those for A.D. 85-1. Again, the public improvements are substantially complete. As of March, 1994, there were approximately 2,298 assessed parcels from the original 56 parcels. The respective Indentures of Trust (the "Prior Indentures") pursuant to which the variable rate improvement bonds of the Prior Districts (the "Prior Variable Rate Bonds") were issued each provided for the conversion of a portion of the Prior Bonds to a fixed rate mode (the "Prior Fixed Rate Bonds") upon the occurrence of certain events prescribed by the Prior Indentures 'R4X)SL3 2 4MO.374m yam (primarily, the transfer to third parties of title to portions of the assessed property by The Irvine Company, the owner of substantially all of the assessed property at the time of issuance of the Prior Variable Rate Bonds). The Prior Indentures and related legal documents for the Prior Districts also provided for conversion to a fixed rate of the unpaid assessments on the related parcels (the "Fixed Rate Parcels"), the conveyance of which caused the conversion of the subject portion of the Prior Variable Rate Bonds into the Prior Fixed Rate Bonds. The Reassessment District consists of all Fixed Rate Parcels from the Prior Districts which have an unpaid reassessment. Of the $132,050,000 principal amount of Prior Variable Rate Bonds, $53,024,000 have been converted to Prior Fixed Rate Bonds, of which $51,756,377 remain outstanding and will be redeemed on September 2, 1995, from the proceeds of sale of the Series A Bonds and other available funds. See "THE REFUNDING PLAN" herein. The Series A Bonds are limited obligations of the Authority, payable solely from Revenues (as defined in the Indenture) of the Authority, consisting primarily of payments received by the Authority from the City in connection with the Assessment Bonds (95-1), which payments are in turn secured by liens of the unpaid reassessments levied upon the parcels in the Reassessment District. The Series A Bonds are not a debt of the City, the State of California or any of its political subdivisions, and neither the faith and credit nor the general taxing power of the City, the State or any of its political subdivisions is pledged to the payment of the Series A Bonds. Pursuant to the Act, reassessment installments sufficient to pay the principal of and interest on the Assessment Bonds (95-1) are to be billed on the regular County property tax bills and are to be remitted to the City in accordance with established procedures for such remittances. Pursuant to the Indenture, the Authority has assigned to the Trustee, for the benefit of the Owners from time to time of the Series A Bonds, all right, title and interest of the Authority in the Assessment Bonds (95-1), including the entitlement to receive payment of the principal of and interest on said Assessment Bonds (95-1). If a delinquency occurs in the payment of any reassessment installment securing the Assessment Bonds (95-1), the Fiscal Agent will have a duty only to transfer into the Redemption Fund for the Assessment Bonds (95-1) from the Reserve Fund for the Assessment Bonds (95-1)(but only to the extent funds are available therein) the amount necessary to pay principal of or interest on the Assessment Bonds (95-1) when due. There is no assurance that sufficient funds will be available in the Reserve Fund for the Assessment Bonds (95-1) for this purpose. The City has determined, pursuant to Section 8769 of the California Streets and Highways Code, that it will not obligate itself to advance funds from its treasury to cover any delinquency on the reassessments or payments on the Assessment Bonds (95-1). m47D".3 3 .orr►ssr�ua,As The City has covenanted in the Fiscal Agent Agreement that, no later than October 1 each year, judicial foreclosure proceedings will be commenced and diligently prosecuted to enforce payment of reassessment installments which are then delinquent in an amount of $2,000 or more and to enforce payment of other, delinquent installments of a lesser amount in certain prescribed circumstances. See "SECURITY FOR THE BONDS - Covenant of Superior Court Foreclosure" herein. THE REFUNDING PLKN The Refunding Plan for the Prior Variable Rate Bonds and the Prior Fixed Rate Bonds (the "Refunding Plan") is being implemented in two separate components. The first component is related to the Series A Bonds and pertains to refunding of the Prior Fixed Rate Bonds, as discussed herein. The second component is related to proposed Reassessment District No. 95-2 and the proposed issuance and sale by the City of its Series A of variable rate limited obligation improvement bonds (the "Series A Assessment Bonds (95-2)") of said Reassessment District No. 95-2 and provides for the proposed refunding of the remaining outstanding Prior Variable Rate Bonds. The proposed issuance and sale by the City of its Series A of variable rate limited obligation improvement bonds, if, as and when authorized, will be the subject of a separate Official Statement pertaining to said proposed issue and is not further discussed herein. Pursuant to the Indenture, proceeds from the sale of the Series A Bonds will be deposited as follows: (a) An amount equal to the Reserve Requirement with respect to the Series A Bonds, as established in accordance with the definition of Reserve Requirement in the Indenture, will be deposited in the Reserve Account. (b) The remainder of the proceeds will be deposited in the Program Fund. On the Closing Date, the Trustee will withdraw from the Program Fund an amount equal to the purchase price of the Assessment Bonds (95-1), as established by the Bond Purchase Agreement (the "Purchase Agreement (95-1)"), dated as of , 1995, by and between the City and the Authority, and relating to the acquisition by the Authority of the Assessment Bonds (95-1). Payment of said purchase price will be made by the Trustee on behalf of the Authority, pursuant to the Purchase Agreement (95- 1), and the ownership of the Assessment Bonds (95-1) will be registered to the Trustee. in -an" 4 4WW-"-J3&11WM Payment of said purchase price of the Assessment Bonds (95- 1) will be made by the Trustee to State Street Bank and Trust Company of California, N.A., as Fiscal Agent pursuant to the Fiscal Agent Agreement. Pursuant to Section 3.02 of the Fiscal Agent Agreement, proceeds of sale of the Assessment Bonds (95-1) will be deposited or transferred as follows: (a) An amount representing capitalized interest with respect to the Assessment Bonds (95-1) will be deposited in the Redemption Fund for the Assessment Bonds (95-1). (b) An amount representing the Reserve Requirement for the Assessment Bonds (95-1), as established pursuant to the Fiscal Agent Agreement, will be deposited in the Reserve Fund for the Assessment Bonds (95-1). (c) A prescribed amount will be deposited in the Improvement Fund to finance a portion of the cost of the remaining components of the public improvement projects of*the Prior Districts. (d) A prescribed amount will be deposited in the Costs of Issuance Fund for the Assessment Bonds (95-1). (e) A prescribed amount will be transferred to State Street Bank and Trust Company of California, N.A., as escrow bank (the "Escrow Bank"), pursuant to the Escrow Agreement (the "Escrow Agreement"), dated as of , 1995, by and between the City and the Escrow Bank. Pursuant to the Escrow Agreement, the Escrow Bank will establish two separate escrow funds (the "Escrow Funds"), one (the "85-1 Escrow Fund") for the redemption on the Redemption Date of the Prior Fixed Rate Bonds of A.D. 85-1 and the other (the "86-2 Escrow Fund") for the redemption on the Redemption Date of the Prior Fixed Rate Bonds of A.D. 86-2. As provided in the Escrow Agreement, the moneys deposited in the Escrow Funds from proceeds of sale of the Assessment Bonds (95-1) will be supplemented by transfers from prescribed funds held and administered by the trustee under the Prior Indentures in amounts certified by a nationally recognized firm of independent certified public accountants to be sufficient to redeem the Prior Fixed Rate Bonds on the Redemption Date. m420SL3 5 M 3741W I M The Prior Fixed Rate Bonds are the result of eleven (11) separate conversion/reoffering transactions under the Prior Indentures as follows: Reoffering Outstanding 1. No. 85-1A $ 3,965,000 2. No. 85-1B 7,165,000 3. No. 85-1C 210,000 4. No. 85-1D 21570,000 5. No. 85-1E 1,035,177 6. No. 86-2A 8,505,000 7. No. 86-2B 14,135,000 S. No. 86-2C 4,365,000 9. No. 86-2D 6,390,000 10. No. 86-2E 535,000 11. No. 86-2F 7_aal inn Total Principal Outstanding: $51,756,377 The total redemption price of the Prior Fixed Rate Bonds on the Redemption Date is $ calculated as follows: Principal Amount $51,756,377 Interest Payable Redemption Premium Total Redemption Price: $ As evidenced by Sections 2 and 3 and Schedules 1 and 2 of the Escrow Agreement, the sources of funds to pay the total redemption price are as follows: Transfer from Fiscal Agent (from proceeds of Sale of Assessment Bonds (95-1)) Transfers from Prior Indentures Interest Earned on Escrow Securities Total Redemption Price: S S W242ML S 6 .or,}r,.tr. l laays ESTIMATED SOURCES AND USES Series A Bonds The estimated sources and uses of proceeds of sale of the Series A Bonds are as follows: Principal Amount of Series A Bonds $ [Less Original Issue Discount ( )� [Plus Contribution from 95-1 Total Sources: KM Program Fund Reserve Account [Cost of Issuance Total Uses: Assessment Bonds (95-1) $ $ The estimated sources and uses of proceeds of sale of the Assessment Bonds (95-1) are as follows: Principal Amount of Bonds $ Transfers from Other Sources $ Total Sources: $ Uses [Reserve Fund for the Assessment Bonds (95-1) $ Improvement Fund $ Costs of Issuance Fund $ Transfer to the Escrow Bank for deposit in the Escrow Funds $ Total Uses: $ W2-GM.3 7 4MPP-374s&1jmM THE SERIES A BONDS Description of the Series A Bonds The Series A Bonds will amount of $37,829,000*. The fully registered bonds in th, integral multiple of $5,000. their date of delivery. The the rates per annum and will provisions set forth below, amounts, all as set forth on be issued in the aggregate principal Series A Bonds will be issued as a denomination of $5,000 or any The Series A Bonds will be dated Series A Bonds will bear interest at mature, subject to the redemption Dn the dates and in the principal the inside cover page hereof. Interest on the Series A Bonds is payable semiannually on March 2 and September 2 of each year, commencing March 2, 1996 (each an "Interest Payment Date") to the person whose name appears on the Registration Books of the Trustee as the registered Owner thereof on the Record Date. Such interest will be paid by check mailed by the Trustee on such Interest Payment Date, by first class mail, to such registered Owner at the address which appears on such Registration Books or at such other address as may have been filed with the Trustee for that purpose prior to the Record Date. Interest on the Series A Bonds shall be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Principal of, and redemption premium, if any, on the Series A Bonds will be payable upon presentation and surrender thereof at the principal corporate trust office (the "Trust Office") of the Trustee in Los Angeles, California. Principal of and redemption premiums, if any, and interest on the Series A Bonds shall be paid in lawful money of the United States of America. The Series A Bonds will be issued in book -entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company ("DTC"), New York, New York. Payment of interest with respect to any Series A Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co. See "Book Entry System" herein. 7 The Series A Bonds maturing on or after September 2, 2005, shall be subject to optional redemption in whole, or in part among maturities on such basis as shall be designated by the Authority in a Written Certificate of the Authority filed with the Trustee, on any Interest Payment Date on or after September 2, 2004, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series A Bonds to * Preliminary, subject to change. SP24205LS 8 .o?% -374W .uio,es be redeemed), plus.accrued interest thereon to the date of redemption: Redemption Dates Redemption Price September 2, 2004 and March 2, 2005 102% September 2, 2005 and March 2, 2006 101 September 2, 2006 and thereafter 100 The Series A Bonds shall be subject to mandatory redemption, in whole, or in part among maturities on the same basis as the Assessment Bonds (95-1) are redeemed and by lot within a maturity, on any Interest Payment Date, from and to the extent of any Principal Prepayments with respect to the Assessment Bonds (95-1), at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series A Bonds to be redeemed), plus accrued interest thereon to the date of redemption: .ID_ September 2, 1995 through March 2, 2004 103% September 2, 2004 and March 2, 2005 102 September 2, 2005 and March 2, 2006 101 September Mandatory 2, Sinkinc 2006 and thereafter Fund Rod ration 100 The Outstanding Series A Term Bonds maturing on September 2, 2013, are subject to mandatory sinking fund redemption in part, by lot, at a redemption price equal to 100% of the principal amount to be redeemed, together with accrued interest to the September 2 fixed for redemption, without premium, in the years and in the aggregate principal amount listed below (provided that, in the event of an optional or mandatory redemption of any of the Series A Term Bonds maturing on September 2, 2013, such amounts shall be adjusted as provided in the redemption instructions pertaining thereto): Redemption Date (September 2) 2006 2007 2008 2009 2010 2011 2012 2013 (to come) moos. 9 4WW."