HomeMy WebLinkAboutCC AG PKT 2015-05-26 #H AGENDA STAFF REPORT
DATE: May 26, 2015
TO: Honorable Mayor and City Council
THRU: Jill R. Ingram, City Manager
FROM: Victoria L. Beatley, Director of Finance/City Treasurer
SUBJECT: APPROVAL OF ISSUANCE OF 2015 SPECIAL TAX REFUNDING
BONDS FOR CITY OF SEAL BEACH COMMUNITY FACILITIES
DISTRICT NO. 2002-01 (HERON POINTE)
SUMMARY OF REQUEST:
That the City Council adopt Resolution No. 6562, a resolution of the Seal Beach
City Council authorizing the issuance of Community Facilities District No.
2002-01 (Heron Pointe) 2015 Special Tax Refunding Bonds (the "Refunding
Bonds") and approving related documents and actions.
BACKGROUND AND ANALYSIS:
On August 4, 2005, the City of Seal Beach, for and on behalf of Community
Facilities District No. 2002-01 (Heron Pointe) (the "District"), issued $3,985,000
principal amount of City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe) Special Tax Bonds, Series 2005 (the "Prior Bonds") with a final
maturity of September 1, 2035, to finance facilities authorized to be funded by the
District. The Prior Bonds' current outstanding par amount is $3,425,000 and the
bonds are callable at par. The coupons on the outstanding Prior Bonds range
from 4.45% to 5.125%.
Due to favorable market conditions, the City has the ability to refund the Prior
Bonds to realize debt service savings. As a result of such refunding, the annual
special taxes to be levied on the 64 parcels in the District would be lower than if
the refunding did not occur.
The proposed Refunding Bonds will have the same final maturity as the Prior
Bonds in 2035, have a fully funded debt reserve fund, and carry estimated
interest rates ranging between 2.00% and 4.25%. Based on current market
conditions, the refunding would potentially result in net present value savings of
more than 5%, with estimated average annual savings of approximately $14,750.
These savings will be applied toward reducing property owners' special tax
payments starting in FY 2015-2016. Actual savings are dependent upon market
conditions at the time of sale of the Refunding Bonds.
Agenda Item H
The Refunding Bonds for CFD No. 2002-01 are proposed to be issued pursuant
to a Fiscal Agent Agreement setting forth the various terms and provisions for the
Refunding Bonds. The proceeds of the Refunding Bonds will be applied to the
redemption of the Prior Bonds. The Refunding Bonds are expected to be offered
to investors for sale pursuant to the Preliminary Official Statement, and are
expected to be sold to Stifel, Nicolaus & Company, Incorporated, the underwriter
for the Refunding Bonds, subject to parameters set forth in the attached
resolution for the Refunding Bonds, the title of which is set forth above.
These parameters allow for the issuance of up to $3,750,000 in principal amount
of Refunding Bonds for the District, provided that the net interest cost of the
Refunding Bonds does not exceed 4.00% and the underwriter's discount (without
regard to any original issue discount) is not in excess of 1.5% of the principal
amount of the Refunding Bonds. The City will enter into a Continuing Disclosure
Agreement for the Refunding Bonds, which will require that the City provide
certain ongoing information for the District on an annual basis until the Refunding
Bonds have been paid in full. City staff and consultants have reviewed the
documents described above and they are now ready for approval by the City
Council so that the sale and issuance of the Refunding Bonds can occur.
The firm of Fieldman, Rolapp & Associates is hereby designated as financial
advisor to the City with respect to the Bonds. The firm of Albert A. Webb
Associates is hereby designated as special tax consultant to assist with the
preparation of the Preliminary Official Statement and the Final Official Statement.
Finally, the law firm of Quint & Thimmig LLP is hereby designated as Bond
Counsel and as Disclosure Counsel to the City in connection with the refunding.
The Mayor (or in the Mayor's absence, the Mayor Pro Tempore) is hereby
authorized to execute agreements with said firms for their services in connection
with the financing in the respective forms on file with the City Clerk, provided that
the compensation payable to the financial advisor, Bond Counsel and Disclosure
Counsel, and Special Tax Consultant is payable solely from the proceeds, and
wholly contingent upon the issuance, of the Refunding Bonds.
Following tonight's action, the tentative schedule to complete the refunding is as
follows:
• June 10, 2015: Bond Sale date
• July 8, 2015: Bond Closing date
ENVIRONMENTAL IMPACT:
There is no environmental impact related to this item..
LEGAL ANALYSIS:
No legal analysis is required for this item.
Page 2
FINANCIAL IMPACT:
The District is authorized to levy special taxes to repay its indebtedness and to pay
the annual costs of administration of the District. The District is only authorized to
levy special taxes on land included within the boundaries of the District.
The Refunding Bonds will not be obligations of the City of Seal Beach, but will be
limited obligations of the District secured solely by the special taxes of the District
and amounts held in certain funds and accounts established under the Fiscal Agent
Agreement for the District. All costs of issuance of the Refunding Bonds will be
paid from the proceeds of the Refunding Bonds and will be wholly contingent on the
successful closing of the refunding.
RECOMMENDATION:
That the City Council adopt Resolution No. 6562, a resolution of the Seal Beach
City Council authorizing the issuance of Community Facilities District No.
2002-01 (Heron Pointe) 2015 Special Tax Refunding Bonds (the "Refunding
Bonds") and approving related documents and actions.
SUBMITTED NOTED AND APPROVED:
,w
Lt,�:.
Victoria L. Beatley IRA, Ingram, City M# ger
Director of Finance/City Treasurer
Attachments:
A. Resolution No. 6562
B. Escrow Agreement
C. Bond Purchase Agreement
D. Preliminary Official Statement & Continuing Disclosure Agreement (attached to
the Preliminary Official Statement as Exhibit E)
E. Bond and Disclosure Counsel Services Agreement
F. Financial Advisor Services Agreement
G. Special Tax Consultant Services Agreement
Page 3
RESOLUTION NUMBER 6562
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL AUTHORIZING
THE ISSUANCE OF COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE) 20115 SPECIAL TAX REFUNDING BONDS, AND
APPROVING RELATED DOCUMENTS AND ACTIONS
WHEREAS, the City Council of the City of Seat Beach (the "City Council") has
conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act
of 1952" as amended (the "Act"), to form the City of Seal Beach Community Facilities
District No. 2002-01 (Heron Pointe) (the"District',), to authorize the levy of special taxes
upon the land within the District, and to issue bonds secured by said special taxes to
finance public improvements authorized to be funded by the District;and
WHEREAS, on August 4,. 2005, the City,for and on behalf of the District, issued
$0,956,000 principal amount of City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe) Special Tax Bonds, Series 2005 (the "Prior Bonds"), the Prior
Bonds having been issued by the City for the District to finance facilities authorized to
be funded by the(District; and
WHEREAS, this City Council has determined that, due to favorable interest
rates, it is in the best interests of the City and the District that the Prior Bonds be
refunded; and
WHEREAS„ 'there has been submitted to 'this City Council a fiscal agent
agreement (the "Fiscal Agent Agreement") providing for the Issuance of special tax'
refunding bonds of the City (the ""Bonds"") for and on behalf of the District under the
authority provided in the Act and Article 11, commencing with Section 50500, of
Chapter 0 of Part 1 of Division 2 of Title 5 of the California Government Code (the
"Refunding Law"), and this City Council now desires to approve the Fiscal Agent
Agreement and the Issuance of the Bonds;, and
WHEREAS" there has been presented to this City Council an escrow agreement
providing for the creation of an escrow fund which will be used to defease and refund
the Prior Bonds and this City Council now desires to approve such agreement in
connection with the refunding of the Prior Bonds; and
WHEREAS, the City proposes to sell the Bonds to Sti'fel, Nicolaus & Company,
Incorporated (the "Underwriter") pursuant to the terms of a bond purchase agreement
(the "Bonet Purchase Agreement") by and between the City and the Underwriter, and
the Underwriter proposes to offer the Bonds to the investing public by means of a
preliminary official statement(the"Preliminary Official Statement");and
WHEREAS, it appears that each of said documents and instrument's which are
now before this meeting is in appropriate Form and is an appropriate document or
instrument to be executed and delivered for the purpose intended„and
WHEREAS, all conditions, things and acts required to exist, to have happened
and to have been performed precedent to and in the issuance of the Bonds as
contemplated by this Resolution and the documents referred to herein exist, have
happened and have been performed in dine time, form and manner as required by the
Paws of the State of California, including the Act and the Refunding Law,
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEAL BEACH THAT:
SECTION 1, Pursuant to the Refunding Law, the Act, this Resolution and the
Fiscal Agent Agreement, special tax refunding bonds of the City for the District
designated' as "City of Seal Beach Community Facilities District No. 2002-01 (Heron
Pointe) 2015 Special Tax Refunding Bonds" in an aggregate principal amount not to
exceed $3,750,000„ are hereby authorized to be issued. The Bonds shall be executed
In the form set forth in and otherwise as provided in the Fiscal Agent.Agreement.
Resolution Number 6562
In furtherance of the issuance of the Bonds, the City Council hereby makes the
following findings and determinations: (i) it is prudent in the management of the fiscal
affairs of the City, the City Council and the District to issue the Bonds for the purpose of
refunding the Prior Bonds, (ii) the total net interest cost to maturity on the Bonds plus
the principal amount of the Bonds will not exceed the total net interest cost to maturity
on the Prior Bonds to be refunded plus the principal amount of the Prior Bonds to be
refunded, (iii)the final maturity date of the Bonds will not exceed the final maturity date
of the Prior Bonds, and (iv) the Bonds satisfy the requirements of Section 53345.8(a) of
the Act in that the assessed value of the land in the District is more than three times the
principal amount of the Bonds. The City Council hereby further finds and determines
that (i)the issuance of the Bonds should proceed for the public policy reason that, as a
result of such issuance, the annual special taxes to be levied in the District will be lower
than if the refunding contemplated with the proceeds of the Bonds did not occur, and (ii)
the sale of the Bonds by negotiated sale to the Underwriter as contemplated by the
Bond Purchase Agreement will result in a lower overall cost.
The City Council hereby approves the Fiscal Agent Agreement in the form on file
with the City Clerk. The Mayor (or in the Mayor's absence, the Mayor Pro Tempore) is
hereby authorized to execute the Fiscal Agent Agreement in such form, together with
any additions thereto or changes therein deemed necessary or advisable by the
Director of Finance/City Treasurer upon consultation with Bond Counsel and the City
Attorney, the approval of any such changes to be conclusively evidenced by the
execution and delivery by the Mayor(or in his absence, the Mayor Pro Tempore) of the
Fiscal Agent Agreement. The proceeds of the Bonds shall be applied by the City for
the purposes and in the amounts as set forth in the Fiscal Agent Agreement. The City
Council hereby authorizes the delivery and performance by the City of the Fiscal Agent
Agreement. For purposes of Section 53363.2 of the Act, (i) it is expected that the
purchase of the Bonds will occur on or after June 10, 2015, (ii)the date, denomination,
maturity dates, places of payment and form of the Bonds shall be as set forth in the
Fiscal Agent Agreement, (iii) the minimum rate of interest to be paid on the Bonds shall
be one-half percent (0.5%) with the actual rate or rates to be set forth in the Fiscal
Agent Agreement as executed, (iv)the place of payment for the Prior Bonds shall be as
set forth in the fiscal agent agreement for the Prior Bonds; and (v)the designated costs
of issuing the Bonds shall be as described in Section 53363.8 of the Act, and as
otherwise described in the Fiscal Agent Agreement, in the Official Statement for the
Bonds and the closing certificates for the Bonds, including fees and expenses of the
financial advisor and special tax consultant, Bond Counsel and Disclosure Counsel fees
and expenses, Underwriter's discount, printing costs for the Official Statement, initial
fiscal agent fees, City Attorney fees, and costs of City Staff incurred in connection with
the sale and issuance of the Bonds.
The City Council hereby approves the refunding of the Prior Bonds with the
proceeds of the Bonds, in accordance with the provisions of the fiscal agent agreement
pursuant to which the Prior Bonds were issued and the Escrow Agreement between the
City and The Bank of New York Mellon Trust Company, N.A., as Escrow Bank. The
City Council hereby approves the Escrow Agreement in the form on file with the City
Clerk. The City Council hereby authorizes the Mayor(or in his absence, the Mayor Pro
Tempore), to execute and deliver the Escrow Agreement in such form, together with
any changes therein or additions thereto deemed necessary or advisable by the
Director of Finance/City Treasurer upon consultation with Bond Counsel and the City
Attorney, the approval of any such changes to be conclusively evidenced by the
execution and delivery by the Mayor(or in his absence, the Mayor Pro Tempore) of the
Escrow Agreement. This City Council hereby authorizes the delivery and performance
by the City of the Escrow Agreement.
SECTION 2. The Bonds, when executed, shall be delivered to the Fiscal Agent
for authentication. The Fiscal Agent is hereby requested and directed to authenticate
the Bonds by executing the Fiscal Agent's certificate of authentication and registration
appearing thereon, and to deliver the Bonds, when duly executed and authenticated, to
the Underwriter or its order in accordance with written instructions executed on behalf of
the City by the City Manager or the Director of Finance/City Treasurer (each an
"Authorized Officer"), which instructions each such Authorized Officer is hereby
authorized and directed to execute and deliver to the Fiscal Agent. Such instructions
Resolution Number 6562
shall provide for the delivery of the Bonds to the Underwriter or its order in accordance
with the Bond Purchase Agreement, upon payment of the purchase price therefor.
SECTION 3. This City Council hereby approves the sale of the Bonds to the
Underwriter. The Bond Purchase Agreement, in the form on file with the City Clerk, is
hereby approved and the Mayor(or in the Mayor's absence, the Mayor Pro Tempore) is
hereby authorized and directed to execute the Bond Purchase Agreement in said form,
together with such changes therein or additions thereto as may be approved by the
Director of Finance/City Treasurer upon consultation with Bond Counsel and the City
Attorney, provided that the aggregate principal amount of the Bonds does not exceed
the amount set forth in Section 1, the net interest cost of the Bonds is not in excess of
4.00%, and the Underwriter's discount (without regard to any original issue discount) is
not in excess of 1.50% of the principal amount of the Bonds.
SECTION 4. This City Council hereby approves the preliminary official
statement for the Bonds (the"Preliminary Official Statement") in the form on file with the
City Clerk, together with any changes therein or additions thereto deemed advisable by
the Director of Finance/City Treasurer. The City Council authorizes the Authorized
Officers, each acting alone, on behalf of the City and the District, to deem "final"
pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") the
Preliminary Official Statement prior to its distribution by the Underwriter to prospective
purchasers of the Bonds.
The Underwriter, on behalf of the City and the District, is authorized and directed
to cause the Preliminary Official Statement to be distributed to such municipal bond
broker-dealers, to such banking institutions and to such other persons as may be
interested in purchasing the Bonds.
The Authorized Officers are hereby authorized and directed to assist the
Disclosure Counsel in causing the Preliminary Official Statement to be brought into the
form of a final official statement (the "Final Official Statement"), and the Authorized
Officers, each acting alone, are hereby authorized to execute the Final Official
Statement and a statement that the facts contained in the Final Official Statement, and
any supplement or amendment thereto (which shall be deemed an original part thereof
for the purpose of such statement) were, at the time of sale of the Bonds, true and
correct in all material respects and that the Final Official Statement did not, on the date
of sale of the Bonds, and do not, as of the date of delivery of the Bonds contain any
untrue statement of material fact with respect to the City or the District or omit to state
material facts with respect to the City or the District required to be stated where
necessary to make any statement made therein not misleading in the light of the
circumstances under which it was made. The execution and delivery by an Authorized
Officer of the Final Official Statement, which shall include such changes and additions
thereto deemed advisable by the Director of Finance/City Treasurer and such
information permitted to be excluded from the Preliminary Official Statement pursuant
to the Rule, shall be conclusive evidence of the approval of the Final Official Statement
by the City.
The Final Official Statement, when prepared, is approved for distribution in
connection with the offering and sale of the Bonds.
SECTION 5. The Continuing Disclosure Agreement, in the form attached as
Appendix E to the Preliminary Official Statement, is hereby approved. The Mayor(or in
the Mayor's absence, the Mayor Pro Tempore) is hereby authorized to execute and
deliver the Continuing Disclosure Agreement in said form, with such additions thereto or
changes therein as are deemed necessary or advisable by the Director of Finance/City
Treasurer, the approval of any such changes to be conclusively evidenced by the
execution and delivery by the Mayor(or in his absence, the Mayor Pro Tempore) of the
Continuing Disclosure Agreement.
SECTION 6. The City hereby covenants, for the benefit of the Bondowners, to
commence and diligently pursue to completion any foreclosure action regarding
delinquent installments of any amount levied as a special tax for the payment of interest
or principal of the Bonds, said foreclosure action to be commenced and pursued as
more completely set forth in the Fiscal Agent Agreement.
Resolution Number 6562
SECTION 7. The firm of Fieldman, Rolapp & Associates is hereby designated
as financial advisor to the City with respect to the Bonds, the firm of Albert A. Webb
Associates is hereby designated as special tax consultant to assist with the preparation
of the Preliminary Official Statement and the Final Official Statement, and the law firm
of Quint & Thimmig LLP is hereby designated as Bond Counsel and as Disclosure
Counsel to the City for the Bonds. The Mayor (or in the Mayor's absence, the Mayor
Pro Tempore) is hereby authorized to execute agreements with said firms for their
services in connection with the Bond financing in the respective forms on file with the
City Clerk, provided that compensation payable to the financial advisor and Bond
Counsel and Disclosure Counsel is payable solely from the proceeds, and wholly
contingent upon the issuance, of the Bonds.
SECTION 8. All actions heretofore taken by the officers and agents of the City
with respect to the sale and issuance of the Bonds are hereby approved, confirmed and
ratified, and the proper officers of the City are hereby authorized and directed to do any
and all things and take any and all actions and execute any and all certificates,
agreements and other documents, which they, or any of them, may deem necessary or
advisable in order to consummate the lawful issuance and delivery of the Bonds and
the refunding of the Prior Bonds in accordance with this Resolution, and any certificate,
agreement, and other document described in the documents herein approved.
SECTION 9. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular
meeting held on the 26tl'day of May, 2015 by the following vote:
AYES: Council Members:
NOES: Council Members:
ABSENT: Council Members:
ABSTAIN: Council Members:
Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Tina Knapp, City Clerk of the City of Seal Beach, do hereby certify that the foregoing
resolution is the original copy of Resolution Number 6562 on file in the office of the City
Clerk, passed, approved, and adopted by the Seal Beach City Council at a regular
meeting held on the 26th day of�Lay, 2015.
City Clerk
Quint&Thinunig LLP 4/3/15
4/14/15
4/30/15
ESCROW AGREEMENT
by and between the
CITY OF SEAL BEACH, CALIFORNIA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A.,
as Escrow Bank
dated as of July 1,2015
relating to:
City of Seal Beach
Community Facilities District No. 2002-01
(Heron Pointe)
Special Tax Bonds, Series 2005
19040.02:113209
TABLE OF CONTENTS
Section 1. Establishment of Refunding Fund—... ......... ......... ............ 1
Section 2. Deposit into Refunding Fund;Investment of Amounts............................. .............,...,2
Section 3. Instructions as to Application of Deposit...................................................................................2
Section 4. Application of Proceeds from Prior Bond Funds.......................................................................3
Section 5. Application of Certain Terms of Prior Agreement... ......... ......... ..................... ....,..,....3
Section 6. Proceedings for Redemption of Prior Bonds..............................................................................3
Section7. Compensation to Escrow Bank ........ .......... ......... ......... ....... .. . .......,. .............3
Section 8. Liabilities and Obligations of Escrow Bank................................................................................3
Section 9. Resignation of Escrow Bank.,— ......... ....... . ... ., .......,,,...--......5
Section 10. Amendment....................................................................................................................................5
Section11. Unclaimed Moneys,..,,, ......... ............ .. ... d ., ....... ,......., ..,...,,, .,,.,.,.. ,...5
Section 12. Execution in Counterparts............................................................................................................6
Section13. Applicable Law..............................................................................................................................7
EXHIBIT A: SCHEDULE OF PAYMENTS ON PRIOR BONDS
EXHIBIT B: FORM OF NOTICE OF REDEMPTION
EXHIBIT C: NOTICE OF DEFEASANCE
�i-
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of July 1, 2015, is by and
between the CITY OF SEAL BEACH, CALIFORNIA, a municipal corporation and political
subdivision of the State of California (the "City"), for and on behalf of the CITY OF SEAL
BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) (the "District"),
and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking
association organized and existing under the laws of the United States of America, acting as
escrow bank hereunder (the "Escrow Bank").
RECITALS :
WHEREAS, the City Council of the City has conducted proceedings under and pursuant
to the Mello-Roos Community Facilities Act of 1982, as amended, to form the District, to
authorize the levy of special taxes upon the land within the District, and to issue bonds secured
by said special taxes to finance certain facilities;and
WHEREAS, the City Council of the City, as legislative body of the District, authorized
the issuance of bonds of the City for the District in the original principal amount of $3,985,000
(the "Prior Bonds"), said Prior Bonds having been issued on August 4, 2005 pursuant to
Resolution No. 5351 of the City Council adopted on June 13,2005, and Fiscal Agent Agreement,
dated as of July 1, 2005 (the "Prior Agreement"),by and between the City and The Bank of New
York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company,
N.A.),as fiscal agent(the"Prior Fiscal Agent");and
WHEREAS, the City has determined to issue, for and on behalf of the District, special
tax refunding bonds in the aggregate principal amount of $ (the "Refunding
Bonds") at this time for the purpose of providing funds to currently refund and defease the
Prior Bonds;and
WHEREAS, the City and the Escrow Bank wish to enter into this Agreement for the
purpose of providing the terms and conditions relating to the deposit and application of
moneys to provide for the payment and redemption of the Prior Bonds in full, pursuant to and
in accordance with the provisions of Section 10.03(B) of the Prior Agreement.
AGREEMENT :
NOW,THEREFORE,in consideration of the above premises and of the mutual promises
and covenants herein contained and for other consideration the receipt and sufficiency of
which are hereby acknowledged,the parties hereto do hereby agree as follows:
Section 1. Establishment of Refundine Fund. There is hereby created an escrow fund
(the "Refunding Fund") to be held in trust by the Escrow Bank as an irrevocable escrow
securing the payment of the Prior Bonds, as hereinafter set forth. The Escrow Bank shall
administer the Refunding Fund as provided in this Agreement. All cash in the Refunding Fund
is hereby irrevocably pledged as a special fund for the payment of the principal of and interest
and premium on the Prior Bonds in accordance with the provisions of this Agreement and the
-1-
Prior Agreement. If at any time the Escrow Bank shall receive actual knowledge that the cash in
the Refunding Fund will not be sufficient to make the payment required by Section 3 hereof,
the Escrow Bank shall notify the City of such fact and the City shall immediately cure such
deficiency from any source of funds legally available to the District. The Escrow Bank shall
have no obligation whatsoever to use its own funds to cure any such deficiency.
Section 2. Deposit into Refunding Fund; Investment of Amounts. Concurrent with
delivery of the Refunding Bonds, the City shall cause to be transferred to the Escrow Bank for
deposit into the Refunding Fund the amount of $3,509,993.13 in immediately available funds,
which shall be derived from (a) proceeds of sale of the Refunding Bonds in the amount of
$ (b) the moneys on deposit in the reserve fund established under the Prior
Agreement in the amount of _ .................., (c) moneys on deposit in the special tax fund
established under the Prior Agreement in the amount of$ , (d) moneys on deposit in
the redemption fund established under the Prior Agreement in the amount of$ , and
(e) moneys on deposit in the bond fund established under the Prior Agreement in the amount
of $ . The Prior Fiscal Agent is hereby directed by the City to make the transfers of
funds from the reserve fund, the bond fund, and the redemption fund under the Prior
Agreement to the Refunding Fund as described in clauses (b), (d) and (e) of the preceding
sentence.
The moneys deposited into the Refunding Fund pursuant to the preceding paragraph
shall be held by the Escrow Bank in cash, uninvested. The funds deposited with and held by
the Escrow Bank in the Refunding Fund shall be used by the Escrow Bank solely for the uses
and purposes set forth herein. The Escrow Bank shall have no lien upon or right of set off
against the funds at any time on deposit in the Refunding Fund.
Section 3. Instructions as to Application of Deposit. The total amount held in the
Refunding Fund hereunder shall be applied by the Escrow Bank for the sole purpose of paying
the principal of and interest on the Prior Bonds in accordance with Section 2.03(A)(ii) of the
Prior Agreement and the schedule set forth in Exhibit A attached hereto and by this reference
incorporated herein. Following payment in full of the principal of and interest on the Prior
Bonds, all amounts on deposit in the Refunding Fund shall be transferred by the Escrow Bank
on September 2, 2015 to The Bank of New York Mellon Trust Company, N.A., in its capacity as
Fiscal Agent for the Refunding Bonds, for deposit by such Fiscal Agent in the Bond Fund
established pursuant to Section 4.02 of the Fiscal Agent Agreement relating to the Refunding
Bonds,to be used for purposes of such Bond Fund.
The Escrow Bank is hereby irrevocably directed to apply the amounts in the Refunding
Fund to the redemption of the Prior Bonds pursuant to the preceding paragraph, and is hereby
irrevocably directed to provide notice of redemption (at the expense of the City) in substantially
the form of Exhibit B hereto, as required under Section 2.03(D) the Prior Agreement to effect
such redemption.
The Escrow Bank, in its capacity as Prior Fiscal Agent, is hereby requested, and the
Escrow Bank, in its capacity as Prior Fiscal Agent, hereby agrees to promptly give notice of the
defeasance of the Prior Bonds in the form of defeasance notice attached hereto as Exhibit C.
-2-
Section 4. Application of Proceeds from Prior Bond Funds. Upon receipt by the Escrow
Bank from the Prior Fiscal Agent under the Prior Agreement of certain amounts remaining on
deposit in the funds and accounts established under the Prior Agreement as of the date of
delivery of the Refunding Bonds as described in Section 2 above, such amounts received shall
be deposited by the Escrow Bank in the Refunding Fund.
After making the foregoing deposit, any other amounts remaining on deposit in or
accruing to any funds and accounts established under the Prior Agreement held by the Prior
Fiscal Agent shall be transferred in immediately available funds as provided in Section 3.02(B)
of the Fiscal Agent Agreement for the Refunding Bonds. In addition, any investment earnings
on funds held by the Prior Fiscal Agent under the Prior Agreement which are posted after the
date of the foregoing transfers, shall be remitted by the Prior Fiscal Agent to the Fiscal Agent
for the Refunding Bonds for deposit by such Fiscal Agent to the Bond Fund established under
the Fiscal Agent Agreement for the Refunding Bonds to be used for purposes of such Bond
Fund.
Section 5. Application of Certain Terms of Prior Agreement. All of the terms of the Prior
Agreement relating to the making of payments of the principal of and interest on the Prior
Bonds are incorporated in this Agreement as if set forth in full herein.
Section 6. Proceedings for Redemption of Prior Bonds. The City hereby irrevocably
elects to redeem all of the outstanding Prior Bonds in full on September 1,2015,pursuant to the
provisions of Section 2.03(A)(ii) of the Prior Agreement. It is hereby acknowledged that notice
of such redemption is to be given by the Escrow Bank in accordance with the second paragraph
of Section 3 above, at the expense of the District.
Section 7. Compensation to Escrow Bank. The City shall pay the Escrow Bank,promptly
upon written request, full compensation for its duties under this Agreement, including out-of-
pocket costs such as publication costs, redemption expenses, legal fees (including fees of
outside counsel and the allocated costs of internal attorneys) and other costs and expenses
relating hereto. Under no circumstances shall amounts deposited in or credited to the
Refunding Fund be deemed to be available for said purposes. The obligation of the City under
this Section 7 to pay compensation already earned by the Escrow Bank and to pay costs and
expenses already incurred shall survive termination of this Agreement and shall survive the
resignation or removal of the Escrow Bank.
Section 8. Liabilities and Obligations-of Escrow Bank. The Escrow Bank shall have no
obligation to make any payment or disbursement of any type or incur any financial liability in
the performance of its duties under this Agreement unless the City shall have deposited
sufficient funds therefor with the Escrow Bank. The Escrow Bank may rely and shall be fully
protected in acting upon the written instructions of the City or its agents relating to any matter
or action as Escrow Bank under this Agreement.
The City covenants to indemnify, defend and hold harmless the Escrow Bank and its
officers, employees, directors, and agents, against any loss, liability or expense, including
reasonable legal fees and expenses (including the fees of outside counsel and internal
attorneys), incurred in connection with the performance of any of the duties of Escrow Bank
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hereunder, except the Escrow Bank shall not be indemnified against any loss, liability or
expense resulting from its negligence or willful misconduct.
The indemnity provided in this Section 8 shall survive the termination of this
Agreement and shall survive the resignation or removal of the Escrow Bank.
The Escrow Bank shall have such duties as are expressly set forth herein and no implied
duties shall be read into this Agreement against the Escrow Bank. The Escrow Bank shall not be
liable for any act or omission of the City under this Agreement or the Prior Agreement.
The Escrow Bank shall not be liable for the accuracy of any calculations provided as to
the sufficiency of moneys deposited with it to pay the principal, interest and premiums on the
Prior Bonds.
Any bank, federal savings association, national association or trust company into which
the Escrow Bank may be merged or with which it may be consolidated shall become the Escrow
Bank without any action of the City.
The Escrow Bank shall have no liability or obligation to the holders of the Prior Bonds
or the Refunding Bonds with respect to the payment of debt service by the City or with respect
to the observance or performance by the City of the other conditions, covenants and terms
contained in the Prior Agreement or any agreement pursuant to which the Refunding Bonds
are issued (collectively, the 'Bond Agreements'), or with respect to the investment of any
moneys in any fund or account established, held or maintained by the City pursuant to the
Prior Agreement.
The Escrow Bank may conclusively rely, as to the truth of the statements and
correctness of the opinions expressed therein, on any certificate or opinion furnished to it in
accordance with this Agreement or the Prior Agreement. The Escrow Bank may consult with
counsel, whose opinion shall be full and complete authorization and protection to the Escrow
Bank if it acts in accordance with such opinion.
The Escrow Bank shall not be liable for any error of judgment made in good faith by an
authorized officer.
Nothing herein should be interpreted to require the Escrow Bank to expend, advance or
risk its own funds or otherwise incur financial liability in the performance of any of its duties or
the exercise of any of its rights hereunder, if it believes that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured.
Any corporation or association succeeding to all or substantially all of the corporate
trust business of the Escrow Bank shall be the successor of the Escrow Bank hereunder,without
the execution or filing of any paper or any further act on the part of any of the parties hereto.
The Escrow Bank shall not have any liability hereunder except to the extent of its own
negligence or willful misconduct. In no event shall the Escrow Bank be liable for any special
indirect or consequential damages.
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The Escrow Bank shall not be responsible for any of the recitals or representations
contained herein.
The Escrow Agent may execute any of the trusts or powers under this Agreement or
perform any duties under this Agreement either directly or by or through agents, attorneys,
custodians or nominees.
The Escrow Agent agrees to accept and act upon instructions or directions pursuant to
this Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods; provided, however, that, the Escrow Agent shall have received an
incumbency certificate listing persons designated to give such instructions or directions and
containing specimen signatures of such designated persons,which such incumbency certificate
shall be amended and replaced whenever a person is to be added or deleted from the listing. If
the City elects to give the Escrow Agent e-mail or facsimile instructions (or instructions by a
similar electronic method) and the Escrow Agent in its discretion elects to act upon such
instructions, the Escrow Agent's reasonable understanding of such instructions shall be
deemed controlling. The Escrow Agent shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Escrow Agent's reliance upon and compliance with such
instructions notwithstanding such instructions conflict or are inconsistent with a subsequent
written instruction. The City agrees to assume all risks arising out of the use of such electronic
methods to submit instructions and directions to the Escrow Agent, including without
limitation the risk of the Escrow Agent acting on unauthorized instructions, and the risk of
interception and misuse by third parties. Notwithstanding the foregoing, the protection
afforded to the Fiscal Agent in each provision of this paragraph shall be operative only in the
absence of the Fiscal Agent's negligence or willful misconduct.
Section 9. Resignation of Escrow Bank. The Escrow Bank may at any time resign by
giving written notice to the City, which notice shall indicate the date on which the resignation
is to be effective (the "resignation date'). The City shall promptly appoint a successor Escrow
Bank by the resignation date. Resignation of the Escrow Bank will be effective only upon
acceptance of appointment by a successor Escrow Bank. If the City does not appoint a successor
Escrow Bank by the resignation date, the Escrow Bank may, at the expense of the City, petition
any court of competent jurisdiction for the appointment of a successor Escrow Bank, which
court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may
be required by law, appoint a successor Escrow Bank.
Section 10. Amendment. This Agreement may be amended or modified by the parties
hereto, but only if there shall have been filed with the City and the Escrow Bank (a) a written
opinion of Bond Counsel stating that such amendment will not materially adversely affect the
interests of the owners of the Prior Bonds, and that such amendment will not cause interest on
the Prior Bonds or the Refunding Bonds to become includable in the gross income of the
owners thereof for federal income tax purposes, and (b) a certification of an independent
certified public accountant that the funds on deposit in the Refunding Fund will be in an
amount at all times at least sufficient to make the payments specified in Section 3 hereof.
Section 11. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Escrow Bank in trust for the payment and discharge
of the principal of, and the interest and any premium on, the Prior Bonds which remains
..5_
unclaimed for two (2) years after the date when the payment of such principal, interest and
premium have become payable, if such moneys were held by the Escrow Bank at such date,
shall be repaid by the Escrow Bank to the City as its absolute property free from any trust, and
the Escrow Bank shall thereupon be released and discharged with respect thereto and the
owners of such Prior Bonds shall look only to the City for the payment of the principal of, and
interest and any premium on, such Prior Bonds. Any right of any Prior Bondowner to look to
the City for such payment shall survive only so long as required under applicable law.
Section 12. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and
the same instrument.
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Section 13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made and performed
in California.
IN WITNESS WHEREOF, the City and the Escrow Bank have each caused this
Agreement to be executed by their duly authorized officers all as of the date first above written.
CITY OF SEAL BEACH,CALIFORNIA,for
and on behalf of the CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.
2002-01 (HERON POINTE)
By
City Manager
THE BANK OF NEW YORK MELLON TRUST
COMPANY,N.A.,as Escrow Bank
By
Authorized Officer
19040.02:J13209
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EXHIBIT A
SCHEDULE OF PAYMENTS ON PRIOR BONDS
Redemption Maturing Called
Date Interest Principal Principal Total
September 1,2015 $84,993.13 $100,000.00 $3,325,000.00 $3,509,993.13
Exhibit A
EXHIBIT B
NOTICE OF FULL/FINAL REDEMPTION OF
City of Seal Beach
Community Facilities District No. 2002-01
(Heron Pointe)
Special Tax Bonds,Series 2005
Maturity Principal Redemption Interest CUSIP
Date Amount Called PriceM Rate Number
- 9/1/2016 $ 105,000 $ 105,000 4.450 812054 AKOWW 3
9/1/2017 105,000 105,000 4.550 812054 AL8
9/1/2018 110,000 110,000 4.650 812054 AM6
9/1/2019 115,000 115,000 4.700 812054 AN4
9/1/2020 120,000 120,000 4.850 812054 AP9
9/1/2021 130,000 130,000 4.900 812054 AQ7
9/1/2022 135,000 135,000 4.950 812054 AR5
9/1/2025 445,000 445,000 5.000 812054 AU8
9/1/2030 905,000 905,000 5.000 812054 AW4
9/1/2035 1,155,000 1,155,000 5.125 812054 AV6
(1)Accrued interest to be added.
NOTICE is hereby given that the City of Seal Beach, California (the "City") has
irrevocably called for redemption on September 1, 2015 (the "Redemption Date"), the
outstanding City of Seal Beach Community Facilities District No. 2002-01 (Heron Pointe)
Special Tax Bonds, Series 2005 originally issued on August 4, 2005 (the "Bonds"), as described
above, at a price equal to 100% of the principal amount thereof,plus accrued interest to the date
fixed for redemption (the "Redemption Price"). On the Redemption Date, the Redemption
Price will become due and payable upon each Bond and interest with respect thereto shall cease
to accrue from and after the Redemption Date.
Payment of principal of and premium on the Bonds will be made upon presentation of
the Bonds for payment on and after the Redemption Date, at one of the following addresses of
The Bank of New York Mellon Trust Company,N.A. (as Escrow Bank):
By First Class/Registered/
Certified Mail: Express Delivery On By Hand Only:
The Bank of New York Mellon The Bank of New York Mellon The Bank of New York Mellon
Global Corporate Trust Global Corporate Trust Global Corporate Trust
P.O.Box 396 111 Sanders Creek Parkway Corporate Trust Window
East Syracuse,NY 13057 East Syracuse,NY 13057 101 Barclay Street,1st Floor
New York,NY 10286
Owners of Bonds presenting their Bond certificates in person for the same day payment
must surrender their certificates by 1:00 p.m. on the Redemption Date and a check will be
Exhibit B
Page 1
available for pickup after 2:00 p.m. Checks not picked up by 4:30 p.m. will be mailed to the
applicable Bondholders by first class mail.
Interest on the Bonds shall cease to accrue on and after the Redemption Date.
If payment of the Redemption Price is to be made to the registered owner of a Bond,the
owner of such Bond is not required to endorse the Bond to collect the Redemption Price.
Neither the City nor the Escrow Bank shall be held responsible for the selection or use of
the CUSIP numbers shown above, nor is any representation made as to their correctness as
shown in this Notice of Full/Final Redemption. CUSIP numbers are included solely for
convenience of the owners of the Bonds.
Dated:July ,2015 The Bank of New York Mellon Trust
Company,N.A.,as Escrow Bank
Exhibit B
Page 2
EXHIBIT C
NOTICE OF DEFEASANCE
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
SPECIAL TAX BONDS,SERIES 2005
Maturity Amount CUSIP
Date Defeased Number
.............�
September 1,2015 $ 100,000 812054 AJ3
September 1,2016 105,000 812054 AKO
September 1,2017 105,000 812054 AL8
September 1,2018 110,000 812054 AM6
September 1,2019 115,000 812054 AN4
September 1,2020 120,000 812054 AP9
September 1,2021 130,000 812054 AQ7
September 1,2022 135,000 812054 AR5
September 1,2025 445,000 812054 AU8
September 1,2030 905,000 812054 AW4
September 1,2035 1,155,000 812054 AV6
NOTICE IS HEREBY GIVEN, on behalf of the City of Seal Beach, California (the "City")
to the owners of the outstanding City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe) Special Tax Bonds, Series 2005, described above (the 'Bonds"), that pursuant to
the Fiscal Agent Agreement pursuant to which the Bonds were issued (the "Fiscal Agent
Agreement") the lien of the Fiscal Agent Agreement with respect to the Bonds has been
discharged through the irrevocable deposit of cash in an escrow fund (the "Refunding Fund").
The Refunding Fund has been established and is being maintained pursuant to that certain
Escrow Agreement, dated as of July 1, 2015, by and between the City, for and on behalf of the
City of Seal Beach Community Facilities District No. 2002-01 (Heron Pointe) (the "District"),
and The Bank of New York Mellon Trust Company, N.A., as escrow bank. As a result of such
deposit, the Bonds are deemed to have been paid and defeased in accordance with the Fiscal
Agent Agreement. The pledge of the funds provided for under the Fiscal Agent Agreement and
all other obligations of the City and the District to the owners of the Bonds shall hereafter be
limited to the application of moneys in the Refunding Fund for the payment of the principal
and interest with respect to the Bonds as the same become due and payable as described below.
The cash deposited in the Refunding Fund is calculated to provide sufficient moneys to
pay the principal and interest due on the Bonds on September 1, 2015,and to redeem the Bonds
maturing on or after September 1, 2015 in full on September 1,2015 at a redemption price equal
to 100% of the principal thereof plus accrued interest to such date.
DATED this day of 2015
Exhibit C
THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A.,as Escrow Bank
Exhibit C
Stradling Yocca Carlson&Rauth
Draft of 5113115
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
BOND PURCHASE AGREEMENT
12015
City of Seal Beach, California
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), acting not as a fiduciary or
agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (the
"Purchase Agreement") with the City of Seal Beach (the "City") acting on behalf of City of Seal
Beach Community Facilities District No. 2002-01 (Heron Pointe) (the "District") which, upon
acceptance, will be binding upon the City and upon the Underwriter. This offer is made subject to
acceptance of it by the City on the date hereof, and if not accepted will be subject to withdrawal by
the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the
City.
The City acknowledges and agrees that: (i) the purchase and sale of the Bonds (defined
below) pursuant to this Purchase Agreement is an arm's-length commercial transaction between the
City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and
procedures leading up to the consummation of such transaction, the Underwriter is and has been
acting solely as a principal and is not acting as a Municipal Advisor (as defined in Section 15B of
The Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an
advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated
hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the
Underwriter has provided other services or is currently providing other services to the City on other
matters); and (iv)the City has consulted its own legal, financial and other advisors to the extent it has
deemed appropriate in connection with this transaction.
1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions and in reliance upon the representations,
warranties and agreements set forth herein,the Underwriter agrees to purchase from the City, and the
City agrees to sell to the Underwriter, all (but not less than all) of the City of Seal Beach Community
Facilities District No. 2002-01 (Heron Pointe) 2015 Special Tax Refunding Bonds (the "Bonds") in
the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing
Date (hereinafter defined), and bear interest from said date (payable semiannually on March 1 and
September I in each year, commencing March 1, 2016) at the rates per annum and maturing on the
dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the
amount specified as such in Exhibit A hereto.
DOC S OC/1703 996v4/2003 5 6-0084
(b) The Bonds shall be substantially in the form described in, shall be issued and secured
under the provisions of, and shall be payable and subject to redemption as provided in, the Fiscal
Agent Agreement by and between the City, for and on behalf of the District, and The Bank of New
York Mellon Trust Company, N.A., as Fiscal Agent (the "Fiscal Agent"), dated as of July 1, 2015
(the "Fiscal Agent Agreement"), approved by Resolution No. adopted by the City Council of
the City (the "City Council"), as the legislative body of the District, on May 26, 2015 (the
"Resolution of Issuance"). The Bonds and interest thereon will be payable from a special tax (the
"Special Tax") levied and collected on the taxable land within the District in accordance with
Resolution No. 5063 adopted by the City Council on September 23, 2002 (the "Resolution of
Formation") and Ordinance No. 1513 adopted on January 26, 2004 (the "Ordinance"). Proceeds of
the sale of the Bonds will be used in accordance with the Fiscal Agent Agreement and the
Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the
Government Code of the State of California) (the "Act"): (a)to refund in full the City of Seal Beach
Community Facilities District No. 2002-01 (Heron Pointe) Special Tax Bonds, Series 2005 (the
"Refunded Bonds"); (b) to fund a reserve fund for the Bonds; and (c) to pay the costs of issuing the
Bonds. In connection with the refunding of the Refunded Bonds, the City will enter into an Escrow
Agreement, dated as of July 1, 2015 (the "Escrow Agreement"), by and between the City, for and on
behalf of the District, and The Bank of New York Mellon Trust Company,N.A., as escrow bank(the
"Escrow Bank"). The Resolution of Issuance, the Ordinance, and the Resolution of Formation are
collectively referred to herein as the "District Resolutions."
(c) At or prior to the acceptance hereof by the City, the City shall cause to be delivered to
the Underwriter a certificate (the "Rule 15c2-12 Certificate"), in substantially the form attached
hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter.
(d) Subsequent to its receipt of the Rule 15c2-12 Certificate deeming the Preliminary
Official Statement for the Bonds, dated May_, 2015 (which Preliminary Official Statement,
together with the cover page and all appendices thereto, is herein collectively referred to as the
"Preliminary Official Statement"), final for purposes of Rule 15c2-12 of the Securities and Exchange
Commission ("Rule 15c2-12"), the Underwriter has distributed copies of the Preliminary Official
Statement in connection with the offer and sale of the Bonds. The City hereby ratifies the use by the
Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and
distribute the final Official Statement dated the date hereof (including all information previously
permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as
have been approved by the City as evidenced by the execution and delivery of such document by an
officer of the City, the "Official Statement"), the Fiscal Agent Agreement, the Continuing Disclosure
Agreement dated as of July 1, 2015, by and between the City and Willdan Financial Services, as
Dissemination Agent (the "City Disclosure Agreement"), this Purchase Agreement, and all other
documents, certificates and statements furnished by the City to the Underwriter in connection with
the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of
the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official
Statement to the Municipal Securities Rulemaking Board (the "MSRB") through the Electronic
Municipal Marketplace Access website of the MSRB on or before the Closing Date and otherwise to
comply with all applicable statutes and regulations in connection with the offering and sale of the
Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12.
(e) At 8:00 A.M., Pacific Daylight Time, on July 8, 2015, or at such earlier time or date
as shall be agreed upon by the Underwriter and the City (such date being herein referred to as the
"Closing Date"), the City will deliver (i)to the Depository Trust Company in New York,New York,
2
DO C SO C/1703 996v4/2003 56-0084
the Bonds in definitive form (all Bonds being in book-entry form registered in the name of
Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly executed by the
officers of the City, as provided in the Fiscal Agent Agreement, and (ii)to the Underwriter, at the
offices of Bond Counsel, or at such other place as shall be mutually agreed upon by the City and the
Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery
and pay the purchase price of the Bonds in immediately available funds (such delivery and payment
being herein referred to as the "Closing"). Notwithstanding the foregoing, the Underwriter may, in
its discretion, accept delivery of the Bonds in temporary form upon making arrangements with the
City which are satisfactory to the Underwriter relating to the delivery of the Bonds in definitive form.
(f) Except as otherwise disclosed in writing and agreed to by the City, the Underwriter
agrees to make a bona fide public offering of the Bonds at the initial public offering price or prices
set forth on the inside cover page of the Official Statement and in Exhibit A hereto; provided,
however, the Underwriter reserves the right to change such initial public offering prices as the
Underwriter deems necessary or desirable, in its sole discretion, in connection with the marketing of
the Bonds, and to sell the Bonds to certain dealers (including dealers depositing the Bonds into
investment trusts) and others at prices lower than the initial offering prices set forth in the Official
Statement. A "bona fide public offering" shall include an offering to institutional investors or
registered investment companies, regardless of the number of such investors to which the Bonds are
sold. The Underwriter shall provide to the City on the Closing Date a certificate stating that the
Underwriter made a bona fide public offering of the Bonds at the initial public offering price or
prices set forth on the inside cover page of the Official Statement and in Exhibit A, in a form
reasonably acceptable to Bond Counsel.
2. Representations, Warranties and Agreements of the City. The City represents,
warrants and covenants to and agrees with the Underwriter that:
(a) The City is duly organized and validly existing as a municipal corporation under the
laws of the State of California and has duly authorized the formation of the District pursuant to the
Resolution of Formation and the Act. The City Council, as the legislative body of the District, has
duly adopted the District Resolutions, and has caused to be recorded on October 9, 2002 in the real
property records of the County of Orange as Document No. 20020875634, a Notice of Special Tax
Lien (the "Notice of Special Tax Lien") (such District Resolutions and Notice of Special Tax Lien
being collectively referred to herein as the "Formation Documents"). Each of the Formation
Documents remains in full force and effect as of the date hereof and has not been amended. The
District is duly organized and validly existing as a community facilities district under the laws of the
State of California. The City has, and at the Closing Date will have, as the case may be, full legal
right, power and authority (i)to execute, deliver and perform its obligations under this Purchase
Agreement,the Fiscal Agent Agreement, the Escrow Agreement and the City Disclosure Agreement,
and to carry out all transactions contemplated by each of such agreements, (ii)to issue, sell and
deliver the Bonds to the Underwriter pursuant to the Resolution of Issuance and the Fiscal Agent
Agreement as provided herein, and (iii)to carry out, give effect to and consummate the transactions
on its part contemplated by the Formation Documents and by the Fiscal Agent Agreement, the
Escrow Agreement, this Purchase Agreement, and the City Disclosure Agreement (collectively, the
"District Documents") and the Official Statement;
(b) The City has complied, and will at the Closing Date be in compliance, in all material
respects, with the Formation Documents and the District Documents, and any immaterial compliance
by the City, if any, will not impair the ability of the City to carry out, give effect to or consummate
3
DOC SOC/1703996v4/2003 56-0084
the transactions on its part contemplated by the foregoing. From and after the date of issuance of the
Bonds, the City will continue to comply with the covenants of the City contained in the District
Documents;
(c) The City Council has duly and validly: (i) adopted the District Resolutions,
(ii)called, held and conducted in accordance with all requirements of the Act an election within the
District to approve the levy of the Special Taxes within the District and the issuance of the Refunded
Bonds, and directed the recording of the Notice of Special Tax Lien which established a continuing
lien on certain real property within the District securing the payment of the Special Tax,
(iii)authorized and approved the execution, delivery and due performance by the City for the District
of the Bonds and the District Documents, (iv) authorized the preparation, delivery and distribution of
the Preliminary Official Statement and the Official Statement, and (v) authorized and approved the
performance by the City of its obligations contained in, and the taking of any and all action as may
be necessary to carry out, give effect to and consummate the transactions on its part contemplated by,
each of the District Documents (including, without limitation, the collection of the Special Taxes),
the Bonds and the Official Statement, and at the Closing Date, the Formation Documents will be in
full force and effect and the District Documents and the Bonds will constitute the valid, legal and
binding obligations of the City for the District and (assuming due authorization, execution and
delivery by other parties thereto, where necessary) will be enforceable upon the City in accordance
with their respective terms, subject to bankruptcy, insolvency, debt adjustment, fraudulent
conveyance or transfer, 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 and to the limitations on legal remedies against public entities in the State;
(d) To the best of the City's knowledge,neither the District nor the City is in breach of or
default under any applicable law or administrative rule or regulation of the State of California (the
"State") or the United States, or of any department, division, agency or instrumentality thereof, or
under any applicable court or administrative decree or order, or under any loan agreement, note,
resolution, fiscal agent agreement, contract, agreement or other instrument to which the District or
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 District or the City of their respective obligations under
the Bonds, the Formation Documents or the District Documents, 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 or the United States, or of any department, division,
agency or instrumentality thereof, or under any applicable court or administrative decree or order, or
a material breach of or default under any loan agreement, note, resolution, trust agreement, contract,
agreement or other instrument to which the District or the City, as the case may be, is a party or is
otherwise subject or bound;
(e) Except for compliance with the blue sky or other states securities law filings, as to
which the City makes no representations, to the best of the City's knowledge all approvals, consents,
authorizations, elections and orders of or filings or registrations with any State 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 Formation Documents or the District Documents, have been
obtained and are in full force and effect;
(f) The Special Tax constituting the source of funds for the repayment of the Bonds has
been duly and lawfully authorized and may be levied under the Act, the State Constitution and the
4
DOCSOC/1703996v4/2003 56-0084
applicable laws of the State, and such Special Tax,when levied, will,pursuant to the Act, constitute a
valid and legally binding continuing lien on the properties on which it has been levied;
(g) Until the date which is twenty-five (25) days after the "end of the underwriting
period" (as hereinafter defined), 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 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 reasonable opinion, so that the statements therein as so
supplemented will not be misleading in light of the circumstances existing at such time and the City
shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As
used herein, the term "end of the underwriting period" means the later of such time as (i)the City
delivers the Bonds to the Underwriter, or(ii)the Underwriter does not retain, directly or as a member
of an underwriting syndicate, an unsold balance of the Bonds for sale to the public; and unless the
Underwriter gives notice to the contrary, the "end of the underwriting period" shall be deemed to be
the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to
the City at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be
deemed the "end of the underwriting period";
(h) The Fiscal Agent Agreement creates a valid pledge of the Special Tax Revenues and
the moneys in the Special Tax Fund, the Bond Fund, and the Reserve Fund established pursuant to
the Fiscal Agent Agreement, including the investments thereof, subject in all cases to the provisions
of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms
and conditions set forth therein; and, until such time as moneys have been set aside in an amount
sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior
to maturity, plus unpaid interest thereon to maturity or to the date of redemption if redeemed prior to
maturity, and premium, if any, the City will faithfully perform and abide by all of the covenants,
undertakings and provisions contained in the Fiscal Agent Agreement;
(i) Except as disclosed in the Official Statement, 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 with respect to which the City has been served with process or, to the best knowledge of the
City, is threatened(i)which would materially adversely affect the ability of either the City to perform
its obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking
to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds
thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special
Taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge
thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the
Formation Documents, the District Documents, or any action contemplated by any of said
documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official
Statement or the powers or authority of the City or the District with respect to the Bonds, the
Formation Documents, the District Documents, or any action of the City or the District contemplated
by any of said documents; nor is there any action pending with respect to which the City has been
served with process or, to the best knowledge of the City, threatened against the City or the District
which alleges that interest on the Bonds is not excludable from gross income for federal income tax
purposes or is not exempt from California personal income taxation;
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DOCSOC/1703996v4/200356-0084
0) 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 register as a dealer or a broker of
securities or to consent to service of process in connection with any blue sky filing;
(k) Any certificate signed by any official of the City authorized to do so in connection
with the offer, sale or closing for the Bonds shall be deemed a representation and warranty to the
Underwriter as to the statements made therein;
(1) The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent
Agreement and as described in the Official Statement;
(m) The information contained in the Preliminary Official Statement (other than any
information regarding the Depository Trust Company ("DTC") and its Book-Entry Only System,
CUSIP numbers and any information provided by the Underwriter, as to which no view is expressed)
was as of the date thereof, and the information contained in the Official Statement (other than any
information regarding DTC and its Book-Entry Only System, as to which no view is expressed) as of
its date and on the Closing Date shall be, true and correct in all material respects and such
information does not and shall 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 light of the circumstances
under which they were made, not misleading;
(n) The Preliminary Official Statement heretofore delivered to the Underwriter has been
deemed final by the City as of its date, except for the omission of such information as is permitted to
be omitted in accordance with paragraph (b)(1) of Rule 15c2-12; and the City hereby covenants and
agrees that, within seven (7) business days from the date hereof, the City shall cause a final printed
form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon
by the Underwriter and the City so that the Underwriter may comply with paragraph (b)(4) of
Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board;
(o) Except as otherwise disclosed in the Preliminary Official Statement, the City is, and
has been, in material compliance with respect to all reporting obligations in the last five years that it
has undertaken under Rule 15c2-12 for all indebtedness issued by the City;
(p) Except as otherwise disclosed in the Preliminary Official Statement, the Formation
Documents have not been amended,terminated,rescinded or modified; and
(q) The City shall not knowingly take or omit to take any action that, under existing law,
may adversely affect the exemption from state income taxation or the exclusion from gross income
for federal income tax purposes of the interest on the Bonds.
3. 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 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 made in any
certificates or other documents furnished pursuant to the provisions hereof, to the performance by the
6
DOC S O C/1703 996v4/2003 56-0084
City 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 Formation Documents and the District Documents 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 with the transactions contemplated thereby and by this
Purchase Agreement, all such actions as, in the opinion of Quint & Thimmig LLP, Bond Counsel for
the City, and Stradling Yocca Carlson& Rauth, a Professional Corporation, counsel to the
Underwriter, shall be necessary and appropriate;
(b) The information contained in the Official Statement will, as of the Closing Date and
as of the date of any supplement or amendment thereto pursuant to Section 2(g) hereof, be true and
correct in all material respects and will not, as of the Closing Date or as of the date of any
supplement or amendment thereto pursuant to Section 2(g) hereof, 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;
(c) Between the date hereof and the Closing Date, the market price or marketability of
the Bonds at the initial offering prices set forth in the Official Statement shall not have been
materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written
notice to the City 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 had 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 that would be received by the
owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date
hereof,
(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 obligations of the
general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of 1933, as amended, or
that the Fiscal Agent Agreement 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 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, rules or regulations as amended and then in effect;
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DOCSOC/1703996v4/200356-0084
(3) 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 District, their property, income, securities (or interest
thereon), or the validity or enforceability of the Special Taxes;
(4) 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 light
of the circumstances under which they were made, not misleading;
(5) the declaration of war or the escalation of, or engagement in, military
hostilities by the United States or the occurrence of any other national or international emergency or
calamity relating to the effective operation of the government of, or the financial community in, the
United States which, in the reasonable judgment of the Underwriter, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Bonds on the terms and in the manner
contemplated in the Preliminary Official Statement or the Official Statement;
(6) the declaration of a general banking moratorium by federal, State of New
York or State of California authorities, or the general suspension of trading on any national securities
exchange or minimum or maximum prices for trading shall have been fixed and be in force, or
maximum ranges for prices for securities shall have been required and be in force on the New York
Stock Exchange or other national securities exchange, whether by virtue of determination by that
exchange or by order of the Securities and Exchange Commission (the "SEC") or any other
governmental authority having jurisdiction that, in the Underwriter's reasonable judgment, makes it
impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds;
(7) 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 Bonds or obligations of the general character of the Bonds or securities generally, or the material
increase of any such restrictions now in force, including those relating to the extension of credit by,
or the charge to the net capital requirements of,the Underwriter;
(8) a material disruption in securities settlement, payment or clearance services
affecting the Bonds shall have occurred;
(9) there shall have been any material adverse change in the affairs of the City
that in the Underwriter's reasonable judgment will materially adversely affect the market for the
Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;
(10) there shall be filed or threatened any litigation described in Section 2(i)
hereof;
(11) there shall be established any new restriction on transactions in securities
materially affecting the free market for securities (including the imposition of any limitation on
interest rates) or the extension of credit by, or a change to the net capital requirements of,
underwriters established by the New York Stock Exchange, the SEC, any other federal or State
agency or the Congress of the United States, or by Executive Order; or
8
DOCSOC/1703996v4/2003 56-0084
(12) a stop order, release, regulation, or no-action letter by or on behalf of the SEC
or any other governmental agency having jurisdiction of the subject matter shall have been issued or
made to the effect that the issuance, offering, or sale of the Bonds, including all the underlying
obligations as contemplated hereby or by the Official Statement, or any document relating to the
issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal
securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended.
(d) On 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:
(1) The Formation Documents and the District Documents, together with a
certificate dated as of the Closing Date of the City Clerk to the effect that each Formation Document
(other than the Notice of Special Tax Lien) is a true, correct and complete copy of the one duly
adopted by the City Council;
(2) The Official Statement;
(3) An approving opinion for the Bonds, dated the Closing Date and addressed to
the City, of Quint & Thimmig LLP, Bond Counsel for the City, in the form attached to the Official
Statement as Appendix D, and an unqualified letter of such counsel, dated the Closing Date and
addressed to the Underwriter, to the effect that such approving opinion addressed to the City may be
relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
(4) A supplemental opinion, dated the Closing Date and addressed to the
Underwriter, of Quint & Thimmig LLP, Bond Counsel for the City, to the effect that (i)the Escrow
Agreement, this Purchase Agreement and the City Disclosure Agreement have been duly authorized,
executed and delivered by the City, and, assuming such agreements constitute a valid and binding
obligation of the other parties thereto, constitute the legally valid and binding agreements of the City
enforceable upon the City in accordance with their terms, except as enforcement may be limited by
bankruptcy, moratorium, insolvency or other laws affecting creditor's rights or remedies and may be
subject to general principles of equity (regardless of whether such enforceability is considered in
equity or at law); (ii)the Bonds are not subject to the registration requirements of the Securities Act
of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust
Indenture Act of 1939, as amended; (iii)the information contained in the Official Statement on the
cover and under the captions "INTRODUCTION," "THE 2015 BONDS," "SECURITY FOR THE
2015 BONDS" and "TAX MATTERS" and in Appendices C and D thereof(except that no opinion
or belief need be expressed as to any financial or statistical data contained in the Official Statement
or DTC and its Book-Entry Only System), is accurate insofar as it purports to summarize or replicate
certain provisions of the Act, the Bonds and the Fiscal Agent Agreement and the exclusion from
gross income for federal income tax purposes and exemption from State of California personal
income taxes of interest on the Bonds; and (iv)the Special Taxes have been duly and validly
authorized in accordance with the provisions of the Act;
(5) A defeasance opinion of Bond Counsel with respect to the Refunded Bonds,
dated the Closing Date and addressed to the Underwriter and the Fiscal Agent,to the effect that, upon
the deposit with the Escrow Bank as provided for in the Escrow Agreement, the Refunded Bonds will
no longer be considered Outstanding within the meaning of the fiscal agent agreement under which
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DO C S nC/1703996v4/200356-0084
such obligations were issued, and will not have any lien on, or be payable from, the Special Tax
Revenues (as such term is defined in the fiscal agent agreement pursuant to which the Refunded
Bonds were issued);
(6) An opinion of Quint & Thimmig LLP, as Disclosure Counsel ("Disclosure
Counsel"), dated the Closing Date and addressed to the City and to the Underwriter,to the effect that,
based upon information made available to such counsel in the course of such counsel's participation
in the transaction as Disclosure Counsel, and assuming the accuracy, completeness and fairness of
the statements contained in the Official Statement, nothing has come to such counsel's attention
which has led such counsel to believe that the Official Statement as of its date (excluding financial
statements and other statistical data; forecasts,projections, estimates, assumptions and expressions of
opinions; information about the book-entry only system and DTC; statements relating to the
treatment of the 2015 Bonds or the interest, discount or premium related thereto for tax purposes
under the law of any jurisdiction; and, without limiting the foregoing, the statements contained in the
Official Statement under the caption "TAX MATTERS" and Appendices A, B, C, D and F; as to all
of which Disclosure Counsel need express no view) contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading;
(7) An opinion, dated the Closing Date and addressed to the Underwriter, of
Stradling Yocca Carlson& Rauth, a Professional Corporation, counsel for the Underwriter, to the
effect that (i)the Bonds are exempt from the registration requirements of the Securities Act of 1933,
as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture
Act of 1939, as amended; and (ii)the provisions of the Continuing Disclosure Agreement comply
with the requirements of Rule 15c2-12 under the Securities Exchange Act of 1934;
(8) A certificate or certificates, dated the Closing Date and signed by an
authorized officer 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 that (i)the representations and warranties of the City contained in Section 2 hereof 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 except that all references therein to the Preliminary Official Statement shall be
deemed to be references to the Official Statement; (ii)to the best of his or her knowledge, no event
has occurred since the date of the Official Statement affecting the matters contained therein 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, the Formation Documents and the District Documents conform as to
form and tenor to the descriptions thereof contained in the Official Statement; and (iii)the City has
complied with all the agreements and satisfied all the conditions on its part to be performed or
satisfied under the Formation Documents and the District Documents at or prior to the Closing Date;
(9) An opinion, dated the Closing Date and addressed to the Underwriter, of
Richards, Watson & Gershon, A Professional Law Corporation, as counsel to the City, to the effect
that (i)the City is a municipal corporation duly organized and existing under and by virtue of the
Constitution and laws of the State; (ii)the District is a community facilities district duly organized
and existing under and by virtue of the Constitution and laws of the State; (iii)the Resolution of
Issuance adopted by the City Council of the City, authorizing the issuance of the Bonds and the
execution and delivery of the District Documents, was duly adopted at a meeting of such City
Council, which meeting was called and held on May 26, 2015,pursuant to law, with all public notice
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D O C S OC/1703 996v4/2003 56-0084
required by law and at which a quorum was present and acting throughout; (iv)the Resolution of
Issuance is in full force and effect; and (v)there is no litigation, action, suit, proceeding or
investigation at law or in equity before or by any court, governmental agency or body, pending and
notice of which has been served on and received by the City or, to the best of our knowledge,
threatened against the City, challenging the creation, organization or existence of the City or the
District, or the validity of the Bonds or the District Documents or contesting the authority of the City
to enter into or perform its obligations under any of such documents, or which, in any manner,
questions the right of the City to issue the Bonds, or the allocation and payment of the Special Taxes
to the City and the other security for the Bonds provided by the Fiscal Agent Agreement;
(10) One or more certificates dated the Closing Date from Albert A. Webb
Associates ("Webb") to the effect that: (i)the description of the Rate and Method in the Official
Statement under the caption "SECURITY FOR THE 2015 BONDS — Summary of Rate and
Method" is true and correct in all material respects, (ii)all information supplied by Webb for use in
the Official Statement is true and correct as of the date of the Official Statement and as of the Closing
Date, and (iii)the information set forth in the Official Statement attributed to Webb as a source,
including such information set forth under the captions "SECURITY FOR THE 2015 BONDS,"
"THE DISTRICT" and "SPECIAL RISK FACTORS," was fairly and accurately presented as of the
date of the Official Statement;
(11) A certificate of the City dated the Closing Date, in a form acceptable to Bond
Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal
Revenue Code of 1986, as amended;
(12) A certificate of the Fiscal Agent and an opinion of counsel to the Fiscal Agent
dated the Closing Date and addressed to the City and the Underwriter to the effect that the Fiscal
Agent has authorized the execution and delivery of the Fiscal Agent Agreement and that the Fiscal
Agent Agreement is a valid and binding obligation of the Fiscal Agent, enforceable in accordance
with its terms;
(13) A certificate of the Escrow Bank and an opinion of counsel to the Escrow
Bank dated the Closing Date and addressed to the City and the Underwriter to the effect that the
Escrow Bank has authorized the execution and delivery of the Escrow Agreement and that the
Escrow Agreement is a valid and binding obligation of the Escrow Bank, enforceable in accordance
with its terms;
(14) A certified copy of the general resolution of the Fiscal Agent authorizing the
execution and delivery of certain documents by certain officers of the Fiscal Agent, which resolution
authorizes the execution and delivery of the Fiscal Agent Agreement;
(15) A certified copy of the general resolution of the Escrow Bank authorizing the
execution and delivery of certain documents by certain officers of the Escrow Bank, which resolution
authorizes the execution and delivery of the Escrow Agreement;
(16) Written confirmation from Willdan Financial Services in a form acceptable to
the Underwriter that, except as disclosed in the Official Statement, the City has timely filed
materially complete continuing disclosure reports with respect to City's non-community facilities
district continuing disclosure requirements and its community facilities district continuing disclosure
requirements relating to Rule 15c2-12 in each of the last five fiscal years; and
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(17) 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 Preliminary Official
Statement and the Official Statement, of the City's representations and warranties contained herein
and the due performance or satisfaction by the City at or prior to the Closing of all agreements then
to be performed and all conditions then to be satisfied by the City and the District in connection with
the transactions contemplated hereby and by the Official Statement;
If the City shall be unable to satisfy the conditions to the obligations of the
Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase
Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the
Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase
Agreement shall terminate and neither the Underwriter nor the City shall be under any further
obligation hereunder, except that the respective obligations of the City and the Underwriter set forth
in Section 5, Section 6 and Section 8 hereof shall continue in full force and effect.
4. Conditions of the City's Obligations. The City's obligations hereunder are subject to
the Underwriter's performance of its obligations hereunder, and are also subject to the following
conditions:
(a) As of the Closing Date,no litigation shall be pending or,to the knowledge of the duly
authorized officer of the City executing the certificate referred to in Section 3(d)(8) hereof,
threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any
authority for or the validity of the Bonds, the Formation Documents, the District Documents or the
existence or powers of the City or of the District; and
(b) As of the Closing Date, the City shall receive the approving opinion of Bond Counsel
referred to in Section 3(d)(3)hereof, dated as of the Closing Date.
5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth
herein:
(a) The City will pay or cause to be paid the approved expenses incident to the
performance of its obligations hereunder and certain expenses relating to the sale of the Bonds,
including, but not limited to, (a) the cost of the preparation and printing or other reproduction of the
District Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond
Counsel, Disclosure Counsel, the Fiscal Agent, the Escrow Bank and any other experts or other
consultants retained by the City; (c) the cost of preparing and delivering the definitive Bonds; (d) the
cost of the printing or other reproduction of the Preliminary Official Statement and Official
Statement and any amendment or supplement thereto, including a reasonable number of certified or
conformed copies thereof; and (e) the fees of Willdan Financial Services for a continuing disclosure
undertaking compliance review. The Underwriter will pay the expenses of the preparation of this
Purchase Agreement and all other expenses incurred by the Underwriter in connection with the
public offering and distribution of the Bonds, and the fee and expenses of Underwriter's Counsel.
The Underwriter is required to pay the fees of the California Debt and Investment Advisory
Commission ("CDIAC") in connection with the offering of the Bonds. The City acknowledges that
it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to
evaluate and consider such fees. Notwithstanding that such fees are solely the legal obligation of the
12
DOCSOC/1703 996v4/2003 56-0084
Underwriter, the City agrees to reimburse the Underwriter for such CDIAC fees as an expense
component of the Underwriter's discount.
(b) The Underwriter shall pay, and the City shall be under no obligation to pay, all
expenses incurred by the Underwriter in connection with the public offering and distribution of the
Bonds.
6. Notices. Any notice or other communication to be given to the City under this
Purchase Agreement may be given by delivering the same in writing to the City at 211 Eighth Street,
Seal Beach, California 90740, Attention: Director of Finance; and any notice or other
communication to be given to the Underwriter under this Purchase Agreement may be given by
delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, One Montgomery
Street, 35th Floor, San Francisco, California 94104, Attention: Sara Oberlies Brown, Managing
Director.
7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the
City and the Underwriter(including their successors or assigns), and no other person shall acquire or
have any right hereunder or by virtue hereof.
8. Survival of Representations and Warranties. The representations and warranties of
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 investigations) concerning such representations and statements
of the City and regardless of delivery of and payment for the Bonds.
9. Effective. This Purchase Agreement shall become effective and binding upon the
respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid
and enforceable as of the time of such acceptance.
10. 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.
11. Governing Law. This Purchase Agreement shall be governed by the laws of the State
of California applicable to contracts made and performed in California.
[Remainder of page intentionally left blank.]
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DOCSOC/1703 996v4/2003 56-0084
12. Counterparts. This Purchase Agreement may be executed simultaneously in several
counterparts, each of which shall be an original and all of which shall constitute one and the same
instrument.
Very truly yours,
STIFEL,NICOLAUS & COMPANY,
INCORPORATED
By:
Managing Director
ACCEPTED:
CITY OF SEAL BEACH
By:
Mayor
Time:
14
DOCSOC/1703996v4/200356-0084
EXHIBIT A
MATURITY SCHEDULE
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
Maturity Date Principal
(September 1) Amount Interest Rate Yield Price
$- %Term Bond due September 1,20_, Yield %;Price:
The purchase price of the Bonds shall be $ which is the principal amount
thereof($ ) plus/less a net original issue premium/discount of$ and less
Underwriter's discount of$
A-1
DOCSOC/1703996v4/200356-0084
EXHIBIT B
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents that he is the City Manager of the City of Seal
Beach (the "City"), and, as such, is duly authorized to execute and deliver this certificate and further
hereby certifies that:
(1) this certificate is being delivered in connection with the sale and issuance of the City of
Seal Beach Community Facilities District No. 2002-01 (Heron Pointe) 2015 Special Tax Refunding
Bonds (the "Bonds") in order to enable the underwriter of the Bonds to comply with Rule 15c2-12
promulgated under the Securities and Exchange Act of 1934, as amended(the"Rule");
(2) in connection with the sale and issuance of the Bonds, there has been prepared a
Preliminary Official Statement dated May_, 2015 setting forth information concerning the Bonds and
the City of Seal Beach Community Facilities District No. 2002-01 (Heron Pointe) (the "Preliminary
Official Statement"); and
(3) except for the Permitted Omissions, the Preliminary Official Statement is deemed final
within the meaning of the Rule. As used herein, the term "Permitted Omissions" refers to the offering
price(s), interest rates(s), selling compensation, aggregate principal amount, principal amount per
maturity, delivery dates and other terms of the Bonds depending on such matters, all as set forth in the
Rule.
IN WITNESS WHEREOF, I have hereunto set my hand as of ,2015.
CITY OF SEAL BEACH
By: _ ............
Its: City Manager
B-1
DOCSOC/1703996v4/200356-0084
- U PRELIMINARY OFFICIAL STATEMENT DATED AS OF MAY 2015
r�r
NEW ISSUE-BOOK ENTRY ONLY NOT RATED
' a;y In the opinion of Quint&Thimmig LLP,Larkspur,California,Bond Counsel,subject however,to certain qualifications described in this
Official Statement,under existing law,interest on the 2015 Bonds is excludable from gross income of the owners thereof for federal income tax
purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations
Pa under the Internal Revenue Code of 1986, as amended, but such interest is taken into account in computing an adjustment used in
determining the federal alternative minimum tax for certain corporations.In the firther opinion of Bond Counsel,interest on the 2015 Bonds
o is exempt from personal income taxation imposed by the State of California.See"TAX MATTERS."
$3,515,000"
co 4
" CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
unl kl M
Dated:Date of Issuance Due:September 1,as shown on inside cover
The City of Seal Beach,California(the"City"),for and on behalf of the,City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe)(the"District"),is issuing the above-cal'taoned bonds(the 201.5 Bonds")to(i)refund in full the City of
Seal Beach Community Facilities District No.2002-01 Mervin Pointe)Speeaal 1"ax Bonds,Series 2005(the"Prior Bonds"),(ii)fund a
" reserve fund for the 2015 Bonds, and (iii)pay costs of issuing the 2015 Bonds.See"PLAN OF REFUNDING." The Prior Bonds
were issued by the City, for and on behalf of the District,to finance various public infrastructure improvements within the City.
The 2015 l'londs are being issued pursuant to a Fiscal Agent Agreement,dated as of July 1,2015(the"Fiscal Agent Agreement"),
ID " by and between the City, for and on behalf of the District, and The Bank of New York Mellon Trust Company, N.A., as fiscal
Lu fi agent(the"Fiscal Agent„)
tU i1Y
F The 2015 Bonds are payable from the proceeds of an annual Special Tax(as defined in this Official Statement)being levied on
nr property located within the District(see"THE DISTRICT"),and from certain funds pledged under the Fiscal Agent Agreement.
rap The Special Tax us,being levied according to a rate and method of apportionment of Special Taxes approved in 2002 by the then-
�' '
qualified elector of the District,as amended in 2004 with the approval of the then qualified elector of the District.See"SECURITY
p"
FOR Tl IE 2015 BONDS-Special raa%es”and Appendix B-"Rate and Method."
In ru
k W Interest on the 2015 Bonds is payable on March 1 and September 1 of each year, commencing on March 1, 2016.The 2015
rn „ Bonds will be issued in book-entry form only and,when delivered,will be registered in the name of Cede&Co.,as nominee of
E L 'd: the Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the 2015 Bonds.
z6Individual purchases of the 2015 Bonds will be made in book-entry form only. Purchasers of the 2015 Bonds will not receive
a� �t
65°6 physical certificates representing their ownership interests in the 2015 Bonds purchased.The 2015 Bonds will be issued in the
' principal amount of$5,M)and any integral natultiple thereof.Principal of and interest on the 2015 Bonds are payable directly to
"" � " DTC by the Fiscal Agent, Lfpon receipt 6f payments of principal and interest,DTC will in turn distribute such payments to the
C) n beneficial owners of t'fie.2015 Brands.See-I"HE 2015. BONDS,"and Appendix F-"DTC and the Book-Entry Only System."
" The 2015 Bonds are subject to optional redemption, mandatory sinking payment redemption and mandatory redemption
F=- "" from Special Tax Prepayments,prior to their respective maturities.See"THE 2015 BONDS—Redemption."
r? The City may issue additional bonded indebtedness that is secured by a lien on the Special Tax Revenues and by funds
"Xa
pledged under the Fiscal Agent Agreement for the payment of the 2015 Bonds on a parity with the 2015 Bonds("Parity Bonds"),
but only for the purpose of refunding the 2015 Bonds and refunding any outstanding Parity Bonds.See "SECURITY FOR THE
2015 BONDS-Issuance of Additional Bonds."
NONE OF THE FAITH AND CREDIT OF THE DISTRICT,THE CITY OR THE STATE OF CALIFORNIA OR OF ANY OF ITS
POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2015 BONDS.EXCEPT FOR THE SPECIAL TAXES,NO
OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2015 BONDS.THE 2015 BONDS ARE NEITHER GENERAL NOR
SPECIAL OBLIGATIONS OF THE CITY, NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED
e' OBLIGATIONS OF THE CITY FOR THE DISTRICT, PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR
" ' UNDER THE FISCAL AGENT AGREEMENT,AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
" I�5 This cover page contains certain information for quick reference only.Investors should read the entire Official Statement to
obtain information essential to the making of an informed investment decision with respect to the 2015 Bonds.The purchase of
r'0 the 2015 Bonds involves significant risks, and the 2015 Bonds are not appropriate investments for all types of investors. See
" "SPECIAL RISK FACTORS"in this Official Statement for a discussion of certain risk factors that should be considered,in addition
r, to the other matters set forth in this Official Statement,in evaluating the investment quality of the 2015 Bonds.
The 2015 Bonds are offered when, as and if issued, subject to approval as to their legality by Quint & Thimmig LLP,
F. Larkspur, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the 2015 Bonds will be
". passed upon for the City and the District by Richards,Watson&Gershon,Los Arigele*.s,Cal ifornia, in their capacity as attorneys
for the City,and for the City by Quint&Thimmig LLP,Larkspur,California,acting as Disclosu,are, Coun;se t.Certain legal matters
will be passed upon for the Underwriter by Stradling Yocca Carlson & Raauth, a Professional Corporation, Newport Beach,
California.It is anticipated that the 2015 Bonds in definitive form will be available for delivery to DTC on or about July S,2015.
r,fll
STIFEL
a r; w
i t The date of this Official Statement is June 2015.
ID Preliminary,subject to change.
19040.02:J13213
$3,515,000*
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
MATURITY SCHEDULE
$ Serial Bonds;CUSIP*Prefix 812054t
Maturity Date Principal Interest CUSIP
(September 1) Amount Rate Yield Price Suffixt
$ %Term Bond due September 1,2035,Yield %,Price %,CUSIPt No.812054
t Copyright 2015,American Bunkers Association. CUSIP data is provided by Standard&Poor's CUSIP Service
Bureau,a division of The McGraw-Hill Companies,Inc. Neither the City nor the Underwriter assumes any
responsibility for the accuracy of the CUSIP data.
Preliminary,subject to change.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
The information contained in this Official Statement has been obtained from sources that are
believed to be reliable. No representation, warranty or guarantee, however, is made by the Underwriter
as to the accuracy or completeness of any information in this Official Statement, including, without
limitation,the information contained in the Appendices, and nothing contained in this Official Statement
should be relied upon as a promise or representation by the Underwriter.
Neither the City nor the Underwriter has authorized any dealer, broker, salesperson or other
person to give any information or make any representations with respect to the offer or sale of the 2015
Bonds other than as contained in this Official Statement. If given or made, any such information or
representations must not be relied upon as having been authorized by the City or the Underwriter. The
information and expressions of opinion in this Official Statement are subject to change without notice,
and neither the delivery of this Official Statement nor any sale of the 2015 Bonds shall under any
circumstances create any implication that there has been no change in the affairs of any party described in
this Official Statement, or in the status of any property described in this Official Statement,subsequent to
the date as of which such information is presented.
This Official Statement and the information contained in this Official Statement are subject to
amendment without notice. The 2015 Bonds may not be sold, and no offer to buy the 2015 Bonds may be
accepted,prior to the time the Official Statement is delivered in final form. Under no circumstances shall
this Official Statement constitute an offer to sell or the solicitation of an offer to buy,nor shall there be any
sale of,the 2015 Bonds in any jurisdiction in which such offer,solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such jurisdiction.
When used in this Official Statement, in any continuing disclosure by the City, in any press
release, or in any oral statement made with the approval of an authorized officer of the City or any other
entity described or referenced in this Official Statement, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and
similar expressions identify "forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause
actual results to differ materially from those contemplated in such forward-looking statements. Any
forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will
not be realized, and unanticipated events and circumstances may occur. Therefore, there are likely to be
differences between forecasts and actual results,and those differences may be material.
All summaries of the documents referred to in this Official Statement are qualified by the
provisions of the respective documents summarized and do not purport to be complete statements of any
or all of such provisions.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
"The Underwriter has reviewed the information in this Official Statement in accordance with,and as part
of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy or the
completeness of such information."
In connection with the offering of the 2015 Bonds, the Underwriter may overallot or effect
transactions that stabilize or maintain the market prices of the 2015 Bonds at levels above that which
might otherwise prevail in the open market. Such stabilizing,if commenced, may be discontinued at
any time.
The 2015 Bonds have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption from the registration requirements contained in the
Securities Act. The 2015 Bonds have not been registered or qualified under the securities laws of any
state.
The City maintains an Internet website,but the information on the website is not incorporated in
this Official Statement.
Wi.
CITY OF SEAL BEACH
City Council
Ellery A. Deaton,Mayor
David W.Sloan,Mayor Pro Tem
Mike Varipapa, Councilmember
Gary A. Miller, Councilmember
Sandra Massa-Lavitt,Councilmember
City Officials
Jill R.Ingram, City Manager
Patrick Gallegos,Assistant City Manager
Victoria L.Beatley, Director of Finance/City Treasurer
Tina Knapp,City Clerk
PROFESSIONAL SERVICES
City Attorney
Richards,Watson&Gershon
Los Angeles,California
Financial Advisor
Fieldman, Rolapp &Associates
Irvine, California
Bond Counsel and Disclosure Counsel
Quint&Thimmig LLP
Larkspur,California
Special Tax Consultant
Albert A.Webb Associates
Riverside,California
Dissemination Agent
Willdan Financial Services
Temecula, California
Fiscal Agent and Escrow Bank
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
-]1-
TABLE OF CONTENTS
INTRODUCTION.....,„,..,„,..,...„„„,„,„,„.,,.„,„„.,„„,..,..,„,.,.,,.1 Direct and Overlapping Governmental
General 1 Obligations...........................................................23
Authority for Issuance—, .. 1 Sample"1 ax llill..„ ,. ....„................. .........,25
The 2015 Bonds ......... ............2 SPECIAL RISK FACTORS. .....-..... ,...,..„,26
Security for the 2015 Bonds...,..,..„.........,„..,„,.„„...„....2 Payment of the Special Tax is not a
Reserve Fund.............................................................3 Personal Obligation..................,.........___....,,..26
The District .... .......... ....... ,...........3 No General Obligation of the City or the
LimitedObligation„...................................................3 District...................................................................26
Issuance of Additional Bonds............... __.__4 Property Value....... .........._„,.............,„.26
Bondowners'Risks...................................................4 Exempt Properties..................................................27
Continuing Disclosure............... ..........................4 Parity Taxes and Special Assessments................27
Other Information....................................................,.A Insufficiency of Special Taxes-...._________.27
PLAN OF REFUNDING.............................................4 Tax Delinquencies.................................„...,...„,......,28
Redemption of Prior Bonds.....................................4 Bankruptcy Delays ... ........28
Estimated Sources and Uses of Funds...................5 Proceeds of Foreclosure Sales...... ........, ..,,.,.,29
Natural Disasters..................„,.„„......„„...,..„...,.....,....29
THE 2015 BONDS........................................................ce5 Hazardous Substances...........................................30
Authority for Issuance...„„..„.................„,.„.....,..........5 Disclosure to Future Purchasers...........................30
General Provisions .,,6 FDIC/Federal Government Interests in
I'�ed�w���pti��rr ................................................. „.6 Properties....................... 30
....
Transfer or l��cl�angc*�,af 2(lIS Bonds...... ............9 No Acceleration Provision 32
Scheduled�Debt ServiceSc� .� 19
Taxability isk.... 32
y
”"„' ""'°" 0 Enforceability of Remedies
SECURITY FOR THE 2015 BONDS........................11 No Secondary Market............................................33
General, ....... .11 Proposition 218 .33
......................................................
Limited Obligation..,.,.,. ..,..,..,. ..,11 Ballot Initiatives......................................................34
Special Taxes............................................................11 IRS Audit of Tax-Exempt Bond Issues................34
Special Tax Fund......................... .....12 Recent Court Action Involving
Summary of Rate and Method,, ...,,,13 Landowner—Voted Special Tax
Reserve Fund .... 16 District...................................................................34
Covenant for Superior Court Foreclosure...........16 TAX MATTERS..........................................................35
No Teeter Plan.........................................................18
Investment of Moneys.............................................18 LEGAL MATTERS.....................................................38
Issuance of Additional Bonds...............................18 NO RATING...............................................................38
THE DISTRICT,.,...,....„„...................„...........,......,..,.„...19 NO LITIGATION.......................................................38
Location and Description of the District.............19 UNDERWRITING.....................................................39
Land Use Distribution............................................20 CONTINUING DISCLOSURE.....................
Assessed Property Values.....................................20 39
Value-to-District Lien Ratio........ ......21 MISCELLANEOUS....................................................40
No Major Land Owners.........................................22
Special Tax Delinquencies.....................................23
APPENDIX A SEAL BEACH GENERAL DEMOGRAPHIC INFORMATION
APPENDIX B RATE AND METHOD
APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT
APPENDIX D FORM OF OPINION OF BOND COUNSEL
APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT
APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM
-iii-
[insert area location map here]
-iv-
OFFICIAL STATEMENT
$3,515,000*
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
2015 SPECIAL TAX REFUNDING BONDS
INTRODUCTION
This introduction is not a summary of this Official Statement and is only a brief description of
and guide to,and is qualified by, more complete and detailed information contained in the entire Official
Statement and the documents summarized or described in this Official Statement.A full review should be
made of the entire Official Statement by those interested in purchasing the 2015 Bonds. The sale and
delivery of 2015 Bonds to potential investors is made only by means of the entire Official Statement.
Certain capitalized terms used in this Official Statement and not defined herein have the meanings set
forth in Appendix C – "Summary of the Fiscal Agent Agreement—Definitions" or in Appendix B –
"Rate and Method."
General
The purpose of this Official Statement, which includes the cover page, the inside cover
page, the table of contents and the attached appendices (the "Official Statement"),is to provide
certain information concerning the issuance of the above-captioned bonds (the "2015 Bonds").
The 2015 Bonds are being issued by the City of Seal Beach, California (the "City"), for and on
behalf of the City of Seal Beech Community Facilities District No. 2002-01 (Heron Pointe) (the
"District"), to (i) refund in full the City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe) Special Tax Bonds, Series 2005 currently outstanding in the aggregate principal
amount of$3,425,000 (the "Prior Bonds"), (ii) fund a reserve fund for the 2015 Bonds, and (iii)
pay costs of issuing the 2015 Bonds. See "PLAN OF REFUNDING." The Prior Bonds were
issued to finance various public infrastructure improvements (the "Improvements") within the
City.
Authority for Issuance
General. The District was formed under the authority of the Mello-Roos Community
Facilities Act of 1982, as amended, commencing at Section 53311, et seq., of the California
Government Code (the "Act"), which was enacted by the California Legislature to provide an
alternative method of financing certain public capital facilities and services, especially in
developing areas of the State. The Act authorizes local governmental entities to establish
community facilities districts as legally constituted governmental entities within defined
boundaries, with the legislative body of the local applicable governmental entity acting on
behalf of the district. Subject to approval by at least a two-thirds vote of the votes cast by the
qualified electors within a district and compliance with the provisions of the Act, the legislative
body may issue bonds for the community facilities district established by it and may levy and
collect a special tax within such district to repay such bonds.
Bond Authority. The 2015 Bonds are authorized to be issued pursuant to the Act, Article
11 of Chapter 3 of Part 1 of Division 2 of the Government Code of the State of California (the
"Refunding Law"), a Resolution adopted on May 26, 2015 by the City Council of the City (the
.... .....
.. .................... ...................................... .
Preliminary,subject to change.
-1-
"City Council") acting as the legislative body of the District, and the Fiscal Agent Agreement
dated as of July 1, 2015 (the "Fiscal Agent Agreement"),between the City, for and on behalf of
the District, and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the
"Fiscal Agent").
For more detailed information about the formation of the District, the authority for
issuance of the Prior Bonds and the authority for issuance of the 2015 Bonds, see "THE
DISTRICT-Authority for Issuance."