-U4.11MM Whenever less than all of the Series A Bonds of a maturity are redeemed, the Trustee shall select the Series A Bonds to be redeemed from all Series A Bonds not previously called for redemption, by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Series A Bonds shall be deemed to be comprised of separate $5,000 denominations, and such separate denominations shall be treated as separate Series A Bonds which may be separately redeemed. Notice of any redemption shall be given by the Trustee by first class mail to the respective Owners of any Series A Bonds designated for redemption, at their respective addresses appearing on the Registration Books maintained by the Trustee, at least 30 but not more than 60 days prior to the redemption date. Neither the failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of the Series A Bonds or the cessation of the accrual of interest thereon. The redemption price of any Series A Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Trust Office of the Trustee. From and after the date fixed for redemption of any Series A Bonds, interest on such Series A Bonds will cease to accrue. Any Series A Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Series A Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Series A Bond or Bonds are surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver a new Series A Bond or Bonds for a like aggregate principal amount of the same maturity, in any authorized denomination. The Trustee shall require the Series A Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Series A Bonds may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount of Series A Bonds of the same maturity, but of other authorized denominations. The Trustee shall require the payment by the Series A Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. St.4=SL3 10 4MW574 -IIVM The Trustee shall not exchange of Series A Bonds Trustee for the selection with respect to any Series redemption. be obligated to make any transfer or during the period established by the of Series A Bonds for redemption, or A Bonds which have been selected for Except as otherwise provided in the Indenture, the registered Owner of all of the Series A Bonds shall be DTC, and the Series A Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Any additional Series of Bonds under a Supplemental Indenture may also be registered in the name of Cede & Co., as nominee of DTC, as provided in such Supplemental Indenture. Payment of interest with respect to any Series A Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co. on the payment date for the Series A Bonds at the address indicated on the record date or special record date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. The Series A Bonds shall be initially issued in the form of separate single fully registered Series A Bonds in the amount of each separate stated maturity of the Series A Bonds. Upon initial issuance, the ownership of such Series A Bonds shall be registered in the Registration Books in the name of Cede & Co., as nominee of DTC. The Trustee and the Authority may treat DTC (or its nominee) as to the sole and exclusive Owner of the Series A Bonds registered in its name for the purposes of payment of the principal, Redemption Price or interest with respect to the Series A Bonds, selecting the Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Series A Bonds under the Indenture, registering the transfer of Series A Bonds, obtaining any consent or other action to be taken by Owners of Series A Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. Neither the Trustee nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Series A Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an owner, with respect to the accuracy of any records maintained by DTC or any Participant; the payment by DTC or any Participant of any amount in respect of the principal, Redemption Price or interest with respect to the Series A Bonds; any notice which is permitted or required to be given to Owners of Series A Bonds under this Indenture; the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Series A Bonds; or any consent given or other action taken by DTC as Owner of Series A Bonds. The Trustee shall pay all principal, premium (if any) and interest with respect to the Series A Bonds, only to DTC, and all such payments shall be valid and effective 02.2aS 11 4W79-P4M4-11WsW to fully satisfy and discharge the Authority's obligations with respect to the principal, premium (if any) and interest with respect to the Series A Bonds to the extent of the sum or sums so paid. Except under the conditions of (c) below, no person other than DTC shall receive an executed Series A Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of CEDE & Co., and subject to the provisions herein with respect to record dates, the term "Cede & Co." in the Indenture shall refer to such new nominee of DTC. In the event (i) DTC, including any successor as securities depository for the Series A Bonds, determines not to continue to act as securities depository for the Series A Bonds, or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will discontinue the book -entry system with the incumbent securities depository for the Series A Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Series A Bond for the aggregate outstanding principal amount of Series A Bonds of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Series A Bonds are not inconsistent with the terms of the Indenture. If the Authority fails to identify another qualified successor securities depository of the Series A Bonds to replace the incumbent securities depository, then the Series A Bonds shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for the Series A Bonds, or its nominee, shall designate. In such event the Trustee shall authenticate and deliver a sufficient quantity of Series A Bonds as to carry out the transfers and exchanges provided in Sections 2.05, 2.07 and 2.08 of the Indenture. All such Series A Bonds shall be in fully registered form in denominations authorized by the Indenture. In the event that the book entry system is discontinued, payments of principal of and redemption premiums, if any, and interest on the Series A Bonds shall be payable as described in the section herein entitled "THE SERIES A BONDS - Description of the Series A Bonds". . So long as any Series A Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium (if any) and interest with respect to such Series A Bond and all notices with respect to such Series A Bond shall be made and given, respectively, as provided in the Representation Letter. 'nom 3 12 =10-5740&11971" In connection with any notice or other communication to be provided to Owners of Book -Entry Bonds pursuant to the Indenture by the Authority or the Trustee with respect to any consent or other action to be taken by Owners, the Authority or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. In addition to the Series A Bonds, the Authority may issue additional Authority revenue bonds (the "Additional Bonds") payable from the Revenues on a parity with the Series A Bonds, in such principal amount as shall be determined by the Authority in a supplemental indenture (the "Supplemental Indenture"), subject to the requirements of the Bond Law (as defined in the Indenture), and further subject to certain conditions set forth in the Indenture, summarized as follows: (1) The Authority shall not be in default under the Indenture; (2) The Supplemental Indenture shall provide for an increase in the Reserve Account to an amount equal to the Reserve Requirement, as computed for the combined Series A Bonds and Additional Bonds; (3) Principal and Interest Payment Dates for the Additional Bonds shall be matched up to those for the Series A Bonds; (4) The redemption provisions for the Additional Bonds shall be compatible with the redemption provisions for the additional Assessment Bonds (95-2) being acquired with the proceeds of such Additional Bonds; (5) Issuance of the Additional Bonds shall be related to acquisition of the additional Assessment Bonds (95-2); (6) No default shall have occurred and be continuing under the fiscal agent agreement [the "Fiscal Agent Agreement (95-2)"] pursuant to which the Assessment Bonds (95-2) were issued; (7) The aggregate principal amount of the Series A Bonds and Additional Bonds shall not exceed any limitation imposed by law or by any Supplemental Indenture; and (8) The Authority shall have filed the following documents with the Trustee: (a) An opinion of Bond Counsel respecting certain matters prescribed by the Indenture, including an opinion that the issuance of the Additional Bonds and the application of the proceeds thereof in accordance with the applicable Supplemental Indenture will not adversely affect the tax-exempt status of the m_42M 3 13 4Wr5740+1IM?M outstanding Series A Bonds and previously -issued additional Authority revenue bonds; (b) A certificate of the Authority that Item (1) above has been met; (c) A certificate of the fiscal agent (the "Fiscal Agent (95-2") under the Fiscal Agent Agreement (95-2) that Item 6 above has been met; (d) A written report of an Independent Financial Consultant respecting the sufficiency of the Revenues to make timely payment of the principal of and interest on the Series A Bonds and Additional Bonds. Among other things, said written report must confirm and demonstrate that, upon the issuance of such Additional Bonds and upon acquisition of the additional Assessment Bonds (95-2) related thereto, the Revenues in each Bond Year will be at least equal to 110% of the principal of and premium, if any, and interest on all remaining outstanding Series A Bonds and Additional Bonds scheduled to be paid in each such Bond Year; and (e) An executed copy of the Supplemental Indenture. Under the Indenture, Additional Bonds may be issued without complying with the foregoing conditions if the Additional Bonds are being issued to refund and retire any outstanding Series A Bonds and previously -issued additional Authority revenue bonds. The schedule of annual debt service payments on the Series A Bonds, based on the maturity schedule and interest rates set forth on the inside cover of this Official Statement, together with the mandatory sinking fund redemption payments listed for the Series A Term Bonds maturing on September 2, 2013, set forth herein in the section entitled "THE SERIES A BONDS - Redemption of the Series A Bonds - Mandatory Sinking Fund Redemption", is as follows: Year (September 21 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 (to come) (to come) Annual Debt Service (to come) m_4WX3 14 4WWP.484.11M7M Year Annual Debt 1September 21 Principal Interest Service 2006 (to come) (to come) (to come) 2007 2008 2009 2010 2011 2012 2013 Totals: SECURITY FOR THE SERIES A BONDS The Series A Bonds are secured by the Revenues of the Authority, as defined in the Indenture and consisting primarily of principal of and interest on the Assessment Bonds (95-1), whether as a result of scheduled debt service or redemption of any Assessment Bond (95-1) in advance of maturity, together with all investment earnings on any moneys held in the funds or accounts established under the Indenture except the Rebate Fund. Pursuant to the Indenture, a Reserve Account will be funded with proceeds of the Series A Bonds in the amount of $ As prescribed by the Indenture, the Trustee will be the registered Owner of the Assessment Bonds (95-1) and will therefore receive from the Fiscal Agent the payments of the principal of and the redemption premiums, if any, and interest on the Assessment Bonds (95-1), all of which payments constitute Revenues upon receipt by the Trustee. Pursuant to the Act, the City is required annually to transmit to the County Auditor the respective amounts of individual reassessment installments on all unpaid reassessments, the sum of which individual reassessment installments is sufficient to pay the principal of and interest on the Assessment Bonds (95-1) as such principal and interest become due and payable. Said reassessment installments are then billed on the regular County property tax bills and are remitted to the City in accordance with established procedures for such remittances. Assuming timely payment by the respective property owners of the obligations (including the reassessment installments) billed on the regular County property tax bills, and further assuming timely remittance by the County to the City of the amount of such reassessment installments thereby collected, the City will have sufficient funds from the reassessment installments to make timely payment to the Fiscal Agent of each March 2 interest SP24MS S 15 gran ek-11a7n payment and each September 2 principal and interest payment on the Assessment Bonds (95-1), as the same become due and payable. In December, 1994, and as a consequence of the bankruptcy filing of the County of Orange (see "SPECIAL RISK FACTORS - Delays in Remittances" herein), the City experienced temporary delays in the remittance by the County of certain amounts collected for the City on the County's property tax bills, including installments of assessments related to the Prior Fixed Rate Bonds. However, as of January 31, 1995, all amounts related to property tax bill collections on behalf of the City had been remitted to the City in full, and the March 2, 1995, interest payments and September 2, 1995 principal and interest payments to holders of the Prior Fixed Rate Bonds were made on time. The City presently expects that future remittances of such amounts will be made to the City on a timely basis and in accordance with established procedures for such remittances. However, as the County reduces staffing levels in response to its financial problems, neither the City nor the Authority can be certain that the City's expectation of timely remittances will be met, and there may be further delays in such remittances from the County to the City which could lead to delays in principal or interest payments to the Owners of the Series A Bonds. THE SERIES A BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR IN THE INDENTURE. THE SERIES A BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF PRINCIPAL OR INTEREST ON THE SERIES A BONDS. IN NO EVENT SHALL THE SERIES A BONDS OR ANY INTEREST OR REDEMPTION PREMIUM THEREON BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY AS SET FORTH IN THE INDENTURE. NEITHER THE SERIES A BONDS NOR THE OBLIGATION TO MAKE PAYMENTS UNDER THE ASSESSMENT BONDS (95-1) CONSTITUTE AN INDEBTEDNESS OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. The Assessment Bonds (95-1) are secured by unpaid reassessments levied against private property within the Reassessment District, pursuant to the Act. Such unpaid reassessments (together with interest thereon) and moneys in the Redemption Fund established for the Assessment Bonds (95-1) constitute a trust fund for the redemption and payment of the principal of, premium, if any, and interest on the Assessment Bonds (95-1). Principal of, premium, if any, and interest on the Assessment Bonds (95-1) are payable exclusively out of the Redemption Fund. Pursuant to the Fiscal Agent Agreement, a Reserve Fund has been established for the Assessment Bonds (95-1) in the amount of $ m-oscs 16 o7n.ns4.1IMM THE ASSESSMENT BONDS (95-1) ARE NOT SECURED BY THE GENERAL TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE, AND NEITHER THE CITY NOR THE STATE HAS PLEDGED ITS FULL FAITH AND CREDIT FOR THE PAYMENT THEREOF. PURSUANT TO SECTION 8769 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE, THE CITY HAS ELECTED NOT TO OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND. A DETERMINATION NOT TO OBLIGATE ITSELF, HOWEVER, SHALL NOT PREVENT THE CITY FROM SO ADVANCING FUNDS IN ITS SOLE DISCRETION. The reassessments levied in the Reassessment District and each installment thereof and any interest and penalties thereon constitute liens against the parcels of land on which they are levied until the same are paid. The liens imposed in the Reassessment District are subordinate to fixed special assessment liens previously imposed upon the same property but have priority over existing and future private liens and over any fixed special assessment liens which hereafter be created against the property. Such liens are co -equal to and independent of the lien for general property taxes and special taxes. While there are no prior special assessment liens on any of the parcels of land in the Reassessment District, there are liens for special taxes and the recurring lien for general property taxes. See "LAND OWNERSHIP AND FUTURE DEVELOPMENT - Estimated Direct and Overlapping Debt" herein. ALTHOUGH THE UNPAID REASSESSMENTS CONSTITUTE LIENS ON THE PARCELS OF LAND ASSESSED, THEY DO NOT CONSTITUTE A PERSONAL INDEBTEDNESS OF THE RESPECTIVE PROPERTY OWNERS. THERE IS NO ASSURANCE THAT PRESENT PROPERTY OWNERS WILL REMAIN THE PROPERTY OWNERS, THAT PROPERTY OWNERS WILL BE FINANCIALLY ABLE TO PAY THEIR ASSESSMENTS, OR THAT PROPERTY OWNERS WILL IN FACT PAY SUCH REASSESSMENT INSTALLMENTS EVEN THOUGH FINANCIALLY ABLE TO DO S0. Under provisions of the Act, installments sufficient to meet annual payments of principal and interest on the Assessment Bonds (95-1) are to be collected on the regular property tax bills sent by the Orange County Tax Collector to owners of the parcels of land against which there are unpaid reassessments. These annual installments are to be paid into the Redemption Fund for the Assessment Bonds (95-1), which will be held by the Fiscal Agent, and used to pay the principal of and interest on the Assessment Bonds (95-1) as they become due. The installment billed against each parcel of land each year represents a pro -rata share of the total principal and interest coming due on all of the Assessment Bonds (95-1) that year. The amount billed against each parcel of land is based on the percentage which the unpaid reassessment against the parcel bears to the total of unpaid reassessments in the Reassessment District, plus an administrative charge of the City. The failure of a property owner to pay an annual reassessment installment will not result in an increase in reassessment installments against other property in the Reassessment District. W2-MU.3 17 4WWV Z&31W1 s In the event of delinquencies of a certain amount respecting any installment of an unpaid reassessment, and with respect to all delinquencies in certain circumstances, as prescribed in the Fiscal Agent Agreement, the City has covenanted to institute superior court foreclosure proceedings to enforce payment of such delinquencies. See "Covenant for Superior Court Foreclosure" herein. The Assessment Bonds (95-1) are being issued pursuant to the Fiscal Agent Agreement in a principal amount equal to the unpaid reassessments for the Reassessment District. Pursuant to the Act, no additional Assessment Bonds (95-1) can be issued upon the security of the unpaid reassessments for the Reassessment District. Reserve Account Under the Indenture, the Trustee is required on the Closing Date to deposit in the Reserve Account from proceeds of sale of the Series A Bonds an amount equal to the "Reserve Requirement", which is defined in the Indenture to mean, as of the date of any calculation, the lesser of (1) ten percent (10%) of the original aggregate principal amount of the Series A Bonds or (2) the maximum amount of principal of and interest on the Series A Bonds coming due and payable in the current or any future Bond Year. The moneys in the Reserve Account may be invested in any "Permitted Investment", as said term is defined in the Indenture, subject to the following: (1) In the event that such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, then any amount in the Reserve Account may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final maturity date of the Series A Bonds. (2) Otherwise, investment of Reserve Account moneys shall be restricted to Permitted Investments which mature no later than the earlier of (a) five years from the date of investment or (b) the final maturity date of the Series A Bonds. All interest or gain from the investment of moneys in the Reserve Account shall be retained therein, subject to the payment of rebate respecting portions of such interest or gain. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the then applicable Reserve Requirement on February 15 and August 15 of each year shall be withdrawn from the Reserve Account by the Trustee and, subject to payment of rebate respecting portions of such excess, deposited in the Interest Account. W2 -42M.3 1s 4WWJ74W&11M7M Pursuant to Section 6.02 of the Fiscal Agent Agreement, the City has covenanted, for the benefit of the Owners of the Assessment Bonds (95-1), that, no later than October 1 each year, it will cause to be commenced and thereafter diligently prosecuted a superior court foreclosure action, pursuant to Sections 8830 through 8835, inclusive, of the California Streets and Highways Code, under the following circumstances: (1) If there is a cumulative delinquency respecting reassessment installments of $2,000 or greater for a specific parcel for one or more prior Fiscal Years, foreclosure shall be commenced against each such parcel. (2) If there is a cumulative delinquency respecting reassessment installments of $1,000 or greater for a specific parcel for one or more prior Fiscal Years, and if the total amount of delinquent reassessment installments for the prior Fiscal Year attributable to all parcels in the Reassessment District other than the parcels subject to foreclosure under (1) above exceeds 5% of the total reassessment installments billed for the prior Fiscal Year, then foreclosure shall be commenced against each parcel having the cumulative delinquency of $1,000 or greater. (3) Finally, if the total amount of delinquent reassessment installments for the prior Fiscal Year attributable to all parcels in the Reassessment District other than the parcels subject to foreclosure under (1) and (2) above exceeds 3% of the total reassessment installments billed for the prior Fiscal Year, then foreclosure shall be commenced against every delinquent parcel. Even though foreclosure is commenced and diligently prosecuted in accordance with the City's covenant of foreclosure, neither the City nor the Authority can be assured that, in the event such foreclosure progresses to the point of a foreclosure sale, there will be any bidder for the subject parcel or parcels. While the City presently believes that each of the parcels in the Reassessment District has sufficient value to assure meaningful bidding at such foreclosure sale, there is no assurance that such present value will not decline in the future, and neither the City nor the Authority is obligated to be a bidder at such foreclosure sale. In the absence of any outside bidder, the foreclosure sale may not produce money to the City in satisfaction of its foreclosure judgment from which to pay the principal of or the interest on the Assessment Bonds (95-1). Priority of Lien vi�_11 The unpaid.reassessments and each installment thereof and any interest and penalties thereon constitute a lien against each m�=SLI 19 40rW57415&11X7 s of the respective parcels within the Reassessment District until the same are paid. Such lien is subordinate to all special assessment or reassessment liens previously imposed upon the same property, but has priority over all private liens and over all special assessment or reassessment liens which may thereafter be created against the same property. However, such lien will be on a parity with the lien of any special taxes or other taxes imposed, whether prior to the date hereof or in the future, against parcels within the Reassessment District pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (the "Mello -Roos Act"), or other applicable legislation. The Tustin Unified School District has formed its Community Facilities District No. 88-1 ("CFD No. 88-1") pursuant to the Mello -Roos Act, encompassing a major portion of the land within the Reassessment District, to provide financing for school facilities. Special tax bonds (the "CFD Series A Bonds") have been issued by CFD No. 88-1 upon the security of the special tax lien established upon the parcels within CFD No. 88-1, and the CFD is obligated to levy special taxes upon the parcels within CFD No. 88-1 from year to year in amounts sufficient to pay the principal of and the interest on the CFD Series A Bonds (together with any additional CFD special tax bonds which may be issued hereafter). The last maturity of the CFD Series A Bonds is in 2017, beyond the last maturity of the Series A Bonds. The lien securing payment of the special taxes to be levied from year to year upon the parcels within CFD No. 88-1 will be on a parity with the lien securing payment of the reassessments. See "REASSESSMENT DISTRICT NO. 95-1 - Direct and Overlapping Debt" herein. ff2431DSL3 20 AWW57.314-IMM BOND INSURANCE (to come, if applicable) JMTHOD OF REASSESSMENT The total amount of reassessments levied in the Reassessment District was established to be equal to the principal amount of the Assessment Bonds (95-1). Said amount of each reassessment was calculated for each of the individual parcels of land within the Reassessment District in proportion to the unpaid existing assessment on each such parcel. The amount of each of the reassessments levied, identified by reassessment number, is shown in the Reassessment Report for the Reassessment District, which report is on file in the office of the Public Works Director of the City. THE REASSESSMENT DISTRICT The parcels of land comprising the Reassessment District are the Prior Fixed Rate Parcels of the Prior Districts (see "INTRODUCTION" herein). Those parcels of the Prior Districts which continued to have a variable rate status are included in Reassessment District No. 95-2. See "REFUNDING PLAN" herein. The public improvements financed with the proceeds of the Prior Bonds are substantially complete. The only remaining public improvements necessary to enable the remaining undeveloped property in the Reassessment District to develop are in -tract improvements to certain specific parcels which will be the responsibility of the developer of such specific parcel or parcels. Examples of such in -tract improvements are local streets; curb, gutters and sidewalk; traffic control signage and striping; street lights; landscaping; water distribution lines and appurtenances; sanitary sewer laterals, collection lines and appurtenances; and underground