The 2015 Bonds
General. The 2015 Bonds will be issued only as fully registered bonds, in denominations
of$5,000 or any integral multiple thereof, and will bear interest at the rates per annum and will
mature on the dates and in the principal amounts set forth on the inside cover page of this
Official Statement. The 2015 Bonds will be dated the date of their issuance and interest on the
2015 Bonds, will be payable on March 1 and September 1 of each year (individually an"Interest
Payment Date"), commencing March 1, 2016. See "THE 2015 BONDS." The 2015 Bonds will be
issued in book-entry form only and, when delivered, will be registered in the name of Cede &
Co., as nominee of the Depository Trust Company, New York, New York ("DTC"), which will
act as securities depository for the 2015 Bonds. See "THE 2015 BONDS—General Provisions."
Redemption Prior to Maturity. The 2015 Bonds are subject to optional redemption,
mandatory sinking payment redemption and mandatory redemption from Special Tax
prepayments prior to their respective maturities. See "THE 2015 BONDS-Redemption."
Security for the 2015 Bonds
Pledge Under the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, the
2015 Bonds are secured by a first pledge of all of the Special Tax Revenues (other than, in each
Fiscal Year, up to the first $25,000 of Special Tax Revenues that may be deposited into the
Administrative Expense Fund) and all moneys deposited in the Bond Fund, the Reserve Fund
and, until disbursed in accordance with the Fiscal Agent Agreement, in the Special Tax Fund.
"Special Tax Revenues," as defined in the Fiscal Agent Agreement, means the proceeds of the
Special Taxes (as defined below) received by the City, including any scheduled payments and
any prepayments thereof,interest and penalties thereon and proceeds of the redemption or sale
of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said
lien,but does not include interest and penalties, if any, collected with the Special Taxes that are
in excess of the rate of interest payable on the Bonds. The Special Tax Revenues and all moneys
deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are
dedicated to the payment of the principal of, and interest and any premium on, the 2015 Bonds
in accordance with the Fiscal Agent Agreement until all of the 2015 Bonds have been paid or
defeased. See "SECURITY FOR THE 2015 BONDS—Special Taxes" and Appendix B-"Rate and
Method."
Amounts in the Administrative Expense Fund and the Costs of Issuance Fund, each of
which is established under the Fiscal Agent Agreement, are neither pledged to nor available for
the repayment of the 2015 Bonds. Proceeds of the 2015 Bonds and other amounts deposited to
the Refunding Fund under the Escrow Agreement(see "PLAN OF REFUNDING-Redemption
of Prior Bonds") are not pledged to, and will not be available for, the payment of the 2015
Bonds.
Special Taxes;Rate and Method. The Special Taxes to be used to pay debt service on the
2015 Bonds will be levied in accordance with the "Rate and Method" of apportionment of
-2-
Special Tax (as described under the heading "THE 2015 BONDS - Authority for Issuance").
"Special Taxes" are those taxes levied on the Taxable Property within the District pursuant to
the Rate and Method and the Fiscal Agent Agreement.
Linjitations. The Improvements are not pledged as collateral for the 2015 Bonds. The
proceeds of condemnation or destruction of any of the Improvements are not pledged to pay
the debt service can the 2015. bonds. In the evert that the Special Taxes are not paid when due,
the only sources of funds available to repay the 2015 Bonds are amounts held by the Fiscal
Agent under the Fiscal Agent Agreement in the Bond Fund and the Reserve Fund, amounts
held by the City under the Fiscal Agent Agreement in the Special Tax Fund, and the proceeds,if
any,from foreclosure sales of parcels with delinquent Special Taxes.
Reserve Fund
The Fiscal Agent Agreement establishes a Reserve Fund to be held by the Fiscal Agent as
a reserve for the payment of principal of and interest on the 2015 Bonds. The Reserve Fund is
required to be funded in an amount equal to the lesser of(i)Maximum Annual Debt Service, (ii)
125% of average Annual Debt Service, or (iii) 10% of the initial principal amount of the Bonds
(the "Reserve Requirement"). The Reserve Fund will be available to pay debt service on the
2015 Bonds and any Parity Bonds (as defined below), in the event that there is a shortfall in the
amount in the Bond Fund to pay such debt service. The Reserve Requirement as of the date of
issuance of the 2015 Bonds will be $247,793.76•. See " SECURITY FOR THE 2015 BONDS—
Reserve Fund."
The District
The District is located in the northern portion of the City, and includes 64 separate
Orange County Assessor's parcels each improved with a detached single-family home. See
"THE DISTRICT—Location and Description of the District." On the 2014-15 property tax roll,
the Orange County Assessor valued the land and improvements comprising the property that is
subject to the levy of Special Taxes in the District at $94,523,972. See "THE DISTRICT—
Assessed Property Values."
The value of individual parcels varies significantly. In addition, City assessed values
may not reflect current market values. No recent independent appraisal of the property subject
to the levy of Special Taxes has been conducted in connection with the 2015 Bonds, and no
assurance can be given that should Special Taxes levied on one or more of the parcels become
delinquent, and should the delinquent parcels be offered for sale at a judicial foreclosure sale,
that any bid would be received for the property or, if a bid is received, that such bid would be
sufficient to pay such parcel's delinquent Special Taxes. See "THE DISTRICT—Value-to-District
Lien Ratio - Value to District Lien Ratio Distribution," "SPECIAL RISK FACTORS—Property
Value" and "SPECIAL RISK FACTORS—Insufficiency of Special Taxes."
Limited Obligation
NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE
OF CALIFORNIA OR OF ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE
PAYMENT OF THE 2015 BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES
ARE PLEDGED TO THE PAYMENT OF THE 2015 BONDS. THE 2015 BONDS ARE NEITHER
GENERAL NOR SPECIAL OBLIGATIONS OF THE CITY, NOR GENERAL OBLIGATIONS OF
THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE CITY FOR THE DISTRICT
Preliminary,subject to change.
�3.
PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE
FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL
STATEMENT.
Issuance of Additional Bonds
The City may issue additional bonded indebtedness for the District that is secured by a
lien on the Special Tax Revenues and on the funds pledged under the Fiscal Agent Agreement
for the payment of the 2015 Bonds on a parity with the 2015 Bonds ("Parity Bonds'), but only
for the purpose of refunding the 2015 Bonds or refunding any outstanding Parity Bonds. See
"SECURITY FOR THE 2015 BONDS—Issuance of Additional Bonds."
Bondowners'Risks
Certain events could affect the ability of the City to pay the principal of and interest on
the 2015 Bonds when due. Except for the Special Taxes, no other taxes are pledged to the
payment of the 2015 Bonds. See "SPECIAL RISK FACTORS" for a discussion of certain factors
that should be considered in evaluating an investment in the 2015 Bonds. The purchase of the
2015 Bonds involves significant risks, and the 2015 Bonds are not appropriate investments for
all types of investors.
Continuing Disclosure
For purposes of complying with Rule 15c2-12(b)(5) promulgated under the Securities
Exchange Act of 1934, as amended (the "Rule"), the City has agreed to provide, or cause to be
provided, to the Municipal Securities Rulemaking Board (the "MSRB") certain annual financial
information and operating data and notice of certain significant events. These covenants have
been made in order to assist the Underwriter in complying with the Rule. See "CONTINUING
DISCLOSURE" and Appendix E for a description of the specific nature of the annual reports
and notices of significant events, as well as the terms of the Continuing Disclosure Agreement
pursuant to which such reports and notices are to be made.
Other Information
This Official Statement speaks only as of its date, and the information contained in this
Official Statement is subject to change without notice. Except where otherwise indicated, all
information contained in this Official Statement has been provided by the City on behalf of the
District.
Copies of the Fiscal Agent Agreement and certain other documents referenced in this
Official Statement are available for inspection at the office of, and (upon written request and
payment to the City of a charge for copying, mailing and handling) are available for delivery
from, the Director of Finance/City Treasurer, City of Seal Beach, 211 Eighth Street, Seal Beach,
California 90740.
PLAN OF REFUNDING
Redemption of Prior Bonds
A portion of the proceeds of the sale of the 2015 Bonds, together with available funds
held under the Fiscal Agent Agreement, dated as of July 1, 2005, pursuant to which the Prior
Bonds were issued (the "2005 Prior Agreement"), will be deposited in an escrow account (the
-4-
"Refunding Fund") held by The Bank of New York Mellon Trust Company, N.A., as escrow
bank (the "Escrow Bank") pursuant to an Escrow Agreement dated as of July 1, 2015, between
the City, for and on behalf of the District, and the Escrow Bank and applied to defease and
refund all of the outstanding Prior Bonds. Amounts in the Refunding Fund will be sufficient,
without reinvestment, to fully pay the Prior Bonds on September 1, 2015, at a redemption price
of 100% of the principal amount thereof plus accrued interest to the redemption date. Upon the
deposit of proceeds of the 2015 Bonds and certain amounts held under the 2005 Prior
Agreement with the Escrow Bank and in accordance with the Escrow Agreement, the Prior
Bonds will be legally defeased and will no longer be entitled to the benefits of, or be secured by,
the 2005 Prior Agreement or any pledge of, or lien on,the Special Taxes levied in the District.
Amounts deposited in the Refunding Fund are not in any way available to pay debt
service on the 2015 Bonds.
Estimated Sources and Uses of Funds
The sources and uses of funds in connection with the 2015 Bonds are expected to be as
follows:
Principal amount of 2015 Bonds
Plus: Amounts relating to the Prior Bonds
Less: Underwriter's Discount
Total Sources $
Deposit to Refunding Fund $
Deposit to Reserve Fun&21
Deposit to Costs of Issuance Fund-
Total Uses $
(1) See"PLAN OF REFUNDING—Redemption of Prior Bonds."
(2) Equal to the initial Reserve Requirement. See "SECURITY FOR THE 2015 BONDS—Reserve
Fund."
(3) Costs of issuance include, without limitation, Fiscal Agent fees and expenses; Financial Advisor
fees and expenses; Bond Counsel, Disclosure Counsel, City Attorney and other legal fees; Escrow
Bank fees and expenses;printing costs and other costs related to the issuance of the 2015 Bonds and
the redemption of the Prior Bonds.
THE 2015 BONDS
Authority for Issuance
Pursuant to the Act, on September 23, 2002, the City Council adopted Resolution No.
5063 establishing the District ("Resolution of Formation"). Also on September 23, 2002, the
City Council adopted Resolution No. 5064 calling an election to authorize the issuance of bonds
and the levying of a special tax within the District. On September 23, 2002, the then sole owner
of land in the District voted to authorize the issuance of bonded indebtedness to finance the
Improvements, and approved the rate and method of apportionment of Special Tax for the
District.
Pursuant to proceedings conducted by the City Council under its Resolution No. 5191
adopted on December 8, 2003, certain changes were made to the rate and method of
-5-
apportionment of Special Tax for the District, and a copy of the rate and method of
apportionment of Special Tax, as so modified and currently in effect for the District (the "Rate
and Method"),is attached to this Official Statement as Appendix B.
The 2015 Bonds are authorized to be issued pursuant to the Act, the Refunding Law,
Resolution No. adopted on May 26, 2015, by the City Council, acting as the legislative
body of the District, and the Fiscal Agent Agreement. The Special Taxes to be used to pay debt
service on the 2015 Bonds will be levied in accordance with the Rate and Method.
General Provisions
The 2015 Bonds will be issued only as fully registered 2015 Bonds, in the denomination
of$5,000 or any integral multiple thereof, and will bear interest at the rates per annum and will
mature on the dates set forth on the inside cover page of this Official Statement.The 2015 Bonds
will be dated the date of their issuance and interest will be payable on each Interest Payment
Date, commencing March 1, 2016.
Each 2015 Bond will bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless (a)it is authenticated after a Record Date and on or before
the following Interest Payment Date, in which event it will bear interest from such Interest
Payment Date; or (b) it is authenticated on or before February 15, 2016, in which event it will
bear interest from the date of issuance of the 2015 Bonds; provided, however, that if, as of the
date of authentication of any Bond, interest thereon is in default, such Bond will bear interest
from the Interest Payment Date to which interest has previously been paid or made available
for payment thereon. "Record Date" is defined in the Fiscal Agent Agreement as the fifteenth
day of the month next preceding the month of the applicable Interest Payment Date,whether or
not such fifteenth(15th)day is a Business Day.
The 20,1.5 Bonds will be payable botli as to principal and interest, and as to any premium
upon the redemption thereof, in lawful money of the United States of America. The principal of
the 2015. Bonds and any premium due upon the redemption thereof will be payable upon
presentation and surrender at the principal corporate trust office of the Fiscal Agent. Interest on
each 2015 Bond will be computed using a year of 360 days comprised of twelve 30-day months.
The 2015 Bonds will be issued in book-entry form only and, when delivered, will be
registered in the name of Cede & Co., as nominee of DTC, which will act as securities
depository for the 2015 Bonds. Individual purchases of the 2015 Bonds will be made in book-
entry form only. Purchasers of the 2015 Bonds will not receive physical certificates representing
their ownership interests in the 2015 Bonds purchased. Principal and interest payments
represented by the 2015 Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of
payments of principal and interest, DTC will in turn distribute such payments to the beneficial
owners of the 2015 Bonds. See Appendix F- "DTC and the Book-Entry Only System." So long
as the 2015 Bonds are registered in the name of Cede & Co.,as nominee of DTC,references in
this Official Statement to the owners shall mean Cede & Co., and shall not mean the
purchasers or Beneficial Owners of the 2015 Bonds.
Redemption
Optional Redemption. The 2015 Bonds are subject to optional redemption prior to their
stated maturities on any Interest Payment Date, as a whole or in part, upon payment from any
source of funds available for that purpose, at a redemption price (expressed as a percentage of
the principal amount of the 2015 Bonds to be redeemed) as set forth below, together with
accrued interest thereon to the date fixed for redemption:
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Redemption Dates Redemption Prices
any Interest Payment Date from March 1, 2016 103%
to and including March 1, 2023
September 1,2023 and March 1,2024 102
September 1,2024 and March 1,2025 101
September 1, 2025 and any Interest Payment 100
Date thereafter
Mandatory Sinking Payment Redemption. The 2015 Bonds maturing on September 1,
2035 are subject to mandatory sinking payment redemption in part on September 1, and
on each September 1 thereafter as set forth below, by lot, at a redemption price equal to the
principal amount thereof to be redeemed, together with accrued interest to the date fixed for
redemption,without premium,from sinking payments as follows:
2015 Bond Maturing September 1,2035
Redemption Date Sinking
(September 1) Payment
The amounts in the foregoing table will be reduced, in such a manner as to maintain
substantially level Debt Service, as a result of any prior partial redemption of the 2015 Bonds
pursuant to the optional redemption provisions described above or the mandatory redemption
from Special Tax Prepayments described below.
Mandatory Redemption From Special Tax Prepayments. The 2015 Bonds are subject to
mandatory redemption prior to their stated maturity on any Interest Payment Date, from the
proceeds of Special Tax Prepayments and corresponding transfers of funds from the Reserve
Fund (as described below under "SECURITY FOR THE 2015 BONDS — Reserve Fund"), as a
whole or in part, at a redemption price (expressed as a percentage of the principal amount of
the 2015 Bonds to be redeemed),as set forth below,together with accrued interest thereon to the
date fixed for redemption:
Redemption Dates Redemption Prices
any Interest Payment Date from March 1, 2016 103%
to and including March 1,2023
September 1,2023 and March 1,2024 102
September 1,2024 and March 1,2025 101
September 1, 2025 and any Interest Payment 100
Date thereafter
Since the formation of the District, there have been no prepayments of Special Taxes;
however, no assurance can be given that prepayments of Special Taxes will not occur in the
future. See "SECURITY FOR THE 2015 BONDS—Summary of Rate and Method—Prepayment
of the Special Tax Obligation."
Purchase of 2015 Bonds In Lieu of Redemption. In lieu of redemption as described
above, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase
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of Outstanding 2015 Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate
requesting such purchase prior to the selection of 2015 Bonds for redemption, at public or
private sale as and when, and at such prices (including brokerage and other charges) as such
Officer's Certificate may provide, but in no event may 2015 Bonds be purchased at a price in
excess of the principal amount thereof, plus interest accrued to the date of purchase.
Selection of 2015 Bonds for Redemption. Whenever provision is made in the Fiscal
Agent Agreement for the redemption of less than all of the 2015 Bonds, the Fiscal Agent will
select the 2015 Bonds to be redeemed, from among the maturities of the 2015 Bonds or such
given portion thereof not previously redeemed, so as to maintain substantially level debt
service on the Bonds, and within a maturity by lot in any manner which the Fiscal Agent in its
sole discretion shall deem appropriate and fair. For purposes of such selection, all 2015 Bonds
shall be deemed to be comprised of separate $5,000 portions, and such portions shall be treated
as separate 2015 Bonds that may be separately redeemed.
Notice of Redemption. The Fiscal Agent will cause notice of any redemption to be
mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to
the date fixed for redemption, to the Securities Depositories and to one or more Information
Services, and to the respective registered Owners of any 2015 Bonds designated for redemption,
at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal
Agent; but such mailing is not a condition precedent to redemption and failure to mail or to
receive any such notice, or any defect therein, will not affect the validity of the proceedings for
the redemption of such 2015 Bonds. The redemption notice will state the redemption date and
the redemption price and,if less than all of the then Outstanding 2015 Bonds are to be called for
redemption, will designate the CUSIP numbers and Bond numbers of the 2015 Bonds to be
redeemed by giving the individual CUSIP number and Bond number of each Bond to be
redeemed or will state that all 2015 Bonds between two stated Bond numbers, both inclusive,
are to be redeemed or that all of the 2015 Bonds of one or more maturities have been called for
redemption, will state as to any Bond called in part the principal amount thereof to be
redeemed, and will require that such 2015 Bonds be then surrendered at the Principal Office of
the Fiscal Agent for redemption at the said redemption price, and will state that further interest
on such 2015 Bonds will not accrue after the redemption date.
Notwithstanding the foregoing, in the case of any redemption of the 2015 Bonds
pursuant to the redemption provisions described above under "—Optional Redemption" or "-
Mandatory Redemption from Special Tax Prepayments," the notice of redemption may state
that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to
redeem the 2015 Bonds on the anticipated redemption date, and that the redemption will not
occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2015
Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does
not receive sufficient funds by the scheduled redemption date to so redeem the 2015 Bonds to
be redeemed, the Fiscal Agent will send written notice to the owners of the 2015 Bonds, to the
Securities Depositories and to one or more of the Information Services to the effect that the
redemption did not occur as anticipated, and the 2015 Bonds for which notice of redemption
was given will remain Outstanding for all purposes of the Fiscal Agent Agreement.
Effect of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the principal of, and interest and any premium on, the 2015 Bonds so called
for redemption have been deposited in the Bond Fund, such 2015 Bonds so called will cease to
be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive
payment of the redemption price, and no interest will accrue thereon on or after the redemption
date specified in such notice.
.g�.
Tender of 2015 Bonds in Payment of Special Taxes. The City has covenanted in the
Fiscal Agent Agreement not to permit the tender of 2015 Bonds in payment of any Special Taxes
except upon receipt of a certificate of an Independent Financial Consultant that to accept such
tender will not result in the City having insufficient Special Tax Revenues to pay the principal
or and interest on the 2015 Bonds that will remain Outstanding following such tender.
Transfer or Exchange of 2015 Bonds
So long as the 2015 Bonds are registered in the name of Cede & Co., as nominee of DTC,
transfers and exchanges of 2015 Bonds shall be made in accordance with DTC procedures. See
Appendix F — "DTC and the Book-Entry Only System." If the book-entry only system for the
2015 Bonds is ever discontinued, any Bond may, in accordance with its terms,be transferred or
exchanged by the person in whose name it is registered, in person or by his duly authorized
attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly
written instrument of transfer in a form approved by the Fiscal Agent. Whenever any 2015
Bond or 2015 Bonds are surrendered for transfer or exchange, the City will execute and the
Fiscal Agent will authenticate and deliver a new 2015 Bond or 2015 Bonds, for a like aggregate
principal amount of 2015 Bonds of authorized denominations and of the same maturity. The
Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental
charge required to be paid with respect to such transfer or exchange.
No transfers or exchanges of 2015 Bonds will be required to be made (i) within the 15
days prior to the date designated by the Fiscal Agent as the date for selecting 2015 Bonds for
redemption, or (ii) with respect to any 2015 Bond after such 2015 Bond has been selected for
redemption.
Discontinuance of DTC Services
DTC may determine to discontinue providing its services with respect to the 2015 Bonds
at any time by giving written notice to the Fiscal Agent during any time that the 2015 Bonds are
Outstanding, and discharging its responsibilities with respect to the 2015 Bonds under
applicable law. The City may terminate the services of DTC with respect to the 2015 Bonds if it
determines that DTC is unable to discharge its responsibilities with respect to the 2015 Bonds or
that continuation of the system of book-entry transfers through DTC is not in the best interest of
the Beneficial Owners.The City will mail any such notice of termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and
if no substitute Depository willing to undertake the functions can be found which is willing and
able to undertake such functions upon reasonable or customary terms, or if the City determines
that it is in the best interest of the Beneficial Owners of the 2015 Bonds that they obtain
certificated Bonds, the 2015 Bonds will no longer be restricted to being registered in the
Registration Books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may
be registered in whatever name or names the Owners designate at that time,in accordance with
the Fiscal Agent Agreement.
To the extent that the Beneficial Owners are designated as the transferees by the
Owners, the 2015 Bonds will be delivered to such Beneficial Owners as soon as practicable in
accordance with the Fiscal Agent Agreement.
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Scheduled Debt Service
The following table shows the annualized debt service on the 2015 Bonds, assuming no
optional redemption of the 2015 Bonds and no redemption of the 2015 Bonds from Special Tax
Prepayments:
Bond Year
ending Annual
September 1 Principal Interest Debt Service
2016 $ $ $
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Totals $ $ $
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SECURITY FOR THE 2015 BONDS
General
Pursuant to the Fiscal Agent Agreement, the 2015 Bonds are secured by a first pledge of
all of the Special Tax Revenues (other than, each Fiscal Year, a maximum of$25,000 of Special
Tax Revenues that may be deposited to the Administrative Expense Fund on a priority basis,
and referred to in the Fiscal Agent Agreement as the "Minimum Administrative Expense
Requirement"), and all moneys deposited in the Bond Fund, the Reserve Fund and, until
disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund. Special Tax
Revenues do not include interest and penalties, if any, collected in respect of delinquent Special
Taxes in excess of the rate of interest payable on the Bonds. The Special Tax Revenues and all
moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement)
are dedicated to the payment of the principal of, and interest and any premium on, the 2015
Bonds in accordance with the Fiscal Agent Agreement until all of the 2015 Bonds have been
paid or defeased. Amounts in the Administrative Expense Fund, the Costs of Issuance Fund
and the Refunding Fund, and Special Tax Revenues collected in any Fiscal Year in the amount
of the Minimum Administrative Expense Requirement that may be deposited to the
Administrative Expense Fund on a priority basis, are not pledged to the repayment of the 2015
Bonds.
The Improvements are not pledged as collateral for the 2015 Bonds. The proceeds of
condemnation or destruction of any of the Improvements are not pledged to pay the Debt
Service on the 2015 Bonds.
Limited Obligation
The 2015 Bonds are limited obligations of the City on behalf of the District and are
payable solely from and secured solely by the Special Tax Revenues and the amounts in the
Bond Fund, the Reserve Fund and the Special Tax Fund created pursuant to the Fiscal Agent
Agreement. In the event that the Special Taxes are not paid when due, the only sources of
funds available to repay the 2015 Bonds are amounts held by the Fiscal Agent under the Fiscal
Agent Agreement in the Bond Fund and the Reserve Fund, amounts held by the City under the
Fiscal Agent Agreement in the Special Tax Fund, and the proceeds, if any, from foreclosure
sales of parcels with delinquent Special Tax levies.
Special Taxes
In accordance with the provisions of the Act,the Rate and Method was approved in 2002
by the then sole qualified elector of the District and was modified by proceedings taken by the
City Council under the Act in 2004. The Rate and Method as so modified and currently in effect
is set forth in its entirety in Appendix B. Under the Fiscal Agent Agreement, the City is
obligated to fix and levy the amount of Special Taxes within the District required for the timely
payment of principal of and interest on the outstanding 2015 Bonds becoming due and payable,
including any necessary replenishment of the Reserve Fund and an amount estimated to be
sufficient to pay the Administrative Expenses, taking into account any prepayments of Special
Taxes previously received by the City. The Special Taxes levied on any parcel of Taxable
Property (as defined in "SECURITY FOR THE 2015 BONDS—Summary of Rate and Method")
may not exceed the maximum amount as provided in the Rate and Method and the Act.
The Special Taxes are payable and are to be collected in the same manner, at the same
time and in the same installment as County ad valorem taxes on property levied on the secured
tax roll are payable, and pursuant to the Act have the same priority, become delinquent at the
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same times and in the same proportionate amounts and bear the same proportionate penalties
and interest after delinquency as do the taxes levied on the County secured tax roll.
Although the Special Taxes will constitute a lien on taxed parcels within the District,
they do not constitute a personal indebtedness of the owners of the property within the District.
Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the
Special Tax on a parcel of Taxable Property, the City may order the institution of a superior
court action to foreclose the lien on the parcel of Taxable Property within specified time limits.
In such an action,the real property subject to the unpaid amount of the Special Tax lien may be
sold at judicial foreclosure sale. The Act provides that the Special Taxes are secured by a
continuing lien that is subject to the same lien priority in the case of delinquency as ad valorem
property taxes. See "SECURITY FOR THE 2015 BONDS—Summary of Rate and Method," and
"—Covenant for Superior Court Foreclosure" and "SPECIAL RISK FACTORS—Parity Taxes
and Special Assessments."
The property located within the District is subject to other liens for taxes and
assessments, and other such liens could come into existence in the future. See "SPECIAL RISK
FACTORS—Parity Taxes and Special Assessments." There is no assurance that any owner of a
parcel subject to the Special Tax levy will be financially able to pay the annual Special Taxes or
that it will pay such taxes even if financially able to do so.See "SPECIAL RISK FACTORS."
For historic information regarding assessed valuations and the payment of, and
delinquencies with respect to, Special Taxes in the District, see "THE DISTRICT."
Special Tax Fund
Deposit of Special Tax Revenues. The Fiscal Agent Agreement establishes a Special Tax
Fund to be held by the Director of Finance/City Treasurer. Under the Fiscal Agent Agreement,
the City is obligated to deposit, as soon as practicable following receipt, in the Special Tax Fund
all Special Tax Revenues received by the City.
Notwithstanding the foregoing,
(i) the first Special Tax Revenues collected by the City in any Fiscal Year, in
an amount equal to the portion of such Fiscal Year's Special Tax levy for Administrative
Expenses (but not to exceed, in any Fiscal Year, the Minimum Administrative Expense
Requirement) will be deposited by the Director of Finance/City Treasurer in the
Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in
payment of Special Taxes will be separately identified by the Director of Finance/City
Treasurer and will be disposed of by the Director of Finance/City Treasurer first, for
transfer to the Fiscal Agent for deposit by the Fiscal Agent in the Bond Fund to pay any
past due debt service on the Bonds; second, to the Fiscal Agent for deposit by the Fiscal
Agent in the Reserve Fund to the extent needed to increase the amount then on deposit
in the Reserve Fund to the then Reserve Requirement;and third,to be held in the Special
Tax Fund and used for its purposes;and
(iii) any proceeds of Special Tax Prepayments will be separately identified by
the Director of Finance/City Treasurer and will be remitted by the Director of
Finance/City Treasurer to the Fiscal Agent for deposit by the Fiscal Agent in the Special
Tax Prepayments Account and used to redeem Bonds, except that the Current Tax
Component of the Special Tax Prepayment will be retained by the Director of
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Finance/City Treasurer in the Special Tax Fund to be disbursed as described under
"Disbursements" below.
Moneys in the Special Tax Fund will be held by the Director of Finance/City Treasurer
for the benefit of the City and the Owners of the Bonds, will be disbursed as provided below
and,pending any disbursement,will be subject to a lien in favor of the Owners of the Bonds.
Disbursements. From time to time as needed to pay the obligations of the District, but
no later than the Business Day before each Interest Payment Date, the Director of Finance/City
Treasurer will withdraw from the Special Tax Fund and transfer the following amounts in the
following order of priority:
(i) to the Fiscal Agent for deposit by the Fiscal Agent in the Bond Fund an
amount, taking into account any amounts then on deposit in the Bond Fund and any
expected transfers under the Fiscal Agent Agreement from the Special Tax Fund and the
Reserve Fund to the Bond Fund, such that the amount in the Bond Fund equals the
principal (including any mandatory sinking payment),premium,if any, and interest due
on the Bonds on the next Interest Payment Date (including the redemption price of any
Bonds to be optionally redeemed or redeemed from Special Tax Prepayments on such
Interest Payment Date), and
(ii) to the Reserve Fund an amount, taking into account amounts then on
deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the
Reserve Requirement;
provided that no such transfers shall exceed the amount then available to be transferred from
the Special Tax Fund.
In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special
Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of
the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the
Director of Finance/City Treasurer may transfer to the Administrative Expense Fund,from time
to time, any amount in the Special Tax Fund in excess of the amount needed to make such
transfers to the Bond Fund and the Reserve Fund, if monies are needed to pay Administrative
Expenses in excess of the amount then on deposit in the Administrative Expense Fund.
Summary of Rate and Method
Special Tax Formula - Calculation of Annual Special Tax. The Rate and Method is used
to allocate the amount of the Special Tax that is needed to be collected each fiscal year among
the Taxable Properties within the District, based upon the development status of the Taxable
Property and its size, subject to a maximum tax rate that may be levied against each class of
Taxable Property. The Rate and Method is set forth in full in Appendix B, and the following is a
summary of the Rate and Method. Capitalized terms used, but not otherwise defined, in this
section have the meanings given to them in the Rate and Method.
The calculation of the Special Tax payable by each parcel of Taxable Property in the
District in each year proceeds by the following steps:
• First, the City determines the "Special Tax Requirement" to be funded from the
Special Tax for the fiscal year. The Special Tax Requirement is comprised of five
components — debt service on the 2015 Bonds, replenishment of the Reserve
Fund, the annual cost of administering the District, a provision for tax
_13_
delinquencies, and eligible "pay-as-you-go" capital expenditures. The Special
Tax Requirement may be reduced in any fiscal year by taking into account
revenues available from one or more of the following sources: (i)interest earnings
on or surplus balances in the funds and accounts related to the 2015 Bonds, (ii)
proceeds from the collection of penalties associated with delinquent Special Taxes,
and(iii)any other funds available to reduce the annual Special Tax levy.
• Second, the City identifies all of the parcels within the District that are Taxable
Property by excluding tax-exempt parcels and parcels for which the Special Tax
obligation has been prepaid. Each parcel of Taxable Property is further classified
as "Developed Property," "Undeveloped Property," "Taxable Property Owner
Association Property' and "Taxable Public Property."
The Rate and Method defines "Developed Property" as all parcels in the District,
exclusive of Taxable Property Owner Association Property and Taxable Public
Property, for which building permits have been issued on or prior to January 1 of
the preceding fiscal year. All 64 parcels of Taxable Property in the District are
currently classified as Developer Property.
The Rate and Method defines "Undeveloped Property" as Taxable Property that
is not Developed Property, Taxable Property Owner Association Property or
Taxable Public Property.
• Third, after classifying the parcels, the City identifies the Residential Floor Area
of each parcel of Developed Property. The City assigns the Assigned Special Tax
to each parcel of Developed Property using the Assigned Special Tax rates as
shown in Table 1 on the following page.
• Fourth, the City determines if sufficient Special Tax revenues are available by
taxing each parcel of Developed Property at 100% of its Assigned Special Tax. If
revenues are sufficient, the Special Taxes are reduced Proportionately against
parcels of Developed Property until the Special Taxes are set at an amount
sufficient to cover the Special Tax Requirement.
• Fifth, if revenues from taxing parcels of Developed Property at 100% of the
Assigned Special Tax are not sufficient, the City will then also tax parcels of
Undeveloped Property up to 100% of the Maximum Special Tax for
Undeveloped Property, as necessary to cover the Special Tax Requirement.
• Sixth, if additional monies are needed to satisfy the Special Tax Requirement
after the Fourth and Fifth steps above have been completed, then the levy of the
Special Tax on each Assessor's Parcel of Developed Property whose Maximum
Special Tax is determined through the application of the Backup Special Tax will
be increased in equal percentages from the Assigned Special Tax up to the
Maximum Special Tax for each such Assessor's Parcel.
• Seventh, if additional monies are needed to satisfy the Special Tax Requirement
after the Fourth, Fifth and Sixth steps above have been completed, then the
Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable
Property Owner Association Property at up to the Maximum Special Tax for
Taxable Property Owner Association Property.
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• Eighth, if additional monies are needed to satisfy the Special Tax Requirement
after all of the foregoing steps have been completed, then the Special Tax shall be
levied Proportionately on each Assessor's Parcel of Taxable Public Property at up
to the Maximum Special Tax for Taxable Public Property.
Notwithstanding the foregoing, under no circumstances will the Special Tax levied
against any Assessor's Parcel of Residential Property for which an occupancy permit for private
residential use has been issued be increased by more than ten percent as a consequence of
delinquency or default by the owner of any other Assessor's Parcel within the District.
The Maximum Special Tax for each Assessor's Parcel classified as Developed Property is
the greater of the Assigned Special Tax for the Parcel or the Backup Special Tax for the Parcel.
The Assigned Special Tax rates per unit for each land use class of Taxable Property are shown
in the table below.
Table 1
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Assigned Special Tax Rates
Land Assigned
Use Class Description Residential Floor Area Special Tax
1 Residential Property Greater than or equal to 4,000 square feet $6,521.62 per unit
2 Residential Property 3,750—3,999 square feet $6,190.05 per unit
3 Residential Property 3,500—3,749 square feet $5,973.07 per unit
4 Residential Property Less than 3,500 square feet $5,570.80 per unit
5 Non-Residential Property N/A $51,169.73 per Acre
(1)The assigned Special Taxes were subject to an annual increase of two percent (2%)on each July 1, commencing
July 1,2003 through and including July 1,2012.
The Backup Special Tax for an Assessor's Parcel of Developed Property is$51,169.73 per
Acre. The Backup Special Tax was subject to annual increases of two percent (2%) on each July
1,commencing July 1,2003 through and including July 1,2012.
Actual Special Tax Levy. Since the buildout of the property in the District (which
occurred in November of 2006), there have been only three land use classes applicable to the 64
Taxable Parcels all of which are improved with single family homes. See "THE DISTRICT—
Land Use Distribution' for a table showing the distribution of Taxable Parcels among the land
use classes of the Rate and Method. Also, there is no Taxable Property Owner Association
Property and no Taxable Public Property in the District. Accordingly, annual Special Tax levies
are not expected to go beyond step Fourth described under the subheading "Special Tax
Formula–Calculation of Annual Special Tax" above.
Prepayment of the Special Tax Obligation. The Special Tax is subject to prepayment.
The prepayment amount will be determined by the procedures that are described in Section H
of the Rate and Method. Since the establishment of the District, there have been no
prepayments of Special Taxes. However, no assurance can be given that there will not be
prepayments of Special Taxes in the future, which if they occur will result in a redemption of a
portion of the 2015 Bonds prior to their stated maturities. See "THE 2015 BONDS—Redemption
–Mandatory Redemption From Special Tax Prepayments."
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Duration of Levy.The Special Tax is authorized to be levied for as long as needed to pay
debt service on bonds issued for the District,but not later than fiscal year 2042-43.
Exemptions. The Rate and Method exempts up to 8.07 Acres of Property Owner
Association Property. Tax-exempt status is irrevocably assigned by the CFD Administrator in
the chronological order in which property becomes Property Owner Association Property.
However, should an Assessor's Parcel no longer be classified as Property Owner Association
Property, its tax-exempt status will be revoked. Parcels for which the Special Tax has been
prepaid are also exempt from further Special Taxes. See "SPECIAL RISK FACTORS - Exempt
Properties." Since formation of the District, there have been no Special Tax Prepayments for
parcels in the District.
Reserve Fund
The Fiscal Agent Agreement establishes a debt service reserve fund (the "Reserve
Fund") as a separate fund to be held by the Fiscal Agent for the benefit of the Owners of the
Bonds (the 2015 Bonds and any Parity Bonds), as a reserve for the payment of principal of, and
interest and any premium on, the Bonds and moneys in the Reserve Fund are subject to a lien in
favor of the Owners of the Bonds. The Reserve Fund is required by the Fiscal Agent Agreement
to be maintained in an amount equal to the Reserve Requirement, which is defined in the Fiscal
Agent Agreement, as of any date of calculation, as an amount equal to the lesser of (i)
Maximum Annual Debt Service, (ii) 125% of average Annual Debt Service, or (iii) 10% of the
initial principal amount of the Bonds issued under the Fiscal Agent Agreement. The Reserve
Requirement as of the date of issuance of the 2015 Bonds will be$247,793.76.
Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of
moneys in the Reserve Fund for the payment of any rebate liability due to the federal
government, and the use of moneys in excess of the Reserve Requirement to pay debt service on
the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the
Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any
deficiency at any time in the Bond Fund of the amount then required for payment of the
principal of, and interest and any premium on, the Bonds. See Appendix C - "Summary of
Fiscal Agent Agreement-Reserve Fund."
Whenever the balance in the Reserve Fund equals or exceeds the amount required to
redeem or pay all of the Outstanding Bonds, including interest accrued to the date of payment
or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the
amount in the Reserve Fund to the Bond Fund to be used for the payment and redemption of all
of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund to
the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the
balance in the Reserve Fund will be retained by the City, free of any encumbrance by the Fiscal
Agent Agreement, to be used for any lawful purpose under the Act. Notwithstanding the
foregoing, no amounts will be transferred from the Reserve Fund until after (i) amounts in the
Reserve Fund are withdrawn for purposes of making payment to the federal government in
accordance with the Fiscal Agent Agreement, and (ii) payment of any fees and expenses due to
the Fiscal Agent.See Appendix C-"Summary of Fiscal Agent Agreement-Reserve Fund."
Covenant for Superior Court Foreclosure
Foreclosure Under the Act. Pursuant to Section 53356.1 of the Act, in the event of any
delinquency in the payment of the Special Tax on the taxed parcel, the City may order the
..Preliminary,subject to change.
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institution of a superior court action to foreclose the lien on the taxed parcel within specified
time limits, In such an action, the real property subject to the unpaid amount of the Special Tax
lien may be sold at judicial foreclosure sale.
City Foreclosure Covenant. The City has covenanted for the benefit of the Bondowners
that the Director of Finance/City Treasurer will determine on or about July 1 of each year
whether or not all Special Taxes levied in the prior Fiscal Year have been received by the City
and, consequently, whether any deficiencies in,payment of Special Taxes exist.The Fiscal Agent
Agreement provides that, following such determination, or if at any other time the Director of
Finance/City Treasurer becomes aware of any delinquency in the payment of any Special Tax
due and awing: (A) if the Director of Finance/City Treasurer determines that any single parcel
subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the
aggregate amount of$10,000 or more, the Director of Finance/City Treasurer will send or cause
to be sent a notice of delinquency (and a demand for immediate payment thereof) to the
property owner by the following October 1, and (if the delinquency remains uncured)
foreclosure proceedings shall be commenced by the City against the delinquent parcel within 90
days of the sending of such notice and will be diligently pursued by the City to completion;
provided, that, the City may defer any such action if the amount then in the Reserve Fund is at
least equal to the Reserve Requirement; and (B) if the Director of Finance/City Treasurer
determines that the aggregate amount of Special Taxes levied in the District for the preceding
Fiscal Year and theretofore collected is less than 90% of the total amount of Special Taxes levied
for such Fiscal Year, the Director of Finance/City Treasurer shall send or cause to be sent a
notice of delinquency (and a demand for immediate payment thereof) to each property owner
with delinquent Special Taxes by the following October 1, and (if any such delinquency remains
uncured) foreclosure proceedings will be commenced by the City within 90 days of the sending
of such notices against all such delinquent parcels. See Appendix C - "Summary of the Fiscal
Agent Agreement."
No assurance can be given as to the time necessary to complete any foreclosure sale or
that any foreclosure sale will be successful. The City is not required to be a bidder at any
foreclosure sale.
Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays. No
assurances can be given that the real property subject to a judicial foreclosure sale will be sold
or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax
installment. 'Subject to the maximum rates, the Rate and Method is designed to generate from
all non-exempt property within the District the current year's debt service, administrative
expenses, and replenishment of the Reserve Fund to the Reserve Requirement, including an
amount reflecting the prior year's delinquencies, However, if foreclosure proceedings are
necessary, and the Deserve fund has been depleted, there could be a delay in payments to
owners of the 2015 Bonds pending prosecution of the foreclosure proceedings and receipt by
the City of the proceeds of the foreclosure sale.
Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the
Act be sold for not less than the amount of judgment in the foreclosure action, plus post-
judgment interest and authorized costs, unless the consent of the owners of 75% of the
outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the City, as
judgment creditor, is entitled to purchase any property sold at foreclosure using a ""credit bid,"
where the City could submit a bid crediting all or part of the amount required to satisfy the
judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser
under a credit bid, the City must pay the amount of its credit bid into the redemption fund
established for the 2015 Bonds,but this payment may be made up to 24 months after the date of
the foreclosure sale. Neither the Act nor the Fiscal Agent Agreement requires the City to
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purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other
purchaser at such sale, and the City has no intent to be such a purchaser.
The City will levy the Special Tax to pay the current year's debt service and related
administrative expenses and to replenish the Reserve Fund to the Reserve Requirement, subject
to Maximum Special Tax rates. However, in the event such superior court foreclosure
proceedings are necessary, and if the Reserve Fund is depleted, there could be a delay in
payments of principal of and interest on the 2015 Bonds pending prosecution of the foreclosure
proceedings and receipt by the City of the proceeds of the foreclosure sale. See "SPECIAL RISK
FACTORS—Bankruptcy Delays" and "—Proceeds of Foreclosure Sales."
No Teeter Plan
Collection of the Special Taxes is not subject to the "Alternative Method of Distribution
of Tax Levies and Collections and of Tax Sale Proceeds," as provided for in Section 4701 et seq.
of the California Revenue and Taxation Code (known as the "Teeter Plan"). Accordingly,
collections of Special Taxes will reflect actual delinquencies,if any.
Investment of Moneys
Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the
funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the
Fiscal Agent solely in Permitted Investments, as directed by the City. See Appendix C —
"Summary of the Fiscal Agent Agreement" for a definition of "Permitted Investments" and for
additional provisions regarding the investment of funds held under the Fiscal Agent
Agreement.
Issuance of Additional Bonds
Parity Bonds. The Fiscal Agent Agreement does not authorize the City to issue any
additional "new money" bonds for the District on a parity with the 2015 Bonds, but it does
authorize the City to issue one or more series of "Refunding Bonds" secured and payable on a
parity under the Fiscal Agent Agreement with the 2015 Bonds. The Fiscal Agent Agreement
defines Refunding Bonds as bonds issued by the City for the District the net proceeds of which
are used to refund all or a portion of the then Outstanding Bonds;provided that the debt service
on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being
refunded, and the final maturity of the Refunding Bonds is not later than the final maturity of
the Bonds being refunded.
Subject to meeting the conditions summarized below, Refunding Bonds will be "Parity
Bonds" that will be secured by a lien on the Special Tax Revenues and funds pledged for the
payment of the Bonds under the Fiscal Agreement on a parity with all other Bonds Outstanding
under the Fiscal Agreement; the Fiscal Agreement defines "Bonds" as the 2015 Bonds and any
Parity Bonds.
The City may issue the Parity Bonds subject to the following specific conditions
precedent, among others set forth in the Fiscal Agent Agreement:
(A) Current Compliance; Refunding Bonds. The City must be in compliance on the
date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement
and all Supplemental Agreements, and the principal amount of the Parity Refunding Bonds
must not cause the City to exceed the maximum authorized indebtedness of the District under
the provisions of the Act. The Parity Bonds must in any event be Refunding Bonds.
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(B) Payment Dates. The interest on the Parity Bonds must be payable on March 1
and September 1, and principal of the Parity Bonds must be payable on September 1 in any year
in which principal is payable (provided that there is no requirement that any Parity Bonds pay
interest on a current basis).
(C) Reserve Fund Deposit. There must be a deposit to the Reserve Fund (or to a
separate account created for such purpose) in an amount necessary so that the amount on
deposit in the Reserve Fund (together with the amount in any such separate account), following
the issuance of such Parity Bonds, is equal to the Reserve Requirement.
(D) Officer's Certificate. The City must certify to the Fiscal Agent that the proposed
issue of Parity Bonds constitutes Refunding Bonds, and that the conditions for the issuance of
Parity Bonds in the Fiscal Agent Agreement have been met.
Subordinate Bonds. Nothing in the provisions described above will prohibit the City
from issuing bonds or otherwise incurring debt secured by a pledge of Special Tax Revenues
subordinate to the pledge of such Special Tax Revenues under the Fiscal Agent Agreement.
THE DISTRICT
Location and Description of the District
The District is located in the northern portion of the City. The property is generally
located to the west side of Seal Beach Boulevard, approximately a quarter mile north of Bolsa
Avenue and one mile south of Westminster Avenue. Surrounding land uses include residential,
commercial, industrial and government uses, as well as large areas of open land. To the west
and northwest of the District is a large area of undeveloped land which includes over 100 acres
of wetlands, 28 acres of salt-marsh preserve and various oil operations. Adjacent to the north
are City facilities, to the northwest is a 4.5 acre office building and the 106-acre Boeing North
American complex. To the east is open space with oil wells and a future park area. To the
northeast, east and south of the District is the United States Naval Weapons Station and Sea
Breeze Village, a U.S. government housing community.
The District was established by the City Council of the City in 2002 pursuant to the Act
to finance the Improvements, including (i) street, sidewalk, street light, traffic signal, drainage,
signage median and appurtenant improvements to Seal Beach Boulevard, Aldolpho Lopez
Drive, and Heron Pointe, including, but not limited to, relocation of existing overhead utilities
lines and construction of a joint trench in furtherance of public safety, (ii) water and sanitary
improvements serving real property within the District, including, but not limited to, a sewer
lift station, (iii) dry utility improvements and burd vaults serving the District, (iv)
improvements to Gum Grove Park, including, but not limited to, landscaping and access
improvements, (v) landscape improvements along Seal Beach Boulevard, and (vi) sewer, water,
park, storm drain, and transportation improvements to be funded through development fees
charged by the City of Seal Beach in connection with the development of real property within
the District.All of the Improvements to be funded by the District have been completed.
At the time of formation of the District, WL Homes, LLC, a Delaware limited liability
company then doing business in California as John Laing Homes (the "Developer") owned all
of the taxable property in the District. The Developer began grading of the property in the
District in November of 2003, and construction of homes in the District began in the second
quarter of 2005. The last of the 64 homes in the District was completed in November of 2006.
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Land Use Distribution
All of the property in the District has been developed for residential use, including 64
separate parcels each improved with a single-family detached home. The following table shows
the distribution of land use classes of Taxable Property within the District based on the Rate and
Method, the current Assigned Special Tax rate for those land use classes, the estimated Special
Tax levy for fiscal year 2015-16 per parcel and in the aggregate for each land use class, and the
percentage of the overall Special Tax levy by land use class.
Table 2
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Distribution of Land Use Classes Under the Rate and Method
Total
Projected Projected
FY 2015-16 FY 2015-16 Fiscal Year
Number Assigned Special Tax 2015-16
of Special Tax Levy Per Special Tax % of
Land Use Class Parcels Per Unite Unit,,) Levya Total-
Residential Property Floor Area>4,000 sq.ft) 21 $6,521.62 $4,452.34 $93,499.07 34.32%
Residential Property(Floor Area>3,750-3,999 sq.ft) 24 6,190.05 4,225.97 101,423.40 37.23
Residential Property(Floor Area>3,500-3,749 sq.ft) 19 5,973.07 4,077.84 77,478.98 28.44
Totals 64 $272,401.45 _100.00%
(1) See "SECURITY FOR THE 2015 BONDS—Summary of Rate and Method-Special Tax Formula-Calculation of
Annual Special Tax."
(2) Based on the estimated scheduled debt service for the 2015 Bonds, allocated among land use classes based on
their respective Assigned Special Taxes. Includes, in addition to the estimated scheduled debt service on the
2015 Bonds during calendar year 2016,$25,000 in respect of the Minimum Administrative Expense Requirement.
Total per Land Use Class may be slightly off due to rounding.
(3) Preliminary,subject to change.
Source: Albert A.Webb&Associates.
Assessed Property Values
No Appraisal of Property in the District. The City has not commissioned an appraisal
of the Taxable Property in the District in connection with the issuance of the 2015 Bonds.
Therefore, the valuation of the Taxable Property in the District has been estimated for purposes
of the Act, and as set forth in this Official Statement,based on the County Assessor's values for
Fiscal Year 2014-15.
Assessed Valuation. The valuation of real property in the City for ad valorem tax
purposes is established by the County Assessor. Assessed valuations are reported at 100% of
the full value of the property, as defined in Article XIIIA of the California Constitution. Article
XIIIA of the California Constitution defines "full cash value" as the appraised value as of March
1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires assessment
of "full cash value" upon change of ownership or new construction. Accordingly, the assessed
valuations presented in this Official Statement may not necessarily be representative of the
actual market value of the property in the District.
According to the County Assessor's records, as reported by the Special Tax
Administrator, the fiscal year 2014-15 total assessed value of 64 parcels of Taxable Property in
the District is$94,523,972.
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Historical Assessed Values. The table below shows annual changes in assessed
valuations between fiscal years 2008-09 and 2014-15 with respect to the 64 parcels of Taxable
Property in the District.
Table 3
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Historical Assessed Values
Fiscal Years 2010-11 through 2014-15
Annual
Land Assessed Improvement Total Percentage
Fiscal Year Value Assessed Value Assessed Value Change
2008-09 $49,021,200 $45,811,144 $94,832,344 _-
2009-10 60,955,736 46,410,095 107,365,831 13.22
2010-11 61,040,747 46,453,085 107,493,832 0.12
2011-12 50,435,326 46,203,891 96,639,217 (10.10)
2012-13 46,266,231 46,300,171 92,566,402 (4.21)
2013-14 45,325,607 46,146,193 91,471,800 (1.18)
2014-15 49,084,316 45,439,656 94,523,972 3.34
Sources: Data for Fiscal Years 2008-09 and 2009-10 sourced from Annual Disclosure Reports filed with the Municipal
Securities Rulemaking Board's Electronic Municipal Market Access website;all other data sourced from information
obtained from the Orange County Assessor's Office as reported by Albert A.Webb&Associates.
Value-to-District Lien Ratio
General Information Regarding Value-to-District Lien Ratios. The value-to-District
lien ratio on bonds secured by special taxes will generally vary over the life of those bonds as a
result of changes in the value of the property that is security for the special taxes and the
principal amount of the bonds.
In comparing the aggregate assessed value of the real property within the District and
the principal amount of the 2015 Bonds, it should be noted that an individual parcel may only
be foreclosed upon to pay delinquent installments of the Special Taxes attributable to that
parcel. The principal amount of the 2015 Bonds is not allocated among the parcels within the
District based on their respective assessed values; rather, the total Special Taxes have been
allocated among the parcels within the District according to the Rate and Method.
Economic and other factors beyond the property owners' control, such as economic
recession, deflation of land values, financial difficulty or bankruptcy by one or more property
owners, or the complete or partial destruction of Taxable Property caused by, among other
possibilities, earthquake, flood, fire or other natural disaster, could cause a reduction in the
assessed value within the District. See "SPECIAL RISK FACTORS - Property Value" and
"Bankruptcy Delays."
Aggregate Value-to-District Lien Ratio. The aggregate value-to-District lien ratio of
Taxable Property in the District, based on fiscal year 2014-15 County assessed values
($94,523,972) and the initial principal amount of the 2015 Bonds ($3,515,000*) is 26:89:1*. There
is, however, overlapping debt, and the properties in the District are subject to a number of
*Preliminary,subject to change.
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taxes, direct charges and assessments. See "THE DISTRICT—Direct and Overlapping
Governmental Obligations"below.
Value-to-District Lien Ratio Distribution. The following table sets forth the distribution
of assessed value-to-District lien ratios among parcels of Taxable Property based on fiscal year
2014-15 assessed values and the initial principal amount of the 2015 Bonds.
Table 4
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Distribution of Value-to-District Lien Ratios
Fiscal Year 2014-15-
%of Allocation %of
Value-to-District Parcel Percent of Assessed Total of Bond Bond
Lien Category,, Count Total Value Value Principal- Principal
gn__.. .�._ ......._
reater t a29.01F, 4 6.25% $6,430,069 08-07,7 $ 219,133 6.23%
27.01:1 to 29.00:1 31 48.44 47,142,809 49.87 1,701,455 48.41
25.01:1 to 27.00:1 22 34.38 31,882,179 33.73 1,209,667 34.41
21.01 to 25.00:1- 7 10.94 9,068,915 9.59 384,745 10.95
Total 64 100.00% $94,523,972 100.00% $3,515,000 100.007"
(1)This column does not reflect any overlapping bond debt. See "THE DISTRICT - Direct and Overlapping
Governmental Obligations."The principal amount of the Bonds is allocated based on each property's fiscal year
2015-16 estimated Special Tax levy as a percentage of the total fiscal year 2015-16 estimated Special Tax levy.See
"THE DISTRICT—Land Use Distribution"above.
(2)The highest estimated Value-to-District Lien for any parcel in the District is 29.40:1.
(3)The minimum estimated Value-to-District Lien for any parcel in the District is 21.01:1.
Source: Albert A.Webb&Associates
No Major Land Owners
For the purposes of the fiscal year 2015-16 levy, no property owner owned more than
one of the 64 parcels of Taxable Property in the District.
Preliminary,..s.....................
ubject to change.
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Special Tax Delinquencies
The following table is a summary of Special Tax levies,collections and delinquency rates
on taxable properties in the District for fiscal years 2010-11 through the first installment of
property taxes for fiscal year 2014-15 based on amounts levied and outstanding delinquencies
as of a specified date in the month of September following the respective Fiscal Year end, and as
of May 5,2015.
Table 5
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Special Tax Levies,Collections and Delinquencies
Fiscal Years 2010-11 through 2014-15
Total
Number Delinquencies Following FY End As of May 5,2015
Special Tax of Parcels Number of Remaining Remaining Remaining
Fiscal Amount Subject Delinquent Amount Percent Parcels Amount Percent
Year Levied to Levy Parcels Delinquent Delinquent Delinquent Delinquent Delinquent
2010-11 $129,958.00 64 2 $1,981.00 1.52% 0 $0.00 0.00%
2011-12 202,010.00 64 1 1,567.00 0.78 0 0.00 0.00
2012-13 290,257.00 64 0 0.00 0.00 0 0.00 0.00
2013-14 288,910.00 64 0 0.00 0.00 0 0.00 0.00
2014-15 289,921.70 64 N/A N/A N/A 4 11,327.71 3.91
(1) Data sourced from annual Continuing Disclosure Reports for the Prior Bonds for Fiscal Year 2010-11 through Fiscal
Year 2013-14. Data as of September 12, 2011, September 11, 2012, September 10, 2013 and September 16, 2014,
respectively.
Source: Albert A.Webb&Associates.
Direct and Overlapping Governmental Obligations
Taxes, Charges and Assessments. The base ad valorem secured property tax rate on
property in the District is 1.00% (including ad valorem tax overrides). Property in the District is
also subject, or will be subject, to certain annual charges and assessments (which are billed to
property owners on a semi-annual basis). See "THE DISTRICT—Sample Tax Bill" below for a
list of public agencies that currently levy annual charges and assessments on property in the
District.
Overlapping Public Debt. The District is located within the boundaries of certain local
agencies, other than the City, that provide public services and assess property taxes,
assessments, special taxes and other charges on the property in the District. Some of these local
agencies have outstanding debt.
The current and estimated direct and overlapping obligations affecting the property in
the District are shown in the following table. The table was prepared by the Special Tax
Consultant and is included for general information purposes only. The City has not reviewed
this report for completeness or accuracy and makes no representation in connection therewith.
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Table 6
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Direct and Overlapping Bonded Debt
(as of April 10,2015)
ASSESSED VALUE
2014-15 Secured Roll Assessed Valuation $94,523,972
LAND SECURED BOND INDEBTEDNESS
Total % Amount
Outstanding Direct and Overlapping Bonded Debt Type Parcels Issued Outstanding Applicable of Debt
T e District CFD 64 $3,985,000- $3,515,000- 100.00070— $3,515,000
TOTAL OUTSTANDING LAND SECURED BONDED DEBT $3,515,000
Authorized and Unissued Direct and Overlapping Total %
Bonded Debt Type Parcels Authorized Unissued Applicable Applicable
The District CFD 64 $5,000,000 $1,015,000^ 100.000% $1,015,000
TOTAL UNISSUED LAND SECURED INDEBTEDNESS $0
TOTAL OUTSTANDING AND UNISSUED LAND $4,530,000
SECURED INDEBTEDNESS-,,
GENERAL OBLIGATION BOND INDEBTEDNESS Total
Parcels % Amount
Outstanding Direct and Overlapping Bonded Debt Type Levied Issued Outstanding Applicable of Debt
Coast Community College District- GO 64 $570,000,000 _....$471,788,867 0.086909% $410,027
Los Alamitos School Infrastructure Financing#1- GO 64 101,390,124 101,098,690- 1.243240 $,256,899
Metropolitan Water District GO 64 850,000,000 110,420,000 0.004083 4,508
TOTAL GENERAL OBLIGATION BONDED DEBT $1,671,434
Total
Authorized and Unissued Direct and Overlapping Parcels %
Indebtedness Type Levied Authorized Unissued Applicable Applicable
Coast Community College District- GO 64 $1,068,000,000 $498,000 001 0.086909% $432,807
Los Alamitos School Infrastructure Financing#1- GO 64 126,000,000 24,609,876 1.243240 305,960
Metropolitan Water District GO 64 850,000,000 0 0.004083 0
TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS $738,767
TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS- $2,410,201
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $5,186,434
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING INDEBTEDNESS $6,940,201
Ratios to 2014-2015 Assessed Valuation
Outstanding Land Secured Bonded Debt 26.89:1
Outstanding Direct and Overlapping Bonded Debt 18.23:1
(1) Property exempt from ad valorem tax levies is not included in the assessed value of the property in the District.
(2) Amount Issued reflects original principal amount of the Prior Bonds.Outstanding Amount is equal to the estimated principal amount
of the 2015 Bonds.
(3) While the City may issue special tax bonds for the District secured on a subordinate basis to the Bonds,Parity Bonds may be issued
only for refunding purposes.See"SECURITY FOR THE 2015 BONDS—Issuance of Additional Bonds."
(4) Los Alamitos CFD 90-1 levies a Special Tax on parcels in the District;however all CFD 90-1 Bonds have been retired early,and there
are no current CFD 90-1 Bonds outstanding.
(5) Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for the referenced
fiscal year.
(6) Reflects Series 2003A Taxable and Tax-Exempt Bonds, 2005 General Obligation Refunding Current Interest Bonds and Capital
Appreciation Bonds, Series 2006B Current Interest Bonds and Capital Appreciation Bonds, Series 2006C Convertible Capital
Appreciation Bonds and Capital Appreciation Bonds, Series 2013A Tax-Exempt Bonds, Series 2013B Taxable Bonds, 2013 General
Obligation Refunding Series A Tax-Exempt Bonds and Series B Taxable Bonds.Data sourced from Annual Disclosure Reports filed
with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access website.
(7) Reflects Los Alamitos Unified School District School Infrastructure Financing District #1 2008 Election, Series 2009 Bonds, 2008
Election Series 2010B Bank Qualified Bonds,2008 Election,Series 2010C Federally Taxable Build America Bonds,2008 Election,Series
D Taxable Direct Pay Qualified School Construction Bonds,and 2008 Election,Series E Bonds.Data sourced from Official Statement
and Audited Financial Report documents filed with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access
website.
(8) Outstanding Amount does not include Accreted Interest.
Source: Albert A.Webb Associates.
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Sample Tax Bill
Table 7 below provides, for an average parcel of Taxable Property in each applicable
land use class under the Rate and Method, the expected property tax bill that would be received
by an owner of the property in the District for fiscal year 2015-16,based on the projected Special
Tax levy for that fiscal year.
Table 7
City of Seal Beach
Community Facilities District No.2002-01
(Heron Pointe)
Estimated Average Fiscal Year 2015-2016 Tax Obligation-
For Individually Owned Parcels of Developed Property
31500 sq.fL to 3,750 sq.ft.to 4,000 sq.fL
Tax Rate Category 3,749 sq.fL 3,999 sq.ft. or greater
Average Projected Home Value-, $1,402,387.00 $1,490,813.00 $1,528,529.00
Ad Valorem Property Taxes:
Basic Levy(1.0000%) 14,023.87 14,908.13 15,285.29
Metropolitan Water District(0.0035%) 49.08 52.18 53.50
Coast Community College District(Multiple 422.82 449.48 460.85
Series 0.03015%)
Los Alamitos School Infrastructure Financing#1 3,076.70 3,270.69 3,353.44
(Multiple Series 0.21939%)
Total General Property Taxes $17,572.47 $18,680.48 $19,153.08
Assessment,Special Taxes&Parcel Charges:
Lighting Maintenance 21.86 21.86 21.86
Los Alamitos USD CFD 90-1 164.52 164.52 164.52
Mosq.Fire Ant Assmt 5.02 5.02 5.02
MWD Water Standby Charge 10.08 10.08 10.08
OCSD Sewer User Fee 316.00 316.00 316.00
Vector Control 1.92 1.92 1.92
The District—, 4,077.84 4,225.97 4,452.34
Total Assessment Charges- $4,597.24 $4,745.37 $4,971.74
Average Total Property Tax- $22,169.72 $23,425.85 $24,124.82
Average Effective Tax Rate- 1.58% 1.57% 1.58%
(1)Average Fiscal Year 2015-16 tax rates based upon Fiscal Year 2014-15 Overlapping Taxes and Assessment Rates.
(2)Average Projected Home Value is based upon average Assessed Values for Fiscal Year 2014-15 per Orange
County Assessor's Secured Roll data.
(3)Reflects average projected FY 2015-16 Special Tax levy.See"THE DISTRICT—Land Use Distribution.
(4)Preliminary,subject to change.
Source: Albert A.Webb Associates,based on home value information provided by Orange County.
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SPECIAL RISK FACTORS
The following is a description of certain risk factors affecting the District, the property owners in
the District, the parcels subject to the levy of Special Taxes and the payment of and security for the 2015
Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the
purchase of the 2015 Bonds and does not necessarily reflect the relative importance of the various risks.
Potential investors are advised to consider the following factors along with all other information in this
Official Statement in evaluating the investment quality of the 2015 Bonds. There can be no assurance
that other risk factors will not become material in the future.
Payment of the Special Tax is not a Personal Obligation
The owners of the parcels in the District are not personally obligated to pay the Special
Tax. Rather, the Special Tax is an obligation that is secured only by a lien against the parcels on
which it is levied. If the value of the taxable parcels is not sufficient to secure fully the payment
of the Special Tax,the City has no recourse against the landowners.
No General Obligation of the City or the District
The City's obligations under the 2015 Bonds and under the Fiscal Agent Agreement are
limited obligations of the City on behalf of the District and are payable solely from and secured
solely by the Special Tax Revenues and amounts in the Special Tax Fund, the Bond Fund and
the Reserve Fund. The 2015 Bonds are neither general or special obligations of the City nor
general obligations of the District,but are limited obligations of the City for the District payable
solely from the revenues and funds pledged therefor and under the Fiscal Agent Agreement.
None of the faith and credit of the District, the City or the State of California or of any of their
respective political subdivisions is pledged to the payment of the 2015 Bonds.
Property Value
If a landowner defaults in the payment of the Special Tax, the only legal remedy is the
institution of a superior court action to foreclose on the delinquent taxable parcel in an attempt
to obtain funds with which to pay the Special Tax. The value of the taxable parcels in the
District could be adversely affected by economic factors beyond the City's control, including,
without limitation, (i)adverse changes in local market conditions, such as changes in the market
value of real property in the vicinity of the District, the supply of or demand for competitive
properties in such area, and the market value of residential property in the event of sale or
foreclosure; (ii)changes in real estate tax rates and other operating expenses, governmental
rules (including, without limitation, zoning laws and laws relating to endangered species and
hazardous materials) and fiscal policies; and (iii)natural disasters (including, without
limitation, wildfire, earthquakes and floods), which may result in uninsured losses. See
"SPECIAL TAX FACTORS—Natural Disasters."
No assurances can be given that the real property subject to a judicial foreclosure sale
will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent
Special Tax installment. Although the Act authorizes the City to cause such an action to be
commenced and diligently pursued to completion, the Act does not specify any obligation of
the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at
the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not
obligated and does not expect to be a bidder at any such foreclosure sale. See "SPECIAL TAX
FACTORS—Proceeds of Foreclosure Sale."
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Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and
Method. In addition, the Act provides that properties or entities of the state, federal or local
government are exempt from the Special Tax; provided, however, that property within the
District acquired by a public entity through a negotiated transaction, or by gift or devise, that is
not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is
possible that property acquired by a public entity following a tax sale or foreclosure based upon
failure to pay taxes could become exempt from the Special Tax. In addition, the Act provides
that if property subject to the Special Tax is acquired by a public entity through eminent domain
proceedings,the obligation to pay the Special Tax with respect to that property, for outstanding
Bonds only, is to be treated as if it were a special assessment. The constitutionality and
operation of these provisions of the Act have not been tested.
In particular, insofar as the Act requires payment of the Special Tax by a federal entity
acquiring property within the District, it may be unconstitutional (see "SPECIAL RISK
FACTORS—FDIC/Federal Government Interests in Properties"). If for any reason property
within the District becomes exempt from taxation by reason of ownership by a nontaxable
entity such as the federal government or another public agency, subject to the limitation of the
Maximum Rate, the Special Tax will be reallocated to the remaining taxable properties within
the District. This would result in the owners of such property paying a greater amount of the
Special Tax and could have an adverse impact upon the timely payment of the Special Tax.
Moreover, if a substantial portion of land within the District becomes exempt from the Special
Tax because of public ownership, or otherwise, the maximum rate that could be levied upon the
remaining acreage might not be sufficient to pay principal of and interest on the Series Prior
Bonds when due and a default would occur with respect to the payment of such principal and
interest.
Parity Taxes and Special Assessments
The Special Taxes and any penalties thereon will constitute liens against the taxable
parcels in the District until they are paid. Such lien is on a parity with all special taxes and
special assessments levied by other agencies and is coequal to and independent of the lien for
general property taxes regardless of when they are imposed upon the taxable parcel. The
Special Taxes have priority over all existing and future private liens imposed on the property.
The City, however, has no control over the ability of other entities and districts to issue
indebtedness secured by special taxes or assessments payable from all or a portion of the
taxable parcels within the District subject to the levy of Special Taxes. In addition, the
landowners within the District may, without the consent or knowledge of the District, petition
other public agencies to issue public indebtedness secured by special taxes or assessments, and
any such special taxes or assessments may have a lien on such property on a parity with the
Special Taxes. The imposition of additional indebtedness could reduce the willingness and the
ability of the property owners within the District to pay the Special Taxes when due. See "THE
DISTRICT—Direct and Overlapping Governmental Obligations."
Insufficiency of Special Taxes
In order to pay debt service on the 2015 Bonds, it is necessary that the Special Taxes
levied against taxable parcels within the District be paid in a timely manner. The City has
established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt
service on the 2015 Bonds and any Parity Bonds to the extent Special Taxes are not paid on time
and other funds are not available. See "SECURITY FOR THE 2015 BONDS—Reserve Fund" and
Appendix C – "Summary of the Fiscal Agent Agreement—Reserve Fund." Under the Fiscal
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Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to
the Reserve Requirement; subject, however, to the limitations that (i) the City may not levy the
Special Tax in any fiscal year at a rate in excess of the Maximum Special Tax rates permitted
under the Rate and Method and (ii) per the Rate and Method, under no circumstances will the
Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy
permit for private residential use has been issued be increased by more than ten percent as a
consequence of delinquency or default by the owner of any other Assessor's Parcel within the
District. See "SECURITY FOR THE 2015 BONDS—Summary of Rate and Method Special Tax
Formula- Calculation of Annual Special Tax." Consequently, if a delinquency occurs, the City
may be unable to replenish the Reserve Fund to the Reserve Requirement due to the limitation
of the Maximum Special Tax rates. If such defaults were to continue in successive years, the
Reserve Fund could be depleted and a default on the 2015 Bonds would occur if proceeds of a
foreclosure sale did not yield a sufficient amount to pay the delinquent Special Taxes.
The City has made certain covenants regarding the institution of foreclosure
proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay
debt service on the 2015 Bonds. See "SECURITY FOR THE 2015 BONDS—Covenant for
Superior Court Foreclosure." If foreclosure proceedings were ever instituted, any mortgage or
deed of trust holder could, but would not be required to, advance the amount of delinquent
Special Taxes to protect its security interest.
Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the
payment of principal of, and interest on, the 2015 Bonds are derived, are being billed to the
taxable parcels within the District on the regular property tax bills sent to owners of the parcels.
Such Special Tax installments are due and payable, and bear the same penalties and interest for
non-payment, as do regular property tax installments. Special Tax installment payments cannot
be made separately from property tax payments. Therefore, the unwillingness or inability of a
property owner to pay regular property tax bills as evidenced by property tax delinquencies
may also indicate an unwillingness or inability to make regular property tax payments and
Special Tax installment payments in the future. See "SECURITY FOR THE 2015 BONDS—
Reserve Fund" and "-Covenant for Superior Court Foreclosure" for a discussion of the
provisions which apply, and procedures which the District is obligated to follow under the
Fiscal Agent Agreement, in the event of delinquency in the payment of Special Tax installments.
See also "THE DISTRICT—Special Tax Delinquencies" for historical Special Tax delinquency
history.
Bankruptcy Delays
The payment of the Special Tax and the ability of the City to commence a superior court
action to foreclose the lien of a delinquent unpaid Special Tax, as discussed in "SECURITY FOR
THE 2015 BONDS—Covenant for Superior Court Foreclosure," may be limited by bankruptcy,
insolvency or other laws generally affecting creditors' rights or by the laws of the State of
California relating to judicial foreclosure. Legal opinions to be delivered concurrently with the
delivery of the 2015 Bonds (including Bond Counsel's approving legal opinion)will be qualified
as to the enforceability of the various legal instruments by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights,by the application
of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become
extinguished, bankruptcy of a property owner or any other person claiming an interest in the
property could result in a delay in superior court foreclosure proceedings and could result in
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the possibility of Special Tax installments not being paid in part or in full. Such a delay would
increase the likelihood of a delay or default in payment of the principal of and interest on the
2015 Bonds.
Proceeds of Foreclosure Sales
Pursuant to Section 53356.1 of the Act,in the event of any delinquency in the payment of
any Special Tax, the City Council, as the legislative body of the District, may order that the
Special Taxes be collected by a superior court action to foreclose the lien within specified time
limits. The City has covenanted in the Fiscal Agent Agreement that it will, under certain
circumstances, commence such a foreclosure action. See "SECURITY FOR THE 2015 BONDS—
Covenant for Superior Court Foreclosure."
No assurances can be given that a taxable parcel in the District that would be subject to a
judicial foreclosure sale for delinquent Special Taxes will be sold or, if sold,that the proceeds of
such sale will be sufficient to pay the delinquent Special Tax installment. Although the Act
authorizes the City to cause such an action to be commenced and diligently pursued to
completion, the Act does not specify any obligation of the City with regard to purchasing or
otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action
if there is no other purchaser at such sale and the City has not in any way agreed nor does it
expect to be such a bidder.
In a foreclosure proceeding, a judgment debtor (i.e., the property owner) has 140 days
from the date of service of the notice of levy in which to redeem the property to be sold and
may have other redemption rights afforded by law. If a judgment debtor fails to so redeem and
the property is sold, his only remedy is an action to set aside the sale, which must be brought
within 90 days of the date of sale if the purchaser at the sale was the judgment creditor. If a
foreclosure sale is thereby set aside, the judgment is revived and the judgment creditor is
entitled to interest on the revived judgment as if the sale had not been made.
If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of
trust on the affected property could, but would not be required to, advance the amount of the
delinquent Special Tax installment to protect its security interest.
In the event such superior court foreclosure or foreclosures are necessary, there could be
a delay in principal and interest payments to the owners of the 2015 Bonds pending prosecution
of the foreclosure proceedings and receipt by the District of the proceeds of the foreclosure sale,
if any. Judicial foreclosure actions are subject to the normal delays associated with court cases
and may be further slowed by bankruptcy actions and other factors beyond the control of the
City, including delay due to crowded local court calendars or legal tactics and, in any event
could take several years to complete. In particular, bankruptcy proceedings involving the
Landowner or any other owner of a taxable parcel in the District could cause a delay, reduction
or elimination in the flow of Special Tax Revenues to the Fiscal Agent. See "SPECIAL RISK
FACTORS—Bankruptcy Delays."
Natural Disasters
The value of the Taxable Property in the future can be adversely affected by a variety of
natural occurrences, particularly those that may affect infrastructure and other public
improvements and private improvements on the Taxable Property and the continued
habitability and enjoyment of such private improvements. Such occurrences include, without
limitation, wildfire, earthquakes and floods. One or more of such natural disasters could occur
and could result in damage to improvements of varying seriousness. The damage may entail
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significant repair or replacement costs and that repair or replacement may never occur either
because of the cost, or because repair or replacement will not facilitate habitability or other use,
or because other considerations preclude such repair or replacement. Under any of these
circumstances, the value of the Taxable Property may well depreciate or disappear.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value
of a parcel. In general, the owners and operators of a parcel may be required by law to remedy
conditions of the parcel relating to releases or threatened releases of hazardous substances. The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980,
sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and
widely applicable of these laws, but California laws with regard to hazardous substances are
also stringent and similar. 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 has
anything to do with creating or handling the hazardous substance. The effect,therefore, should
any of the taxed parcels be affected by a hazardous substance,is to reduce the marketability and
value of the parcel 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 City has not independently verified, but is not aware of, the presence of any
hazardous substances within the District.
Disclosure to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax, even if the
value of the property is sufficient to justify payment, may be affected by whether or not the
owner was given due notice of the Special Tax authorization at the time the owner purchased
the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax
be levied at the maximum tax rate and, at the time of such a levy, has the ability to pay it as well
as pay other expenses and obligations. The City has caused notices of the Special Tax to be
recorded in the Office of the Recorder for the City against each parcel in the District. Although
title companies normally refer to such notices in title reports, there can be no guarantee that
such reference will be made or, if made, that a prospective purchaser or lender will consider
such Special Tax obligation when purchasing a property within the District or lending money
thereon, as applicable.
California Civil Code Section 1102.6b requires that, in the case of transfers, the seller
must at least make a good faith effort to notify the prospective purchaser of the special tax lien
in a format prescribed by statute. Failure by an owner of the property to comply with the above
requirements, or failure by a purchaser or lessor to consider or understand the nature and
existence of the Special Tax, could adversely affect the willingness and ability of the purchaser
or lessor to pay the Special Tax when due.
FDIC/Federal Government Interests in Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax
installments may be limited with regard to properties in which the Federal Deposit Insurance
Corporation (the "FDIC'), the Drug Enforcement Agency, the Internal Revenue Service, or
other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States
Constitution, in the absence of Congressional intent to the contrary, a state or local agency
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cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the
federal government interest.
The supremacy clause of the United States Constitution reads as follows: "This
Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and
all Treaties made, or which shall be made, under the Authority of the United States, shall be the
supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in
the Constitution or Laws of any State to the contrary notwithstanding."
This means that, unless Congress has otherwise provided, if a federal governmental
entity owns a parcel that is subject to Special Taxes within the District but does not pay taxes
and assessments levied on the parcel (including Special Taxes), the applicable state and local
governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a
mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of
delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold
for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special
Taxes and preserve the federal government's mortgage interest. In Rust v.Johnson(9th Circuit;
1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal
National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this
doctrine, and not a private entity, and that, as a result, an exercise of state power over a
mortgage interest held by FNMA constitutes an exercise of state power over property of the
United States.
The City has not undertaken to determine whether any federal governmental entity
currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the
parcels subject to the Special Taxes within the District, and therefore expresses no view
concerning the likelihood that the risks described above will materialize while the 2015 Bonds
are outstanding.
FDIC. In the event that any financial institution making any loan which is secured by
real property within the District is taken over by the FDIC, and prior thereto or thereafter the
loan or loans go into default, resulting in ownership of the property by the FDIC, then the
ability of the District to collect interest and penalties specified by State law and to foreclose the
lien of delinquent unpaid Special Taxes may be limited.
The FDIC's policy statement regarding the payment of state and local real property taxes
(the "Policy Statement")provides that property owned by the FDIC is subject to state and local
real property taxes only if those taxes are assessed according to the property's value, and that
the FDIC is immune from real property taxes assessed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they
become due and payable and will pay claims for delinquent property taxes as promptly as is
consistent with sound business practice and the orderly administration of the institution's
affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will
pay claims for interest on delinquent property taxes owed at the rate provided under state law,
to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay
any amounts in the nature of fines or penalties and will not pay nor recognize liens for such
amounts. If any property tars (including interest) on FDIC--owned property are secured by a
valid lien (in effect before the pro J�erty became owned by the FDIC), the FDIC will pay those
claims. The Policy Statement further provides that no property of the FDIC is subject to levy,
attachment, garnishment, foreclosure or sale without the FDIC's consent. Cn addition, the FDIC
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will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure
without the FDIC's consent.
The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes,
including special assessments, on property in which it has a fee interest unless the amount of
tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it
recognize the validity of any lien to the extent it purports to secure the payment of any such
amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula which
determines the special tax due each year are specifically identified in the Policy Statement as
being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth
Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal
agency,is exempt from Mello-Roos special taxes.
The City is unable to predict what effect the application of the Policy Statement would
have in the event of a delinquency in the payment of Special Taxes on a parcel within the
District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special
Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of
persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw
on the Reserve Fund and perhaps, ultimately,if enough property were to become owned by the
FDIC, a default in payment on the 2015 Bonds.
No Acceleration Provision
The 2015 Bonds and the Fiscal Agent Agreement do not contain a provision allowing for
the acceleration of the 2015 Bonds in the event of a payment default or other default under the
terms of the 2015 Bonds or the Fiscal Agent Agreement or in the event interest on the 2015
Bonds becomes included in gross income for federal income tax purposes.
Taxability Risk
As discussed herein under the caption "TAX MATTERS," interest on the 2015 Bonds
could become includable in gross income for purposes of federal income taxation retroactive to
the date the 2015 Bonds were issued, as a result of future acts or omissions of the City in
violation of its covenants in the Fiscal Agent Agreement. There is no provision in the 2015
Bonds or the Fiscal Agent Agreement for special redemption or acceleration or for the payment
of additional interest should such an event of taxability occur, and the 2015 Bonds will remain
outstanding until maturity or until redeemed under one of the other redemption provisions
contained in the Fiscal Agent Agreement.
In addition, as discussed under the caption "TAX MATTERS," Congress has considered
in the past, is currently considering and may consider in the future, legislative proposals,
including some that carry retroactive effective dates, that, if enacted, would alter or eliminate
the exclusion from gross income for federal income tax purposes of interest on municipal
bonds, such as the 2015 Bonds. Prospective purchasers of the 2015 Bonds should consult their
own tax advisors regarding any pending or proposed federal tax legislation. The City can
provide no assurance that federal tax law will not change while the 2015 Bonds are outstanding
or that any such changes will not adversely effect the exclusion of interest on the 2015 Bonds
from gross income for federal income tax purposes. If the exclusion of interest on the 2015
Bonds from gross income for federal income tax purposes were amended or eliminated, it is
likely that the market price for the 2015 Bonds would be adversely impacted.
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Enforceability of Remedies
The remedies available to the Fiscal Agent and the registered owners of the 2015 Bonds
upon a default under the Fiscal Agent Agreement or any other document described in this
Official Statement are in many respects dependent upon regulatory and judicial actions that are
often subject to discretion and delay. Under existing law and judicial decisions, the remedies
provided for under such documents may not be readily available or may be limited. Any legal
opinions to be delivered concurrently with the issuance of the 2015 Bonds will be qualified to
the extent that the enforceability of the legal documents with respect to the 2015 Bonds is
subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws
affecting the rights of creditors generally and by equitable remedies and proceedings generally.
Judicial remedies, such as foreclosure and enforcement of covenants, are subject to
exercise of judicial discretion. A California court may not strictly apply certain remedies or
enforce certain covenants if it concludes that application or enforcement would be unreasonable
under the circumstances and it may delay the application of such remedies and enforcement.
No Secondary Market
No representation is made concerning any secondary market for the 2015 Bonds. There
can be no assurance that any secondary market will develop for the 2015 Bonds. Investors
should understand the long-term and economic aspects of an investment in the 2015 Bonds and
should assume that they will have to bear the economic risks of their investment to maturity.
An investment in the 2015 Bonds may be unsuitable for any investor not able to hold the 2015
Bonds to maturity.
Proposition 218
An initiative measure entitled the 'Right to Vote on Taxes Act' (the "Initiative") was
approved by the voters of the State at the November 5, 1996 general election. The Initiative
added Article XIIIC and Article XIIID to the California Constitution. According to the "Title
and Summary" of the Initiative prepared by the California Attorney General, the Initiative
limits "the authority of local governments to impose taxes and property-related assessments,
fees and charges." Provisions of the Initiative have been and will continue to be interpreted by
the courts. The Initiative could potentially impact the Special Taxes otherwise available to the
District to pay the principal of and interest on the 2015 Bonds as described below.
Among other things, Section 3 of Article XIIIC states, "...the initiative power shall not be
prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment,
fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and
voting requirements to alter the rate and method of apportionment of an existing special tax.
However,the Act prohibits a legislative body from adopting any resolution to reduce the rate of
any special tax or terminate the levy of any special tax pledged to repay any debt incurred
pursuant to the Act unless such legislative body determines that the reduction or termination of
the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, the
Governor of the State signed a bill into law enacting Government Code Section 5854, which
states that:
Section 3 of Article XIIIC of the California Constitution, as
adopted at the November 5, 1996, general election, shall not be
construed to mean that any owner or beneficial owner of a
municipal security, purchased before or after that date, assumes
the risk of, or in any way consents to, any action by initiative
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measure that constitutes an impairment of contractual rights
protected by Section 10 of Article I of the United States
Constitution.
Accordingly, although the matter is not free from doubt, it is likely that Article XIIIC has
not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction
would interfere with the timely retirement of the 2015 Bonds.
It may be possible, however, for voters or the District or the City Council acting as the
legislative body of the District to reduce the Special Taxes in a manner that does not interfere
with the timely repayment of the 2015 Bonds, but which does reduce the maximum amount of
Special Taxes that may be levied in any year below the existing levels. Furthermore, no
assurance can be given with respect to the future levy of the Special Taxes in amounts greater
than the amount necessary for the timely retirement of the 2015 Bonds. Therefore, no assurance
can be given with respect to the levy of Special Taxes for Administrative Expenses (as defined
in the Fiscal Agent Agreement). Nevertheless, the City has covenanted that it will not consent
to, or conduct proceedings with respect to, a reduction in the maximum Special Taxes that may
be levied in the District on Developed Property below an amount, for any Bond Year, equal to
110% of the aggregate of the debt service due on the 2015 Bonds in such Bond Year, plus a
reasonable estimate of Administrative Expenses for each such Bond Year. However, no
assurance can be given as to the enforceability of the foregoing covenant.
The interpretation and application of Article XIIIC and Article XIIID will ultimately be
determined by the courts with respect to a number of the matters discussed above, and it is not
possible at this time to predict with certainty the outcome of such determination or the
timeliness of any remedy afforded by the courts. See "—Enforceability of Remedies."
Ballot Initiatives
Articles XIIIC and XIIID of the California Constitution were adopted pursuant to
measures qualified for the ballot pursuant to California's constitutional initiative process, and
the State Legislature has in the past enacted legislation that has altered the spending limitations
or established minimum funding provisions for particular activities. On March 6, 1995 in the
case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax
ordinance and prohibit the imposition of further such taxes and that the exemption from the
referendum requirements does not apply to initiatives. From time to time, other initiative
measures could be adopted by California voters or legislation enacted by the legislature. The
adoption of any such initiative or legislation might place limitations on the ability of the State,
the City, or local districts to increase revenues or to increase appropriations.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax-
exempt bond issues, including both random and targeted audits. It is possible that the 2015
Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the
market value of the 2015 Bonds might be affected as a result of such an audit of the 2015 Bonds
(or by an audit of similar bonds).See "TAX MATTERS."
Recent Court Action Involving Landowner–Voted Special Tax District
On August 1, 2014, in a decision in City of San Diego. v. Melvin Shapiro, an Appellate
Court invalidated an election held by the City of San Diego (the term "City" as used in this
paragraph and the next paragraph means the City of San Diego) to authorize the levying of
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special taxes on hotels City-wide pursuant to a City charter ordinance creating a convention
center facilities district(the"CCFD")much like a community facilities district established Linder
the provisions of the Act. While the CCFD is comprised of all of the reel roperty in the entire
City, the special tax was to be levied only can hotel properties located within the CCFD- At the
election to authorize such special tax, the electorate was defined to consist solely of (a) the
owners of real property in the City on which a hotel is located, and (b) the lessees of real
property owned by a governmental entity on which a hotel is located. Such approach to
determining who would constitute the qualified electors of the CCFD was based on Section
53326(c) of the Law, which generally provides that, if a special tax will not be apportioned in
any tax year on residential property, the legislative body may provide that the vote shall be by
the landowners of the proposed district whose property would be subject to the special tax. The
Court held that such landowners and lessees are neither "qualified electors" of the City for
purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper "electorate"
under Article XIIIC,Section 2(d)of the California Constitution.
The Court specifically noted that the decision did not require the Court to consider the
distinct question of whether landowner voting,to impose special taxes under Section 53326(b)of
the Act(which was the nature of the voter approval through which the District was formed, as
the developer of the land in the District was the sole owner of the land in the District at the time
of the District formation and at the time the Rate and Method was altered) violates the
California Constitution in districts that lack sufficient registered voters to conduct an election
among registered voters. In the case of the CCFD, at the tirne of the election all of the registered
voters in the City were within the CCFD. With respect to the District, there were no registered
voters within the District at the time of the election to authorize the Special Tax and issuance of
bonds by the District and at the time the Rate and Method was altered. Thus, by its terms, the
Court's holding does not apply to the formation and Special Tax election in the District.
Moreover, Section 53341 of the Act provides that any "action or proceeding to attack,
review, set aside, void or annul the levy of a special tax...shall be commenced within 30 days
after the special tax is approved by the voters." Similarly, Section 53359 of the Law requires that
any action to determine the validity of bonds issued pursuant, to the Law be brought within 30
days of the voters approving the issuance of such bonds. Also, Section 860 et seq, of the
California Code of Civil Procedure effectively provides that any legal challenge to the 201.5
Bonds and the Fiscal Agent Agreement be filed within 60 days of the date the Fiscal Agent
Agreement and the 2015 Bonds were approved by the City Council. The landowner in the
District, as the sole qualified elector in the District at the time, approved the Special Tax and the
issuance of bonds for the District in 2002;and the 2015 Bonds were authorized to be issued and
the Fiscal Agent Agreement and the 2015 Bonds were approved by a Resolution adopted by the
City Council, as the legislative body of the District, on May 26, 2015. The City is not aware of
any action being filed challenging the formation of the District, the Rate and Method, the
authority to levy the Special Tax on property in the District, or the validity or enforceability of
the Fiscal Agent Agreement or the 2015 Bonds. See "NO LITIGATION." The City believes that,
pursuant to Sections 53341 and 53359 of the Act, the statute of limitations period to challenge
the validity of the Special Tax has expired.