gas, electric, telephone and cable television facilities. IMMSL3 21 4Mr►5704-1 1mAs With the exception of school facilities to be developed by the Tustin Unified School District, no additional major infrastructure such as arterial streets, parks, fire stations, or libraries are required or anticipated for the full development of the remaining undeveloped property in the Reassessment District, and construction of such school facilities is not a condition precedent to issuance of building permits for any of such remaining undeveloped property in the Reassessment District. The City is located in central Orange County, about 40 miles southeast of Los Angeles and 80 miles north of San Diego. The City spans approximately 11.2 square miles and adjoins the cities of Irvine, Orange and Santa Ana. The combined area of the Prior Districts, of which the Reassessment District is a part (and consisting of the Prior Fixed Rate Parcels from both of the Prior Districts), is approximately 2,782 acres and is located along the east side of the City, extending generally in a southwest -to -northeast band approximately 3/4ths of a mile wide, from the Santa Ana Freeway (Interstate 5)(the "Freeway") to Santiago Canyon Road, a distance of approximately 6 miles. The terrain is relatively flat, extending gently uphill toward the northeast, and transitioning to gently rolling hills in the last mile. Land Uses and Development Status The following Table 1 illustrates the land use categories of the reassessed parcels in the Reassessment District. As used in Table 1, the ten "developed" means that at least one structure has been constructed on the parcel, which has been assigned improvement assessed value by County. The developed portion of the reassessed property represents approximately 85% of the total number of reassessed parcels and approximately _% of the unpaid reassessments on the reassessed property. ZMANX3 22 4WW37 N-11MV5 N Li mm U V v as rr .A"► 0aa a Q 44 ° aha• �m a►+ <Ky a•m ��� a7 We OWN 'a ha P7tMa Ma o: a m to 0OA, r rtrt 7 K O r a a C rt N act a �pm P rt a to •� OCO atoo r OAK �•M7 s Nrm O O < r N r 00 10 LCr O a W" w►+ W" O 0 iP K vv vv �►v Koa , <N1p a y0 r J r r M K O rM 1Q 0 O a too• oo Q m Q N O� U1 co O. F+ WCDO W W Ar 1°T rt 00 0 m • g JWA1D CD tb N O coW �D ON r lb 07% -0 %16• e O O arm O rt • 89 Q • M • rt O q N 1D N JCA N N N N t!0K p. O �w W JJCA 00%0 O 1-Aw a r . w J O% NO 7 • rt y • 7•c a o0 • a o w w r o�D �+ W " v� w %O% �D %J 'co Oy rt Y oo am• rPoJa, '011 P JO��O AVN otnwo oO��DP a r IV n rt O Q w 7 G a Mf. OIC K m O+ O+ N %D N M W CD Or %D w %D W rt rt Yf %0J W OVIO N p� v p 0 0 , Q trio v c 0 '+0 • rh{ N W y N N N N N N r r 0 po A P A ►+ Or N0% w O a m O N10 J PF+F+ N WOJ K�a • to rt W O 07 j w0 Y1 N NI J 0 O %0 1D m (T �Qy O Ow CD %D m A �am N 0 �N O Ow+J O WA 7' rm a O Ow O wwOD O or+M 0 p, A n pr O W W O W J O O m w K ft • O . 7 r s y rt a om a7° w a : p• M a O O Ln CD Ln O 0ww y K O Or W O ZD J W O 6%6 r°t a 0 • MI AMM r M0 ta-. r7 O�• a� O rt G 7 t rt I a 1!� NO P 0Lnw J ON • . . . . . . O tll N" J ZD Z, O N P to P JOS J NwA ►+ 0%D Larcest Landowners by Reassessment Amount The following Table 2 illustrates the 15 largest landowners in the Reassessment District, as measured by total reassessment amount levied on property owned by such landowner. All other parcels in the Reassessment District as single family residences. 'R4`'3 24 4WW57 .s.-114745 A A A W N r v v v O H D� Y1 r P J N Y1 a N r r N W F+ W N r O r F+ r P r mai ct c a w r J r r N K N r F+ N W r W r N O F+ r r P a Ofa %D y K %D Ln 0% Wy r\ r N 0% 0% P P to r O %W W O W O, al O W L, P a% O W r O� O O� O� O) 1+ oo r to M P J J 1-• w J P O� P r W r O N O P N N �D • r O P O W ;D W N 0 0 0 0 0 W m N W co W P O 0% O W O N O J W O P OO N r r N N W W Y1 J J W W �O W r Y1 t!1 W �0 P. Y1 W r O O to P O) m O) . N . !p . N . W . J . F+ . O 0 O W O O 0 . . . . . . . W N N W P Y1 �D O\ {J1 O W r r�0 J W O O J Ot O� ►+ r O P !!� J P W J 10 0% P W W W J N J P P O N N N r J 0 �0 W m C 1 N G • V1 . . . . O W �D J . P . Y1 . 10 . {71 . W . P . J . P . 10 . J {l� P Y1 dl J P O r P P J J N 0 O b M • rf HQ O • Ka W O. IN K O O O r r f'' O .J W O at r J J J W 0 J W" M 9 b r a w w • 0 K Debt Service Coverage The following Table 3 illustrates the estimated coverage for debt service on the Series A Bonds from Revenues, consisting of the debt service on the Reassessment Bonds (95-1) plus estimated interest earnings on the Series A Bonds Reserve Account. In the event transfers from the Reserve Account become necessary as a result default by the City in the payment to the Trustee of debt service on the Reassessment Bonds (95-1), there may be reduced or no interest earnings on said Reserve Account. Series A Bond Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TABLE 3 Reassesment District No. 95-1 Estinated Debt service Coverage frog Revenues Series A Bond Estimated Estimated Debt Service Revenues Coverage As of , 1995, there were a total of parcels within the Reassessment District which were delinquent in the payment of assessment installments for Fiscal Year 1994-95. These delinquent 1994-95 assessment installments totaled $ which represents % of the total 1994-95 assessment installments levied. Of the 15 largest landowners (see Table 2 above), only the San Ramo and Lewis Homes parcels were delinquent, and the San Ramo delinquency has been reinstated. The following Table 4 illustrates the historical assessment delinquency for parcels included in the Reassessment District. See Table of Appendix A for a summary of property tax collections and delinquencies (including assessment installments for the Prior Districts) for the entire City for Fiscal Years 1987-88 through 1991-92, inclusive. ZM4WSL3 26 4NMI M-11MM TABLE 4 CITY OF TD8TIN Reassessslent District No. 95-1, Tustin Ranch Assessuent Installnent Delinquencies for Fiscal Years 1990/91 through 1994/95 Fiscal Parcels Parcels Dollars Dollars % of Dollars Year Levied Delinauent levied Delinaent Dotinamt 1990-91 1,979 0 & 3,570,645.34 i 0 0.00% 1991-92 2,826 3 4,388,590.30 77,063 1.76 1992-93 2,835 6 4,358,011.48 74,168 1.70 1993-94 3,288 21 4,991,716.82 91,040 1.82 1994-95 * 3.613 -9 2.688.941.30 118.16¢ im TOTALS 14,541 123 &19,997,905.24 &360,428 1.80% Estimated value -to -Lien Ratios As of March 1, 1994, there were approximately 3,613 separate parcels in the Reassessment District, both developed and undeveloped. These parcels (including improvements, where developed) had a total assessed value of $787,925,188. Total reassessments of $38,214,000 have been levied in the Reassessment District proceedings. This provides an over-all value -to -lien ratio of The following Table 5 illustrates the breakdown, by category of value -to -lien range, of the total number of parcels and the corresponding total reassessment amounts attributable thereto. M -42M3 27 40MJ7-=& J j Wj" Q r N IA w w W t71 r O r M N O N N� W O a i !7 ,i M Y G 1� h1 • 1D �D 10 �D ;D �C 1D �0 1D �C �D �G 1D �0 10 �C y 60r 1 1'•' •` • N M N N N N N I ep� o o K ra aw o W N e�aa • o •r• W c m a e a� to N 1G W v+ A • O ••wp • ama • •ae �* a cotc nn• �• G Q O M it M rapt • c 0 CD O p O O O to O ;D W .j v p 0 0 p w p 0 40 p GPeiO • GO O • o w tr w �D M OC N W N W N A �D M 0 • m a) N .1 Ln 4A O A �D ut D• A A �D a� �D O 440 f+ w w Ln to w d w r m O% O• Ir W W F+ M h+ N O • We 0 ft ONa O M •,b �O'1a.7 ~ o K a 0 o en A!n !a !j o 0 W O O • • w O w F+ w O r O r Ln .j N 0 5 a r40 w • N ft • tr to y P1+ G � D• w f+ a� A A .d • • I•a O N N w%% 1. of O O O n O f' a 0 w O A %D W %D N w Q O N .1 %D 0 co .1 Ln w 14 K O O O Q 0% N W %D Ln • •? O w M+ %D at A aw P O O J • rr ago O< M aan • OO O O O • A a+ ►+ O O� a+ F+ • A ;D W O p 0 w r w p w p r Neither the value -to -lien calculations nor the total reassessment amounts include parity obligations for CFD No. 88-1 and for general property taxes. Set forth in Table 6 is the existing authorized indebtedness payable from taxes and assessments that may be levied on property within the Reassessment District. Additional indebtedness on a parity with the Reassessment Bonds (95-1) could be authorized by the City, subject to the limitation of the total amount of reassessments levied. In addition, other public agencies may issue additional indebtedness on property within the Reassessment District at any time. V2-4WX3 29 .or,sr.w.iiaM TABLE 6 Reassessuent District No. 95-1 Direct and Overlapping Debt 1994-95 Assessed Valuation: 5787,925,188 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Aoclicable Debt 5/1/95 Orange County 0.497% S 2,932 Orange County Flood Control District 0.498 5,453 Metropolitan Water District 0.098 614,367 Irvine Ranch Water District, I.D. 5105 37,466 15,138,754 Irvine Ranch Water District, I.D. 6250 37.583 17,670,185 City of Tustin 24.280 43,704 City of Tustin Reassessment District #1995-1 100. 38,214,000(1) Tustin Unified School District Community facilities District 61988-1 99.698 14.670.561 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $86,359,956 (1) Refunding bonds to be sold. Excludes issues to be refunded. OVERLAPPING LEASE OBLIGATION DEBT: Orange County Certificates of Participation 0.497% 51,454,888 Orange County Pension Obligations 0.497 1,590,599 Orange County Transit Authority 0.497 104,867 Municipal Water District of Orange County Water Facilities Corporation 0.762 671,589 Saddleback Conamity College District Certificates of Participation 1.387 376,432 City of Tustin Water Corporation 24,280 789,100 Irvine Ranch Water District Certificates of Participation 4,715 2,829,000 Orange County Water District Certificates of Participation 0.713 1,482,113 Orange County Sanitation District #14 Certificates of Participation 6.635 125.136 TOTAL GROSS OVERLAPPING LEASE OBLIGATION DEBT $9,423,724 Less: Orange County Transit Authority (80% self-supporting) 83,894 MWDOC Water Facilities Corporation 671,589 City of Tustin Water Corporation 789,100 Orange County Water District Certificates of Participation 1,482,113 TOTAL OVERLAPPING LEASE OBLIGATION DEBT $6,397,028 Ratios to Assessed Valuation Direct Debt. . . . . . . . . . 4.85% Total Direct and OverlappingTax and Assessment Debt . . . . . 10.96% Combined Groes Debt ($92,783,680) . . . . . . . . . . . . . . . 12.16% Combined Net Debt (92,756,974) . . . . . . . . . . . . . . . . 11.77% STATE SCHOOL BUILDING AID REPAYABLE A QF 6/30/94: $0 Source: California Municipal Statistics and an4M$L3 30 M►sn-ru-umM SPECIAL RISK FACTORS The following information should be considered by prospective investors in evaluating the Series A Bonds. However, it does not purport to be an exhaustive listing of the risks and other considerations which may be relevant to an investment in the Series A Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of principal of or interest on the Series A Bonds or both. Funds for the payment of the principal of and the interest on the Series A Bonds are derived from annual reassessment installments. While a modest coverage factor has been established in structuring the annual reassessment amounts (see "REASSESSMENT DISTRICT - Debt Service Coverage - TABLE 6" herein), the amount of annual reassessment installments that are collected by the City could be insufficient to pay principal of and interest on the Series A Bonds due to non-payment of such annual reassessment installments levied or due to insufficient proceeds received from a judicial foreclosure sale of land within the Reassessment District following delinquency. The City's legal obligations with respect to any delinquent reassessment installments which secure the Series A Bonds are limited to (1) payments from the Reserve Fund to the extent of funds on deposit therein, and (2) the institution of judicial foreclosure proceedings with respect to any parcels for which the reassessment installment is delinquent (see "SECURITY FOR THE SERIES A BONDS - Covenant for Superior Court Foreclosure" herein). The Series A Bonds cannot be accelerated in the event of any default. Under the provisions of the Act, reassessment installments will be billed to the owner of each parcel in the Reassessment District against which there is an unpaid reassessment, such billing to be made on the regular property tax bills sent to such owners. Such reassessment installments are due and payable at the same time and bear the same late charges and penalties as for non-payment of regular property tax installments. The obligation to pay reassessment installments does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to the reassessment liens. Enforcement of the payment obligation by the City is limited to judicial foreclosure in the Orange County Superior Court pursuant to Sections 8830 and following of the California Streets and Highways Code. There is no assurance that any current or subsequent owner of a parcel subject to a XMMSU 31 4NM3743&1 tarns reassessment installments installments lien will be able to pay the reassessment or that such owner will choose to pay such even though financially able to do so. The obligation of the City, as issuer of the Assessment Bonds (95-1), to advance the amount of delinquencies to the Trustee, as the registered holder of the Assessment Bonds (95-1), is strictly limited to funds on deposit in the Reserve Fund established and held by the City pursuant to the Fiscal Agent Agreement. Pursuant to Section 8769 of the California Streets and Highways Code, the City has expressly elected not to obligate itself to advance available funds from the City's treasury to make up deficiencies in the amount of reassessment installments collected. Sustained failure by property owners to pay reassessment installments when due, combined with depletion of the Reserve Fund and the inability of the City to sell parcels which have become subject to judicial foreclosure proceedings for amounts sufficient to cover the delinquent reassessment installments, will most likely result in the inability of the City to make full or punctual payments of interest on or principal of the Assessment Bonds (95-1), which could result in a default on the Series A Bonds. The payment of reassessment installments and the ability of the City to foreclose the lien of a delinquent reassessment is normally delayed by and may be limited in other ways by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by State law relating to judicial foreclosure. In addition, the prosecution of a judicial foreclosure may be delayed due to congested local court calendars or procedural delays. The various legal opinions to be delivered concurrently with the delivery of the Series A Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments, including the Series A Bonds, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the reassessments to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting judicial foreclosure proceedings and could result in delinquent reassessment installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Series A Bonds. The ability of the City to foreclose the lien of a delinquent reassessment may be limited in certain respects with W2-ODW 32 4o 70.57- .