TAX MATTERS
Federal tax law contains a number of requirements and restrictions which apply to the
2015 Bonds, including investment restrictions, periodic payments of arbitrage profits to the
United States, requirements regarding the proper use of bond proceeds and the facilities
financed therewith, and certain other matters. The City has covenanted in the Fiscal Agent
Agreement to comply with all requirements that must be satisfied in order for the interest on
the 2015 Bonds to be excludable from gross income for federal income tax purposes. Failure to
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comply with certain of such covenants could cause interest on the 2015 Bonds to become
includable in gross income for federal income tax purposes retroactively to the date of issuance
of the 2015 Bonds.
Subject to the City's compliance with the above-referenced covenants, under present
law, in the opinion of Quint & Thimmig LLP, Bond Counsel, interest on the 2015 Bonds (i) is
excludable from the gross income of the owners thereof for federal income tax purposes, and (ii)
is not included as an item of tax preference in computing the federal alternative minimum tax
for individuals and corporations, but interest on the 2015 Bonds is taken into account, however,
in computing an adjustment used in determining the federal alternative minimum tax for
certain corporations.
In rendering its opinion, Bond Counsel will rely upon certifications of the City with
respect to certain material facts within the City's knowledge. Bond Counsel's opinion represents
its legal judgment based upon its review of the law and the facts that it deems relevant to
render such opinion and is not a guarantee of a result.
The Internal Revenue Code of 1986, as amended (the "Code'),includes provisions for an
alternative minimum tax ("AMT") for corporations in addition to the corporate regular tax in
certain cases. The AMT, if any, depends upon the corporation's alternative minimum taxable
income ("AMTI"), which is the corporation's taxable income with certain adjustments. One of
the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is
an amount equal to 75% of the excess of such corporation's "adjusted current earnings" over an
amount equal to its AMTI (before such adjustment item and the alternative tax net operating
loss deduction). "Adjusted current earnings" would include certain tax-exempt interest,
including interest on the 2015 Bonds.
Ownership of the 2015 Bonds may result in collateral federal income tax consequences to
certain taxpayers, including, without limitation, corporations subject to the branch profits tax,
financial institutions, certain insurance companies, certain S corporations, individual recipients
of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have
incurred (or continued) indebtedness to purchase or carry tax exempt obligations. Prospective
purchasers of the 2015 Bonds should consult their tax advisors as to applicability of any such
collateral consequences.
The issue price (the "Issue Price") for each maturity of the 2015 Bonds is the price at
which a substantial amount of such maturity of the 2015 Bonds is first sold to the public. The
Issue Price of a maturity of the 2015 Bonds may be different from the price set forth, or the price
corresponding to the yield set forth, on the inside cover page of this Official Statement.
If the Issue Price of a maturity of the 2015 Bonds is less than the principal amount
payable at maturity, the difference between the Issue Price of each such maturity, if any, of the
2015 Bonds (the "OID 2015 Bonds") and the principal amount payable at maturity is original
issue discount.
For an investor who purchases an OID 2015 Bond in the initial public offering at the
Issue Price for such maturity and who holds such OID 2015 Bond to its stated maturity, subject
to the condition that the City comply with the covenants discussed above, (a)the full amount of
original issue discount with respect to such OID 2015 Bond constitutes interest which is
excludable from the gross income of the owner thereof for federal income tax purposes; (b)such
owner will not realize taxable capital gain or market discount upon payment of such OID 2015
Bond at its stated maturity; (c) such original issue discount is not included as an item of tax
preference in computing the alternative minimum tax for individuals and corporations under
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the Code, but is taken into account in computing an adjustment used in determining the
alternative minimum tax for certain corporations under the Code, as described above; and (d)
the accretion of original issue discount in each year may result in an alternative minimum tax
liability for corporations or certain other collateral federal income tax consequences in each year
even though a corresponding cash payment may not be received until a later year. Owners of
OID 2015 Bonds should consult their own tax advisors with respect to the state and local tax
consequences of original issue discount on such OID 2015 Bonds.
Owners of 2015 Bonds who dispose of 2015 Bonds prior to the stated maturity (whether
by sale, redemption or otherwise), purchase 2015 Bonds in the initial public offering, but at a
price different from the Issue Price or purchase 2015 Bonds subsequent to the initial public
offering should consult their own tax advisors.
If a 2015 Bond is purchased at any time for a price that is less than the 2015 Bond's stated
redemption price at maturity or, in the case of an OID 2015 Bond, its Issue Price plus accreted
original issue discount reduced by payments of interest included in the computation of original
issue discount and previously paid (the "Revised Issue Price'), the purchaser will be treated as
having purchased a 2015 Bond with market discount subject to the market discount rules of the
Code (unless a statutory de minimis rule applies).Accrued market discount is treated as taxable
ordinary income and is recognized when a 2015 Bond is disposed of(to the extent such accrued
discount does not exceed gain realized) or, at the purchaser's election, as it accrues. Such
treatment would apply to any purchaser who purchases an OID 2015 Bond for a price that is
less than its Revised Issue Price even if the purchase price exceeds par. The applicability of the
market discount rules may adversely affect the liquidity or secondary market price of such 2015
Bond. Purchasers should consult their own tax advisors regarding the potential implications of
market discount with respect to the 2015 Bonds.
An investor may purchase a 2015 Bond at a price in excess of its stated principal amount.
Such excess is characterized for federal income tax purposes as "bond premium" and must be
amortized by an investor on a constant yield basis over the remaining term of the 2015 Bond in
a manner that takes into account potential call dates and call prices. An investor cannot deduct
amortized bond premium relating to a tax-exempt bond. The amortized bond premium is
treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it
reduces the investor's basis in the 2015 Bond. Investors who purchase a 2015 Bond at a
premium should consult their own tax advisors regarding the amortization of bond premium
and its effect on the 2015 Bond's basis for purposes of computing gain or loss in connection with
the sale, exchange,redemption or early retirement of the 2015 Bond.
There are or may be pending in the Congress of the United States legislative proposals,
including some that carry retroactive effective dates, that, if enacted, could alter or amend the
federal tax matters referred to above or affect the market value of the 2015 Bonds. It cannot be
predicted whether or in what form any such proposal might be enacted or whether, if enacted,
it would apply to bonds issued prior to enactment. Prospective purchasers of the 2015 Bonds
should consult their own tax advisors regarding any pending or proposed federal tax
legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax
legislation.
The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-
exempt obligations to determine whether, in the view of the Service, interest on such tax-
exempt obligations is includable in the gross income of the owners thereof for federal income
tax purposes. It cannot be predicted whether or not the Service will commence an audit of the
2015 Bonds. If an audit is commenced, under current procedures the Service may treat the City
as a taxpayer and the 2015 Bondholders may have no right to participate in such procedure.The
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commencement of an audit could adversely affect the market value and liquidity of the 2015
Bonds until the audit is concluded,regardless of the ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or maturity of,tax exempt
obligations, including the 2015 Bonds, are in certain cases required to be reported to the Service.
Additionally, backup withholding may apply to any such payments to any 2015 Bond owner
who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and
Certification, or a substantially identical form, or to any 2015 Bond owner who is notified by the
Service of a failure to report any interest or dividends required to be shown on federal income
tax returns. The reporting and backup withholding requirements do not affect the excludability
of such interest from gross income for federal tax purposes.
In the further opinion of Bond Counsel, interest on the 2015 Bonds is exempt from
California personal income taxes.
Ownership of the 2015 Bonds may result in other state and local tax consequences to
certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral
consequences arising with respect to the 2015 Bonds. Prospective purchasers of the 2015 Bonds
should consult their tax advisors regarding the applicability of any such state and local taxes.
The complete text of the final opinion that Bond Counsel expects to deliver upon
issuance of the 2015 Bonds is set forth in Appendix D.
LEGAL MATTERS
Concurrent with the issuance of the 2015 Bonds, Quint & Thimmig LLP, Larkspur,
California, Bond Counsel,will render its opinion substantially in the form set forth in Appendix
D to this Official Statement. Certain legal matters with respect to the 2015 Bonds will be passed
upon for the City and the District by Richards, Watson & Gershon, Los Angeles, California, in
their capacity as attorneys for the City, and for the City by Quint & Thimmig LLP, Larkspur,
California, acting as Disclosure Counsel. Certain legal matters will be passed upon for the
Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and
Underwriter's Counsel is contingent on the issuance of the 2015 Bonds.
NO RATING
The City has not made, and does not intend to make, any application to any rating
agency for the assignment of a rating to the 2015 Bonds.
NO LITIGATION
The City is not aware of any pending or threatened litigation challenging the validity of
the 2015 Bonds, the Special Taxes securing the 2015 Bonds, or any action taken by the City in
connection with the formation of the District, the levying of the Special Taxes or the issuance of
the 2015 Bonds.
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UNDERWRITING
The 2015 Bonds are being purchased through negotiation by Stifel, Nicolaus &
Company, Incorporated (the "Underwriter"). The Underwriter agreed to purchase the 2015
Bonds at a price of $ (which is equal to the par amount of the 2015 Bonds, less an
underwriter's discount of$ ). The initial public offering prices set forth on the inside
cover page may be changed by the Underwriter. The Underwriter may offer and sell the 2015
Bonds to certain dealers and others at prices lower than the public offering prices set forth on
the inside cover page hereof.
CONTINUING DISCLOSURE
The City has covenanted in a Continuing Disclosure Agreement for the benefit of the
Owners of the 2015 Bonds to provide Annual Reports that include certain annual financial
information and operating data, and to provide notices of the occurrence of certain enumerated
events. The City has retained Willdan Financial Services to act as the Dissemination Agent
under the Continuing Disclosure Agreement. The City or the Dissemination Agent, on behalf of
the City, will file the Annual Reports and notices as required by the Continuing Disclosure
Agreement with the Municipal Securities Rulemaking Board. See Appendix E — "Form of
Continuing Disclosure Agreement" for the complete text of the City's Continuing Disclosure
Agreement. The covenants of the City in the Continuing Disclosure Agreement have been
made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) (the "Rule")
promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended.
A failure by the City to comply with the provisions of the Continuing Disclosure
Agreement is not an event of default under the Fiscal Agent Agreement (although the holders
and beneficial owners of the 2015 Bonds do have remedies at law and in equity). However, a
failure to comply with the provisions of the Continuing Disclosure Agreement must be reported
in accordance with the Rule and must be considered by any broker, dealer or municipal
securities dealer before reconimending the Purchase or sale of the 2015 Bonds. Therefore, a
failure by the City to comply with the provisions of the Continuing Disclosure Agreement may
adversely affect the marketability of the 2015 Bonds on the secondary market.
The City has represented that it has not failed to comply in all material respects with any
undertaking under the Rule in the past five years. [foregoing subject to change upon completion
of Willdan review of compliance]
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MISCELLANEOUS
Included herein are brief summaries of certain documents, which summaries do not
purport to be complete or definitive, and reference is made to such documents for full and
complete statements of the contents thereof. Any statements in this Official Statement involving
matters of opinion, whether or not expressly so stated, are intended as such and not as
representations of fact. This Official Statement is not to be construed as a contract or agreement
between the City or the District and the purchasers or Owners of any of the 2015 Bonds.
The execution and delivery of this Official Statement has been duly authorized by the
City Council, acting as the legislative body of the District.
CITY OF SEAL BEACH, CALIFORNIA, for
and on behalf of the CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.
2002-01 (HERON POINTE)
By:
City Manager
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APPENDIX A
SEAL BEACH AND ORANGE COUNTY
GENERAL DEMOGRAPHIC INFORMATION
The following information in this Appendix is included only to provide general demographic and
economic information regarding the City of Seal Beach, California (the "City")and Orange County. The
information set forth in this Appendix has been obtained from sources that the City believes are reliable,
but does guarantee as to the accuracy or completeness. As discussed in the forepart of this Official
Statement, the 2015 Bonds are not general obligations of the City, but are limited obligations of the City
for the District,payable solely from the sources provided therefor in the Fiscal Agent Agreement.
General
The City. The City of Seal Beach (the "City") is located on the coast of northwestern
Orange County (the "County") California, was incorporated on October 25, 1915. The City
charter, which was adopted in 1964, established the form of government, states the powers and
duties of the City Council, and establishes various City Offices.
The City has an area of 13.23 square miles and sits on the coast as the gateway to Orange
County between the cities of Long Beach and Huntington Beach. In 1901 J.C. Ord, a Civil War
veteran known as "the father of Seal Beach," hired a 30—mule team to bring his small general
store building from Los Alamitos to Bay City where he set it down at the southwest corner of
crossroads now known as Main Street. J.C. Ord was the first Trustee, the first Mayor,
Postmaster, and the first Judge. His store on Main Street was the Post Office and Court House
and the jail house when it was necessary.
The City is the home of Boeing, Company Integrated Defense System international
headquarters, the U.S. Naval Weapons Station, the first Leisure World Retirement Community
and the 1,000 acre Seal leach National. Wildlife Refuge. The City's one and a half miles of
beaches and the public pier attracts more than 2,000,000 visitors each year making recreation an
important factor in the local economy. Seal Beach has a variety of local beach front stores at
Main Street which include several fine dining establishments. Throughout the year many
exciting community events take place in which the residents, and visitors, enjoy and participate.
The City is operated under the City Council/City Manager form of government, and is
governed by a five-member city council elected by district serving four-year alternating terms
and who in turn elect the Mayor and Mayor Pro Tem from among themselves for a one year
term. The governing council is responsible for policy-making, passing local ordinances,
adopting the budget, appointing committees, and hiring the City Manager and City Attorney.
The City provides a full range of services for the citizens utilizing a mix of contracts with
other governmental entities or private companies. The City has its own Police Department but
contracts for fire and paramedic services through the Orange County Fire Authority (OCFA).
The City also operates water and sewer utilities but contracts for refuse and sanitation treatment
services.
The County. Orange County, incorporated in 1889 and located in the southern part of the
State of California, is one of the major metropolitan areas in the state and nation. The County
occupies a land area of 798 square miles with a coastline of 42 miles serving a population of
over 3 million. It represents the third most populous county in the state, and ranks sixth in the
nation.
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Orange County's 3 million residents enjoy a nearly perfect climate in which parks and
beaches provide abundant opportunities for outdoor activities. Orange County is the home of
exciting professional sports, a wide range of tourist attractions and quality venues for visual
and performing arts. Orange County boasts a thriving business economy and a well educated
work force. The County of Orange is a regional service provider and planning agency whose
core businesses include public safety, public health, environmental protection, regional
planning,public assistance,social services and aviation
Population
The table below summarizes population of the City and the County.
CITY OF SEAL BEACH and ORANGE COUNTY
Population
Population
Year City of Seal Beach Orange County
2010 24,168 3,010,232
2011 24,212 3,028,846
2012 24,371 3,057,875
2013 24,514 3,085,269
2014 24,591 3,113,991
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2011-2014,
with 2010 Census Benchmark.
A-2
Employment
The following table summarizes the historical numbers of workers by industry in the
County for the last five years:
ANAHEIM-SANTA ANA-IRVINE MD
(ORANGE COUNTY)
Labor Force and Industry Employment
Annual Averages by Industry
2010 2011 2012 2013 2014-
Total,All Industries 1,370,400 1,385,600 1,422,400 1,462,400 1,498,700
Total Farm 3,700 3,200 2,800 2,900 2,800
Mining and Logging 600 600 600 600 700
Construction 68,000 69,200 71,300 76,800 82,000
Manufacturing 150,500 154,300 158,300 158,000 158,800
Wholesale Trade 77,800 77,300 77,200 79,400 81,700
Retail Trade 141,300 142,600 144,000 145,500 148,700
Transportation,Warehousing&Utilities 26,700 27,500 28,000 27,500 26,600
Information 24,800 23,800 24,300 25,000 24,200
Financial Activities 103,500 104,800 108,300 113,100 114,100
Professional&Business Services 244,900 247,700 260,600 267,300 275,800
Educational&Health Services 165,500 168,000 173,800 184,200 190,300
Leisure&Hospitality 168,600 174,000 180,600 187,800 193,500
Other Services 42,200 43,200 44,600 45,600 47,700
Government 152,300 149,300 147,900 148,700 151,900
Source: California Employment Development Department based on March 2015 benchmark.
Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in
households,and persons involved in labor/management trade disputes.Employment reported by place of
work.Items may not add to totals due to independent rounding.
(1) Last available full year data.
A-3
The following tables summarize historical employment and unemployment for the
County,the State of California and the United States:
ORANGE COUNTY,CALIFORNIA,and UNITED STATES
Civilian Labor Force,Employment,and Unemployment
(Annual Averages)
2010-2014
Unemployment
Year Area Labor Force Employment Unemployment Rate
2010 Orange County 1,592,500 1,441,500 151,000 9.5 0 California 18,336,300 16,091,900 2,244,300 12.2
United States 153,889,000 139,064,000 14,825,000 9.6
2011 Orange County 1,600,100 1,460,100 140,000 8.87.
California 18,419,500 16,260,100 2,159,400 11.7
United States 153,617,000 139,869,000 13,747,000 8.9
2012 Orange County 1,613,600 1,491,600 122,000 7.6%
California 18,554,800 16,630,100 1,924,700 10.4
United States 154,975,000 142,469,000 12,506,000 8.1
2013 Orange County 1,610,900 1,510,600 100,400 6.2%
California 18,671,600 17,002,900 1,668,700 8.9
United States 155,389,000 143,929,000 11,460,000 7.4
2014„ Orange County 1,573,800 1,487,400 86,400 5.5%
California 18,811,400 17,397,100 1,414,300 7.5
United States 155,922,000 146,305,000 9,617,000 6.2
Sources:California Employment Development Department, Report 400 C Monthly Labor Force Data for Counties,
Annual Averages and US Bureau of Labor Statistics.
(1) The unemployment rate is computed from unrounded data,therefore, it may differ from rates computed from
rounded figures available in this table.
(2) Latest available full-year data.
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Major Employers
The table below sets forth the principal employers of the County in 2015.
ORANGE COUNTY
2015 Major Employers
Employer Name Location Industry
Anaheim City Hall Anaheim City Government-Executive Offices
Blogtagon Social Media Fountain Valley Internet Service
Boeing Co Huntington Beach Aircraft-Manufacturers
Boeing Co Seal Beach Aerospace Industries(Mfrs)
Broadcom Corp Irvine Semiconductors&Related Devices(Mfrs)
California State-Fullerton Fullerton Schools-Universities&Colleges Academic
Disneyland Anaheim Amusement&Theme Parks
Emplicity Irvine Employment Contractors-Temporary Help
First American Title Ins Co Santa Ana Title Companies
Hoag Hospital Newport Beach Newport Beach Hospitals
James R Glidewell Dental Crmcs Irvine Laboratories-Dental
Jones Lang La Salle Brea Real Estate Management
Laguna Woods Village Cmnty Ctr Laguna Woods Senior Citizens Service
Puro Clean Anaheim Fire Damage Restoration
Quiksilver Eyeware USA Huntington Beach Optical Goods-Retail
Raytheon Co Fullerton Search Detection/Nav Systs/Instr(Mfrs)
St Jude Medical Ctr Brea Hospitals
St Jude Medical Ctr Fullerton Hospitals
Tenet Healthcare Fountain Valley Hospitals
Uc Irvine Healthcare Orange Hospitals
United Healthcare Cypress Health Plans
University of Ca-Irvine Irvine Schools-Universities&Colleges Academic
University-Ca Irvine Med Ctr Orange Medical Centers
US Health Care Svc Seal Beach Health&Allied Services
Walt Disney Parks&Resorts Anaheim Amusement&Theme Parks
Source: California Employment Development Department,Major Employers in Orange County.
A-5
Construction Activity
The following table reflects the five-year history of building permit valuation for the
City and the County:
CITY OF SEAL BEACH
Building Permits and Valuation
(Dollars in Thousands)
2009 2010 2011 2012 2013
Permit Valuation:
New Single-family 1,971 1,259 5,688 3,250 1,868
New Multi-family - - - - 158
Res.Alterations/Additions 8,503 9,087 10,085 4,866 9,065
Total Residential 10,474 10,347 15,773 8,116 11,092
Total Nonresidential 6,078 32,750 5,124 6,831 23,189
Total All Building 16,552 43,098 20,898 14,948 34,281
New Dwelling Units:
Single Family 5 4 5 7 4
Multiple Family - - - - 2
Total 5 4 5 7 6
Source: Construction Industry Research Board:'Building Permit Summary"
Note: Totals may not add due to independent rounding.
ORANGE COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2009 2010 2011 2012 2013
Permit Valuation:
New Single-family 437,832 492,529 518,681 752,931 1,237,994
New Multi-family 109,750 208,046 378,599 438,118 994,873
Res.Alterations/Additions 307,610 328,830 450,105 363,854 363,674
Total Residential 855,192 1,029,406 1,347,386 _ 1,554,904 2,596,542
Total Nonresidential 952,484 1,151,928 1,188,199 1,271,034 4,208,209
Total All Building 1,807,677 2,181,334 2,535,586 2,825,938 6,804,752
New Dwelling Units:
Single Family 1,376 1,553 1,908 2,438 3,889
Multiple Family 824 1,538 2,897 3,725 6,564
Total 2,200 3,091 4,805 6,163 10,413
Source: Construction Industry Research Board:'Building Permit Summary."
Note: Totals may not add due to independent rounding.
A-6
Commercial Activity
Taxable sales in the City and County are shown below. Beginning in 2009, reports
summarize taxable sales and permits using the NAICS codes. As a result of the coding change,
however,industry-level data for 2009 are not comparable to that of prior years.
CITY OF SEAL BEACH
Taxable Sales,2009-2013
(Dollars in thousands)
2009 2010 2011 2012 2013«
Retail and Food Services
Motor Vehicles and Parts Dealers # # # # #
Home Furnishings and Appliance Stores 20,162 18,578 20,129 21,211 22,108
Bldg.Matrl.and Garden Equip.and Supplies 2,100 1,679 1,968 # 1,931
Food and Beverage Stores 19,920 20,178 21,394 22,992 23,267
Gasoline Stations 40,090 48,124 50,348 47,071 43,712
Clothing and Clothing Accessories Stores 18,167 23,714 25,771 27,935 29,524
General Merchandise Stores 61,761 61,502 60,069 59,650 60,066
Food Services and Drinking Places 70,998 71,606 78,237 83,293 84,836
Other Retail Group 29,343# 30,353# 30,540# 37,899# 46,131#
Total Retail and Food Services 262,540 275,733 288,456 300,050 311,575
All Other Outlets 112,148 97,711 155,091 177,015 110,316
Total All Outlets 374,688 373,445 443,547 477,065 421,891
Source: California Board of Equalization,Taxable Sales in California(Sales&Use Tax).
(1) Totals may not add up due to independent rounding.
(2) Last available full year data.
(#) Sales omitted because their publication would result in disclosure of confidential information.
ORANGECOUNTY
Taxable Sales,2009-2013
(Dollars in thousands)
2009 2010 2011 2012 2013-
Retail and Food Services
Motor Vehicles and Parts Dealers 4,902,480 5,244,266 5,777,582 6,551,466 7,147,519
Furniture and Home Furnishings Stores 850,889 869,868 909,455 965,018 1,050,308
Electronics and Appliance Stores 1,978,869 2,058,383 2,319,992 2,536,415 2,488,963
Bldg Mtrl.and Garden Equip.and Supplies 2,039,686 2,112,467 2,267,363 2,351,574 2,581,968
Food and Beverage Stores 1,894,642 1,911,192 1,990,893 2,056,803 2,111,209
Health and Personal Care Stores 784,067 824,719 894,003 948,220 983,067
Gasoline Stations 3,383,678 3,801,651 4,826,228 5,063,762 4,706,666
Clothing and Clothing Accessories Stores 2,742,626 2,923,680 3,164,857 3,510,757 3,764,088
Sporting Goods,Hobby,Book and Music Stores 1,074,579 1,075,996 1,101,159 1,133,702 1,176,097
General Merchandise Stores 4,376,154 4,527,201 4,771,143 5,026,911 5,169,057
Miscellaneous Store Retailers 1,625,880 1,611,739 1,656,162 1,738,855 1,766,848
Nonstore Retailers 484,692 481,563 459,841 635,707 893,254
Food Services and Drinking Places 5,024,379 5,109,383 5,449,117 5,853,267 6,186,883
Total Retail and Food Services 31,162,619 32,552,107 35,587,795 3g,372,456 40,025,929
All Other Outlets 14,550,164 15,115,073 16,143,344 16,858,156 17,565,288
Totals All Outlets 45,712,784 47,667,179 51,731,139 55,230,612 57,591,217
Source: California Board of Equalization,Taxable Sales in California(Sales&Use Tax).
(1)Totals may not add up due to independent rounding.
(2)Last available full year data.
A-7
Median Household Income
The following table summarizes the median household effective buying income for the
City,the County,the State of California and the nation for the years 2010 through 2014.
CITY OF SEAL BEACH,ORANGE COUNTY,CALIFORNIA and UNITED STATES
Effective Buying Income
Total Effective Buying Median Household
Year Area Income(000's Omitted) Effective Buying Income
2010 City of Seal Beach 800,798 43,247
Orange County 75,063,558 57,849
California 801,393,028 47,177
United States 6,365,020,076 41,368
2011 City of Seal Beach 826,928 43,790
Orange County 76,315,505 57,607
California 814,578,457 47,062
United States 6,438,704,663 41,253
2012 City of Seal Beach 904,315 41,062
Orange County 81,079,398 57,181
California 864,088,827 47,307
United States 61737,867,730 41,358
2013 City of Seal Beach 910,718 41,779
Orange County 81,151,078 59,589
California 858,676,636 48,340
United States 61982,757,379 43,715
2014 City of Seal Beach 958,255 43,690
Orange County 83,607,615 60,931
California 901,189,699 50,072
United States 7,357,153,421 45,448
Source: Nielsen Claritas,Inc.
A-8
APPENDIX B
AMENDED AND RESTATED
RATE AND METHOD OF APPORTIONMENT FOR CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE)
A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in the
City of Seal Beach Community Facilities District No. 2002-01 (Heron Pointe) ("CFD No.
2002-01") and collected each Fiscal Year commencing in Fiscal Year 2002-03, in an amount
determined by the City Council of the City of Seal Beach, through the application of the Rate
and Method of Apportionment as described below. All of the real property in CFD No.
2002-01, unless exempted by law or by the provisions hereof, shall be taxed for the purposes,
to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an
Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the
land area shown on the applicable final map, parcel map, condominium plan, or other
recorded County parcel map.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5,Division 2 of Title 5 of the Government Code of the State of California.
"Administrative Expenses" means the following actual or reasonably estimated costs
directly related to the administration of CFD No. 2002-01: the costs of computing the
Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or designee thereof or both); the costs of collecting the Special Taxes (whether by
the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the
costs of the Trustee(including its legal counsel)in the discharge of the duties required of
it under the Indenture;the costs to the City, CFD No. 2002-01 or any designee thereof of
complying with arbitrage rebate requirements; the costs to the City, CFD No. 2002-01 or
any designee thereof of complying with City, CFD No. 2002-01 or obligated persons
disclosure requirements associated with applicable federal and state securities laws and
of the Act; the costs associated with preparing Special Tax disclosure statements and
responding to public inquiries regarding the Special Taxes; the costs of the City, CFD
No. 2002-01 or any designee thereof related to an appeal of the Special Tax; the costs
associated with the release of funds from any escrow account; and the City's annual
administration fees and third party expenses. Administrative Expenses shall also
include amounts estimated or advanced by the City or CFD No. 2002-01 for any other
administrative purposes of CFD No. 2002-01, including attorney's fees and other costs
related to commencing and pursuing to completion any foreclosure of delinquent
Special Taxes.
"Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an
assigned Assessor's parcel number.
"Assessor's Parcel Map" means an official map of the County Assessor of the County
designating parcels by Assessor's parcel number.
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"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed
Property, as determined in accordance with Section C below.
"Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of
Developed Property, as determined in accordance with Section C below.
"Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act),
whether in one or more series, issued by the City on behalf of CFD No. 2002-01 under
the Act.
"CFD Administrator" means an official of the City, or designee thereof, responsible for
determining the Special Tax Requirement and providing for the levy and collection of
the Special Taxes.
"CFD No. 2002-01" means the City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe).
"City" means the City of Seal Beach. "Council" means the City Council of the City.
"County" means the County of Orange.
"Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of
Taxable Public Property and Taxable Property Owner Association Property, for which a
building permit for new construction was issued after January 1, 2001 and prior to
January 1 of the prior Fiscal Year.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
"Indenture" means the indenture, fiscal agent agreement,resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from
time to time.
"Land Use Class" means any of the classes listed in Table 1 below.
"Maximum Special Tax" means the Maximum Special Tax, determined in accordance
with Section C below,that can be levied in any Fiscal Year on any Assessor's Parcel.
"Non-Residential Property" means all Assessor's Parcels of Developed Property for
which a building permit was issued for a non-residential use.
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the
Indenture.
"Proportionately" means, for Developed Property, that the ratio of the actual Special
Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed
Property. For Undeveloped Property, "Proportionately" means that the ratio of the
actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all
Assessor's Parcels of Undeveloped Property. For Taxable Public Property and Taxable
Property Owner Association Property, "Proportionately" means that the ratio of the
actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all
Assessor's Parcels of Taxable Public Property or Taxable Property Owner Association
Property, as applicable.
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"Property Owner Association Property" means, for each Fiscal Year, any property
within the boundaries of CFD No. 2002-01 that was owned by a property owner
association, including any master or sub-association, as of January 1 of the prior Fiscal
Year.
"Public Property" means, for each Fiscal Year, any property within CFD No. 2002-01
that is owned by, irrevocably offered for dedication to, or dedicated to the federal
government, the State, the County, the City or any other public agency as of June 30 of
the prior Fiscal Year;provided however that any property leased by a public agency to a
private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and
classified in accordance with its use. To ensure that property is classified as Public
Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication
to, or dedicated to a public agency, the property owner shall notify the CFD
Administrator in writing of such acquisition, offer, or dedication not later than June 30
of the Fiscal Year in which the acquisition,offer, or dedication occurred.
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure, not including any carport, walkway, garage,
overhang, patio, enclosed patio, or similar area. The determination of Residential Floor
Area shall be made by reference to the building permit(s) issued for such Assessor's
Parcel.
"Residential Property" means all Assessor's Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more residential
dwelling units.
"Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's
Parcel of Taxable Property to fund the Special Tax Requirement.
"Special Tax Requirement" means that amount required in any Fiscal Year for CFD No.
2002-01 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the
Bonds, including but not limited to, credit enhancement and rebate payments on the
Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or
replenish any reserve funds for all Outstanding Bonds; (v)pay directly for acquisition or
construction of CFD No. 2002-01 facilities eligible under the Act; (vi) pay for reasonably
anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes
levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the
annual Special Tax levy, as determined by the CFD Administrator pursuant to the
Indenture.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD
No. 2002-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
"Taxable Property Owner Association Property" means all Assessor's Parcels of
Property Owner Association Property that are not exempt pursuant to Section E below.
"Taxable Public Property" means all Assessor's Parcels of Public Property that are not
exempt pursuant to Section E below.
"Trustee" means the trustee or fiscal agent under the Indenture.
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"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified
as Developed Property, Taxable Public Property or Taxable Property Owner Association
Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within CFD No. 2002-01 shall be classified as
Developed Property, Taxable Public Property, Taxable Property Owner Association
Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance
with the rate and method of apportionment determined pursuant to Sections C and D
below.
C. MAXIMUM SPECIAL TAX
1. Developed Property
a. Maximum Special Tax
The Maximum Special Tax for each Assessor's Parcel classified as
Developed Property shall be the greater of (i) the amount derived by
application of the Assigned Special Tax or (ii) the amount derived by
application of the Backup Special Tax.
b. Assigned Special Tax
The Fiscal Year 2002-03 Assigned Special Tax for each Land Use Class is
shown below in Table 1.
TABLE 1
Fiscal Year 2002-03
Assigned Special Taxes for Developed Property in
Community Facilities District No. 2002-01 (Heron Pointe)
Land Use
Class Description Residential Floor Area Assigned Special Tax
1 Residential Property 4,000 s.f. $5,350 per unit
2 Residential Property 3,750-3,999 s.f. $5,078 per unit
3 Residential Property 3,500-3,749 s.f. $4,900 per unit
4 Residential Property <3,500 s.f. $4,570 per unit
5 Non-Residential NA $41,977 per Acre
Property
C. Backup Special Tax
The Fiscal Year 2002-03 Backup Special Tax for an Assessor's Parcel of
Developed Property shall equal $41,977 per Acre.
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d. Increase in the Assigned Special Tax and Backup Special Tax
On each July 1, commencing on July 1, 2003 and through and including
July 1, 2012, the Assigned Special Tax and the Backup Special Tax shall
be increased by an amount equal to two percent (2%) of the amount in
effect for the previous Fiscal Year. There will be no increase in the
Assigned Tax or Backup Special Tax subsequent to July 1,2012.
2. Undeveloped Property, Taxable Public Property, and Taxable Property
Owner Association Property
a. Maximum Special Tax
The Fiscal Year 2002-03 Maximum Special Tax for Undeveloped
Property, Taxable Public Property, and Taxable Property Owner
Association Property shall be$47,043 per Acre.
b. Increase in the Maximum Special Tax
On each July 1, commencing on July 1, 2003 and through and including
July 1, 2012, the Maximum Special Tax for Undeveloped Property,
Taxable Public Property, and Taxable Property Owner Association
Property shall be increased by an amount equal to two percent(2%)of the
amount in effect for the previous Fiscal Year. There will be no increase in
the Maximum Special Tax for Undeveloped Property, Taxable Public
Property, and Taxable Property Owner Association Property subsequent
to July 1,2012.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2002-03 and for each following Fiscal Year, the Council
shall determine the Special Tax Requirement and shall levy the Special Tax until the
amount of Special Taxes equal the Special Tax Requirement. The Special Tax shall
be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax;
Second: If additional monies are needed to satisfy the Special Tax Requirement after
the first step has been completed, the Special Tax shall be levied Proportionately on
each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum
Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement after the
first two steps have been completed, then the levy of the Special Tax on each Assessor's
Parcel of Developed Property whose Maximum Special Tax is determined through
the application of the Backup Special Tax shall be increased in equal percentages
from the Assigned Special Tax up to the Maximum Special Tax for each such
Assessor's Parcel;
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Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the
first three steps have been completed, then the Special Tax shall be levied
Proportionately on each Assessor's Parcel of Taxable Property Owner Association
Property at up to the Maximum Special Tax for Taxable Property Owner Association
Property; and
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the
first four steps have been completed, then the Special Tax shall be levied
Proportionately on each Assessor's Parcel of Taxable Public Property at up to the
Maximum Special Tax for Taxable Public Property.
Notwithstanding the above, under no circumstances will the Special Tax levied
against any Assessor's Parcel of Residential Property for which an occupancy
permit for private residential use has been issued be increased by more than ten
percent as a consequence of delinquency or default by the owner of any other
Assessor's Parcel within the CFD.
E. EXEMPTIONS
No Special Tax shall be levied on up to 8.07 Acres of Property Owner Association
Property. Tax-exempt status will be irrevocably assigned by the CFD Administrator
in the chronological order in which property becomes Property Owner Association
Property. However, should an Assessor's Parcel no longer be classified as Property
Owner Association Property, its tax-exempt status will be revoked. No Public
Property shall be exempt from Special Tax, except as required by law.
Public Property or Property Owner Association Property that is not exempt from
Special Taxes under this section shall be subject to the levy of the Special Tax and
shall be taxed Proportionately as part of the fourth or fifth step in Section D above, at
up to 100% of the applicable Maximum Special Tax for Taxable Public Property or
Taxable Property Owner Association Property.
F. APPEALS AND INTERPRETATIONS
Any taxpayer may file a written appeal of the Special Tax on his/her property with the
CFD Administrator, provided that the appellant is current in his/her payments of
Special Taxes. During the pendency of an appeal, all Special Taxes previously levied
must be paid on or before the payment date established when the levy was made. The
appeal must specify the reasons why the appellant claims the calculation of the
Special Tax is in error. The CFD Administrator shall review the appeal, meet with the
appellant if the CFD Administrator deems necessary, and advise the appellant of its
determination. If the CFD Administrator agrees with the appellant, the CFD
Administrator shall eliminate or reduce the Special Tax on the appellant's property
and/or provide a refund to the appellant. If the CFD Administrator disagrees with the
appellant and the appellant is dissatisfied with the determination, the appellant then
has 30 days in which to appeal to the Council by filing a written notice of appeal with
the City clerk, provided that the appellant is current in his/her payments of Special
Taxes. The second appeal must specify the reasons for its disagreement with the CFD
Administrator's determination.
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G. MANNER OF COLLECTION
The Special Tax will be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that CFD No. 2002-01 may
directly bill the Special Tax, may collect Special Taxes at a different time or in a
different manner if necessary to meet its financial obligations, and may covenant to
foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted
by the Act.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
"CFD Public Facilities Cost" means either $3.015 million in 2002 dollars, which
shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1
thereafter, or such lower number as (i) shall be determined by the CFD Administrator
as sufficient to provide the public facilities to be provided by CFD No. 2002-01
under the authorized bonding program for CFD No. 2002-01, or (ii) shall be
determined by the Council concurrently with a covenant that it will not issue any
more Bonds to be supported by Special Taxes levied under this Rate and Method of
Apportionment as described in Section D.
"Construction Fund" means an account specifically identified in the Indenture to
hold funds which are currently available for expenditure to acquire or construct
public facilities eligible under the Act.
"Construction Inflation Index" means the annual percentage change in the
Engineering News-Record Building Cost Index for the City of Los Angeles, measured
as of the calendar year which ends in the previous Fiscal Year. In the event this index
ceases to be published, the Construction Inflation Index shall be another index as
determined by the CFD Administrator that is reasonably comparable to the
Engineering News-Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities Cost minus (i) public
facility costs previously paid from the Construction Fund, (ii) moneys currently on
deposit in the Construction Fund, and (iii) moneys currently on deposit in an escrow
fund that are expected to be available to finance facilities costs.
"Outstanding Bonds" means all Previously Issued Bonds which are deemed to be
outstanding under the Indenture after the first interest and/or principal payment date
following the current Fiscal Year.
"Previously Issued Bonds" means all Bonds that have been issued by CFD No.
2002-01 prior to the date of prepayment.
1. Prepayment in Full
The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid
and permanently satisfied as described herein; provided that a prepayment
may be made only for Assessor's Parcels of Developed Property or
Undeveloped Property for which a building permit has been issued, and only if
there are no delinquent Special Taxes with respect to such Assessor's Parcel at
the time of prepayment. An owner of an Assessor's Parcel intending to prepay
B-7
the Special Tax obligation shall provide the CFD Administrator with written
notice of intent to prepay. Within 30 days of receipt of such written notice, the
CFD Administrator shall notify such owner of the prepayment amount of such
Assessor's Parcel. The CFD Administrator may charge a reasonable fee for
providing this service. Prepayment must be made not less than 45 days prior to
the next occurring date that notice of redemption of Bonds from the proceeds
of such prepayment may be given to the Trustee pursuant to the Indenture.
The Prepayment Amount (defined below) shall be calculated as summarized
below(capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total:equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined
below)shall be calculated as follows:
Paragraph No.:
1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel.
2. For Assessor's Parcels of Developed Property, compute the Assigned Special
Tax and Backup Special Tax applicable for the Assessor's Parcel to be
prepaid.For Assessor's Parcels of Undeveloped Property (for which a building
permit has been issued) to be prepaid, compute the Assigned Special Tax and
Backup Special Tax for that Assessor's Parcel as though it was already
designated as Developed Property, based upon the building permit which has
already been issued for that Assessor's Parcel.
3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the
total estimated Assigned Special Taxes for the entire CFD No. 2002-01 based on
the Developed Property Special Taxes which could be charged in the current
Fiscal Year on all expected development through buildout of CFD No. 2002-01,
excluding any Assessor's Parcels which have been prepaid, and
(b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the
estimated Backup Special Taxes at buildout of CFD No. 2002-01 using the
Backup Special Tax amount for the current Fiscal Year, excluding any
Assessor's Parcels which have been prepaid.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by
the Outstanding Bonds to compute the amount of Outstanding Bonds to be
retired and prepaid (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4
by the applicable redemption premium, if any, on the Outstanding Bonds to
be redeemed (the "Redemption Premium").
B-8
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by
the amount determined pursuant to paragraph 6 to compute the amount of
Future Facilities Costs to be prepaid (the "Future Facilities Amount").
8. Compute the amount needed to pay interest on the Bond Redemption Amount
from the first bond interest and/or principal payment date following the current
Fiscal Year until the earliest redemption date for the Outstanding Bonds.
9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal
Year which have not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably expects to
derive from the reinvestment of the Prepayment Amount(as defined below)less
the Future Facilities Amount and the Administrative Fees and Expenses (as
defined below) from the date of prepayment until the redemption date for the
Outstanding Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the
amount computed pursuant to paragraph 10(the"Defeasance Amount").
12. Verify the administrative fees and expenses of CFD No. 2002-01, including the
costs of computation of the prepayment, the costs to invest the prepayment
proceeds, the costs of redeeming Bonds, and the costs of recording any notices to
evidence the prepayment and the redemption (the "Administrative Fees and
Expenses").
13. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the
reserve requirement (as defined in the Indenture) on the prepayment date, a
reserve fund credit shall be calculated as a reduction in the applicable reserve
fund for the Outstanding Bonds to be redeemed pursuant to the prepayment(the
"Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve
funds are below 100% of the reserve requirement.
14. If any capitalized interest for the Outstanding Bonds will not have been expended
at the time of the first interest and/or principal payment following the current
Fiscal Year, a capitalized interest credit shall be calculated by multiplying the
larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected
balance in the capitalized interest fund after such first interest and/or principal
payment (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts computed
pursuant to paragraphs 4,5, 7, 11 and 12,less the amounts computed pursuant to
paragraphs 13 and 14(the "Prepayment Amount").
16. From the Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as
established under the Indenture and be used to retire Outstanding Bonds or
make debt service payments. The amount computed pursuant to paragraph 7
shall be deposited into the construction fund. The amount computed pursuant
to paragraph 12 shall be retained by CFD No. 2002-01.
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The Prepayment Amount may be sufficient to redeem other than a $5,000 increment
of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will
be retained in the appropriate fund established under the Indenture to be used with
the next prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as determined
under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal
Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With
respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice
to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes
and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of
such Assessor's Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless
the amount of Assigned Special Taxes that may be levied on Taxable Property within
CFD No. 2002-01 both prior to and after the proposed prepayment is at least 1.1 times
the maximum annual debt service on all Outstanding Bonds.
2. Prepayment in Part
The Special Tax on an Assessor's Parcel of Developed Property or an
Assessor's Parcel of Undeveloped Property for which a building permit has
been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section H.1; except that a partial prepayment shall be
calculated according to the following formula:
PP—PE x F.
These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1
F = the percentage by which the owner of the Assessor's Parcel(s)
is partially prepaying the Special Tax.
The owner of any Assessor's Parcel who desires such prepayment shall notify
the CFD Administrator of such owner's intent to partially prepay the Special
Tax and the percentage by which the Special Tax shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount required
for the partial prepayment of the Special Tax for an Assessor's Parcel within
thirty (30) days of the request and may charge a reasonable fee for providing
this service. With respect to any Assessor's Parcel that is partially prepaid, the
City shall (i) distribute the funds remitted to it according to Section H.1, and (ii)
indicate in the records of CFD No. 2002-01 that there has been a partial
prepayment of the Special Tax and that a portion of the Special Tax with
respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 -
F) of the remaining Maximum Special Tax, shall continue to be levied on such
Assessor's Parcel pursuant to Section D.
B-10
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for the period necessary to fully satisfy the Special Tax
Requirement, but in no event shall it be levied after Fiscal Year 2042-43.
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EXHIBIT B
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.2002-01
(HERON POINTE)
ASSIGNED SPECIAL TAX RATES FOR DEVELOPED PROPERTY
FY 2002-03
Land Use Assigned Special
Class Description Tax[1]
1 Residential Property(4,000 SF) $5,350 per unit
2 Residential Property (3,750 to 3,999 SF) $5,078 per unit
3 Residential Property (3,500 to 3,749 SF) $4,900 per unit
4 Residential Property(<3,500 SF) $4,570 per unit
...............__
5 Non-Residential Property $41,977 per Acre
[1] On each July 1, commencing July 1,2003 and ending on July 1, 2012, the Assigned Special Tax for
Developed Property shall be increased by two percent (2.007o) of the amount in effect in the
previous Fiscal Year.