-uanss regard to.parcels in which the Federal Deposit Insurance Corporation (the "FDIC") or the Resolution Trust Company (the "RTC") has an interest or hereafter obtains an interest. In 1991 and 1992, the RTC issued certain policy statements (the "Policy Statements")(and later adopted by the FDIC) pursuant to which the RTC, when liquidating assets in its corporate and receivership capacities (but not when acting as a conservator) has taken the position, in part, that real property owned by the RTC is subject to state and local real property taxes if those taxes are assessed according to the property's value, but that the RTC is immune from real property taxes assessed on other bases. The Policy Statements also provide that the RTC will pay its proper tax obligations when they become due and will pay claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the RTC interest in the property is appropriate. It further provides that the RTC will pay claims for interest on delinquent property taxes owed at the rate provided under state law. The RTC will not pay for any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. The Policy Statements also provide that if any property taxes (including interest) on RTC -owned property are secured by a valid lien (in effect before the property became owned by the RTC), the RTC will pay those claims. No property of the RTC is subject to levy, attachment, garnishment, foreclosure or sale without the RTC's consent. In addition, a lien for taxes and interest may attach, but the RTC will not permit a lien or security interest held by the RTC to be eliminated by foreclosure without the RTC's consent. The Policy Statements are unclear as to whether the RTC considers the reassessments levied by the City to be "real property taxes" which the RTC intends to pay. The Policy Statements provide: "The [RTC] is only liable for state and local taxes which are based on the value of the property during the period for which the tax is imposed, notwithstanding the failure of any person, including prior record owners, to challenge an assessment under the procedures available under State law. In the exercise of its business judgment, the [RTC] may challenge assessments which do not conform with the statutory provisions, and during the challenge will generally pay tax claims based on the assessment level deemed appropriate. The [RTC] will generally limit challenges to the current and immediately preceding taxable years and to the pursuit of previously filed tax protests. However, the [RTC] may, in the exercise of its business judgment, challenge any prior taxes and assessments provided that (1) the [RTC's] records (including appraisals, offers or bids received for the purchase of the property, etc.) indicate that the assessed value is clearly excessive, (2) a successful challenge will result in a substantial savings to the [RTC], (3) the challenge will not a2_osL3 33 4OM57.e94.11a7tvs unduly delay the sale of the property, and (4) there is a reasonable likelihood of a successful challenge." The Authority and the City are unable to predict what effect, if any, the application of,the Policy Statement will have in the event of a delinquency in the payment of reassessments relating to a parcel or to parcels within the Reassessment District in which either the RTC or the FDIC have an interest. The Authority and the City are likewise unable to predict what effect, if any, the application of the Policy Statements will have on the payment of the interest on and the principal of the Series A Bonds. The Authority and the City are unable to determine if the RTC or the FDIC has an interest in any parcel within the Reassessment District. Existence of Undeveloped Property Approximately t of the reassessments are secured by liens on undeveloped property, and the average value -to -lien ratio for such undeveloped property is :1 (see "THE REASSESSMENT DISTRICT - Development Status - TABLE 1" herein). The undeveloped property consists of subdivided lots which are owned by developers or merchant builders who intend to develop the property for single family residential (see "THE REASSESSMENT DISTRICT - Zoning Classifications for Undeveloped Property - TABLE 3" herein). There may be subsequent transfers of ownership of the undeveloped property prior to completion of development. Failure of the owners of undeveloped property to pay the reassessment installments when due could result in a default in the payments of principal of and interest on the Reassessment Bonds (95-1), which could result in the inability of the Authority to make payments of the principal of and interest on the Series A Bonds. Price Realised Upon Foreclosure Section 8832 of the California Streets and Highways Code (the "Streets and Highways Code") prescribes the minimum price (the "Minimum Price") at which property may be sold in a judicial foreclosure resulting from delinquencies on reassessment installments. The Minimum Price is the amount equal to the delinquent installments of principal and interest of the reassessment, together with all interest, penalties, costs, fees, charges and other amounts more fully detailed in said Section 8832. However, Section 8836 of the Streets and Highways Code provides that the court may authorize a sale a less than the Minimum Price if the court makes certain determinations, based on the evidence introduced at the required hearing, which evidence must establish that no ultimate loss will result to the Bondholders or that no other remedy is acceptable and at least 75% of the Bondholders' consent. The reassessment lien upon property sold pursuant to this procedure at a lesser price than the Minimum Price shall be reduced by the difference between the Minimum Price and the W242MS 34 W10 -574184-1107M actual sale price. In addition, the court shall permit participation by the Authority, as owner of all of the Reassessment Bonds (95-1), in its consideration of the petition as necessary to it determination. Reference should be made to Section 8836 for the complete presentation of this provision. If foreclosure proceedings do not result in full collection of delinquent reassessments, it is possible that owners of the Series A Bonds may not receive payment of principal of or interest on the Series A Bonds. The motivation of the present or future owners of the undeveloped property in the Reassessment District may be diminished in the event significant delays are experienced in development efforts. However, further development of the lands located in the Reassessment District may be affected by changes in general economic conditions, fluctuations in the real estate market, changes in the ownership of the land, and other factors. In addition, any proposed development is subject to existing and future federal, state and local regulations. Approval may be required from various public agencies in connection with the design, nature and extent of the required public improvements, or such matters as land use and zoning. Failure to meet any such future regulations or obtain any such approvals in a timely manner could delay or adversely affect any proposed development of the parcels of land in the Reassessment District. The land within the Reassessment District is subject to a number of contingencies which could slow or prevent future development of the undeveloped land. Consequently, no assurance can be given that such development will be partially or fully completed, and in assessing the investment quality of the Series A Bonds, prospective purchasers should evaluate the risks of noncompletion, including but not limited to the following. (1) First, undeveloped land.is less valuable than such land in a developed condition and provides less valuable security to the Series A Bondowners should it be necessary for the City to foreclose due to the nonpayment of reassessment installments which secure the Assessment Bonds (95-1). (2) Second, if much of the land in the Reassessment District remains undeveloped, the number of likely purchasers at a foreclosure sale, in the event the City forecloses the lien of delinquent unpaid reassessment installments, is likely to be reduced. (3) Third, in addition to potentially reducing the ability and willingness of the landowners to pay reassessment installments, a slowdown of the economic development process in the region could adversely affect land values and reduce the proceeds received at a foreclosure sale in the event reassessment installments are not paid when due. sn-=SLS 35 4WO-P-M-11M s There can be no assurance that land development operations within the Reassessment District will not be adversely affected by future governmental policies, including, but not limited to, governmental policies to restrict or control development. Any event that significantly impacts the ability to develop land in the Reassessment District may cause the property values on undeveloped property to decrease substantially from the assessed values set forth herein and could affect the willingness and ability of the owners of the undeveloped property to pay the reassessment installments when due. The ability or willingness of an owner of land within the Reassessment District to pay reassessment installments could be affected by the imposition of other taxes and assessments imposed upon the land. In addition, other public agencies whose boundaries overlap those of the Reassessment District could, without the consent of the City or the Authority, and in certain cases without the consent of the owners of the land within the Reassessment Districts, impose additional taxes or assessment liens on the property within the Reassessment District to finance public improvements or services to be located or provided inside of or outside of the Reassessment District. A statement of direct and overlapping indebtedness on land within the Reassessment District is included herein under the heading "REASSESSMENT DISTRICT NO. 95-1 - Estimated Direct and Overlapping Debt - TABLE 911. Earthquakes The Reassessment District, may be subject to unpredictable of seismic activity in or around result in substantial damage to District, which, in turn, could such properties and could affect the property owners to pay their due. Drought Conditions like all California communities, seismic activity. The occurrence the Reassessment District could properties in the Reassessment substantially reduce the value of the willingness or ability of reassessment installments when California has recently experienced drought conditions, although rainfall this year has terminated the drought conditions throughout the State. Water service within the Reassessment District is provided by the Irvine Ranch Water District ("IRWD"). While IRWD currently anticipates being able to supply water for existing and new development within its service area for the foreseeable future, there can be no assurance that any renewal of drought conditions will not adversely affect IRWD's ability to do so. Such failure could adversely affect the financial condition of the property owners and could slow or halt development efforts, thereby adversely affecting the willingness or the m4205LS 36 408n.n40&11mn ability of the owners of undeveloped property to pay their reassessment installments when due. Land Values The value of land within the Reassessment District is an important factor in evaluating the investment quality of the Series A Bonds. In the event that a property owner defaults in the payment of a reassessment installment, the City's only remedy is to judicially foreclose on that property. Prospective purchasers of the Series A Bonds should not assume that the property within the Reassessment District could be sold for the assessed amount described herein at a foreclosure sale for delinquent reassessment installments or for an amount adequate to pay delinquent reassessment installments. The property values set forth in the various tables herein are the property values determined by the Orange County Assessor for property tax purposes. These assessed value determinations may be subject to an appeal by the property owner. Assessment appeals are annually filed with the County Assessment Appeals Board for a hearing and resolution. At the time of filing, applicants are required to estimate an opinion of value. The resolution of an appeal may result in a reduction to the Assessor's original taxable value and a tax refund to the applicant/property owner. Any reduction in assessed taxable values of property within the Reassessment District would have an adverse impact on the value -to -lien ratios discussed in the tables herein. The actual market value of the property is subject to future events such as downturn in the economy, occurrences such as earthquakes, droughts or floods or other events, all of which could adversely impact the value of the land in the Reassessment District which is the security for the Assessment Bonds (95-1) which secure the Series A Bonds. As discussed herein, many factors could adversely affect property values or prevent or delay land development within the Reassessment District. The market value of the property in the Reassessment District is subject to diminution upon the future release or discovery thereon of a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfund Act", is the most well know and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect therefore, should m-OoSLa 37 4NW3749+11v M any of the parcels be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. The value of the property within the Reassessment District, as set forth in the various tables herein, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the property. Neither the Authority nor the city has independently verified, and neither is aware, that the owner (or operator) of any of the parcels within the Reassessment District have such a current liability with respect to any such parcel. However, it is possible that such liabilities do currently exist and that neither the Authority nor the City is aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the Reassessment District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly adversely affect the value of a parcel and the willingness or ability of the owner of any parcel to pay the reassessment installments when due. Endangered and Threatened Bpeciea There is no known presence of any endangered or threatened species of animal or plant life within the area of the Reassessment District. Future discovery of any endangered or threatened species could delay or halt further development of the undeveloped property in the Reassessment District. Cumulative Burden of Parity Taxes, special Assosmontg and Development Costs The reassessments and the annual installments thereon constitute a lien against the parcels of land on which the reassessments have been levied. Such lien is on a parity with all special taxes levied by other agencies and is co -equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property. Development of the undeveloped land within the Reassessment District is contingent upon construction and installation of public improvements within the respective parcels of land, including local streets, water distribution facilities, sewage collection laterals and lines, drainage facilities, gas, telephone, electrical and cable television facilities, as well as Xn-OM3 38 on-site grading and related improvements. The cost of these additional improvements could increase the public and private debt for which the undeveloped land within the Reassessment District is security. This increased debt could reduce the ability or willingness of the owners of the undeveloped property to pay the reassessment installments when due. Neither the City nor the Authority has control over the ability of other entities to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the Reassessment District. In addition, the owners of property within the Reassessment District may, without the consent or knowledge of the City or the Authority, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes may have a lien on such property on a parity with the lien of the reassessments. Loss of Taz Zzemption As discussed under the caption "CONCLUDING INFORMATION - Tax Exemption" herein, the interest on the Series A Bonds could become includable in gross income for federal income tax purposes, retroactive to the -date of issuance of the Series A Bonds, as a result of failure of the Authority or the City to comply with certain provisions of the Code. Should such an event of taxability occur, the Series A Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption or mandatory sinking fund redemption provisions of the Indenture. On December 6, 1994, the County and the Orange County Investment Pools (collectively, the "Pool") filed for protection under Chapter 9 of the United States Bankruptcy Code following losses which were eventually realized at approximately $1.7 billion in the market value of the Pool's investment portfolio. County funds and funds of more than 200 non -County governmental agencies within the State were invested in the Pool. As of November 30, 1994, the Pool had assets of approximately $20.6 billion, of which $13 billion was borrowed through repurchase contracts and reverse repurchase contracts. The remaining $7.6 billion included $2.7 billion deposited by the County and $4.9 billion deposited by local agencies other than the County. Although non -County Pool investors ("Pool Participants") were entitled to withdraw monies on relatively short notice, the Pool was invested in securities with an average duration of four (4) years in order to enhance returns. To further enhance yield, some Pool monies were also invested in a variety of structured sn_=58.3 39 a 79.57-M-i►Mss instruments, such as inverse floaters and step-up callable notes, which were highly sensitive to changes in market interest rates. Repurchase and reverse repurchase agreements were also used to obtain loans from broker/dealers to further enhance returns by leveraging. Such borrowing exposed the County to cash collateral calls in the event of losses in the market value of the collateral. These long dated and structured securities, together with leverage, caused the Pool's portfolio to generate high rates of return while the interest rate yield curve was steep from late 1991 through 1993. However, these same factors limited the Pool's liquidity and resulted in substantial losses of market value when market interest rates incureased and the yield curve flattened through most of 1994. Shortly after the cases were filed, an Official Investment Pool Participants' Committee (the "Pool Participants' Committee") was formed, comprised of representative Pool depositors, to facilitate negotiation and settlement of various issues with the County. Several other official and unofficial committees and subcommittees have been formed in each Chapter 9 cases, all with the same overall purpose. The Bankruptcy Code provides for the creation of official creditors' committees to represent their constituents before the U.S. Bankruptcy Court, to investigate the debtor's conduct and to advise the debtor in connection with formulation of a plan of adjustment. Following the $1.7 billion losses in the Pool's investment portfolio and the resulting bankruptcy filings, distributions from the Pool were stayed, and various Pool Participants asserted a variety of tort claims against the County, including breach of fiduciary duty, fraud and negligence, and asserted trust claims seeking the full amount of the funds they had placed in the County treasury. After extensive negotiations between the County and the Pool Participants Committee, the County and the Pool Participants entered into the Comprehensive Settlement Agreement Re the Orange County Investment Pools ("the Settlement Agreement"). See "The Settlement Agreement" below. In 1994, the City had approximately $4 million of principal on deposit with the Pool which it withdrew. There were certain interest earnings on the City's investment that could be withdrawn only after giving written notice to the County. These earnings were not withdrawn before the bankruptcy filing. The interest earnings of the City currently on deposit in the Pool amount to approximately $8,000.00. The Settlement Agreement On April 5, 1995, the County filed with the Bankruptcy Court the Settlement Agreement. The effectiveness of the Settlement Agreement was contingent upon acceptance of the Settlement Agreement within approximately three (3) weeks by at least 80% of the Pool Participants holding at least 90% in aggregate amount of the non -County investment balances in the Pool. The requisite number of Pool Participants accepted the Settlement Agreement, m42osc3 40 40M57s4-109s5 and on May 2, 1995, the Bankruptcy Court entered an order approving the Settlement Agreement and authorizing the county to perform its respective obligations under the Settlement Agreement. The Settlement Agreement generally provides for distributing to Pool Participants a portion of their. December 6, 1994, investment balances in the Pool which portion constitutes approximately 77% of the Pool Participants' aggregate December 6, 1994, investment balances. This amount was distributed to Pool Participants on May 19, 1995. Moreover, the Settlement Agreement enables Pool Participants to select one or two options for the treatment of the deficiency between that distribution and their investment balances. Under "Option B", which was selected by less than 10% of the Pool Participants, Pool Participants generally reserve their rights to litigate against the County to recover their deficiency. Under "Option All, which was selected by more than 90% of the Pool Participants, including the City (the "Option A Pool Participants"), Option A Pool Participants release any and all.Pool-related claims they may have against the County and assign to the County any and all Pool -related claims they may have against third parties, and receive in exchange the following three types of consideration, intended to enable the Option A Pool Participants eventually to receive approximately 100% of their investment balances. The first component of consideration consists of approximately $236 million in "Recovery Notes" to be distributed to Option A Pool Participants in amounts such that (a) each Option A Pool participant that is a school district or school - related entity (the "School Pool Participants") will receive approximately $.13 for each $1.00 invested in the Pool and (b) the other Option A Pool Participants will receive approximately $.03 for each $1.00 invested in the Pool. The Recovery Notes constitute administrative claims under Section 364(c)(1) of the Bankruptcy Code, with priority over all other administrative expenses and unsecured claims against the County, subject to certain carve -out expenses for professional and legal fees incurred by the County in the bankruptcy proceedings. Under the Settlement Agreement, the County is required to use its "best efforts" to monetize the Recovery Notes, and did so by selling bonds on June 16, 1995. The second component of consideration consists of approximately $343 million of "Settlement Secured Claims" allocated to the Option A Pool Participants that are not School Pool Participants in an amount that provides them the approximately 90% level of recovery provided to School Pool Participants through the Recovery Notes. The Settlement Secured Claims are allowed general claims in the County's bankruptcy case that are secured by a first priority security interest in a ratable share of 65% of the net proceeds the County receives from the assertion of certain Pool -related claims against third parties. SP2.msl3 41 4WI6S7-ss4-i IM9/95 The County has filed lawsuits against Merrill Lynch & Co., Inc. and its affiliates (the "Merrill Lynch Lawsuit") and may proceed against other entities in efforts to recover some or all of the Pool's investment losses. The outcome of these lawsuits is not certain, but any recovery received by the County would be subject to distribution as stated above. The third and final component of consideration consists of approximately $514 million of "Repayment Claims" that represent the final approximately $.10 increment of the deficiency claims asserted by Option A Pool Participants. The Repayment Claims are allowed general unsecured claims in the County's bankruptcy case on account of which the holder is not entitled to receive any payment from the County or out of any assets of the County, whether under a plan of adjustment or otherwise, until the payment in full of all "Senior Claims" against the County and the payment of postpetition interest therein, "Senior Claims" include, among other indebtedness, short-term debt for borrowed money, some trade debt incurred prior to the commencement of the County's bankruptcy case, and certain other indebtedness of the County. On May 23, 1995, the Bankruptcy court determined that the Pool was not eligible for bankruptcy relief because it is not a "municipality" specifically authorized by State law to file for bankruptcy protection and that the Pool's bankruptcy case would be dismissed. All orders made in the Pool's