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EXHIBIT C
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2002-01
(HERON POINTE)
MAXIMUM SPECIAL TAX FOR UNDEVELOPED PROPERTY, TAXABLE PUBLIC
PROPERTY, AND TAXABLE PROPERTY OWNER ASSOCIATION PROPERTY
Fiscal Year 2002-03
Description Maximum Special Tax[1]
Undeveloped Property, Taxable Public
Property, and Taxable Property Owner $47,043 per Acre
Association Property
[1] On each July 1, commencing July 1, 2003 and ending on July 1, 2012, the Maximum Special Tax
for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association
Property shall be increased by two percent (2.00%) of the amount in effect in the previous Fiscal
Year.
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EXHIBIT D
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICTNO.2002-01
(HERON POINTE)
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B-14
APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
The following is a summary of certain provisions of the Fiscal Agent Agreement not otherwise
described in the text of this Official Statement. This summary does not purport to be comprehensive or
definitive and is subject to the complete terms and provisions of the Fiscal Agent Agreement, to which
reference is hereby made.
Definitions
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Sections 53311 et seq. of the California Government Code.
"Administrative Expenses" means any or all of the following: the fees and expenses of
the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in
carrying out its duties under the Fiscal Agent Agreement (including, but not limited to, the
levying and collection of the Special Taxes, and the foreclosure of the lien in respect of any
delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of
the salaries of City staff related thereto and a proportionate amount of City general
administrative overhead related thereto, any amounts paid by the City from its general funds
pursuant to the rebate provisions of the Fiscal Agent Agreement, any amounts paid or payable
to any persons or entities employed by the City in connection with the discharge of any of the
City's obligations under the Fiscal Agent Agreement (including, but not limited to, the
calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes, and
the calculation of amounts subject to rebate to the United States), any fees or expenses of the
Escrow Bank and any costs incurred by the City under or in connection with the Escrow
Agreement, and all other costs and expenses of the City or the Fiscal Agent incurred in
connection with the discharge of their respective duties under the Fiscal Agent Agreement or in
connection with the 2015 Bonds or the refunding of the Prior Bonds and, in the case of the City,
in any way related to the administration of the Bonds or the District (including, but not limited
to, administrative costs and expenses of the City. Administrative Expenses shall include any
such expenses incurred in prior years but not yet paid.
"Administrative Expense Fund" means the fund by that name established by the Fiscal
Agent Agreement.
"Agreement" means the Fiscal Agent Agreement, as it may be amended or
supplemented from time to time by any Supplemental Agreement adopted pursuant to the
provisions of the Fiscal Agent Agreement.
"Annual Debt Service" means, for each Bond Year, the sum of(i)the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
scheduled, and (ii) the principal amount of the Outstanding Bonds due in such Bond Year
(including any mandatory sinking payment due in such Bond Year pursuant to the Fiscal Agent
Agreement).
"Auditor" means the auditor/controller of the County, or such other official at the
County who is responsible for preparing property tax bills.
"Authorized Officer" means the City Manager, the Director of Finance/City Treasurer,
the City Clerk, or any other officer or employee authorized by the City Council or by an
C-1
Authorized Officer to undertake the action referenced in the Fiscal Agent Agreement as
required to be undertaken by an Authorized Officer.
"Bond Counsel" means (i) Quint & Thimmig LLP, or (ii) any attorney or other firm of
attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as
to the legality and tax-exempt status of securities issued by public entities.
"Bond Fund" means the fund by that name established by the Fiscal Agent Agreement.
"Bond Register" means the books for the registration and transfer of Bonds maintained
by the Fiscal Agent under the Fiscal Agent Agreement.
"Bond Year" means the one-year period beginning on September 2 in each year and
ending on September 1st in the following year, both dates inclusive, except that the first Bond
Year shall begin on the Closing Date and end on September 1,2015.
"Bonds" means, collectively, the 2015 Bonds, and, if the context requires, any Parity
Bonds,at any time Outstanding under the Fiscal Agent or any Supplemental Agreement.
"Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a day on
which banking institutions in the state in which the Fiscal Agent has its corporate trust office
are authorized or obligated by law or executive order to be closed.
"City" means the City of Seal Beach,California.
"Closing Date" means the date upon which there is a physical delivery of the 2015
Bonds in exchange for the amount representing the purchase price of the 2015 Bonds by the
Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the 2015 Bonds or (except as otherwise referenced in the Fiscal Agent Agreement) as it may be
amended to apply to obligations issued on the date of issuance of the 2015 Bonds, together with
applicable temporary and final regulations promulgated, and applicable official public
guidance published,under the Code.
"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement,
executed by the City and Willdan Financial Services as the initial Dissemination Agent
thereunder, dated as of July 1, 2015, as originally executed and as it may be amended from time
to time in accordance with its terms.
"Costs of Issuance" means items of expense payable or reimbursable directly or
indirectly by the City and related to the authorization, sale and issuance of the 2015 Bonds and
the refunding and defeasance of the Prior Bonds, which items of expense shall include, but not
be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing
and recording fees, initial fees and charges of the Fiscal Agent including its first annual
administration fee, fees and expenses of Fiscal Agent's counsel, expenses incurred by the City in
connection with the issuance of the 2015 Bonds and the defeasance and redemption of the Prior
Bonds (including, but not limited to, administrative costs and expenses of the City and the City
Attorney), Escrow Bank fees and expenses, special tax consultant fees and expenses, Bond
(underwriter's)discount, legal fees and charges,including bond counsel and disclosure counsel,
financial consultants' fees, charges for execution, transportation and safekeeping of the 2015
Bonds and other costs, charges and fees in connection with the foregoing.
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"Cost of Issuance Fund" means the fund by that name established by the Fiscal Agent
Agreement.
"Coup " means Orange County, California.
"Current Tax Component" means the portion of a Special Tax Prepayment received by
the City consisting of the amount described in paragraph 9 of Section H of the Rate and Method
of Apportionment.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Debt Service" means the scheduled amount of interest and amortization of principal
(including principal payable by reason of the mandatory sinking fund provisions of the Fiscal
Agent Agreement)payable on the Bonds during the period of computation, excluding amounts
scheduled during such period which relate to principal which has been retired before the
beginning of such period.
"Depository" means (i) initially, DTC, and (ii) any other Securities Depository acting as
Depository pursuant to the Fiscal Agent Agreement.
"Director of Finance/City Treasurer" means the Director of Finance/City Treasurer of
the City, or such other person who performs the duties of the chief financial officer of the City.
"District" means the City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe),formed pursuant to the Act and the Resolution of Formation.
"Escrow Agreement" means the Escrow Agreement, dated as of July 1, 2015, by and
between the City and the Escrow Bank.
"Escrow Bank" means The Bank of New York Mellon Trust Company, N.A., in its
capacity as escrow bank under the Escrow Agreement.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding)if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired
in accordance with applicable regulations under the Code, (ii) the investment is an agreement
with specifically negotiated withdrawal or reinvestment provisions and a specifically
negotiated interest rate (for example, a guaranteed investment contract, a forward supply
contract or other investment agreement) that is acquired in accordance with applicable
regulations under the Code, or (iii) the investment is a United States Treasury Security--State
and Local Government Series that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt.
"Federal Securities" means any of the following which are non-callable and which at the
time of investment are legal investments under the laws of the State of California for funds held
by the Fiscal Agent:
(i) direct general obligations of the United States of America (including
obligations issued or held in book entry form on the books of the United States
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Department of the Treasury)and obligations, the payment of principal of and interest on
which are directly or indirectly guaranteed by the United States of America, including,
without limitation, such of the foregoing which are commonly referred to as "stripped"
obligations and coupons;or
(ii) any of the following obligations of the following agencies of the United
States of America: (a) direct obligations of the Export-Import Bank, (b) certificates of
beneficial ownership issued by the Farmers Home Administration, (c) participation
certificates issued by the General Services Administration, (d) mortgage-backed bonds
or pass-through obligations issued and guaranteed by the Government National
Mortgage Association, (e) project notes issued by the United States Department of
Housing and Urban Development, and (f) public housing notes and bonds guaranteed
by the United States of America.
"Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an
independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement,
its successors and assigns, and any other corporation or association which may at any time be
substituted in its place, as provided in the Fiscal Agent Agreement.
"Fiscal Year" means the twelve-month period extending from July 1 in a calendar year
to June 30 of the succeeding year,both dates inclusive.
"Independent Financial Consultant" means any consultant or firm of such consultants
appointed by the City, and who, or each of whom: (i)is judged by the Director of Finance/City
Treasurer to have experience in matters relating to the issuance and/or administration of bonds
under the Act; (ii)is in fact independent and not under the domination of the City; (iii)does not
have any substantial interest, direct or indirect, with or in the City, or any owner of real
property in the District, or any real property in the District; and (iv) is not connected with the
City as an officer or employee of the City,but who may be regularly retained to make reports to
the City.
"Information Services" means the Electronic Municipal Market Access System (referred
to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, (at
http://emma.msrb.org); and, in accordance with then current guidelines of the Securities and
Exchange Commission, such other addresses and/or such services providing information with
respect to called bonds as the City may designate in an Officer's Certificate delivered to the
Fiscal Agent.
"Interest Payment Dates" means March 1 and September 1 of each year, commencing
March 1,2016.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond
Year after the calculation is made through the final scheduled maturity date for any
Outstanding Bonds.
"Minimum Administrative Expense Requirement" means$25,000.00 per Fiscal Year.
"Officer's Certificate" means a written certificate of the City signed by an Authorized
Officer of the City.
"Ordinance" means Ordinance No. 1513, adopted by the City Council on January 26,
2004, and any other ordinance of the City amending or supplementing said Ordinance.
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"Original Purchaser" means the first purchaser of the 2015 Bonds from the City, being
Stifel, Nicolaus&Company, Incorporated.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of the Fiscal Agent Agreement relating to certain disqualified bonds)
all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal
Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the
Fiscal Agent Agreement; and (iii)Bonds in lieu of or in substitution for which other Bonds shall
have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent
Agreement or any Supplemental Agreement.
"Owner" or "Bondowner" means any person who is the registered owner of any
Outstanding Bond.
"Parity Bonds" means bonds issued by the City for the District payable and secured on a
parity with any then Outstanding Bonds, pursuant to the Parity Bond provisions of the Fiscal
Agent Agreement.
"Participating Underwriter" shall have the meaning ascribed thereto in the Continuing
Disclosure Agreement.
"Permitted Investments" means the following, but only to the extent that the same are
acquired at Fair Market Value and are otherwise legal investments for funds of the City:
(a)Federal Securities.
(b) Registered state warrants or treasury notes or bonds of the State of California
(the "State"), including bonds payable solely out of the revenues from a revenue-
producing property owned, controlled, or operated by the State or by a department,,
board, agency, or authority of the State, which, are rated in one of the two highest short-
term or long-term rating categories by either Moody",,; Investors Service or Standard and
Poor's Ratings Group, and which have a maximum term to maturity not to exceed three
years.
(c) Time certificates of deposit or negotiable certificates of deposit issued by a
state or nationally chartered bank or trust company, or a state or federal savings and
loan association which may include the Fiscal Agent and its affiliates;provided, that the
certificates of deposit shall be one or more of the following: continuously and fully
insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation, and/or continuously and fully secured by securities described in
subdivision (a) or (b) of this definition of Permitted Investments which shall have a
market value, as determined on a marked-to-market basis calculated at least weekly,
and exclusive of accrued interest, or not less than 102 percent of the principal amount of
the certificates on deposit.
(d) Commercial paper which at the time of purchase is of "prime" quality of the
highest ranking or of the highest letter and numerical rating as provided by either
Moody's Investors Service or Standard and Poor's Ratings Group, which commercial
paper is limited to issuing corporations that are organized and operating within the
United States of America and that have total assets in excess of five hundred million
dollars ($500,000,000) and that have an "A" or higher rating for the issuer's debentures,
other than commercial paper, by either Moody's Investors Service or Standard and
Poor's Ratings Group, provided that purchases of eligible commercial paper may not
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exceed 180 days' maturity nor represent more than 10 percent of the outstanding
commercial paper of an issuing corporation. Purchases of commercial paper may not
exceed 20 percent of the total amount invested pursuant to this definition of Permitted
Investments.
(e) A repurchase agreement with a state or nationally charted bank or trust
company or a national banking association or government bond dealer reporting to,
trading with, and recognized as a primary dealer by the Federal Reserve Bank of New
York, provided that all of the following conditions are satisfied: (1) the agreement is
secured by any one or more of the securities described in subdivision (a) of this
definition of Permitted Investments, (2) the underlying securities are required by the
repurchase agreement to be held by a bank, trust company, or primary dealer having a
combined capital and surplus of at least one hundred million dollars ($100,000,000) and
which is independent of the issuer of the repurchase agreement, and (3) the underlying
securities are maintained at a market value, as determined on a marked-to-market basis
calculated at least weekly,of not less than 103 percent of the amount so invested.
(f) An investment agreement or guaranteed investment contract with, or
guaranteed by, a financial institution the long-term unsecured obligations of which are
rated Aa2 and "AA" or better, respectively, by Moody's Investors Service and Standard
and Poor's Ratings Group at the time of initial investment. The investment agreement
shall be subject to a downgrade provision with at least the following requirements: (1)
the agreement shall provide that within five business days after the financial
institution's long-term unsecured credit rating has been withdrawn, suspended, other
than because of general withdrawal or suspension by Moody's Investors Service or
Standard and Poor's Ratings Group from the practice of rating that debt, or reduced
below "AA-" by Standard and Poor's Ratings Group or below "Aa3" by Moody's
Investors Service (these events are called "rating downgrades") the financial institution
shall give notice to the City and,within the five-day period, and for as long as the rating
downgrade is in effect, shall deliver in the name of the City or the Fiscal Agent to the
City or the Fiscal Agent Federal Securities allowed as investments under subdivision (a)
of this definition of Permitted Investments with aggregate current market value equal to
at least 105 percent of the principal amount of the investment agreement invested with
the financial institution at that time, and shall deliver additional allowed federal
securities as needed to maintain an aggregate current market value equal to at least 105
percent of the principal amount of the investment agreement within three days after
each evaluation date, which shall be at least weekly, and (2)the agreement shall provide
that, if the financial institution's long-term unsecured credit rating is reduced below
"A3" by Moody's Investors Service or below "A-" by Standard and Poor's Ratings
Group, the Fiscal Agent or the City may, upon not more than five business days' written
notice to the financial institution, withdraw all funds invested under the investment
agreement, with accrued but unpaid interest thereon to the date, and terminate the
agreement.
(g) The Local Agency Investment Fund of the State of California.
(h) Investments in a money market fund rated in the highest rating category
(without regard to plus W or minus (-) designations) by Moody's Investors Service or
Standard and Poor's Ratings Group, including such funds for which the Fiscal Agent, its
affiliates or subsidiaries provide investment advisory or other management services or
for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (i) the Fiscal Agent or an affiliate of the Fiscal Agent receives fees
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from funds for services rendered, (ii) the Fiscal Agent collects fees for services rendered
pursuant to this Agreement, which fees are separate from the fees received from such
funds, and (iii) services performed for such funds and pursuant to this Agreement may
at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the
Fiscal Agent.
(i) Any other lawful investment for City funds.
"Principal Office" means the corporate trust office of the Fiscal Agent as identified in the
Fiscal Agent Agreement;provided, however, for the purpose of maintenance of the Registration
Books and surrender of Bonds for payment, transfer or exchange such term means the office at
which the Fiscal Agent conducts its corporate agency business, or such other or additional
offices as may be designated by the Fiscal Agent.
"Prior Bonds" means the City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe)Special Tax Bonds,Series 2005.
"Project" means the facilities eligible to be funded by the District, as specified by the
Resolution of Formation.
"Rate and Method of Apportionment" means the Rate and Method of Apportionment
of Special Tax for the District, as approved by proceedings conducted pursuant to the
Resolution of Formation, and as altered by proceedings conducted pursuant to the Resolution
of Consideration, and as it may be further altered or amended from time to time in accordance
with the provisions of the Act.
"Rating Category" means one of the two highest rating categories then in effect under
the rating systems of Moody's Investors Service or Standard and Poor's Ratings Group, a
division of McGraw-Hill, without regard to plus or minus sign or numerical or other qualifying
designation.
"Record Date" means the fifteenth day of the month next preceding the month of the
applicable Interest Payment Date, whether or not such fifteenth(15,^)day is a Business Day.
"RefUndin Boiads" aaaewis bonds issued by the City for the District the net proceeds of
which are used to refund all or a portion of the then Outstanding Bonds;provided that the debt
service oaa the Refcaaiding Bonds in any Bond Year is not in excess of the debt service on the
Bonds being refunded, and the final maturity of the Refunding Bonds is not later than the final
maturity of the Bonds being refunded.
"Refunding Fund" means the fund by that name created by and held by the Escrow
Bank pursuant to the Escrow Agreement.
"Refunding Law" means Article 11, commencing with Section 53580, of Chapter 3 of
Part 1 of Division 2 of Title 5 of the California Government Code.
"Registration Books" means the records maintained by the Fiscal Agent pursuant to
Fiscal Agent Agreement for the registration and transfer of ownership of the Bonds.
"Regulations" means temporary and permanent regulations promulgated under the
Code.
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"Reserve Fund" means the fund by that name established pursuant to the Fiscal Agent
Agreement
"Reserve Requirement" means, as of any date of calculation, an amount equal to the
lesser of (i) Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of
average Annual Debt Service, or (iii) ten percent (10%) of the initial principal amount of the
Bonds issued under the Fiscal Agent Agreement.
"Resolution" means the Resolution adopted by the City Council on May 26, 2015,
authorizing the issuance of the 2015 Bonds.
"Resolution of Consideration" means Resolution No. 5191, adopted by the City Council
on December 8,2003.
"Resolution of Formation" means Resolution No. 5063, adopted by the City Council of
the City on September 23, 2002.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 1SL,
New York, New York 10041-0099 Attention: Call Notification Department, Fax (212) 855-3274;
and, in accordance with then current guidelines of the Securities and Exchange Commission,
such other addresses and/or such other securities depositories as the City may designate in an
Officer's Certificate delivered to the Fiscal Agent.
"Special. Tax Fund" means the fund by that name established by the Fiscal Agent
Agreement
"Special Tax Prepayments" means the proceeds of any prepayments of Special Taxes
received by the City, as calculated pursuant to the Rate and Method of Apportionment, less any
administrative fees or penalties collected as part of any such prepayment.
"Special Tax Prepayments Account" means the account by that name within the Special
Tax Fund established by the Fiscal Agent Agreement.
"Special Tax Revenues" means the proceeds of the Special Taxes received by the City,
including any scheduled payments and any prepayments thereof, interest and penalties thereon
and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of
the Special Taxes to the amount of said lien, but shall not include interest and penalties, if any,
collected with the Special Taxes that are in excess of the rate of interest payable on the Bonds.
"Special Taxes" means the special taxes levied within the District pursuant to the Act,
the Ordinance and the Fiscal Agent Agreement.
"Supplemental Agreement" means an agreement the execution of which is authorized
by a resolution which has been duly adopted by the City under the Act and which agreement is
amendatory of or supplemental to the Fiscal Agent Agreement,but only if and to the extent that
such agreement is specifically authorized under the Fiscal Agent Agreement.
"2015 Bonds" means the City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe) 2015 Special Tax Refunding Bonds at any time Outstanding under the Fiscal
Agent Agreement.
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Pledge of Special Tax Revenues
The Bonds shall be secured by a first pledge of all of the Special Tax Revenues (other
than the first Special Tax Revenues collected by the City in any Fiscal Year, in an amount equal
to the portion of such Fiscal Year's Special Tax levy for Administrative Expenses (but not to
exceed,in any Fiscal Year,the Minimum Administrative Expense Requirement),which are to be
deposited to the Administrative Expense Fund under the Fiscal Agent Agreement) and all
moneys deposited in the Bond Fund, the Special Tax Prepayments Account, the Reserve Fund
and, until disbursed as provided in the Fiscal Agent Agreement, in the Special Tax Fund. Such
Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided
in the Fiscal Agent Agreement) are dedicated in the Fiscal Agent Agreement to the payment of
the principal of, and interest and any premium on, the Bonds as provided in the Fiscal Agent
Agreement and in the Act until all of the Bonds have been paid and retired or until moneys or
Federal Securities have been set aside irrevocably for that purpose in accordance with the
defeasance provisions of the Fiscal Agent Agreement.
Amounts in the Administrative Expense Fund, the Costs of Issuance Fund and the
Refunding Fund, and the Special Tax Revenues to be deposited to the Administrative Expense
Fund as described in the parenthetical in the first sentence of the preceding paragraph, are not
pledged to the repayment of the Bonds.The facilities financed by the District are not in any way
pledged to pay the debt service on the Bonds. Any proceeds of the sale, condemnation or
destruction of any facilities financed by the District are not pledged to pay the debt service on
the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent
Agreement.
Funds and Accounts
Special Tax Fund. There is established under the Fiscal Agent Agreement a separate
fund to be held by the Director of Finance/City Treasurer designated the Community Facilities
District No. 2002-01(Heron Pointe) 2015 Special Tax Refunding Bonds Special Tax Fund, to the
credit of which the City shall deposit, as soon as practicable following receipt, all Special Tax
Revenues received by the City and any amounts required by the Fiscal Agent Agreement to be
deposited to the Special Tax Fund.
Notwithstanding the foregoing,
(i) the first Special Tax Revenues collected by the City in any Fiscal Year, in an
amount equal to the portion of such Fiscal Year's Special Tax levy for Administrative
Expenses (but not to exceed, in any Fiscal Year, the Minimum Administrative Expense
Requirement), shall be deposited by the Director of Finance/City Treasurer in the
Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in
payment of Special Taxes shall be separately identified by the Director of Finance/City
Treasurer and shall be disposed of by the Director of Finance/City Treasurer first, for
transfer to the Fiscal Agent for deposit by the Fiscal Agent in the Bond Fund to pay any
past due debt service on the Bonds;second for transfer to the Fiscal Agent for deposit by
the Fiscal Agent in the Reserve Fund to the extent needed to increase the amount then
on deposit in the Reserve Fund up to the then Reserve Requirement; and third, to be
held in the Special Tax Fund for use as described in the second and third succeeding
paragraphs below;and
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(iii) any proceeds of Special Tax Prepayments shall be separately identified by
the Director of Finance/City Treasurer and shall be remitted by the Director of
Finance/City Treasurer to the Fiscal Agent for deposit by the Fiscal Agent in the Special
Tax Prepayments Account, except that the Current Tax Component of the Special Tax
Prepayment shall be retained by the Director of Finance/City Treasurer in the Special
Tax Fund for use as described in the second succeeding paragraph below.
Moneys in the Special Tax Fund and the Special Tax Prepayments Account shall be held
by the Director of Finance/City Treasurer for the benefit of the City and the Owners of the
Bonds, shall be disbursed as provided below and,pending and disbursement,shall be subject to
a lien in favor of the Owners of the Bonds.
From time to time as needed to pay the obligations of the District, but no later than the
Business Day before each Interest Payment Date, the Director of Finance/City Treasurer shall
withdraw from the Special Tax Fund and transfer the following amounts in the following order
of priority (i) to the Fiscal Agent for deposit by the Fiscal Agent in the Bond Fund an amount,
taking into account any amounts then on deposit in the Bond Fund and any expected transfers
from the Special Tax Fund and the Reserve Fund to the Bond Fund as described in the Fiscal
Agent Agreement, such that the amount in the Bond Fund equals the principal (including any
sinking payment provided for in the Fiscal Agent Agreement), premium, if any, and interest
due on the Bonds on the next Interest Payment Date (including the redemption price of any
Bonds to be redeemed on such Interest Payment Date pursuant to the Fiscal Agent Agreement),
and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the
Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement;
provided that no such transfers shall exceed the amount then available to be transferred from
the Special Tax Fund.
In addition to the foregoing,if in any Fiscal Year there are sufficient funds in the Special
Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of
the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the
Director of Finance/City Treasurer may transfer to the Administrative Expense Fund,from time
to time, any amount in the Special Tax Fund in excess of the amount needed to make such
transfers to the Bond Fund and the Reserve Fund, if monies are needed to pay Administrative
Expenses in excess of the amount then on deposit in the Administrative Expense Fund.
Moneys in the Special Tax Fund shall be invested in accordance with the Fiscal Agent
Agreement. Interest earnings and profits resulting from investment of amounts in the Special
Tax Fund shall be retained in the Special Tax Fund to be used for the purposes thereof.
Administrative Expense Fund. There is established under the Fiscal Agent Agreement a
separate fund to be held by the Director of Finance/City Treasurer, the Community Facilities
District No. 2002-01(Heron Pointe) 2015 Special Tax Refunding Bonds Administrative Expense
Fund, to the credit of which deposits shall be made as required by the Fiscal Agent Agreement.
Moneys in the Administrative Expense Fund shall be held by the Director of Finance/City
Treasurer for the benefit of the City, and shall be disbursed as provided in the Fiscal Agent
Agreement. Amounts in this fund are not pledged as security for the Bonds.
Amounts in the Administrative Expense Fund shall be withdrawn by the Director of
Finance/City Treasurer and paid to the City or its order upon receipt by the Director of
Finance/City Treasurer of an Officer's Certificate stating the amount to be withdraw, that such
amount is to be used to pay an Administrative Expense, and the nature of such Administrative
Expense. Amounts transferred to the Administrative Expense Fund pursuant to Fiscal Agent
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Agreement shall be used for purposes of such fund prior to using other available amounts
therein.
Annually, on the last day of each Fiscal Year, the Director of Finance/City Treasurer
shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of
$25,000 that have not been allocated to pay Administrative Expenses incurred but not yet paid,
and which are not otherwise encumbered and transfer such amounts to the Special Tax Fund.
Moneys in the Administrative Expense Fund shall be invested in accordance with the
Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be
retained by the Director of Finance/City Treasurer in the Administrative Expense Fund to be
used for the purposes of such fund.
Costs of Issuance Fund. There is established under the Fiscal Agent Agreement a
separate fund to be held by the Fiscal Agent designated the Community Facilities District No.
2002-01 (Heron Pointe) 2015 Special Tax Refunding Bonds Costs of Issuance Fund, to the credit
of which a deposit shall be made on the Closing Date as required by the Fiscal Agent
Agreement. Moneys in the Costs of Issuance Fund shall be held by the Fiscal Agent and shall be
disbursed as provided in the Fiscal Agent Agreement. Moneys in this fund are not pledged as
security for the Bonds.
Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay
Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the
designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent
concurrently with the delivery of the 2015 Bonds. The Fiscal Agent shall pay all Costs of
Issuance upon receipt of an invoice from any such payee which requests payment in an amount
which is less than or equal to the amount set forth with respect to such payee in such
requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance
not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. Each such
Officer's Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and
the Fiscal Agent shall have no duty to confirm the accuracy of such facts.
The Fiscal Agent shall maintain the Cost of Issuance Fund for a period of 120 days from
the Closing Date and then shall transfer any moneys remaining therein, including any
investment earnings thereon, to the Director of Finance/City Treasurer for deposit by the
Director of Finance/City Treasurer in the Administrative Expense Fund.
Moneys in the Cost of Issuance Fund shall be invested in accordance with the terms of
the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall
be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such
fund.
Bond Fund And Special Tax Prepayments Account. There is established under the Fiscal
Agent Agreement a separate fund to be held by the Fiscal Agent, the Community Facilities
District No. 2002-01(Heron Pointe) 2015 Special Tax Refunding Bonds Bond Fund, to the credit
of which deposits shall be made as required by the Fiscal Agent Agreement, and any other
amounts required to be deposited therein by the Act. There is also hereby created in the Bond
Fund a separate account held by the Fiscal Agent, consisting of the Special Tax Prepayments
Account, to the credit of which deposits shall be made as required by the Fiscal Agent
Agreement. Moneys in the Bond Fund and the Special Tax Prepayments Account shall be held
by the Fiscal Agent for the benefit of the owners of the Bonds, shall be disbursed for the
payment of the principal of, and interest and any premium on, the Bonds as provided in the
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Fiscal Agent Agreement, and, pending such disbursement, shall be subject to a lien in favor of
the owners of the Bonds.
On each Interest Payment Date, and following any transfers required under the Fiscal
Agent Agreement in connection with such Interest Payment Date, the Fiscal Agent shall
withdraw from the Bond Fund and pay to the owners of the Bonds the principal of, and interest
and any premium, then due and payable on the Bonds, including any amounts due on the
Bonds by reason of the sinking payments set forth in the Fiscal Agent Agreement, or a
redemption of the Bonds required by the Fiscal Agent Agreement, such payments to be made in
the priority listed in the second succeeding paragraph. Notwithstanding the foregoing,
amounts in the Bond Fund as a result of a transfer from the Special Tax Fund of amounts
collected in respect of delinquent Special Taxes shall be immediately disbursed by the Fiscal
Agent to pay past due amounts owing on the Bonds.
In the event that amounts in the Bond Fund are insufficient for the purpose set forth in
the preceding paragraph, the Fiscal Agent shall notify the Director of Finance/City Treasurer of
the amount of the insufficiency, and the Fiscal Agent shall withdraw from the Reserve Fund to
the extent of any funds therein an amount to cover the amount of such Bond Fund insufficiency.
Amounts so withdrawn from the Reserve Fund shall be deposited by the Fiscal Agent in the
Bond Fund.
If after the foregoing transfers, there are insufficient funds in the Bond Fund to make the
payments described above, the Fiscal Agent shall apply the available funds first to the payment
of interest on the Bonds, then to the payment of principal due on the Bonds other than by
reason of sinking payments, and then to payment of principal due on the Bonds by reason of
sinking payments. Each such payment shall be made ratably to the Owners of the Bonds based
on the then Outstanding principal amount of the Bonds, if there are insufficient funds to make
the corresponding payment for all of the then Outstanding Bonds. Any sinking payment not
made as scheduled shall be added to the sinking payment to be made on the next sinking
payment date.
Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent
to the Bond Fund on the next date for which notice of redemption of Bonds under Fiscal Agent
Agreement can timely be given by the Fiscal Agent under the Fiscal Agent Agreement, and
shall be used (together with any amounts transferred pursuant to the Fiscal Agent Agreement
to redeem Bonds on the redemption date selected in accordance with the Fiscal Agent
Agreement.
Moneys in the Bond Fund and the Special Tax Prepayments Account shall be invested in
accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from
investment of amounts in the Bond Fund and the Special Tax Prepayments Account shall be
retained in the Bond Fund and the Special Tax Prepayments Account, respectively, to be used
for the purposes of such fund and account.
Reserve Fund. There is established under the Fiscal Agent Agreement a separate fund to
be held by the Fiscal Agent, the Community Facilities District No. 2002-01(Heron Pointe) 2015
Special Tax Refunding Bonds Reserve Fund, to the credit of which a deposit shall be made as
required by the Fiscal Agent Agreement which deposit is equal to the initial Reserve
Requirement, and deposits shall be made as provided in the Fiscal Agent Agreement. Moneys
in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the owners of the Bonds
as a reserve for the payment of principal of, and interest and any premium on, the Bonds and
shall be subject to a lien in favor of the owners of the Bonds.
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Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in
the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of
making transfers to the Bond Fund (as described in the Fiscal Agent Agreement)in the event of
any deficiency at any time in the Bond Fund of the amount then required for payment of the
principal of, and interest and any premium on, the Bonds or for the purpose of redeeming
Bonds from the Bond Fund.
Whenever, on the Business Day before any Interest Payment Date, or on any other date
at the request of an Authorized Officer, the amount in the Reserve Fund exceeds the Reserve
Requirement, the Fiscal Agent shall provide written notice to the City of the amount of the
excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond
Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in
accordance with the Fiscal Agent Agreement.
Amounts in the Reserve Fund shall be withdrawn, at the written request of the Director
of Finance/City Treasurer, for purposes of making payment to the federal government to
comply with the federal tax rebate provisions of the Fiscal Agent Agreement.
Whenever the balance in the Reserve Fund equals or exceeds the amount required to
redeem or pay all of the Outstanding Bonds, including interest accrued to the date of payment
or redemption and premium, if any, due upon redemption, the Fiscal Agent shall transfer the
amount in the Reserve Fund to the Bond Fund to be used for the payment and redemption, in
accordance with the terms of the Fiscal Agent Agreement, as applicable, of all of the
Outstanding Bonds. In the event that the amount then on deposit in the Reserve Fund exceeds
the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve
Fund in excess of the amount needed for such payment and redemption,shall be transferred by
the Fiscal Agent to the Director of Firiance/City "Treasurer, to be retained by the City,
unencumbered by the Fiscal Agent agreement, to be used by the City for any lawful purpose
under the Act. Notwithstanding the foregoing, no amounts shall be transferred from the
Reserve Fund for the purposes described in this paragraph until after (i)the calculation, of any
amounts due to the federal government following payment of the Bonds and withdrawal of any
such amount for purposes of making such payment to the federal government, and (ii)payment
of any fees and expenses due to the Fiscal Agent.
Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of
such prepayment pursuant to the Fiscal Agent Agreement, a proportionate amount in the
Reserve Fund (determined in accordance with the applicable provisions of the Rate and Method
of Apportionment and communicated by the Director of Finance/City Treasurer to the Fiscal
Agent)shall be transferred not later than the Business Day prior to the redemption date by the
Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds pursuant to the
Fiscal Agent Agreement.
Moneys in the Reserve Fund shall be invested in accordance with the Fiscal Agent
Agreement. Interest earnings and profits resulting from said investment shall be retained by
the Fiscal Agent in the Reserve Fund to be used for purposes of the Reserve Fund
Certain Covenants of the City
The City will punctually pay or cause to be paid the principal of and interest and any
premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent
Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of
the conditions, covenants and requirements of the Fiscal Agent Agreement and all
Supplemental Agreements and of the Bonds.
C-13
The Bonds are limited obligations of the City on behalf of the District and are payable
solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund,
the Reserve Fund and the Special Tax Fund created under the Fiscal Agent Agreement.
In order to prevent any accumulation of claims for interest after maturity, the City shall
not, directly or indirectly, extend or consent to the extension of the time for the payment of any
claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the
approval of any such arrangement by purchasing or funding said claims for interest or in any
other manner. In case any such claim for interest shall be extended or funded, whether or not
with the consent of the City, such claim for interest so extended or funded shall not be entitled,
in case of default under the Fiscal Agent Agreement, to the benefits of the Fiscal Agent
Agreement, except subject to the prior payment in full of the principal of all of the Bonds then
Outstanding and of all claims for interest which shall not have been so extended or funded.
The City will not encumber, pledge or place any charge or lien upon any of the Special
Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge
and lien created by the Fiscal Agent Agreement for the benefit of the Bonds,except as permitted
thereby.
The City will keep, or cause to be kept, proper books of record and accounts, separate
from all other records and accounts of the City, in which complete and correct entries shall be
made of all transactions relating to the deposits to and expenditure of amounts disbursed from
the Administrative Expense Fund and the Special Tax Fund, and to the Special Tax Revenues.
Such books of record and accounts shall at all times during City business hours and following
reasonable prior written notice be subject to the inspection of the Fiscal Agent and the Owners
of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or
their representatives duly authorized in writing.
The City will preserve and protect the security of the Bonds and the rights of the
Owners, and will warrant and defend their rights against all claims and demands of all persons.
From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by
the City.
The City will comply with all applicable provisions of the Act in administering the
District;provided that the City shall have no obligation to advance any of its own funds for any
purpose whatsoever under the Fiscal Agent Agreement.
The City shall assure that the proceeds of the Prior Bonds and of the 2015 Bonds are not
so used as to cause the Prior Bonds or the 2015 Bonds to satisfy the private business tests of
section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. The
City shall not take any action or permit or suffer any action to be taken if the result of the same
would be to cause any of the 2015 Bonds to be "federally guaranteed" within the meaning of
section 149(b)of the Code.
The City shall comply with all requirements of the Act so as to assure the timely
collection of Special Tax Revenues, including without limitation, the enforcement of delinquent
Special Taxes.
On or about July 1 of each year, the Fiscal Agent shall provide the Director of
Finance/City Treasurer with a notice stating the amounts then on deposit in the Reserve Fund
and in the Bond Fund. The receipt of such notice by the Director of Finance/City Treasurer
shall in no way affect the obligations of the Director of Finance/City Treasurer under the
C-14
following three paragraphs. Also on or about July 1 of each year, the Director of Finance/City
Treasurer shall communicate with the Auditor or other appropriate official of the County to
ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account
any parcel splits during the preceding and then current year. In computing the amount of
Special Taxes to be levied, the Director of Finance/City Treasurer shall take into account funds
in the Bond Fund and the Special Tax Fund, and any amounts then in the Reserve Fund in
excess of the Reserve Requirement, available to make the payment of debt service on the Bonds
due on the Interest Payment Dates occurring in the next calendar year.
The Director of Finance/City Treasurer shall effect the levy of the Special Taxes from
time to time during each Fiscal Year in accordance with the Ordinance and the Rate and
Method of Apportionment. Specifically, the Director of Finance/City Treasurer shall compute
the amount of Special Taxes to be so levied each Fiscal Year before the final date on which the
Auditor will accept the transmission of the Special Tax amounts for the parcels within the
District for inclusion on the next secured or unsecured, as applicable, real property tax roll.
Upon the completion of the computation of the amounts of the levy, the Director of
Finance/City Treasurer shall prepare or cause to be prepared, and shall transmit to the Auditor,
such data as the Auditor requires to include the levy of the Special Taxes on the next real
property tax roll. The Special Taxes so levied shall be payable and be collected in the same
manner and at the same time and in the same installment as the ad valorem taxes on property
levied on the tax roll are payable, and have the same priority, become delinquent at the same
times and in the same proportionate amounts and bear the same proportionate penalties and
interest after delinquency as do the general ad valorem taxes levied on the County secured tax
roll.
In the event that the Director of Finance/City Treasurer determines to levy all or a
portion of the Special Taxes by means of direct billing of the property owners within the
District, and to the extent permitted by the Ordinance, the Director of Finance/City Treasurer
shall, not less than forty-five (45) days prior to each Interest Payment Date, send bills to the
property owners in the District for Special Taxes necessary to meet the financial obligations of
the District due on the next Interest Payment Date said bills to specify that the amounts so
levied shall be due and payable not less than thirty (30) days prior to such Interest Payment
Date and shall be delinquent if not paid when due.
In any event, the City shall fix and levy the amount of Special Taxes within the District
required for the timely payment of principal of and interest on any outstanding Bonds
becoming due and payable, including any necessary replenishment or expenditure of the
Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative
Expenses, and shall take into account any prepayments of Special Taxes theretofore received by
the City. The Special Taxes so levied shall not exceed the maximum amounts as provided in the
Rate and Method of Apportionment.
The Director of Finance/City Treasurer is authorized to employ consultants to assist in
computing the levy of the Special Taxes thereunder and any reconciliation of amounts levied to
amounts received. The fees and expenses of such consultants and the costs and expenses of the
Director of Finance/City Treasurer (including a charge for City staff time) in conducting its
duties under the Fiscal Agent Agreement shall be an Administrative Expense under the Fiscal
Agent Agreement.
The City will adopt, make, execute and deliver any and all such further resolutions,
instruments and assurances as may be reasonably necessary or proper to carry out the intention
or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and
confirming unto the Owners of the rights and benefits provided in the Fiscal Agent Agreement.
C-15
The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise,
any action with respect to the proceeds of the 2015 Bonds which, if such action had been
reasonably expected to have been taken, or had been deliberately and intentionally taken, on
the date of issuance of the 2015 Bonds would have caused the 2015 Bonds to be "arbitrage
bonds" within the meaning of section 148 of the Code.
The City shall take all actions necessary to assure the exclusion of interest on the 2015
Bonds from the gross income of the owners of the 2015 Bonds to the same extent as such interest
is permitted to be excluded from gross income under the Code as in effect on the date of
issuance of the 2015 Bonds.
The City covenants with and for the benefit of the Owners of the Bonds that it will order,
and cause to be commenced as described below, and thereafter diligently prosecute to judgment
(unless such delinquency is theretofore brought current), an action in the superior court to
foreclose the lien of any Special Tax or installment thereof not paid when due as described in
the following paragraph. The Director of Finance/City Treasurer shall notify legal counsel of
any such delinquency of which it is aware, and such legal counsel shall commence, or cause to
be commenced, such proceedings.
On or about July 1 of each Fiscal Year, the Director of Finance/City Treasurer shall
compare the amount of Special Taxes theretofore levied in the District to the amount of Special
Tax Revenues theretofore received by the City. Following such comparison, or if at any other
time the Director of Finance/City Treasurer bec°omes aware of any delinquency in the payment
of any Special Tax due and owing:
(A) if the Director of Finance/City Treasurer determines that any single parcel
subject to the Special Tax in the District is delinquent in the payment of Special Taxes in
the aggregate amount of $10,000 or more, the Director of Finance/City Treasurer will
send or cause to be sent a notice of delinquency (and a demand for immediate payment
thereof) to the property owner by the following October 1, and (if the delinquency
remains uncured) foreclosure proceedings shall be commenced by the City against the
delinquent parcel within 90 days of the sending of such notice and will be diligently
pursued by the City to completion. Notwithstanding the foregoing, the City need not
take any such action so long as the amount then in the Reserve Fund is at least equal to
the Reserve Requirement.
(B) If the Director of Finance/City Treasurer determines that the aggregate
amount of Special Taxes levied in the District for the preceding Fiscal Year and
theretofore collected is less than ninety-five percent (95%) of the total amount of Special
Taxes levied for such Fiscal Year, the Director of Finance/City Treasurer will send or
cause to be sent a notice of delinquency (and a demand for immediate payment thereof)
to each property owner with delinquent Special Taxes by the following October 1, and
(if any such delinquency remains uncured)foreclosure proceedings shall be commenced
by the City within 90 days of the sending of such notices against all such delinquent
parcels.
The Director of Finance/City Treasurer is authorized under the Fiscal Agent Agreement
to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any
such counsel (including a charge for City staff time)in conducting foreclosure proceedings shall
be an Administrative Expense under the Fiscal Agent Agreement.
C-16
Except as expressly permitted by the Fiscal Agent Agreement, the City shall not issue
any additional bonds secured by (A) a pledge of Special Taxes on a parity with or senior to the
pledge thereof under the Fiscal Agent Agreement; or (B) any amounts in any funds or accounts
established under the Fiscal Agent Agreement.
In determining the yield of the 2015 Bonds to comply with the Fiscal Agent Agreement,
the City will take into account redemption (including premium, if any) in advance of maturity
based on the reasonable expectations of the City, as of the Closing Date, regarding prepayments
of Special Taxes and use of prepayments for redemption of the 2015 Bonds, without regard to
whether or not prepayments are received or 2015 Bonds redeemed.
The City covenants and agrees that it will comply with and carry out all of the
provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of
the Fiscal Agent Agreement, failure of the City to comply with the Continuing Disclosure
Agreement shall not be considered a default on the Bonds or a breach of any other provision of
the Fiscal Agent Agreement; however, the Participating Underwriter, any Bondowner or any
beneficial owner of the Bonds may take such actions as may be necessary and appropriate to
compel performance by the City, of its obligations under the Continuing Disclosure Agreement,
including seeking mandate or specific performance by court order.
The City covenants and agrees to not consent or conduct proceedings with respect to a
reduction in the maximum Special Taxes that may be levied in the District on Developed
Property (as defined in the Rate and Method of Apportionment) below an amount, for any
Bond Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Bond
Year, plus a reasonable estimate of Administrative Expenses for each such Bond Year. It is
acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing
covenant, and that said covenant is necessary to assure the full and timely payment of the
Bonds.