case, including the order approving the Settlement Agreement, will be preserved or otherwise protected by transfer to the County's bankruptcy case. The final eight orders were scheduled for court hearing to approve transfer on July 27, 1995. One -Half Cent Sales Tax Increase Ballot Proposal The County submitted to the voters for election on June 27, 1995, a proposal to increase the County -wide sales tax by one- half cent for up to ten years ("Measure R"). The election was held and Measure R did not pass. Consensus County Recovery Plan The County submitted to the State Legislature a Consensus County Recovery Plan which provided for the transfer of revenues between certain public agencies in Orange County, the purpose of which was to enable the County, over time, to obtain revenues sufficient to satisfy its obligations under the Settlement Agreement. Both Houses of the State Legislature adopted Assembly Bill 1664, Senate Bill 863, and Senate Bill 1276, the purpose of which was to amend or provide authority under State law to effectuate the Consensus County Recovery Plan. These Bills were signed by the Governor on October 9, 1995, along with Senate Bill 727 which pertains to Los Angeles County. Assembly Bill 1664 authorizes the County to enter into an agreement to finance the lease or lease purchase of County sn-WSL3 42 a P9-"- 4-»MAs property through the issuance of certificates of participation or lease revenue bonds. Such certificates of participation or lease revenue bonds shall be paid from monies credited to the Motor Vehicle License Fee Account in the Transportation Tax Fund to which the Orange County Transportation Authority ("OCTA") is currently entitled. This Fund would then be reduced by the amount of the payments on the certificates of participation or lease revenue bonds to which the County would otherwise be entitled. The monies of the County in the Motor Vehicle License Fee Account in the Transportation Fund are pledged to all certificates of participation or lease revenue bonds issued by the County in 1996 or 1997, including any obligations issued before 2010 to refund such certificates of participation or lease revenue bonds having a maturity of 20 years or more. In addition, the County may also elect to provide funds to pay such certificates of participation or lease revenue bonds from monies which would otherwise be transmitted by the County pursuant to Section 7204 of the Revenue and Taxation Code (sales and use taxes imposed by the County in excess of 1%). The funds transferred from the Transportation Tax Fund and sales and use taxes to pay for the certificates of participation or lease revenue bonds are authorized to be transferred for a period of 15 years commencing in 1996. The legislation also limits the amount of such taxes which may be transferred during the 15 -year period to $38 million per year. The County is required to use these funds to provide satisfaction in full or other consensual treatment of the outstanding and allowed claims of County vendors, employees and holders of outstanding debt of the County and the expenses of administration of the County's bankruptcy case and to perform the County's obligations pursuant to a confirmed plan of adjustment. Senate Bill 863 provides that the Orange County Development Agency shall transfer to the general fund of the County $4 million per year. In addition, the Orange County Flood Control District and Harbors, Beaches and Parks District is to transfer $4 million per year to the County. The County is required to utilize these funds for the purpose of providing satisfaction in full, or other consensual treatment of the outstanding and allowed claims of County vendors, employees and holders of County debt. These funds may also be utilized to pay expenses of administration in the County's bankruptcy case and of the County's obligations pursuant to confirmed plan of adjustment. Senate Bill 1276 provides that it is in the interest of the State of California and all public debt issuers in the State of California to enable the County of Orange to finance an acceptable plan of adjustment in order to improve the credit standing of all California public debt issuers and to protect the health, safety and welfare of the residents of the County and the State. This Bill also provides a backup plan in the event that the County does not file a plan of adjustment with the Bankruptcy Court by January 1, 1996, the Governor may appoint an individual to serve as a trustee of the County. The appointment may occur sn_=58.3 43 40M574SW IMns at any time after January 1, 1996, until confirmation of the plan. Moreover, if the Governor determines that as of May 1, 1996, or any date thereafter, the Parties in the Orange County bankruptcy case have failed to reach substantial agreement on the terms of a plan of adjustment and the timely confirmation of the Plan appears unlikely, the Governor shall appoint a trustee. This legislation also provides for the duties of the trustee with regards to the Orange County bankruptcy case. This Bill also provides that $23 million per year that would be allocated to the County for motor vehicle fuel taxes shall be transferred instead to OCTA. This transfer shall end in June, 2013. It is anticipated that the County will file a plan of adjustment with the Bankruptcy Court before January 1, 1996. The City cannot currently predict when the County will be able to emerge from the Chapter 9 bankruptcy. The Authority was not a Pool Participant, and the City, with only $8,000.00 remaining in the Pool, does not expect any material adverse consequences from the losses to the Pool. However, water, sanitary sewer, and fire protection services are provided to property within the Reassessment District by entities which are either governed by the County or are Pool Participants. Furthermore, school facilities and K through 12 public educational programs and services are provided within the Reassessment District by the Tustin Unified School District (the "School District"), which is a Pool Participant. Neither the City nor the Authority can predict the severity of the adverse consequences to either the water, sanitary sewer and fire protection service providers or the School District as a result of the investment losses experienced by the Pool, and neither the City nor the Authority can predict either (1) the degree or duration of any possible curtailment of services normally provided to the property and inhabitants of the Reassessment District by the respective service providers and the School District or (2) the need for either the service providers or the School District to increase fees or taxes to pay for such services. However, it is possible that such services will be curtailed to a degree or for a period of time or that fees or taxes will be increased to an extent that such curtailment or increases or both may lead to delays in further development of the undeveloped property in the Reassessment District or to decreases in property values or both. Either such delays or such decreases in property values could reduce the willingness or the ability of the property owners in the Reassessment District to pay reassessment installments when due, which could lead to default in the payment of the principal of or the interest on the Series A Bonds. SP24203L3 44 4W79 -57 -SU -1009/95 As a consequence of the Orange County bankruptcy, the City has experienced temporary delays in the remittance by the County of certain amounts collected for the City on the County's property tax bills, including installments of assessments related to the Prior Fixed Rate Parcels. However, as of , 1995, all amounts related to property tax bill collections on behalf of the City have been remitted to the City in full, and the March 2, 1995, interest payments to holders of the Prior Fixed Rate Bonds were made on time. The City presently expects that future remittances of such amounts will be made to the City on a timely basis and in accordance with established procedures for such remittances. THE AUTHORITY The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers Agreement, dated as of April 3, 1995, between the City and the Tustin Community Redevelopment Agency (the "Agreement"). The Agreement was entered into pursuant to Sections 6500 and following of the California Government Code. The Authority is a separate entity, constituting a public instrumentality of the State of California and was formed for the public purpose of assisting in financing and refinancing projects pursuant to the Bond Law for the benefit of the City. The Authority is governed by a Commission, which is comprised of five members. The members of the City Council of the City constitute the members of the Commission of the Authority. The Authority is specifically granted all of the powers specified in the Bond Law, including but not limited to the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise the powers common to its members and necessary to accomplish the purposes for which it was formed. These powers include the power to make and enter into contracts; to employ agents and employees; to acquire, construct, manage, maintain and operate buildings, works or improvements; to acquire, hold or dispose of property within the City; and to incur debts, liabilities or obligations. THE CITY The City of Tustin is located in central Orange County, approximately 40 miles southeast of Los Angeles and 80 miles north of San Diego. The City covers approximately 11.2 square miles and adjoins the cities of Irvine, Orange and Santa Ana. See APPENDIX [ ] hereto for a description of the City and certain economic and demographic information related thereto. snxsosu 45 .or79657-su-11M9A3 CONCLUDING INFORMATION Underwriting The Series A Bonds are being purchased through negotiation by PaineWebber Incorporated (the "Underwriter"). The Underwriter has agreed to purchase the Series A Bonds at an aggregate purchase price of $ Simultaneously with the purchase of the Series A Bonds by the Underwriter, the Authority has agreed to purchase the Assessment Bonds (95-1) from the City. The Underwriter's obligation to purchase the Series A Bonds is contingent upon the Authority's purchase of the Assessment Bonds (95-1), the approval of certain legal matters by counsel and certain other conditions. The Underwriter is obligated to purchase all of the Series A Bonds if any are purchased. The Underwriter may offer and sell the Series A Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof. The offering prices of the Series A Bonds may be changed from time to time by the Underwriter. Legal opinion The legal opinions of Jones Hall Hill & White, A Professional Law Corporation, Bond Counsel, approving the validity of the Series A Bonds and the Assessment Bonds (95-1), in substantially the forms set forth as Appendix [ ] hereto, will be made available to purchasers at the time of original delivery. A copy of the legal opinion approving the validity of the Series A Bonds will be provided with each definitive bond. Certain legal matters will be passed upon for the Underwriters by Orrick, Herrington & Sutcliffe and for the Authority and the City by the City Attorney. Tax Matters In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series A Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the Authority comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Series A Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Authority sn-M$8.3 46 4OM57ss4-1 IMg3 has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series A Bonds. In the further opinion of Bond Counsel, interest on the Series A Bonds is exempt from California personal income taxes. Owners of the Series A Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series A Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Series A Bonds other than as expressly described above. There is no proceeding or litigation of any nature now pending to restrain or enjoin the issuance, sale, execution or delivery of the Series A Bonds, or in any way contesting or affecting the validity of the Series A Bonds, the proceedings of the Authority taken with respect to the issuance or sale thereof, the proceedings of the City relating to the issuance and sale to the Authority of the Assessment Bonds (95-1), the pledge or application of any moneys or securities provided for the payment of the Series A Bonds, the existence or powers of the Authority or the title of any Commissioners or officers of the Authority to their respective positions. A certificate of the Authority to this effect will be delivered on the date of delivery of the Series A Bonds. Ratinc (to come) Financial Advisor Bartle Wells Associates is acting as Financial Advisor to the Authority and the City. The Financial Advisor's services include.consulting with and advising the Authority and the City regarding the structure and technical details of the financing, providing the Authority and the City with information regarding municipal bond market conditions, assisting the City and the Authority in bond pricing negotiations with the Underwriter, and attending meetings and hearings at the Authority's or the City's request. Sn4mu.3 47 4OMS"454.1 i"ps erification of Mathematical Comoutatio Upon delivery of the Bonds, Grant Thornton LLP will deliver its independent certified public accountants' verification report on the mathematical accuracy of certain computations, contained in schedules