Not later than October 30 of each calendar year, beginning with the October 30, 2015,
and in each calendar year thereafter until the October 30 following the final maturity of the
Bonds, the Director of Finance/City Treasurer shall cause the following information to be
supplied to the California Debt and Investment Advisory Commission("CDIAC"): (i)the name
of the City; (ii)the full name of the District;(iii)the name, title, and series of the Bond issue; (iv)
any credit rating for the Bonds and the name of the rating agency; (v) the Closing Date of the
Bond issue and the original principal amount of the Bond issue; (vi) the amount of the Reserve
Requirement; (vii) the principal amount of Bonds outstanding; (viii) the balance in the Reserve
Fund; (ix)that there is no capitalized interest account for the Bonds;(x)the number of parcels in
the District that are delinquent with respect to Special Tax payments, the amount that each
parcel is delinquent, the total amount of Special Taxes due on the delinquent parcels, the length
of time that each has been delinquent, when foreclosure was commenced for each delinquent
parcel, the total number of foreclosure parcels for each date specified, and the total amount of
tax due on the foreclosure parcels for each date specified; (xi) that there is no balance in any
improvement fund for the District; (xii) the assessed value of all parcels subject to the Special
Tax to repay the Bonds as shown on the most recent equalized roll, the date of assessed value
reported, and the source of the information; (xiii) the total amount of Special Taxes due, the
total amount of unpaid Special Taxes, and whether or not the Special Taxes are paid under the
County's Teeter Plan (Chapter 6.6 (commencing with Section 54773) of the California
Government Code); (xiv)the reason and the date, if applicable, that the Bonds were retired;and
(xv) contact information for the party providing the foregoing information. The annual
reporting shall be made using such form or forms as may be prescribed by CDIAC.
C-17
If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled
payment date for the Bonds, or if funds are withdrawn by the Fiscal Agent from the Reserve
Fund pursuant to the Fiscal Agent Agreement for transfer to the Fiscal Agent to be used to pay
principal and interest on the Bonds, the Director of Finance/City Treasurer shall notify CDIAC
and the Original Purchaser of such failure or withdrawal within 10 days of such failure or
withdrawal, and the Director of Finance/City Treasurer shall provide notice under the
Continuing Disclosure Agreement of any such event as required thereunder.
The Director of Finance/City Treasurer shall file a report with the City no later than
January 1, 2012, and at least once a year thereafter, which annual report shall contain: (i) the
amount of Special Taxes collected and expended with respect to the District, (ii) the amount of
Bond proceeds collected and expended with respect to the District, and (iii) the status of the
Project. It is acknowledged that the Special Tax Fund, the Bond Fund, the Reserve Fund, the
Special Tax Prepayments Account and the Administrative Expense Fund are the accounts into
which Special Taxes collected in the District will be deposited for purposes of Section 50075.1(c)
of the California Government Code, and the funds and accounts listed in the Fiscal Agent
Agreement are the funds and accounts into which Bond proceeds will be deposited for
purposes of Section 53410(c) of the California Government Code, and the annual report
described in the preceding sentence is intended to satisfy the requirements of Sections
50075.1(d), 50075.3(d)and 53411 of the California Government Code.
The reporting requirements of the Fiscal Agent Agreement shall be amended from time
to time, without action by the City or the Fiscal Agent(i)with respect to subparagraphs (A)and
(B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act, and
(ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1,
50075.3, 53410 or 53411 of the California Government Code. Notwithstanding the foregoing,
any such amendment shall not, in itself, affect the City's obligations under the Continuing
Disclosure Agreement. The City shall notify the Fiscal Agent in writing of any such
amendments which affect the reporting obligations of the Fiscal Agent under the Fiscal Agent
Agreement.
None of the City and its officers, agents and employees (including but not limited to the
Director of Finance/City Treasurer), or the Fiscal Agent, shall be liable for any inadvertent error
in reporting the information required by the Fiscal Agent Agreement.
The Director of Finance/City Treasurer shall provide copies of any reports prepared
pursuant to the above-described provisions of the Fiscal Agent Agreement to any Bondowner
upon the written request of a Bondowner and payment by the person requesting the
information of the cost of the City to produce such information and pay any postage or other
delivery cost to provide the same, as determined by the Director of Finance/City Treasurer.
The term "Bondowner" for purposes of the foregoing shall include any beneficial owner of the
Bonds.
The City covenants not to exercise its rights under the Act to waive delinquency and
redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty
program if to do so would materially and adversely affect the interests of the owners of the
Bonds. The City further covenants not to permit the tender of Bonds in payment of any Special
Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept
such tender will not result in the City having insufficient Special Tax Revenues to pay the
principal of and interest on the Bonds that will remain Outstanding following such tender.
The City will not bid at a foreclosure sale of property in respect of delinquent Special
Taxes unless it expressly agrees to take the property subject to the lien for Special Taxes
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imposed by the District and that the Special Taxes levied on the property are payable while the
City owns the property.
Deposit and Investment of Moneys in Funds
Moneys in any fund or account created or established by the Fiscal Agent Agreement
and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as
directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2)Business
Days in advance of the making of such investments. The Officer's Certificate shall contain a
certification to the Fiscal Agent that the investments being directed are Permitted Investments
as required hereunder. In the absence of any such Officer's Certificate, the Fiscal Agent shall
invest any such moneys in Permitted Investments described in clause (h) of the definition
thereof;provided, however, that any such investment shall be made by the Fiscal Agent only if,
prior to the date on which such investment is to be made, the Fiscal Agent shall have received
an Officer's Certificate specifying a specific money market fund into which the funds shall be
invested and, if no such Officer's Certificate is so received, the Fiscal Agent shall hold such
moneys uninvested.
Moneys in any fund or account created or established by the Fiscal Agent Agreement
and held by the Director of Finance/City Treasurer shall be invested by the Director of
Finance/City Treasurer in any lawful investments that the City may make or in any Permitted
Investment, which in any event by their terms mature prior to the date on which such moneys
are required to be paid out hereunder. Obligations purchased as an investment of moneys in
any fund shall be deemed to be part of such fund or account, subject, however, to the
requirements of the Fiscal Agent Agreement for transfer of interest earnings and profits
resulting from investment of amounts in funds and accounts. Whenever in the Fiscal Agent
Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such
transfer may be accomplished by transferring a like amount of Permitted Investments.
The Fiscal Agent or the Director of Finance/City Treasurer may act as principal or agent
in the acquisition or disposition of any investment, and all investments may be made through
the Fiscal Agent's investment department or that of its affiliates. The Fiscal Agent or its
affiliates may act as sponsor, agent manager or depository with regard to any Permitted
Investment. Neither the Fiscal Agent nor the Director of Finance/City Treasurer shall incur any
liability for losses arising from any investments made pursuant to the Fiscal Agent Agreement.
Except as otherwise provided in the next sentence, the City shall direct or make
investments hereunder such that all investments of amounts deposited in any fund or account
created by or pursuant to the Fiscal Agent Agreement, or otherwise containing gross proceeds
of the Bonds (within the meaning of section 148 of the Code)shall be acquired, disposed of, and
valued (as of the date that valuation is required by the Fiscal Agent Agreement or the Code) at
Fair Market Value. The City shall direct or make investments under the Fiscal Agent
Agreement such that investments in funds or accounts (or portions thereof)that are subject to a
yield restriction under applicable provisions of the Code and (unless valuation is undertaken at
least annually) investments in the Reserve Fund shall be valued at their present value (within
the meaning of section 148 of the Code). The Fiscal Agent shall have no duty in connection with
the determination of the Fair Market Value of any investment other than to follow: (A) its
normal practices in the purchase, sale and determining the value of Permitted Investments;and
(B)the investment directions of the City.
Investments in any and all funds and accounts may be commingled in a separate fund or
funds for purposes of making, holding and disposing of investments, notwithstanding
provisions herein for transfer to or holding in or to the credit of particular funds or accounts of
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amounts received or held by the Fiscal Agent or the Director of Finance/City Treasurer
hereunder, provided that the Fiscal Agent or the Director of Finance/City Treasurer, as
applicable, shall at all times account for such investments strictly in accordance with the funds
and accounts to which they are credited and otherwise as provided in the Fiscal Agent
Agreement.
The Fiscal Agent shall sell in a commercially reasonable manner, or present for
redemption, any investment security whenever it shall be necessary to provide moneys to meet
any required payment, transfer,withdrawal or disbursement from the fund or account to which
such investment security is credited and neither the Fiscal Agent nor the Director of
Finance/City Treasurer shall be liable or responsible for any loss resulting from the acquisition
or disposition of such investment security in accordance herewith.
Liability of the City
The City shall not incur any responsibility in respect of the Bonds or the Fiscal Agent
Agreement other than in connection with the duties or obligations explicitly therein or in the
Bonds assigned to or imposed upon it. The City shall not be liable in connection with the
performance of its duties under the Fiscal Agent Agreement, except for its own negligence or
willful default. The City shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions covenants or agreements of the Fiscal Agent therein
or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to
the existence of a default or event of default under the Fiscal Agent Agreement.
In the absence of bad faith, the City, including the Director of Finance/City Treasurer,
may conclusively rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the City and conforming to the
requirements of the Fiscal Agent Agreement. The City, including the Director of Finance/City
Treasurer, shall not be liable for any error of judgment made in good faith unless it shall be
proved that it was negligent in ascertaining the pertinent facts.
No provision of the Fiscal Agent Agreement shall require the City to expend or risk its
own general funds or otherwise incur any financial liability (other than with respect to the
Special Tax Revenues)in the performance of any of its obligations thereunder, or in the exercise
of any of its rights or powers,if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or
document believed by it to be genuine and to have been signed or presented by the proper
party or proper parties. The City may consult with counsel, who may be the City Attorney,
with regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it under the Fiscal
Agent Agreement in good faith and in accordance therewith.
The City shall not be bound to recognize any person as the Owner of a Bond unless and
until such Bond is submitted for inspection, if required, and his title thereto satisfactory
established,if disputed.
Whenever in the administration of its duties under the Fiscal Agent Agreement the City
shall deem it necessary or desirable that a matter be proved or established prior to taking or
suffering any action thereunder,such matter(unless other evidence in respect thereof be therein
specifically prescribed) may, in the absence of willful misconduct on the part of the City, be
C-20
deemed to be conclusively proved and established by a certificate of the Fiscal Agent or other
appropriate agent or consultant, and such certificate shall be full warrant to the City for any
action taken or suffered under the provisions of the Fiscal Agent Agreement or any
Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu
thereof, accept other evidence of such matter or may require such additional evidence as to it
may seem reasonable.
Fiscal Agent
The Bank of New York Mellon Trust Company, N.A., at its corporate trust office in Los
Angeles, California is appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent
undertakes to perform such duties, and only such duties, as are specifically set forth in the
Fiscal Agent Agreement, and no implied covenants or obligations shall be read into the Fiscal
Agent Agreement against the Fiscal Agent.
Any company or association into which the Fiscal Agent may be merged or converted or
with which it may be consolidated or any company or association resulting from any merger,
conversion or consolidation to which it shall be a party or any company or association to which
the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business,
provided such company or association shall be eligible under the following paragraph, shall be
the successor to such Fiscal Agent without the execution or filing of any paper or any further
act, anything herein to the contrary notwithstanding. The Fiscal Agent shall give the Director of
Finance/City Treasurer written notice of any such succession under the Fiscal Agent
Agreement.
The City may remove the Fiscal Agent initially appointed, and any successor thereto,
and may appoint a successor or successors thereto, but any such successor shall be a bank,
association or trust company having a combined capital (exclusive of borrowed capital) and
surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination
by federal or state authority. If such bank, association or trust company publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of the Fiscal Agent Agreement,
combined capital and surplus of such bank, association or trust company shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by
giving to the Owners notice by mail of such resignation. Upon receiving notice of such
resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in
writing. Any resignation or removal of the Fiscal Agent shall become effective only upon
acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the successor
Fiscal Agent shall be vested with all rights and powers of its predecessor under the Fiscal Agent
Agreement without any further act.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of the Fiscal Agent Agreement within forty-five (45)days after the Fiscal Agent shall
have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall
have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to
any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may
thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal
Agent.
If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is
rendered unable to perform its duties under the Fiscal Agent Agreement, all such duties and all
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of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the
Director of Finance/City Treasurer for the benefit of the Owners. The City covenants for the
direct benefit of the Owners that its Director of Finance/City Treasurer in such case shall be
vested with all of the rights and powers of the Fiscal Agent under the Fiscal Agent Agreement,
and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent
under the Fiscal Agent Agreement, in trust for the benefit of the Owners of the Bonds. In such
event, the Director of Finance/City Treasurer may designate a successor Fiscal Agent qualified
to act as Fiscal Agent under the Fiscal Agent Agreement.
The recitals of facts, covenants and agreements in the Fiscal Agent Agreement and in the
Bonds contained shall be taken as statements, covenants and agreements of the City, and the
Fiscal Agent assumes no responsibility for the correctness of the same, or makes any
representations as to the validity or sufficiency of the Fiscal Agent Agreement or of the Bonds,
or shall incur any responsibility in respect thereof, other than in connection with the duties or
obligations in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The
Fiscal Agent shall not be liable in connection with the performance of its duties under the Fiscal
Agent Agreement, except for its own negligence or willful default. The Fiscal Agent assumes
no responsibility or liability for any information, statement or recital in any offering
memorandum or other disclosure material prepared or distributed with respect to the issuance
of the Bonds.
In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Fiscal Agent and conforming to the requirements of the Fiscal Agent
Agreement; but in the case of any such certificates or opinions by which any provision of the
Fiscal Agent Agreement are specifically required to be furnished by the City to the Fiscal Agent,
the Fiscal Agent shall be under a duty to examine the same to determine whether or not they
conform to the requirements of the Fiscal Agent Agreement on their face. Except as described
above in this paragraph, Fiscal Agent shall be protected and shall incur no liability in acting or
proceeding, or in not acting or not proceeding, in good faith,reasonably and in accordance with
the terms of the Fiscal Agent Agreement, upon any resolution, order, notice, request,
requisition, Officer's Certificate, consent or waiver, certificate, statement, affidavit, or other
paper or document which it shall in good faith reasonably believe to be genuine and to have
been adopted or signed by the proper person or to have been prepared and furnished pursuant
to any provision of the Fiscal Agent Agreement, and the Fiscal Agent shall not be under any
duty to make any investigation or inquiry as to any statements contained or matters referred to
in any such instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith by a
responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining
the pertinent facts.
No provision of the Fiscal Agent Agreement shall require the Fiscal Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of its
duties under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers
vested in it by the Fiscal Agent Agreement at the request or direction of any of the Owners
pursuant to the Fiscal Agent Agreement unless such Owners shall have offered to the Fiscal
Agent security or indemnity satisfactory to it against the fees, expenses and liabilities (including
reasonable attorney's fees) which might be incurred by it in compliance with such request or
direction.
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The Fiscal Agent may become the owner of the Bonds with the same rights it would
have if it were not the Fiscal Agent.
The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of
Special Taxes or other funds to be deposited with it under the Fiscal Agent Agreement, or as to
the correctness of any amounts received, and its liability shall be limited to the proper
accounting for such funds as it shall actually receive.
In order to perform its duties and obligations under the Fiscal Agent Agreement, the
Fiscal Agent may employ such persons or entities as it deems necessary or advisable.
The Fiscal Agent shall have the right to accept and act upon instructions, including
funds transfer instructions ("Instructions") given pursuant to this Agreement and delivered
using Electronic Means ("Electronic Means" shall mean the following communications
methods: e-mail, facsimile transmission, secure electronic transmission containing applicable
authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or
another method or system specified by the Fiscal Agent as available for use in connection with
its services hereunder); provided, however, that the City shall provide to the Fiscal Agent an
incumbency certificate listing officers with the authority to provide such Instructions and
containing specimen signatures of such officers,which incumbency certificate shall be amended
by the City whenever a person is to be added or deleted from the listing. If the City elects to
give the Fiscal Agent Instructions using Electronic Means and the Fiscal Agent in its discretion
elects to act upon such Instructions, the Fiscal Agent's reasonable understanding of such
Instructions shall be deemed controlling provided, in the event of an ambiguity or a
contradiction in such Instructions, the Fiscal Agent shall notify the City and request clarification
from the City, and the Fiscal Agent shall not be required to act on such ambiguous or
contradictory Instructions pending the City's clarification. The City understands and agrees
that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and
that the Fiscal Agent shall conclusively presume that directions that purport to have been sent
by an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have
been sent by such Authorized Officer. The City shall be responsible for ensuring that only
Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all
Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable
user and authorization codes, passwords and/or authentication keys upon receipt by the City.
The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly
from the Fiscal Agent's reliance upon and compliance with such Instructions notwithstanding
such directions conflict or are inconsistent with a subsequent written instruction. The City
agrees: (i)to assume all risks arising out of the use of Electronic Means to submit Instructions to
the Fiscal Agent, including without limitation the risk of the Fiscal Agent acting on
unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) if the
City elects to give the Fiscal Agent instructions using Electric Means the City acknowledges that
there may be more secure methods of transmitting Instructions than the method(s) selected by
the City; (iii) that the security procedures (if any) to be followed in connection with its
transmission of Instructions provide to it a commercially reasonable degree of protection in
light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately
upon learning of any compromise or unauthorized use of the security procedures.
Notwithstanding the foregoing, the protection afforded to the Fiscal Agent in each provision of
this paragraph shall be operative only in the absence of the Fiscal Agent's negligence or willful
misconduct.
The Fiscal Agent shall not be considered in breach of or in default in its obligations
under the Fiscal Agent Agreement or progress in respect thereto in the event of enforced delay
("unavoidable delay") in the performance of such obligations due to unforeseeable causes
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beyond its control and without its fault or negligence, including, but not limited to, acts of god
or of the public enemy or terrorists, acts of a government, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,
material or supplies in the open market, malicious mischief, condemnation, and unusually
severe weather or delays of suppliers or subcontractors due to such causes or any similar event
and/or occurrences beyond the control of the Fiscal Agent.
The Fiscal Agent shall provide to the City such information relating to the Bonds and the
funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement as the
City shall reasonably request, including but not limited to quarterly statements reporting funds
held and transactions by the Fiscal Agent.
The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts,
separate from all other records and accounts of the Fiscal Agent, in which complete and correct
entries shall be made of all transactions relating to the deposit to and expenditure of amounts
disbursed from the Bond Fund, the Special Tax Prepayments Account, the Reserve Fund and
the Costs of Issuance Fund. Such books of record and accounts shall upon reasonable prior
notice at all times during business hours be subject to the inspection of the City and the Owners
of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or
their representatives duly authorized in writing.
The Fiscal Agent may rely and shall be protected in acting or refraining from acting
upon any notice, resolution, request, requisition, Officer's Certificate, consent, order, certificate,
report,warrant,bond or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or proper parties. The Fiscal Agent may consult with
counsel, who may be counsel to the City, with regard to legal questions, and the opinion or
advice of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance
therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond
unless and until such Bond is submitted for inspection, if required, and his title thereto
satisfactorily established, if disputed.
Whenever in the administration of its duties under the Fiscal Agent Agreement the
Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect thereof
be herein specifically prescribed) may, in the absence of willful misconduct on the part of the
Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City,
and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered
under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the
faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of
such matter or may require such additional evidence as to it may seem reasonable.
Amendment of the Fiscal Agent Agreement
The Fiscal Agent Agreement and the rights and obligations of the City and of the
Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement
pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a
meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the
Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent
Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or
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reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the
principal of, and the interest and any premium on, any Bond, without the express consent of the
Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the
Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the
Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal
Agent Agreement), or reduce the percentage of Bonds required for the amendment of the Fiscal
Agent Agreement. Any such amendment may not modify any of the rights or obligations of the
Fiscal Agent without its written consent.
The Fiscal Agent Agreement and the rights and obligations of the City and of the
Owners may also be modified or amended at any time by a Supplemental Agreement, without
the consent of any Owners, only to the extent permitted by law and only for any one or more of
the following purposes:
(A) to add to the covenants and agreements of the City in the Fiscal Agent
Agreement contained, other covenants and agreements thereafter to be observed, or to
limit or surrender any right or power herein reserved to or conferred upon the City;
(B) to make modifications not adversely affecting any outstanding series of
Bonds of the City in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in the Fiscal
Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement,
as the City may deem necessary or desirable and not inconsistent with the Fiscal Agent
Agreement, and which shall not materially adversely affect the rights of the Owners of
the Bonds;
(D) to make such additions, deletions or modifications as may be necessary or
desirable to assure the exclusion from gross income, for purposes of federal income
taxation, of interest on the 2015 Bonds;and
(E) in connection with the issuance of Parity Bonds under and pursuant to the
Fiscal Agent Agreement.
The Fiscal Agent may in its discretion, but shall not be obligated to, enter into any such
Supplemental Agreement authorized by the Fiscal Agent Agreement which materially
adversely affects the Fiscal Agent's own rights, duties or immunities under the Fiscal Agent
Agreement or otherwise with respect to the Bonds or any agreements related thereto. The Fiscal
Agent may request and shall be fully protected in relying upon, an opinion of Bond Counsel
that any proposed Supplemental Agreement complies with the applicable requirements of the
Fiscal Agent Agreement.
Discharge of the Fiscal Agent Agreement
The City shall have the option to pay and discharge the entire indebtedness on all or any
portion of the Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest
and any premium on, such Bonds Outstanding, as and when the same become due and
payable;
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(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money
which, together with the amounts then on deposit in the funds and account provided in
the Fiscal Agent Agreement is fully sufficient to pay such Bonds Outstanding, including
all principal,interest and redemption premiums;or
(C) by irrevocably depositing with the Fiscal Agent or another fiduciary,in trust,
cash and Federal Securities in such amount as the City shall determine as confirmed by
Bond Counsel, an Independent Financial Consultant or an independent certified public
accountant will,together with the interest to accrue thereon and moneys then on deposit
in the funds and account provided for in the Fiscal Agent Agreement, be fully sufficient
to pay and discharge the indebtedness on such Bonds (including all principal, interest
and redemption premiums)at or before their respective maturity dates.
If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if
such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall
have been given as in the Fiscal Agent Agreement provided or provision satisfactory to the
Fiscal Agent shall have been made for the giving of such notice,then, at the election of the City,
and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge
of the Special Taxes and other funds provided for in the Fiscal Agent Agreement and all other
obligations of the City under the Fiscal Agent Agreement with respect to such Bonds
Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal
Agent. Notwithstanding the foregoing, the obligations of the City to pay or cause to be paid to
the Owners of the Bonds not so surrendered and paid all sums due thereon, to pay all amounts
owing to the Fiscal Agent for its compensation, and otherwise to assure that no action is taken
or failed to be taken if such action or failure adversely affects the exclusion of interest on the
Bonds from gross income for federal income tax purposes, shall continue in any event.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding,
any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent,
which are not required for the purposes of the preceding paragraph, shall be paid over to the
City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal
Agent but shall be retained by the City to be used for any purpose permitted under the Act.
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
July J 2015
City Council
City of Seal Beach
211 Eighth Street
Seal Beach, California 90740
OPINION: $ City of Seal Beach Community Facilities District No. 2002-01
(Heron Pointe)2015 Special Tax Refunding Bonds
Members of the City Council:
We have acted as bond counsel to the City of Seal Beach, California (the "City") in
connection with the issuance by the City,for and on behalf of the City of Seal Beach Community
Facilities District No. 2002-01 (Heron Pointe) (the "District"), of its $ City of Seal
Beach Community Facilities District No. 2002-01 (Heron Pointe) 2015 Special Tax Refunding
Bonds (the "Bonds"), pursuant to the Mello-Roos Community Facilities Act of 1982, as
amended, constituting Sections 53311 et seq. of the California Government Code (the "Act"),
Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, a
Fiscal Agent Agreement, dated as of July 1, 2015 (the "Fiscal Agent Agreement"), by and
between the City, for and on behalf of the District, and The Bank of New York Mellon Trust
Company, N.A., as fiscal agent, and Resolution No. adopted by the City Council of the
City on May 26,2015 (the "Resolution").
In connection with this opinion, we have examined the law and such certified
proceedings and other documents as we deem necessary to render this opinion. As to questions
of fact material to our opinion, we have relied upon representations of the City contained in the
Resolution and in the Fiscal Agent Agreement, and in the certified proceedings and
certifications of public officials and others furnished to us, without undertaking to verify the
same by independent investigation.
Based upon the foregoing,we are of the opinion,under existing law, as follows:
1. The City is duly created and validly existing as a municipal corporation and political
subdivision of the State of California, with the power to enter into the Fiscal Agent Agreement
and perform the agreements on its part contained therein and issue the Bonds.
2. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a
valid and binding obligation of the City enforceable upon the City in accordance with its terms.
3. Pursuant to the Act, the Fiscal Agent Agreement creates a valid lien on the funds
pledged by the Fiscal Agent Agreement for the security of the Bonds on a parity with the pledge
thereof with respect to any Parity Bonds that may be issued under, and as such term is defined
in,the Fiscal Agent Agreement.
D-1
4. The Bonds have been duly authorized, executed and delivered by the City and
are valid and binding limited obligations of the City for the District, payable solely from the
sources provided therefor in the Fiscal Agent Agreement.
5. Subject to the City's compliance with certain covenants, interest on the Bonds (i)
is excludable from gross income of the owners thereof for federal income tax purposes, and (ii)
is not included as an item of tax preference in computing the alternative minimum tax for
individuals and corporations under the Internal Revenue Code of 1986, as amended, but is
taken into account in computing an adjustment used in determining the federal alternative
minimum tax for certain corporations. Failure by the City to comply with certain of such
covenants could cause interest on the Bonds to be includable in gross income for federal income
tax purposes retroactively to the date of issuance of the Bonds.
6. The interest on the Bonds is exempt from personal income taxation imposed by the
State of California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and
we express no opinion regarding any such collateral consequences arising with respect to the
Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds,the Resolution
and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted
and also may be subject to the exercise of judicial discretion in accordance with general
principles of equity.
In rendering this opinion, we have relied upon certifications of the City and others with
respect to certain material facts. Our opinion represents our legal judgment based upon such
review of the law and facts that we deem relevant to render our opinion and is not a guarantee
of a result. This opinion is given as of the date hereof and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention or any changes in law that may hereafter occur.
Respectfully submitted,
D-2
APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement"), dated
an of July 1, 2015, is by and between VVlLLDAN FINANCIAL SERVICES, as dissemination
agent (the "Dissemination Agent"), and the CITY OF SEAL 8BA[}l, CALIFORNIA, a
municipal corporation and political subdivision of the State of California(the "City").
RECITALS:
WIIEREAS, the City has iaSued, for and on behalf o{ the City of Sea] Beach Community
Facilities District No. 2002~01 Pointe) (the "District"), its City of Sea] Beach Community
Facilities District No. 2002-01 (Heron Pointe), 20I5 Special Tax Ileh/mdimg Bonds (the "Bonds")
im the initi&l pri n«iPal aooOuntmf$_______;amd
WHEREAS, the Bonds have been issued pursuant to a Fiscal A ent Agreement, dated ao
of July l, 2015 (the "Fiscal Agent Agreement"), by and between The Bank of New York Mellon
Trust Company, N.A., as fiscal agent(the "Fiscal Agent"), and the City, for and on behalf of the
District;and
WHEREAS, this Disclosure being executed and delivered by the City and
the Dissemination Agent brtbebeoebtoftheowneoandbeue6ciaiowoeaoftheBondoandin
order to assist the underwriter uf the Bonds io complying with S.E.[ Rule 15c2-12(h)(5).
AGREEMENT:
NOW, THEREFORE, for and in consideration ofthe premises and mutual covenants
herein contained, and for other consideration the receipt and sufficiency of which is hereby
acknowledged,the parties hereto agreeaoddlovvu:
Section l. Definitions. In addition to the definitions of capitalized terms set forth in
Section 1.03 of the Fiscal Agent Agreement, which apply to any capitalized term oeed in this
Disclosure Agreement unless otherwise defined in this Section or in the Recitals above the
following terms shall have the following meanings when used in this Disclosure Agreement:
"Annual Report" zoeaoe any Annual Report provided by the City pursuant to, and as
described in,Sections 3 and 4of this Disclosure Agreement.
"Bono5c6n/ (Jzonor" ahu|| mean any person who (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership f, any Bond (including persons
holding any Bonds through nominees, depositories or other intermediaries), or (h) iytreated as
the owner of any Bond for federal income tax purposes.
"Disclosure Representative" roeono the Director of Finance/City Treasurer, or such
person's designee, or such other officer or employee of the City an the City shall designate as the
Disclosure Representative hereunder in writing to the Dissemination Agent from time totime.
"I)isoon//uu/ion Anent" means VVilldan Financial Services, acting in its capacity as
[)ieyecuinaboo Agent hereunder, or any successor [)iaeenzioadou Agent designated in writing
by the City and which has filed with the City a written acceptance of such designation.
E-1
"EMMA" or "Electronic Municipal Market Access" means the centralized on-line
repository for documents to be filed with the MSRB, such as official statements and disclosure
information relating to municipal bonds, notes and other securities as issued by state and local
governments.
"Listed Events" means any of the events listed in Section 5(a) or 5(b) of this Disclosure
Agreement.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information which may be
designated by the Securities and Exchange Commission as such for purposes of the Rule in the
future.
"Official Statement" means the Official Statement, dated 2015, relating to the
Bonds.
"Participating Underwriter" means the original underwriter of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 2. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the City and the Dissemination Agent for the benefit of the owners
and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in
complying with the Rule.
Section 3. Provision of Annual Reports.
(a) Delivery of Annual Report. The City shall, or shall cause the Dissemination Agent to,
not later than the March 1 occurring after the end of each fiscal year of the City, commencing
with the report for the 2014-15 fiscal year, which is due not later than March 1, 2016, file with
EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual
Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. The
Annual Report may be submitted as a single document or as separate documents comprising a
package and may cross-reference other information as provided in Section 4 of this Disclosure
Agreement; provided that any audited financial statements of the City may be submitted
separately from the balance of the Annual Report and later than the date required above for the
filing of the Annual Report if they are not available by that date.
(b) Change of Fiscal Year. If the City's fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section 5(c), and subsequent Annual
Report filings shall be made no later than six months after the end of such new fiscal year end.
(c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business
Days prior to the date specified in subsection (a) (or, if applicable, subsection (b) of this Section
3 for providing the Annual Report to EMMA), the City shall provide the Annual Report to the
Dissemination Agent (if other than the City). If by such date, the Dissemination Agent has not
received a copy of the Annual Report, the Dissemination Agent shall notify the City.
(d) Report of Non-Compliance. If the City is the Dissemination Agent and is unable to file
an Annual Report by the date required in subsection (a) (or, if applicable, subsection(b)) of this
E-2
Section 3, the City shall send a notice to EMMA substantially in the form attached hereto as
Exhibit A. If the City is not the Dissemination Agent and is unable to provide an Annual Report
to the Dissemination Agent by the date required in subsection (c) of this Section 3, the
Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as
Exhibit A.
(e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination
Agent is other than the City, file a report with the City certifying that the Annual Report has
been filed with EMMA pursuant to Section 3 of this Disclosure Agreement, stating the date it
was so provided and filed.
Section 4. Content of Annual Reports. It is acknowledged that the Closing Date for the
Bonds occurred after the end of the 2014-2015 fiscal year of the City. In light of the foregoing,
submission of the Official Statement shall satisfy the City's obligation to file an Annual Report
for fiscal year 2014-2015.
The Annual Report for each fiscal year commencing with the Annual Report for the
2015-2016 fiscal year, shall contain or incorporate by reference the following:
(a) Financial Statements. Audited financial statements of the City for the most recently
completed fiscal year, prepared in accordance with generally accepted accounting principles as
promulgated to apply to governmental entities from time to time by the Governmental
Accounting Standards Board. If the City's audited financial statements are not available by the
time the Annual Report is required to be filed pursuant to Section 3(a), the audited financial
statements shall be filed in the same manner as the Annual Report when they become available.
(b) Other Annual Information. The Annual Report for each fiscal year commencing with
fiscal year 2015-2016 shall also include the following information:
(i) The principal amount of Bonds Outstanding as of the September 30 next
preceding the date of the Annual Report.
(ii) The balance in the Reserve Fund, and a statement of the Reserve
Requirement, as of the September 30 next preceding the date of the Annual Report.
(iii)The total assessed value of all parcels within the District on which the Special
Taxes are levied, as shown on the assessment roll of the County Assessor last equalized
prior to the September 30 next preceding the date of the Annual Report, and a statement
of assessed value-to-lien ratios therefor, either by individual parcel or by categories, in a
table similar to Table 4 in the Official Statement.
(iv)The Special Tax aggregate delinquency rate for all parcels within the District
on which the Special Taxes are levied, the aggregate number of parcels within the
District on which the Special Taxes are levied and which are delinquent in payment of
Special Taxes, and the percentage of the most recent annual Special Tax levy that is
delinquent, all as of the September 30 next preceding the date of the Annual Report.
(v) The status of foreclosure proceedings for any parcels within the District on
which the Special Taxes are levied and a summary or the results of any foreclosure sales,
or other collection efforts with respect to delinquent Special Taxes, as of the September
30 next preceding the date of the Annual Report.
E-3
(vi)The most recent annual information required to be provided to the California
Debt and Investment Advisory Commission pursuant to Section 5.19(A) of the Fiscal
Agent Agreement.
(c) Cross References. Any or all of the items listed above may be included by specific
reference to other documents, including official statements of debt issues of the City or related
public entities, which are available to the public on EMMA. The City shall clearly identify each
such other document so included by reference.
If the document included by reference is a final official statement, it must be available
from EMMA.
(d) Further Information. In addition to any of the information expressly required to be
provided under paragraph (b) of this Section 4, the City shall provide such further information,
if any, as may be necessary to make the specifically required statements, in the light of the
circumstances under which they are made,not misleading.
Section 5. Reporting of Listed Events.
(a) Reportable Events. The City shall, or shall cause the Dissemination Agent (if not the
City)to,give notice of the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(3) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(4) Substitution of credit or liquidity providers,or their failure to perform.
(5) Defeasances.
(6) Rating changes.
(7) Tender offers.
(8) Bankruptcy, insolvency, receivership or similar event of the obligated
person.
(9) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
5701-TEB) or other material notices or determinations with respect to the tax status of
the security, or other material events affecting the tax status of the security.
Note: For the purposes of the event identified in subparagraph (8), the event is
considered to occur when any of the following occur: the appointment of a receiver,
trustee or similar officer for an obligated person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court
or governmental authority has assumed jurisdiction over substantially all of the assets or
business of the obligated person, or if such jurisdiction has been assumed by leaving the
existing governmental body and officials or officers in possession but subject to the
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supervision and orders of a court or governmental authority, or the entry of an order
confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the
assets or business of the obligated person.
(b) Material Reportable Events. The City shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to the Bonds,if material:
(1) Non-payment related defaults.
(2) Modifications to rights of security holders.
(3) Bond calls.
(4) The release, substitution, or sale of property securing repayment of the
securities.
(5) The consummation of a merger, consolidation,or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the obligated
person, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive agreement
relating to any such actions,other than pursuant to its terms.
(6) Appointment of a successor or additional trustee, or the change of name
of a trustee.
(c) Time to Disclose. The City shall, or shall cause the Dissemination Agent (if not the
City) to, file a notice of such occurrence with EMMA, in an electronic format as prescribed by
the MSRB, in a timely manner not in excess of 10 business days after the occurrence of any
Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections
(a)(5) and (b)(3) above need not be given under this subsection any earlier than the notice (if
any) of the underlying event is given to owners of affected Bonds under the Fiscal Agent
Agreement.
Section 6. Identifying Information for Filings with EMMA. All documents provided to
EMMA under this Disclosure Agreement shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City's obligations under this
Disclosure Agreement shall terminate upon the defeasance,prior redemption or payment in full
of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City
shall give notice of such termination in the same manner as for a Listed Event under Section
5(c).
Section 8.Dissemination Agent.
(a) Appointment of Dissemination Agent. The City may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement and may discharge any such agent, with or without appointing a successor
Dissemination Agent.The initial Dissemination Agent shall be Willdan Financial Services.
If the Dissemination Agent is not the City, the Dissemination Agent shall not be
responsible in any manner for the content of any notice or report prepared by the City pursuant
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to this Disclosure Agreement. It is understood and agreed that any information that the
Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it
by the City. The Dissemination Agent has undertaken no responsibility with respect to the
content of any reports, notices or disclosures provided to it under this Disclosure Agreement
and has no liability to any person, including any Bond owner, with respect to any such reports,
notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have
any fiduciary or banking relationship with the City shall not be construed to mean that the
Dissemination Agent has actual knowledge of any event or condition, except as may be
provided by written notice from the City.
(b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid
compensation by the City for its services provided hereunder as agreed to between the
Dissemination Agent and the City from time to time and all expenses, legal fees and expenses
and advances made or incurred by the Dissemination Agent in the performance of its duties
hereunder, with payment to be made from any lawful funds of the District. The Dissemination
Agent shall not be deemed to be acting in any fiduciary capacity for the City, the owners of the
Bonds, the Beneficial Owners, or any other party. The Dissemination Agent may rely, and shall
be protected in acting or refraining from acting, upon any written direction from the City or a
written opinion of nationally recognized bond counsel. The Dissemination Agent may at any
time resign by giving written notice of such resignation to the City. The Dissemination Agent
shall not be liable hereunder except for its negligence or willful misconduct.
(c) Responsibilities of Dissemination Agent. In addition of the filing obligations of the
Dissemination Agent set forth in Sections 3(e) and 5, the Dissemination Agent shall be
obligated, and hereby agrees, to provide a request to the City to compile the information
required for its Annual Report at least 30 days prior to the date such information is to be
provided to the Dissemination Agent pursuant to subsection (c) of Section 3. The failure to
provide or receive any such request shall not affect the obligations of the City under Section 3.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement,the City may amend this Disclosure Agreement(and the Dissemination Agent shall
agree to any amendment so requested by the City that does not impose any greater duties or
risk of liability on the Dissemination Agent), and any provision of this Disclosure Agreement
may be waived,provided that all of the following conditions are satisfied:
(a) Change in Circumstances. If the amendment or waiver relates to the provisions
of Sections 3(a), 4 or 5(a) or (b), it may only be made in connection with a change in
circumstances that arises from a change in legal requirements, change in law, or change
in the identity, nature, or status of an obligated person with respect to the Bonds, or the
type of business conducted.
(b) Compliance as of Issue Date. The undertaking, as amended or taking into
account such waiver, would, in the opinion of a nationally recognized bond counsel,
have complied with the requirements of the Rule at the time of the original issuance of
the Bonds, after taking into account any amendments or interpretations of the Rule, as
well as any change in circumstances.
(c) Consent of Holders, Non-impairment Opinion. The amendment or waiver either
(i)is approved by the Bond owners in the same manner as provided in the Fiscal Agent
Agreement for amendments to the Fiscal Agent Agreement with the consent of Bond
owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially
impair the interests of the Bond owners or Beneficial Owners.
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If this Disclosure Agreement is amended or any provision of this Disclosure Agreement
is waived, the City ;shell describe Busch amendment or waiver in the next: ftallowing Annual
Deport:and shall include, as applicable, a narratives explanation of the reason for the amendment
or waiver and its impact on the type(or in the cease of a change of accounting principles, on the
presentation) of financial information or operating data being presented by the City. In
addition, if the amendment relates to the accounting principles to be followed in preparing
financial statements, (i)notice of such change shall be given in the same manner as for a Listed
Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made
should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
Section 10. Additional Information,. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the City chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Agreement, the City shall have
no obligation under this Disclosure Agreement to update such information or include it in any
future Annual Report or future notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Agreement, any Bond owner, any Beneficial Owner, the Fiscal Agent or the
Participating Underwriter may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the City to comply
with its obligations under this Disclosure Agreement. The sole remedy under this Disclosure
Agreement in the event of any failure of the City to comply with this Disclosure Agreement
shall be an action to compel performance.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and the
owners and the Beneficial Owners from time to time of the Bonds, and shall create no rights in
any other person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several
counterparts,each of which shall be an original and all of which shall constitute but one and the
same instrument.
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IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as
of the date first above written.
CITY OF SEAL BEACH,CALIFORNIA
By:
City Manager
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
By:
Its:
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: City of Seal Beach, California
Name of Bond Issue: $ City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe),2015 Special Tax Bonds
Date of Issuance: July_,2015
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with
respect to the above-named Bonds as required by Section 5.17 of the Fiscal Agent Agreement,
dated as of July 1, 2015, between the Obligor and The Bank of New York Mellon Trust
Company, N.A., as fiscal agent. The Obligor anticipates that the Annual Report will be filed by
Date:
By: Willdan Financial Services, as
Dissemination Agent
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix F has been provided by The Depository Trust Company
("DTC"), New York, NY, for use in securities offering documents, and the City does not take
responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurances
that DTC, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a)
payments of interest, principal or premium, if any, with respect to the 2015 Bonds or (b) certificates
representing ownership interest in or other confirmation of ownership interest in the 2015 Bonds,or that
they will so do on a timely basis or that DTC,DTC Direct Participants or DTC Indirect Participants mill
act in the manner described in this Official Statement.
The following description of DTC, the procedures and record keeping with respect to beneficial
ownership interests in the 2015 Bonds, payment of principal, interest and other payments on the 2015
Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership
interest in the 2015 Bonds and other related transactions by and between DTC, the DTC Participants
and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no
representations can be made concerning these matters and neither the DTC Participants nor the
Beneficial Owners should rely on the foregoing information with respect to such matters, but should
instead confirm the same with DTC or the DTC Participants,as the case may be.
Neither the City as the issuer of the 2015 Bonds (the "Issuer") nor the fiscal agent or paying
agent appointed with respect to the 2015 Bonds (the "Agent") take any responsibility for the information
contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute
to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2015
Bonds, (b)certificates representing ownership interest in or other confirmation or ownership interest in
the 2015 Bonds, or (c)redemption or other notices sent to DTC or Cede & Co., its nominee, as the
registered owner of the 2015 Bonds, or that they will so do on a timely basis, or that DTC, DTC
Participants or DTC Indirect Participants will act in the manner described in this Appendix. The
current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the
current "Procedures"of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the 2015 Bonds (the "Securities"). The Securities will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other
name as may be requested by an authorized representative of DTC. One fully-registered
Security certificate will be issued for each issue of the Securities, each in the aggregate principal
amount of such issue, and will be deposited with DTC. If, however, the aggregate principal
amount of any issue exceeds $500 million, one certificate will be issued with respect to each
$500 million of principal amount, and an additional certificate will be issued with respect to any
remaining principal amount of such issue.
2. DTC, the world's largest securities depository, is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization' within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments (from over 100
F-1
countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also
facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers
and dealers, banks, trust companies, clearing corporations, and certain other organizations.
DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation("DTCC").
DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by
the users of its regulated subsidiaries. Access to the DTC system is also available to others such
as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). On August 8, 2011, Standard & Poor's
downgraded its rating of DTC from AAA to AA+. The DTC Rules applicable to its Participants
are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com and www.dtc.org. The information contained on this Internet site is not
incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Securities on DTC's records. The ownership
interest of each actual purchaser of each Security ("Beneficial Owner")is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their ownership interests
in Securities, except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name
as may be requested by an authorized representative of DTC. The deposit of Securities with
DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect
any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities
may wish to take certain steps to augment the transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults, and proposed
amendments to the Security documents. For example,Beneficial Owners of Securities may wish
to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and
transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to
provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
F-2
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be
made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's
receipt of funds and corresponding detail information from Issuer or Agent, on payable date in
accordance with their respective holdings shown on DTC's records. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be
the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be
the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the
Securities at any time by giving reasonable notice to Issuer or Agent. Under such
circumstances, in the event that a successor depository is not obtained, Security certificates are
required to be printed and delivered.
10. The Issuer may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, Security certificates will be
printed and delivered to DTC.
11. The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility
for the accuracy thereof.