provided to them which were prepared on behalf of the Authority, relating to (a) the sufficiency of the anticipated receipts from the securities deposited with the Escrow Agent (the "Escrow Securities") to pay when due the principal whether at maturity or upon prior redemption, interest and redemption premium requirements of the Prior Bonds and, (b) the "yield" on the Escrow Securities and on the Series A Bonds considered by Bond Counsel in connection with the tax opinion rendered by such firm. See "CONCLUDING INFORMATION - Tax Exemption" herein. The report of Grant Thornton LLP will include the statement that the scope of their engagement is limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them, and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report. Continuing Disclosure The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Series A Bonds, and the Authority will not provide any such information. The City has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Authority shall have no liability to the Holders of the Bonds or any other person with respect to such disclosures. The City has covenanted for the benefit of holders and beneficial owners of the Series A Bonds (1) to provide certain financial information and operating date (the "Annual Report") relating to the City and the property in the Reassessment District not later than eight (8) months after the end of the City's Fiscal Year (which currently would be March 1), commencing with the report for the 1995-96 Fiscal Year, and (2) to provide notices of the occurrence of certain enumerated events, if deemed by the City to be material. The Annual Report will be filed by the Trustee, acting as Dissemination Agent, on behalf of the City, with each Nationally Recognized Municipal Securities Information Repository and with each State Repository, if any. The notices of material events will be filed by the Trustee on behalf of the City with the Municipal Securities Rulemaking Board and with each State Repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Continuing Disclosure Agreement. See "APPENDIX F - Continuing Disclosure Agreement." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2 -12(b)(5) (the "Rule"). This is the City's first undertaking with respect to sn-os8.3 48 447947-M-1 I M9,V5 the Rule, and the City has not failed to comply in all material respects with any previous undertakings with respect to the Rule to provide annual reports or notices of material events. All of the preceding summaries of the Indenture, the Fiscal Agent Agreement, applicable legislation, agreements and other documents are made subject to the provisions of such documents and legislation and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the Series A Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement have been authorized by the members of the Commission of the Authority. TUSTIN PUBLIC FINANCING AUTHORITY By Authority Chair sn4203&3 49 40M57-ss4.1i)D9As APPENDIX A Reassessment Diagram (To Come) sP2420S a 50'.or,¢s�ss� unuss REASSESSMENT DIAGRAM SHEET 1 OF 19 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA A REASEssmE T wAs LEVEE Ay THE QTY camam O' TIC CITY O' TUSM ON THE LOTS. PIECES AND PARCELS OF LAND 910RN ON TNR REASKUMENT DIAOtAN. SAD REASKIS I MT WAS LEIAED ON THE � OAr 10 19N. TNS REASSESSMENT OMOAN AID M MEAS mx, R01LTRtconow N THE oma or THE ORIECrOR or KOX .oats / an Damm OF THE CITY of TIISiN ON THE — DAY OF It" REFERENCE R NIDE TO THE REASISCISIMENT ROLL IIECOROED N AE OFFICE Of M OM -00 Or PUWX wCMKS / Ory EIONEER rOR TIRE DEACT AMMT OF EACH REASSEMBOMT t[VRD AGAINST EACH PAR= Or MND 900 ON ARS REASSEWMENT DIAOGIL CITY CLEM Tm OF Tum NOTE: THE REASSESSMENTS EV9EEMMD By THIS RGSSESlEIIT OIACRAM SLONOMEDE ALL PRC MSLY LEVIED As$S91WTS AS SECOND N THE d'9RCE OF TME CONNECTOR OF Py`NC wOafS / CITY t IGINI R OTY Or TUSM TO MRC ASSESSMENTS AND REATQEfONO11S REEIEM4 R MESS WOE. REGINA-Or-wAr AND GADIEITs To RE AC01/Im FOR TME ONPROVENDITS TO K NAGE rGR A4 REA1SSSMENT DISTRICT 94ML NOT RE SUANECT TO TIE UEH W NEASSCISMI MIS LEVIED ON REASSEBRINNT PARS SMOMN ON TNS REASSESSMENT CIAO AW gaVeNCIE R HE EW NAGE To TIE MAPS or Rte= N THE Or"M Or TIE AssiSlOR or TIE Cowry O' MUM FOR A DETAIUM 0M RrTROM Or THE LIES AND ORNDgOMS FOT AW PARCELS 91O04 MEREN. MtO1 NMS SMALL GWAM FOR ALL DETALS OONCDb" THE LINES AND OREMSIOR OF AICM PARCELS. FItDTNfS DAY O' 1996. N DIE ONi1CC THE CITY com OF rE CITY O' TUSIIN. DRANO[ Cowry. fAUFORNAA CITY CUE1N. CITY OF RISTN RE'.F r F, TNS DAY OF 1996. N TIE O ICE IEUAU O' THE DCTOR Or PC MONKS / CITY E140011= or THE CITY OF TUSTIN. GRAMM Cowry. CALNFORNA DIRECTOR Or PUBIC 1101 s / CITY ENGINEER CITY or IUSTN IN ROO-� a OF MAPS OF ASSCNMCMT AW f OMM ITTY FFACLJ01 OF I[f OOKT�aCTS� AT WA—ad N DE wim or TIE Cowry RE mmit or T/K COUNTY a ORAMOL STATE OF CALIF0104I cowry RECOROEI. COwTY OF ORANOL CALIFORNIA ®MFS mw Fin.eawl S�Inc 28M Sm" Oak CIM swa a Floc. Ta ecuw Cabo . 92590 Voie6 (9001 699-3990 FAX (909) 699-5160 6095 DECEMBER 1994 REASSESSMENT DIAGRAM SHEET 2 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA REASSESSMENT NUMBER INDEX REASSESSMENT NUMBER INDEX ®MFS 28265 SA" Ow 0•'.a S.eana r6W Tonaoda. :&.# •ro. 92590 vwca (906) 696-3290 FAN 1909) 699-5460 6095 DECEMBER 1994 ,• '• :•rt'r !• S r Q� 4' :•rrr _ O Ys �' :l I S� !f I� f _ r! r' (� r• _ I..:t rS- t I� r 'NEI: n�N77mu-TH, S _ I..:t - - �1 irk • t r.�.� l..t •1 Q' MIS 10 -Wil. •r m. Wu m wm ®MFS 28265 SA" Ow 0•'.a S.eana r6W Tonaoda. :&.# •ro. 92590 vwca (906) 696-3290 FAN 1909) 699-5460 6095 DECEMBER 1994 r Q� :l I !f r! r' (� r• _ rS- t r 'NEI: n�N77mu-TH, S _ I..:t - - irk • t r.�.� l..t •1 REASSESSMENT DIAGRAM SHEET 3 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA 1 DMFS mum r.Nrrcw Sa ft. m- 25765 Sno1R Oat Driw 54oena flea TrnM.a. ;a;f-0, 92590 voice (909) 699-3990 rAx 2909) 699-3K0 6095 DECEMKR 1994 LEGOV 203 NEW OCA92(SSWO WLOMKR 1231 MEW REASYS511EN7 NU16ER RANGE 1734 REASSES91C11i NLAWNS ON INS SHUT: 203 2566-7213 REASSESSMENT DIAGRAM SHEET < OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA /,;SCAU: Sww low r - loo• SEE i BELOW SEE SHEET 3 BROWNING AVENUE SW 5w w low SCAU : ,• - ,Ow (EGM ®MFS ,234 NEW REASSCSSIMT KAMM mb Ainenow so-coc Inc. NM 26765 S+a Oa 0— , NEW KASSESSMENt NMMKR RANGE ,54 -.. Calif—a. 92590 123a Voice (909) 699-3990 FAX (909) 699-3460 REASUSSYENT wtAKRS ON IMS SMEt: 8095 DECEMKR 1994 -m REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA W P� 0-8.01 � c 71 1, 278 R � 30, ,::Z) 276 30 � � C CAU.E U1 MANCNA ��`��F, n� C' D IMFS 'p° www rneecaw siov cee. wx O >� 26755 Si-" Oak 01— secene neo. TeineaMo. :Odom w, 92590 Voice (909) 699-3990 FAX (909) 699-3+60 !095 XCEM6ER 1994 w VIA CAST" SHEET 6 OF 20 mom ,=y4 0" IKA2100ftt NOW n6n, .a6 Ru»oaipr raven Rewac r "U " a 60 xn: :o. -3u 60• 30• 0• 60' sGIE : 1' . 60' REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) QTY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA UggoVWG Amu 10Dar 50 c 1D0' SCAa : ,• • 100' LEGM 17.34 WM RUSS S3►EMT WASM 1n2.NM 1EM REASSQ9W31T MRIT< RAUM 1234 REASYYSSIEIfT RIA9ILRS 0w T19S SHM: .ss -635 ®MFS I my r~csa s�.,G NgS1N 20765 Sinw. Oa or" s.e.n. nw T.T. . Cdito..a. 94590 v.ie. (909) 699-1990 7A% i909) 699-3440 6095 DECEMBER 1994 SHEET 7 OF 20 REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA �F SyFFT IMFS m4 rotonew Sween. Wn 0765 Si^" " Drove 66eene Veer taneeute. cadm 92590 voice (909) 699-3990 r.0 (909) 694-3660 6025 XCEUKR t"4 IRME BOUI.EVAM ,236 NEW IKASICIBMi 12N 1♦9tU NEWRtASZMRS RANK MRRANK12N R[.SYSLEMY NLMNMS OM UR 94C,: 315-432 u REASSESSMENT DIAGRAM SHEET 9 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA 60' 40' 0' 90' SC/4L : ,' • 00' O(—!Jt"t ALVARADO DWA W M, N2 sfi= COURT 8 N7 2660 O O11M11 9QT AROOIOOop ON K ARDorom DOW 1FA1 _ TMRV CST 2 imp% 252, IMFS Mum F'MUMuip 5-- MIC. 26766 S q.. 04M 0— soce c Floor T—"Oo. Cdit,-., 92590 Voicq (909) 699-3990 FAX (909) 699-3460 5095 DECEMBER 1994 A# 11481, 11,Ru BRYAN AVENUE HERR T ,m. AGE WA y ,NRU me ,� LA �Q. Lfam ,256 101 RfA!!S![I,T 1RRr6n tjj 3-4'\ WEIR WA/IESSIENT WARNER RANGE ,236 RCA37rsl DOT ,888161,8 ON /KS 94M 636-6" ,fM-,806 2317-2335 REASSESSMENT DIAGRAM SHEET 10 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA Mk- F.we Y. Hie. 25755 Smaw 06k 01we s.eaea Foe. ew`aewe. :d:fa . 92590 VO o (909) 699-3990 FAX ;9091 699-3460 2095 DECEMBER 1994 400' 200' 0• 400• SCALE : 1' . e00' r ■ RANK s if QT REASSESSMENT DIAGRAM SHEET 11 of 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA TUSnN RANCH ROAD Sell: 11 . ,ow RAWLINGS 7u WA Y O O ll a 7M m 742 �A 745 746 704 O O O h. `p Qy 747 0 741 74o Jt 7� N 709 M2 787 O 701 � 7is 72, 739 O 701 O O 741 O 730 TM RMERA 742 S� D � O 724 O EEGEW 11M FS NEW REASSCINIMENT HINDER MWu FMOIIp01 SMKN. inc. GE jj pV NEW REASSESSMENT NUMKR RAN 28755 S z Oe« 0... ��' low yo' 9' 1wSecond nop T—ewlo. caidw. .. 92590 REASSESSMENT NIO,BERS ON TMS SHEET: vwC• 1909) 699-3990 FAX 19091 699-3460 654-766 SCALE : 1' 100' ?095 DECEMBER 1994 REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTINCOUNT ORANGE COUNTY STATE OF CALIFORNIA RMFS Nun 1Monya S:rvs 1nC 25755 SM1gb Oat Drive i:n.e. Cdatis. a 91590 :t:u� vac: :(9109)629-3M FAUN (909) 669-x60 8095 DECEMBER 1994 r 9'-W- '_ 1I -U 1 SHEET 12 OF 20 N �S.1 0, 14- o� Q � 0 � � �pP �PNG LEGEND -oslo Six NEW REASSESSMENT NUMBER tjj Ry NEW REASSESSMENT 160Mp RANK � t2x REASSESSMENT NUMBERS ON WS lKEN: 773-933 100' 50' 0' 100' SCALE : 1* . 100' REASSESSMENT DIAGRAM SHEET 13 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA O O O O s6fy *�2203 ~ n g 9s4 6 tnlu O2nwu 11MU NJO 2727! Dftkr 'AaW, M— r~CW 5�IMC. 2676s Sq. Oa 0— Socma nw T�.cWo. Sdit ti . 92590 voce (909) 699-7990 FAx (909) 699-1460 6095 XCEMKR 1994 3041 1191U 3101 2179 1)IKJ 2614 tNN 3102 3121 2914 tww Zeas �� ttRfu ens aso' rr o• Iso' SCALE : 1- . 1w Lemw 1234 NE19 W -&SK otort wuuEtt ,234 WW fusscswwr w1N1eu R4w0E U _ n-? --m-s6 ON nos smart 944-956 2153-2761 2814-3129 REASSESSMENT DIAGRAM SHEET to OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA T50' 76' o' 150' MI SCALE . r . M50• LEGEND t23a NEW REASSESAKNI NUMB M FS ER Md0l S.IvcaR. Ino 1N U wY iinanNEW REASSESSNENI NUMBER RANGE 6765 Sin" oat Orm 12� Scene n— ISO' 75' 0' 150' Telnecwa. Ccdda . 92590 REASSESSMENT k%WKRS ON TMS WET: /ace (909) 699-3990 FAX (909) 699-3460 SCALE . t' . 150' 257-10W 1076-1112 !095 DECEMBER 1994 REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CALIFORNIA SHEET 15 OF 20 1W\ - \V\ / DMFS MUM F~cw Smv m WI 26765 Sng14 Dco 0," soc-4 nom iw�.ocwa Ca1:1mMa 92590 Vwo (909) 699-3990 FAX (909) 699-3460 1095 DECEMBER 1994 100' Sw 0' 100' SCALE : t' . '100' LEGM 12x NEW 4EA59ESSMW WJMKR t 2x iMRU 12x NEW REASSESSIIE)/1 MU116ER RANGE R(ASSS94pIT 1AJkism OH TMS SHEET: 113-12�p 100' Sw 0' 100' SCALE : t' . '100' REASSESSMENT DIAGRAM SHEET 16 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA too' So' 0. too• SCAu : t' •too' 1 � r ,292 1291 O 1290 N 1293 IM O 1s 12"$� 9. ,m ,295 1257 i TUsnm Rm(pM ROAo ,Eao+o 125. NEM WAfYSSM04T ,t mm 1T�t MW WASSCIMAD41 NR19Q RAMQ RE4SSE>9AEWT tAUMSERS OM TNS SHM. 1231-1321 2SS4-2565 NM FS me r."Vel Sauk... mc 6755 Smwo Oa Dl— S.c"o hoer Tans . Cdow .. 92590 vo:c. 1909) 699-1990 FAX (909) 699-3460 !995 aCEMKO 1994 ton so o' ,00' strut : 1' • 100' REASSESSMENT DIAGRAM SHEET 17 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) GTY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA 0 ,118 Aviv RpgO LEGEND 123 NEW BUSSESSWNT NUMKR wEw NEBSSE=MDmT NUMM RANGE t23s REASAZlMpIT N{pa6ERS ON TNS TQT: ,327-,.96 �qMe� f f RpAO � O ,oD' 50' 1 ,00r SCALE : ,• • ,00' MM FS o` W W 2 O O_ 0 oT Qrl MY r anew SINN6. me r :6765 Smpo Oak D— i«ew noo. •aw�ocu�o. Coda—m. 92590 ,We (909) 699-3990 FAX (909) 699-3460 ?D95 DECEMBER Me ,o0 50 0' ,ao SCALE : ,- • 109' REASSESSMENT DIAGRAM SHEET 15 of 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA VM FS Hub F -Wasp Servlcee. Mc. 25765 ! nA" Oak 01— Seeena nae. TM1Kub. Calvo o' 92590 voce (909) 699-3990 rAx (909) 6"-3"0 6095 '3ECEMKR 199- 127e NEM REASiSSWKNI MAWR 1T2jRxU NEO REASSESSMENT MAN" RANGE u3e REASSESSMENT NUMBERS ow TNS 94CI: 1497-1572 3AA6-3613 w w' w so' ME: 0 • 60' P. REASSESSMENT DIAGRAM SHEET 19 OF 20 REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) CITY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA ow 4w w ow SCALE : r . 690' VMFS w— F~CW S.,. .& Nie. 6765 S". 00 Dr— S.con. doer 'mn.cu�o. ca -f—. 92590 ,wWo 1A09) 699-3990 FAX (909) 699-3460 '_195 :ECE4era 1994 Sw zw o soar SCALE : ,' • sov rpm LEcm Kw KASKSSktNr «JMSP '111RU NEW KASSESSMDII ANYKR RAMOE tt3. R(ASSZSy/p, kwmRs ON AMs S-EE1: 1322-1326 1573- 663 ,DO' 50' a• ,od SCALE : V _ ,00• REASSESSMENT DIAGRAM REASSESSMENT DISTRICT 95-1 (TUSTIN RANCH) OTY OF TUSTIN ORANGE COUNTY STATE OF CAUFORNIA SHEET 20 OF 20 MM FS MVM Fwwao 1 5p ". MIC. .0763 S"o Oa W— Iona n— e ecwo. :ene.ne. 92590 .oKe 19091 :99-:i90 sAi !9091 699-5"0 •P95 .-:,rBER 1994 RO1D Z11� R� 123A NEW REASSCSS ENI NUbOER 123A T,IRU NEW REASS[SSIENI NUIlEII RAMC( REASSESSMENT NUMEKRS ON rwS 9"EV )SA -t "U 934-27 :046 =.0 • APPENDIX B Summary of Indenture and Fiscal Agent Agreement (To Come) SM -MAS i 4oa9-n.sss-11n0ss APPENDIX C The City of Tustin (To Come) SP24m52.3 ii 4W79-57,SS&I in.As APPENDIX D Insurance Policy Specimen (To Come) sn-=5 3 i i i 4Wro-374M4-11a4ss KN44�9} _f=d Forms of Bond Counsel Opinions (To Come) sn42DSL3 iv .o?s.s --$6.11/14/95 APPENDIX F Continuing Disclosure Agreement (To Come) sF2-. SL3 V 4W79637434 -11n095