F-3
BOND COUNSEL AND DISCLOSURE COUNSEL
SERVICES AGREEMENT
between the
aA[
City of Seal Beach
211 - 8th Street
Seal Beach, CA 90740
Quint & Thimmig LLP
900 Larkspur Landing Circle, Suite 270
Larkspur, CA 94939-1726
Tel: (415) 925-4200
S7296-0001\1818054v4.doc
This Bond Counsel and Disclosure Counsel Services Agreement ("the
Agreement") is made as of the 26th day of May, 2015 (the "Effective Date"), by and
between Quint & Thimmig LLP ("Attorneys"), a California limited liability partnership, and
the City of Seal Beach ("City"), a California charter city ("the Parties").
RECITALS
A. The City has formed the City of Seal Beach Community Facilities District
No. 2002-01 (Heron Pointe) (the "CFD") under the Mello-Roos Community Facilities Act
of 1982, as amended (the "Act")
B. The City is considering the issuance of bonds for the CFD (the "Bonds")
for the purpose of refunding and defeasing the outstanding City of Seal Beach
Community Facilities District No. 2002-01 (Heron Pointe) Special Tax Bonds, Series
2005 (the "Prior Bonds").
C. In connection with the issuance of the Bonds, the City requires the advice
and assistance of bond counsel and disclosure counsel.
D. Attorneys have represented that they are qualified and able to provide City
with such services.
E. Attorneys have advised the City that they have assisted numerous public
agencies in the State of California as bond counsel and as disclosure counsel with the
issuance of refunding bonds for community facilities districts, and the City desires to
retain the services of Attorneys to assist in the issuance of the Bonds, subject to the
provisions of this Agreement.
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as follows:
AGREEMENT
1.0 Scope of Services
1.1. Attorneys shall provide those services ("Services") set forth in the attached
Exhibit A, which is hereby incorporated by this reference. To the extent that there is any
conflict between Exhibit A and this Agreement, this Agreement shall control.
1.2. Attorneys shall perform all Services under this Agreement in accordance
with the standard of care generally exercised by like professionals under similar
circumstances and in a manner reasonably satisfactory to City.
1.3. In performing this Agreement, Attorneys shall comply with all applicable
provisions of federal, state, and local law.
1.4. The City shall cooperate with Attorneys and shall furnish Attorneys with
certified copies of all proceedings taken by the City and deemed necessary by
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Attorneys to render an opinion on the validity of the Bonds and the defeasance of the
Prior Bonds. All costs and expenses incurred incidental to the actual issuance and
delivery of the Bonds and the defeasance and refunding of the Prior Bonds, including
the cost and expense of preparing certified copies of proceedings required by Attorneys
in connection with the issuance of the Bonds and the defeasance and refunding of the
Prior Bonds, the cost of all printing and publication of official notices and offering
documents, fees and expenses of parties other than Attorneys, costs and expenses of
legal advertising and all other expenses incurred in connection with the issuance of the
Bonds and the defeasance and refunding of the Prior Bonds, shall be paid by the City
from the proceeds of the Bonds and shall not be the responsibility of Attorneys;
provided, that the City's payment or reimbursement of costs and expenses incurred by
Attorneys in connection with their services hereunder shall be subject to the provision of
Section 3.0.
1.5. In performing the Services pursuant to this Agreement, it is understood
and acknowledged by the City that Attorneys will not be providing financial advisory,
placement agent, investment banking or other similar services. It is expected that the
City will engage other consultants to provide any such services with respect to the
Bonds.
2.0 Term
Unless previously terminated as provided by this Agreement, this term of this
Agreement shall commence as of the Effective Date and shall end on the earlier of:
(i) the successful issuance of the Bonds and delivery of the Bonds to the initial
purchaser thereof, or (ii) one year from the Effective Date.
3.0 Attorneys' Compensation
For the services as Bond Counsel and Disclosure Counsel under this Agreement,
Attorneys shall be paid a fee of $40,000, inclusive of all out-of-pocket costs and
expenses incurred by Attorneys in connection with such services.
4.0 Payment Contingent on Bond Issuance
Payment of Attorneys' compensation under this Agreement shall be entirely
contingent upon the successful issuance of the Bonds, and shall be payable solely from
the proceeds of the Bonds and no other funds of the City.
5.0 Termination
5.1. This Agreement may be terminated at any time by the City with or without
cause upon written notice to Attorneys.
5.2. This Agreement may be terminated by Attorneys based on reasonable
cause, upon giving the City written notice thereof not less than 30 days prior to the date
of termination.
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5.3. In the event of a termination of this Agreement, all finished and unfinished
documents prepared by Attorneys in connection with their Services hereunder shall at
the option of the City become its property and, upon written request by the City to
Attorneys, shall be delivered to the City by Attorneys.
6.0 Party Representatives
6.1. The City Manager is the City's representative for purposes of this
Agreement.
6.2. Paul J. Thimmig is the Attorneys' primary representative for purposes of
this Agreement.
7.0 Notices
7.1. All notices permitted or required under this Agreement shall be deemed
made when personally delivered or when mailed 48 hours after deposit in the United
States Mail, first class postage prepaid and addressed to the respective party at the
applicable address below:
To City: City of Seal Beach
211-8th Street
Seal Beach, California 90740
Attn: City Manager
To Attorneys: Quint & Thimmig LLP
900 Larkspur Landing Circle, Suite 270
Larkspur, CA 94939-1726
Attn: Paul J. Thimmig
7.2. Actual notice shall be deemed adequate notice on the date actual notice
was received by the party to whom the notice is addressed, regardless of the method of
service.
8.0 Independent Contractor
8.1. Attorneys are independent contractors and not employees of the City. All
Services provided pursuant to this Agreement shall be performed by Attorneys or under
their supervision. Attorneys will determine the means, methods, and details of
performing the Services. Any additional personnel performing Services under this
Agreement on behalf of Attorneys shall also not be employees of City and shall at all
times be under Attorneys' exclusive direction and control. Attorneys shall pay all
wages, salaries, and other amounts due such personnel in connection with their
performance of Services under this Agreement and as required by law. Attorneys shall
be responsible for all reports and obligations respecting such additional personnel,
including, but not limited to: social security taxes, income tax withholding,
unemployment insurance, disability insurance, and workers' compensation insurance.
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8.2. Attorneys shall indemnify and hold harmless City and its elected officials,
officers, employees, and agents serving as independent contractors in the role of City
officials, from any and all liability, damages, claims, costs and expenses of any nature to
the extent arising from Attorneys' personnel practices. City shall have the right to offset
against the amount of any fees due to Attorneys under this Agreement any amount due
to City as a result of Attorneys' failure to promptly pay to City any reimbursement or
indemnification arising under this Section.
9.0 Subcontractors
No portion of this Agreement shall be subcontracted by Attorneys without the
prior written approval of the City. Attorneys are fully responsible to City for the
performance of any and all subcontractors engaged by Attorneys.
10.0 Assignment
Attorneys shall not assign or transfer any interest in this Agreement whether by
assignment or novation, without the prior written consent of City. Any purported
assignment without such consent shall be void and without effect.
11.0 Insurance
11.1. Attorneys shall not receive compensation for work under this Agreement
until it has provided evidence satisfactory to the City that Attorneys have secured all
insurance required under this Section. Attorneys shall furnish City with original
certificates of insurance effecting coverage required by this Agreement on customary
forms reasonably satisfactory to the City. The certificates for each insurance policy
shall be signed by a person authorized by that insurer or its agent to bind coverage on
its behalf. All certificates shall be received and approved by the City before
compensation for work done by Attorneys is paid. The City reserves the right to require
complete, certified copies of all required insurance policies, at any time.
11.2. Attorneys shall, at its expense, procure and maintain for the duration of
the Agreement, insurance against claims for injuries to persons or damages to property
that may arise from or in connection with the performance of this Agreement. Insurance
is to be placed with insurers with a current A.M. Best's rating no less than A:VIII,
licensed to do business in California, and reasonably satisfactory to the City. Coverage
shall be at least as broad as the latest version of the following: (1) General Liability:
Insurance Services Office Commercial General Liability coverage (occurrence form CG
0001); (2) Automobile Liability: Insurance Services Office Business Auto Coverage
form number CA 0001, code 1 (any auto); and, if required by the City, (3) Professional
Liability. Attorneys shall maintain limits no less than: (1) General Liability: $2,000,000
per occurrence for bodily injury, personal injury and property damage and if Commercial
General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this Agreement/location or the
general aggregate limit shall be twice the required occurrence limit; (2) Automobile
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Liability: $1,000,000 per accident for bodily injury and property damage; and
(3) Professional Liability: $1,000,000 per claim/aggregate.
11.3. The insurance policies shall contain the following provisions, or Attorneys
shall provide endorsements on forms reasonably approved by the City to state:
(1) coverage shall not be suspended, voided, reduced or canceled except after 30 days
prior written notice has been given to the City; (2) any failure to comply with reporting or
other provisions of the policies, including breaches of warranties, shall not affect
coverage provided to the City, its elected officials, officers and employees, (3) coverage
shall be primary insurance as respects the City, its elected officials, officers and
employees, or if excess, shall stand in an unbroken chain of coverage excess of the
Attorneys' scheduled underlying coverage and that any insurance or self-insurance
maintained by the City, its elected officials, officers and employees shall be excess of
the Attorneys' insurance and shall not be called upon to contribute with it; (4) for general
liability insurance, that the City, its elected officials, officers and employees shall be
covered as additional insureds with respect to the Services performed by or on behalf of
the Attorneys, including materials, parts or equipment furnished in connection with such
work; and (5) for automobile liability, that the City, its elected officials, officers and
employees shall be covered as additional insureds with respect to the ownership,
operation, maintenance, use, loading or unloading of any auto owned, leased, hired or
borrowed by the Attorneys or for which Attorneys are responsible.
11.4. All insurance required by this Section shall contain standard separation of
insureds provisions and shall not contain any special limitations on the scope of
protection afforded to the City, its elected officials, officers and employees.
11.5. Any deductibles or self-insured retentions shall be declared to and
approved by the City. Attorneys guarantees that, at the option of the City, if any
deductible or self-insured retention is in excess of $75,000 per occurrence: (1) the
insurer shall reduce or eliminate such deductibles or self-insured retentions as respects
the City, its elected officials, officers and employees; or (2) the Attorneys shall procure a
bond guaranteeing payment of losses and related investigation costs, claims and
administrative and defense expenses in the amount of the deductible or self-insured
retention or possible other security therefor reasonably satisfactory to City.
12.0 Indemnification, Hold Harmless, and Duty to Defend
Attorneys shall defend, indemnify, and hold the City, its elected officials, officers,
employees, volunteers and agents serving as independent contractors in the role of City
officials (collectively "Indemnities") free and harmless from any and all claims, demands,
causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to
property or persons, including wrongful death, proximately caused by any acts or
omissions of Attorneys, its employees, or its agents in connection with Attorneys'
performance of this Agreement, including without limitation the payment of all
consequential damages and reasonable attorneys' fees and other related costs and
expenses, except for such claims, demands, causes of action, costs, expenses, liability,
loss, damage or injury attributable to the negligence or willful misconduct of the City, its
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elected officials, employees and agents. With respect to any and all such aforesaid
suits, actions, or other legal proceedings of every kind that may be brought or instituted
against Indemnitees that are subject to the foregoing. Attorneys shall defend
Indemnitees, at Attorneys' own cost, expense, and risk, and shall pay and satisfy any
judgment, award, or decree that may be rendered against Indemnitees. Attorneys shall
reimburse City and its elected officials, officers and employees, for any and all
reasonable legal expenses and costs incurred by each of them in connection therewith
or in enforcing the indemnity herein provided. Attorneys' obligation to indemnify shall
not be restricted to insurance proceeds, if any, received by Attorneys, the City, its
elected officials, officers or employees. Wherever any claim, demand, cause of action,
costs, expenses, liability, loss, damage or injury is the result, in part, of the negligence
or willful misconduct of the City or its elected officials, officers, employees or agents, the
indemnity obligation of Attorneys under this Section 12.0 shall be limited to the position
attributable to the comparable fault of Attorneys, and shall not apply to the portion
attributable to the comparative fault of the City, its elected officials, officers, employees
and agents. All duties of Attorneys under this Section shall survive termination of this
Agreement.
13.0 Equal Opportunity
Attorneys affirmatively represent that they are an equal opportunity employer.
Attorneys shall not discriminate against any subcontractor, employee, or applicant for
employment because of race, religion, color, national origin, handicap, ancestry, sex,
sexual orientation, or age. Such non-discrimination includes, but is not limited to, all
activities related to initial employment, upgrading, demotion, transfer, recruitment or
recruitment advertising, layoff, or termination.
14.0 Labor Certification
By its signature hereunder, Attorneys certify that they are aware of the provisions
of Section 3700 of the California Labor Code that require every employer to be insured
against liability for Workers' Compensation or to undertake self-insurance in accordance
with the provisions of that Code, and Attorneys agree to comply with such provisions in
the performance of the Services.
15.0 Entire Agreement
This Agreement contains the entire agreement of the Parties with respect to the
subject matter hereof, and supersedes all prior negotiations, understandings, or
agreements. This Agreement may only be modified by a writing signed by both Parties.
16.0 Severability
The invalidity in whole or in part of any provisions of this Agreement shall not
void or affect the validity of the other provisions of this Agreement.
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17.0 Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
18.0 No Third Party Rights
No third party shall be deemed to have any rights hereunder against either party
as a result of this Agreement.
19.0 Waiver
No waiver of any default shall constitute a waiver of any other default or breach,
whether of the same or other covenant or condition. No waiver, benefit, privilege, or
service voluntarily given or performed by a party shall give the other party any
contractual rights by custom, estoppel, or otherwise.
20.0 Prohibited Interests; Conflict of Interest
20.1. Attorneys covenant that they presently have no interest and shall not
acquire any interest, direct or indirect, which may be affected by the Services, or which
would conflict in any manner with the performance of the Services. Attorneys further
covenant that, in performance of this Agreement, no person having any such interest
shall be employed by it. Furthermore, Attorneys shall avoid the appearance of having
any interest which would conflict in any manner with their performance of the Services.
Attorneys shall not accept any employment or representation during the term of this
Agreement which is or may likely make Attorneys "financially interested" (as provided in
California Government Code §§1090 and 87100) in any decision made by City on any
matter in connection with which Attorneys has been retained.
20.2. Attorneys further warrant and maintain that they have not employed or
retained any person or entity, other than a bona fide employee working exclusively for
Attorneys, to solicit or obtain this Agreement. Nor have Attorneys paid or agreed to pay
any person or entity, other than a bona fide employee working exclusively for Attorneys,
any fee, commission, gift, percentage, or any other consideration contingent upon the
execution of this Agreement. Upon any breach or violation of this warranty, City shall
have the right, at its sole and absolute discretion, to terminate this Agreement without
further liability, or to deduct from any sums payable to Attorneys hereunder the full
amount or value of any such fee, commission, percentage or gift.
20.3. Attorneys warrant and maintain that they have no knowledge that any
officer or employee of City has any interest, whether contractual, noncontractual,
financial, proprietary, or otherwise, in this transaction or in the business of Attorneys,
and that if any such interest comes to the knowledge of Attorneys at any time during the
term of this Agreement, Attorneys shall immediately make a complete, written
disclosure of such interest to City, even if such interest would not be deemed a
prohibited "conflict of interest" under applicable laws as described in this subsection.
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21.0 Attorneys' Fees
If either party commences any legal, administrative, or other action against the
other party arising out of or in connection with this Agreement, the prevailing party in
such action shall be entitled to have and recover from the losing party all of its
attorneys' fees and other costs incurred in connection therewith.
22.0 Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this Agreement, the
terms of this Agreement shall control.
23.0 Corporate Authority
The person executing this Agreement on behalf of Attorneys warrants that he is
duly authorized to execute this Agreement on behalf of Attorneys and that by his
execution, Attorneys are formally bound to the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto, through their respective authorized
representatives have executed this Agreement as of the date and year first above
written.
CITY OF SEAL BEACH QUINT &THIMMIG, LLP
By: By:
Ellery A. Deaton, Mayor Paul J. Thimmig,
Partner
Attest:
By:
Tina Knapp, Acting City Clerk
Approved as to Form:
By:
Craig A. Steele, Interim City
Attorney
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EXHIBIT A
SCOPE OF SERVICES
I. Bond Counsel Services.
Attorneys, in their role as Bond Counsel, shall do, carry out and perform all of the
following services as are necessary for the issuance of the Bonds:
(i) Consultation and cooperation with City Staff and the City Attorney, and
with the underwriter, financial advisor, special tax consultant and other professional
firms engaged by the City with respect to the issuance of the Bonds, and assisting such
persons in the formulation of a coordinated financial and legal financing with the
proceeds of the Bonds.
(ii) Preparation of all legal proceedings deemed necessary or advisable by
Attorneys for the authorization, issuance and delivery of the Bonds; including
preparation of (A) documentation required for the issuance of the Bonds by the City and
the refunding of the Prior Bonds, including a fiscal agent agreement, a resolution
authorizing the issuance of the Bonds, an escrow agreement for the defeasance of the
Prior Bonds, and all documentation required to be executed by the City in connection
with the delivery of the Bonds to the purchaser thereof and the defeasance and
redemption of the Prior Bonds, (B) necessary California Debt and Investment Advisory
Commission filings and other reports and documents required to be filed by the City in
connection with the issuance of the Bonds, and (C) certificates, requisitions, receipts
and other documents required in connection with the delivery of the Bonds to the
original purchaser thereof.
(iii) Application for any Internal Revenue Service or other rulings deemed
necessary by Attorneys (but only following consultation with and approval by the City) to
ensure the exemption of interest on the Bonds from federal or, if applicable, State of
California personal income taxation.
(iv) Subject to the completion of proceedings to the satisfaction of Attorneys,
providing a legal opinion for the Bonds: (i) approving the legality of the proceedings of
the City for the authorization, issuance and delivery of the Bonds, and (ii) stating that
interest on the Bonds is excluded from gross income for federal income tax purposes
and is exempt from State of California personal income taxation.
(v) Subject to the completion of proceedings to the satisfaction of Attorneys,
providing a defeasance opinion for the Prior Bonds.
(vi) Attorneys shall perform such other and further services as are customarily
performed by bond counsel on similar financings.
Exhibit A-1
S7296-0001\1 818054v4.doc
II. Disclosure Counsel Services.
Attorneys, in their role as Disclosure Counsel, shall provide legal services in
connection with the preparation of the official statement to be used in connection with
the offering and sale of the Bonds and a related continuing disclosure agreement. Such
services shall include the following:
(i) Prepare the official statement (both preliminary and final) in connection
with the offering of the Bonds.
(ii) Confer and consult with the officers and administrative staff of the City as
to matters relating to the official statement.
(iii) Attend all meetings of the City Council and any administrative meetings at
which the official statement is to be discussed, deemed necessary by Attorneys for the
proper exercise of their due diligence with respect to the official statement, or when
specifically requested by the officers of the City to attend.
(iv) Prepare the continuing disclosure agreement for the Bonds.
(v) Subject to the completion of proceedings to the satisfaction of Attorneys,
provide a letter addressed to the City and to the underwriter of the Bonds to the effect
that, although Attorneys have not undertaken to determine independently or assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the official statement for the Bonds, in the course of Attorney's participation
in the preparation of the official statement, Attorneys have been in contact with
representatives of the City and others concerning the contents of the official statement
and related matters, and based upon the foregoing, nothing has come to Attorneys
attention to lead Attorneys to believe that the official statement (except for any financial
or statistical data or forecasts, numbers, charts, estimates, projections, assumptions or
expressions of opinion included therein, and information relating to The Depository
Trust Company and its book-entry system, as to which Attorneys need express no view)
as of the date of the official statement or the date of the closing contains any untrue
statement of a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(ii) Such other and further services as are normally performed by disclosure
counsel on similar financings.
Exhibit A-2
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III. Service Not Provided.
Attorneys shall not be responsible to the City under this Agreement for: (i) any
continuing disclosure requirements under federal securities laws that may apply to the
Bonds or the Prior Bonds after the issuance of the Bonds (except for the preparation of
the continuing disclosure agreement for the Bonds and the preparation of the disclosure
to be included in the official statement of the Bonds relating to continuing disclosure),
(ii) on-going advice and preparation of necessary documentation regarding compliance
with Section 148 of the Internal Revenue Code of 1986, relating to arbitrage limitations
and rebate provisions applicable to the Bonds after issuance of the Bonds, or (iii) the
representation of the City in connection with any litigation involving the Bonds or the
Prior Bonds. Without limiting the generality of the foregoing, Attorneys shall not be
responsible for preparing any documentation related to, or for providing any, ongoing
continuing disclosure, arbitrage and rebate computation services or litigation services in
respect of the Bonds (except for the preparation of the continuing disclosure agreement
for the Bonds and the tax certificate or arbitrage certificate required for the closing of the
Bond issue), without a separate agreement between the Authority and Attorneys. In
addition, unless specifically retained to do so by a separate agreement between
Attorneys and the City, Attorneys shall not be responsible for auditing or otherwise
assuring compliance by the City with any past or existing continuing disclosure
obligations of the City related to any debt obligations:
Exhibit A-3
S7296-0001\1818054v4.doc
FINANCIAL ADVISOR SERVICES AGREEMENT
between
City of Seal Beach
211 8th Street
Seal Beach, CA 90740
Fieldman, Rolapp & Associates, Inc.
19900 MacArthur Boulevard, Suite 1100
Irvine, CA 92612
(949) 660-7300
S7296-0001\1818926v3.doc
This Financial Advisor Services Agreement ("the Agreement") is made as of the
26th day of May, 2015 (the "Effective Date"), by and between Fieldman, Rolapp &
Associates, Inc. ("Consultant"), a corporation duly organized and validly existing under
the laws of the State of California and City of Seal Beach ("City"), a California charter
city, (collectively, "the Parties").
RECITALS
A. City has formed the City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe) (the "CFD") under the Mello-Roos Community Facilities Act of
1982, as amended (the "Act")
B. City is considering the issuance of bonds for the District (the "Bonds") for
the purpose of refunding and defeasing the outstanding City of Seal Beach Community
Facilities District No. 2002-01 (Heron Pointe) Special Tax Bonds, Series 2005 (the
"Prior Bonds").
C. City desires to retain independent financial advisory services in connection
with the issuance of the Bonds.
B. Consultant represented that it is qualified and able to provide City with
such services.
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as follows:
AGREEMENT
1.0 Legal Qualifications; Scope of Services
1.1. Consultant represents and warrants that Consultant is a registered
municipal advisor with the United States Securities and Exchange Commission and the
Municipal Securities Rulemaking Board (the "MSRB"). Throughout the term of this
Agreement, Consultant shall maintain all licenses, permits, certificates and other legal
qualifications (if any) necessary for the provision of services under this Agreement.
1.2. Consultant shall provide those services ("Services") set forth in the
attached Exhibit A, which is hereby incorporated by this reference. To the extent that
there is any conflict between Exhibit A and this Agreement, this Agreement shall control.
1.3. Consultant shall perform all Services under this Agreement in accordance
with the standard of care applicable to municipal advisors and in a manner reasonably
satisfactory to City.
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1.4. In performing Services under this Agreement, Consultant shall comply
with all applicable provisions of federal, state, and local law.
1.5. Consultant will not be compensated for any work performed not specified
in the Scope of Services unless City authorizes such work in advance and in writing.
City Manager may authorize payment for such work up to a cumulative maximum of
$10,000. Payment for additional work in excess of $10,000 requires prior City Council
authorization.
2.0 Term
This term of this Agreement shall commence as of the Effective Date and shall
continue for a term of one year unless previously terminated as provided by this
Agreement.
3.0 Consultant's Compensation
City will pay Consultant in accordance with the provisions set forth in Exhibit B for
Services but in no event will City pay more than [$50,000] (inclusive of reimbursement
of expenses in accordance with Exhibit B), unless prior authorization has been obtained
pursuant to Section 1.5. Any additional work authorized by City pursuant to Section 1.5
will be compensated in accordance with the provisions set forth in Exhibit B.
4.0 Method of Payment
4.1. City shall pay Consultant based on invoices submitted in the manner
described in Exhibit B.
4.2. It is acknowledged that City will not withhold any applicable federal or
state payroll and other required taxes, or other authorized deductions from payments
made to Consultant.
4.3. In connection with any hourly compensation and expense reimbursement
to Consultant, Consultant shall allow City or City's agents or representatives, upon 24-
hour notice, to inspect at Consultant's offices during reasonable business hours all
records, invoices, time cards, cost control sheets and other records maintained by
Consultant in connection with this Agreement. City's rights under this Section 4.3 shall
survive for two years following the termination of this Agreement.
5.0 Termination
5.1. This Agreement may be terminated by City, with or without cause upon
giving written notice to Consultant not less than 10 days prior to the date of termination.
5.2. This Agreement may be terminated by Consultant based on reasonable
cause, upon giving City written notice thereof not less than 30 days prior to the date of
termination.
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5.3. Without limiting the foregoing, this Agreement may be terminated by City
upon 10 days' notice to Consultant if Consultant fails to provide satisfactory evidence of
renewal or replacement of comprehensive general liability insurance as required by this
Agreement at least 20 days before the expiration date of the previous policy.
6.0 Party Representatives; Consultant Staffing
6.1. City Manager is City's representative for purposes of this Agreement.
6.2. Anna Sarabian is Consultant's primary representative for purposes of this
Agreement.
6.3. Consultant has, or will secure, all personnel required to perform the
services under this Agreement. Consultant shall make available other qualified
personnel of the firm as may be required to complete Consultant's services. City has
the right to approve or disapprove any proposed changes in Consultant's staff providing
service to City. City and Consultant agree that such personnel are employees only of
Consultant and shall not be considered to be employees of City in any way whatsoever.
7.0 Notices
7.1. All notices permitted or required under this Agreement shall be deemed
made when personally delivered or when mailed 48 hours after deposit in the United
States Mail, first class postage prepaid and addressed to the party at the following
addresses:
To City: City of Seal Beach
211-8th Street
Seal Beach, California 90740
Attn: City Manager
To Consultant: Fieldman, Rolapp & Associates, Inc.
19900 MacArthur Boulevard, Suite 1100
Irvine, CA 92612
Attn: Anna Sarabian
7.2. Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
8.0 Independent Contractor
8.1. Consultant is an independent contractor and not an employee of City. All
services provided pursuant to this Agreement shall be performed by Consultant or
under its supervision. Consultant will determine the means, methods, and details of
performing the services. Any additional personnel performing services under this
Agreement on behalf of Consultant shall also not be employees of City and shall at all
times be under Consultant's exclusive direction and control. Consultant shall pay all
wages, salaries, and other amounts due such personnel in connection with their
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performance of services under this Agreement and as required by law. Consultant shall
be responsible for all reports and obligations respecting such additional personnel,
including, but not limited to: social security taxes, income tax withholding,
unemployment insurance, disability insurance, and workers' compensation insurance.
8.2. Consultant shall indemnify and hold harmless City and its elected officials,
officers, employees, servants and agents serving as independent contractors in the role
of City officials, from any and all liability, damages, claims, costs and expenses of any
nature to the extent arising from Consultant's personnel practices. City shall have the
right to offset against the amount of any fees due to Consultant under this Agreement
any amount due to City from Consultant as a result of Consultant's failure to promptly
pay to City any reimbursement or indemnification arising under this Section.
9.0 Subcontractors
No portion of this Agreement shall be subcontracted without the prior written
approval of City. Consultant is fully responsible to City for the performance of any and
all subcontractors.
10.0 Assignment
Consultant shall not assign or transfer any interest in this Agreement whether by
assignment or novation, without the prior written consent of City. Any purported
assignment without such consent shall be void and without effect.
11.0 Insurance
11.1. Consultant shall not commence work under this Agreement until
Consultant has secured all insurance required under this Section. Consultant shall
furnish City with original certificates of insurance and endorsements effecting coverage
required by this Agreement on forms satisfactory to City. The certificates and
endorsements for each insurance policy shall be signed by a person authorized by that
insurer to bind coverage on its behalf, and shall be on forms provided by City if
requested. All certificates and endorsements shall be received and approved by City no
later than the Effective Date. City reserves the right to require complete, certified copies
of all required insurance policies, at any time.
11.2. Consultant shall, at its expense, procure and maintain for the duration of
the Agreement, insurance against claims for injuries to persons or damages to property
that may arise from or in connection with the performance of this Agreement. Insurance
is to be placed with insurers with a current A.M. Best's rating no less than A:VIII,
licensed to do business in California, and satisfactory to City. Coverage shall be at
least as broad as the latest version of the following: (1) General Liability: Insurance
Services Office Commercial General Liability coverage (occurrence form CG 0001);
(2) Automobile Liability: Insurance Services Office Business Auto Coverage form
number CA 0001, code 1 (any auto); and, if required by City, (3) Professional Liability.
Consultant shall maintain limits no less than: (1) General Liability: $2,000,000 per
occurrence for bodily injury, personal injury and property damage and if Commercial
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General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this Agreement/location or the
general aggregate limit shall be twice the required occurrence limit; (2) Automobile
Liability: $1,000,000 per accident for bodily injury and property damage; and
(3) Professional Liability: $1,000,000 per claim/aggregate.
11.3. The insurance policies shall contain the following provisions, or Consultant
shall provide endorsements on forms supplied or approved by City to state:
(1) coverage shall not be suspended, voided, reduced or canceled except after 30 days
prior written notice by certified mail, return receipt requested, has been given to City;
(2) any failure to comply with reporting or other provisions of the policies, including
breaches of warranties, shall not affect coverage provided to City, its directors, officials,
officers, (3) coverage shall be primary insurance as respects City, its directors, officials,
officers, employees and agents, or if excess, shall stand in an unbroken chain of
coverage excess of Consultant's scheduled underlying coverage and that any insurance
or self-insurance maintained by City, its directors, officials, officers, employees and
agents shall be excess of Consultant's insurance and shall not be called upon to
contribute with it; (4) for general liability insurance, that City, its directors, officials,
officers, employees and agents shall be covered as additional insureds with respect to
the services or operations performed by or on behalf of Consultant, including materials,
parts or equipment furnished in connection with such work; and (5) for automobile
liability, that City, its directors, officials, officers, employees and agents shall be covered
as additional insureds with respect to the ownership, operation, maintenance, use,
loading or unloading of any auto owned, leased, hired or borrowed by Consultant or for
which Consultant is responsible.
11.4. All insurance required by this Section shall contain standard separation of
insureds provisions and shall not contain any special limitations on the scope of
protection afforded to City, its directors, officials, officers, employees and agents.
11.5. Consultant represents to City that, as of the Effective Date, the retention
amount with respect to the Consultant's excess liability policy is $0.00 and the retention
amount with respect to its professional liability policy is $250,000. Consultant shall
provide prior written notice to City in the event of any change to such amounts.
12.0 Indemnification, Hold Harmless, and Duty to Defend
Consultant shall defend, indemnify, and hold City, its officials, officers,
employees and agents serving as independent contractors in the role of city officials
(collectively "Indemnities") free and harmless from any and all claims, demands, causes
of action, costs, expenses, liability, loss, damage or injury, in law or equity, to property
or persons, including wrongful death, in any manner arising out of or incident to any acts
or omissions of Consultant, its employees, or its agents in connection with the
performance of this Agreement, including without limitation the payment of all
consequential damages and attorneys' fees and other related costs and expenses,
except for such loss or damage arising from the sole negligence or willful misconduct of
City. With respect to any and all such aforesaid suits, actions, or other legal
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proceedings of every kind that may be brought or instituted against Indemnitees,
Consultant shall defend Indemnitees, at Consultant's own cost, expense, and risk, and
shall pay and satisfy any judgment, award, or decree that may be rendered against
Indemnitees. Consultant shall reimburse City and its directors, officials, officers,
employees and/or agents, for any and all legal expenses and costs incurred by each of
them in connection therewith or in enforcing the indemnity herein provided.
Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any,
received by Consultant, City, its directors, officials, officers, employees or agents. All
duties of Consultant under this Section shall survive termination of this Agreement.
13.0 Equal Opportunity
Consultant affirmatively represents that it is an equal opportunity employer.
Consultant shall not discriminate against any subcontractor, employee, or applicant for
employment because of race, religion, color, national origin, handicap, ancestry, sex,
sexual orientation, or age. Such non-discrimination includes, but is not limited to, all
activities related to initial employment, upgrading, demotion, transfer, recruitment or
recruitment advertising, layoff, or termination.
14.0 Labor Certification
By its signature hereunder, Consultant certifies that it is aware of the provisions
of Section 3700 of the California Labor Code that require every employer to be insured
against liability for Workers' Compensation or to undertake self-insurance in accordance
with the provisions of that Code, and agrees to comply with such provisions before
commencing the performance of the Services.
15.0 Confidentiality
Consultant may receive confidential information of City during the course of
Consultant's performance under this Agreement. To the extent that City provides
Consultant any financial, statistical, personal, technical and other data and information
designated by City as confidential, Consultant shall maintain such confidentiality, shall
not disclose or make available the information to third parties except under the following
circumstances: (i) Consultant has obtained City's prior written approval for the
disclosure, or (ii) Consultant is required by law to make the disclosure (in which case,
such disclosure shall be limited to the extent required by law and Consultant shall notify
City as soon as possible upon learning its obligation to disclose).
16.0 Work Products
All work products or any form of property developed by Consultant in providing
services under this Agreement shall be provided to City on request. Work products
developed by Consultant shall be the property of City, provided that Consultant may use
such work products developed for City and may employ those work products to develop
refinements or additional work products in the course of its business, so long as
employment does not cause otherwise cause a violation under Section 15.0 (pertaining
to confidentiality) and Section conflict of interest provisions of this Agreement. City may
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use all or any portion of work submitted by the Financial Advisor as City deems
appropriate.
17.0 Bond Disclosure Documents
17.1. Consultant shall review official statement(s) and other financing
documents as described in the Scope of Services set forth in Exhibit A; however, in
doing so, it is acknowledged that Consultant's shall not assume the responsibilities of
City, nor the responsibilities of the other professionals and vendors representing City in
the provision of services and the preparation of the financing documents, or the initial
and secondary market disclosure, for financings undertaken by City.
17.2. To the extent information or data obtained or prepared by Consultant is
included in any bond disclosure documents, Consultant shall review such bond
disclosure documents insofar as to ensure that such information or data, as known to
Consultant, is accurately and fairly presented. Such information obtained by Consultant
shall be from sources that Consultant believes are reliable based on its experience and
expertise, with the acknowledgment that Consultant does not guarantee the accuracy or
completeness of the information from such sources.
18.0 Entire Agreement
This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all prior negotiations, understandings, or
agreements. This Agreement may only be modified by a writing signed by both parties.
19.0 Severability
The invalidity in whole or in part of any provisions of this Agreement shall not
void or affect the validity of the other provisions of this Agreement.
20.0 Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
21.0 No Third Party Rights
No third party shall be deemed to have any rights hereunder against either party
as a result of this Agreement.
22.0 Waiver
No waiver of any default shall constitute a waiver of any other default or breach,
whether of the same or other covenant or condition. No waiver, benefit, privilege, or
service voluntarily given or performed by a party shall give the other party any
contractual rights by custom, estoppel, or otherwise.
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23.0 Prohibited Interests; Conflict of Interest
20.1. Consultant covenants that it presently has no interest and shall not
acquire any interest, direct or indirect, which may be affected by the Services, or which
would conflict in any manner with the performance of the Services or fulfillment of its
fiduciary duty to City as a financial advisor. Consultant further covenants that, in
performance of this Agreement, no person having any such interest shall be employed
by it. Furthermore, Consultant shall avoid the appearance of having any interest, which
would conflict in any manner with the performance of the Services. Consultant shall not
accept any employment or representation during the term of this Agreement which is or
may likely make Consultant "financially interested" (as provided in California
Government Code §§1090 and 87100) in any decision made by City on any matter in
connection with which Consultant has been retained.
20.2. Consultant further warrants and maintains that it has not employed or
retained any person or entity, other than a bona fide employee working exclusively for
Consultant, to solicit or obtain this Agreement. Nor has Consultant paid or agreed to
pay any person or entity, other than a bona fide employee working exclusively for
Consultant, any fee, commission, gift, percentage, or any other consideration contingent
upon the execution of this Agreement. Upon any breach or violation of this warranty,
City shall have the right, at its sole and absolute discretion, to terminate this Agreement
without further liability, or to deduct from any sums payable to Consultant hereunder the
full amount or value of any such fee, commission, percentage or gift.
20.3. Consultant warrants and maintains that it has no knowledge that any
officer or employee of City has any interest, whether contractual, noncontractual,
financial, proprietary, or otherwise, in this transaction or in the business of Consultant,
and that if any such interest comes to the knowledge of Consultant at any time during
the term of this Agreement, Consultant shall immediately make a complete, written
disclosure of such interest to City, even if such interest would not be deemed a
prohibited "conflict of interest" under applicable laws as described in this subsection.
20.4 Consultant represents that it has not made any payments either directly or
indirectly to obtain or retain business with City.
20.5. There is no additional compensation Consultant will receive in connection
with this Agreement other than what is stipulated within this Agreement. Consultant has
not and will not receive any payments from third parties in connection with this
engagement.
20.6 Consultant has not and will not enter into any fee-splitting arrangements
with any provider of investments or services to City.
20.7 Consultant is not aware of any pending or threatened legal or disciplinary
event that is material to City's evaluation of Consultant or the integrity of its
management or advisory personnel in connection with City's engagement of Consultant
to serve as a financial advisor to City.
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24.0 Attorneys' Fees
If either party commences any legal, administrative, or other action against the
other party arising out of or in connection with this Agreement, the prevailing party in
such action shall be entitled to have and recover from the losing party all of its
attorneys' fees and other costs incurred in connection therewith.
25.0 Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this Agreement, the
terms of this Agreement shall control.
26.0 Corporate Authority
The person executing this Agreement on behalf of Consultant warrants that he or
she is duly authorized to execute this Agreement on behalf of said Party and that by his
or her execution, Consultant is formally bound to the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto, through their respective authorized
representatives have executed this Agreement as of the date and year first above
written.
CITY OF SEAL BEACH CONSULTANT
By: By:
Ellery A. Deaton, Mayor
Name:
Attest: Its:
By:
Tina Knapp, Acting City Clerk By.
Approved as to Form: Name:
By:
Its:
Craig A. Steele, Interim City
Attorney
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EXHIBIT A
SCOPE OF SERVICES
A. Services for Bond Refunding.
Consultant shall provide financial advisory services to City to accomplish the
successful refunding of the Prior Bonds and the issuance of the Bonds (as such terms
are defined in the Recitals of this Agreement), and shall be compensated for such
services as provided in Section A of Exhibit B.
Consultant shall assume primary responsibility for assisting City in coordinating
the planning and execution of the successful refunding of the Prior Bonds and the
issuance of the Bonds. Insofar as Consultant is providing such services which are
rendered only to City (and not to any other party, including but not limited to registered
owners or beneficial owners of bonds), the overall coordination of the financing shall be
such as to minimize the costs of the transaction coincident with maximizing City's
financing flexibility and capital market access. Consultant's financial advisory services
for the debt financing may include, but shall not be limited to, the following:
• Establish the financing objectives
• Develop the financing schedule
• Monitor the transaction process
• Review the official statement, both preliminary and final
• Procure and coordinate additional service providers
• Provide financial advice to City related to financing documents
• Compute sizing and design structure of the debt issue
• Plan and schedule rating agency presentation and investor
briefings
• Conduct credit enhancement procurement and evaluation
• Conduct market analysis and evaluate timing of market entry
• Recommend award of debt issuance
• Provide pre-closing and closing assistance
Specifically, Consultant will:
1. Establish the Financing Objectives.
At the onset of the financing transaction process, Consultant shall review
City's financing needs and in conjunction with City's management, outline
the objectives of the financing transaction to be undertaken and its
proposed form.
Unless previously determined, Consultant shall recommend the method of
sale of debt and outline the steps required to achieve efficient market
access.
Exhibit A-1
S7296-0001\1818926v3.doc
2. Develop the Financing Timetable,
Consultant shall take the lead role in preparing a schedule and detailed
description of the interconnected responsibilities of each team member
and update this schedule, with refinements, as necessary, as the work
progresses.
3. Monitor the Transaction Process.
Consultant shall have primary responsibility for the successful
implementation of the financing strategy and timetable that is adopted for
the refunding and the issuance of the Bonds. Consultant shall coordinate
(and assist, where appropriate) in the preparation of the legal and
disclosure documents and shall monitor the progress of all activities
leading to the sale of debt. Consultant shall prepare the timetables and
work schedules necessary to achieve this end in a timely, efficient and
cost-effective manner and will coordinate and monitor the activities of all
parties engaged in the financing transaction.
4. Review the Official Statement.
Upon direction of City, Consultant shall review the official statement for the
Bonds to insure that City's official statement is compiled in a manner
consistent with industry standards.
5. Procure and Coordinate Additional Service Providers.
Should City desire, Consultant may act as City's representative in
procuring the services of financial printers for the official statement and
related documents, and for the printing of any securities. In addition,
Consultant may act as City's representative in procuring the services of
trustees, paying agents, fiscal agents, feasibility consultants,
redevelopment consultants, or escrow verification agents or other
professionals, if City directs; provided, that Consultant shall not have the
authority to execute any contract on behalf of the City with any such
parties.
6. Provide Financial Advice to City Relating to Financing Documents.
Simultaneous with the review of official statement(s) for the Bonds,
Consultant shall assist the managing underwriters, bond counsel and/or
other legal advisors in the drafting of the respective financing resolutions,
notices and other legal documents. In this regard, Consultant shall
monitor document preparation for a consistent and accurate presentation
of the recommended business terms and financing structure of the Bonds,
Exhibit A-2
S7296-0001\1818926v3.doc
it being specifically understood however that Consultant's services shall in
no manner be construed as Consultant engaging in the practice of law.
7. Compute Sizing and Design Structure of Debt Issue,.
Consultant shall work with City's staff to design a financing structure for
the Bonds that is consistent with City's objectives, that coordinates with
outstanding issues and that reflects current conditions in the capital
markets.
8. Plan and Schedule Rating Agency Presentation and Investor Briefings.
If applicable, Consultant shall develop a plan for presenting the financing
program to the rating agencies and the investor community. Consultant
shall schedule rating agency visits, if appropriate, to assure the
appropriate and most knowledgeable rating agency personnel are
available for the presentation and will develop presentation materials and
assist City officials in preparing for the presentations.
9. Conduct Credit Enhancement Evaluation and Procurement.
Upon City's direction, Consultant will initiate discussions with bond
insurers, letter of credit providers and vendors of other forms of credit
enhancements to determine the availability of and cost benefit of securing
financing credit support.
10. Conduct Market Analysis and Evaluate Timing of Market Entry..
Consultant shall provide regular summaries of current municipal market
conditions, trends in the market and how these may favorably or
unfavorably affect City's proposed financing.
a. Competitive Sales.
For all types of competitive sale of debt, Consultant shall undertake
such activities as are generally required for sale of securities by
competitive bid including, but not limited to the following:
• Review and comment on terms of Notice of Sale Inviting
Bids
• Provide advice on debt sale scheduling
• Provide advice on the use of electronic bidding systems
• Coordinate bid opening with City officials
• Verify bids received and make recommendations for
acceptance
• Provide confirmation of issue sizing, based upon actual bids
received, where appropriate
Exhibit A-3
S7296-0001\1818926v3.doc
• Coordinate closing arrangements with the successful
bidder(s)
b. Negotiated Sales.
In the case of a negotiated sale of debt, Consultant shall perform a
thorough evaluation of market conditions preceding the negotiation
of the terms of the sale of debt and will assist City with the
negotiation of final issue structure, interest rates, interest cost,
reoffering terms and gross underwriting spread and provide a
recommendation on acceptance or rejection of the offer to
purchase the debt. This assistance and evaluation will focus on the
following areas as determinants of interest cost:
• Size of financing
• Sources and uses of funds
• Terms and maturities of the debt issue
• Review of the rating in pricing of the debt issue
• Investment of debt issue proceeds
• Distribution mix among institutional and retail purchasers
• Interest rate, reoffering terms and underwriting discount with
comparable issues
• Redemption provisions
11. Recommend Award of Debt Issuance.
Based upon activities outlined in Task 10(a) and 10(b) above, Consultant
will recommend accepting or rejecting offers to purchase the debt issue. If
City elects to award the debt issue, Consultant will instruct all parties and
help facilitate the actions required to formally consummate the award.
12. Provide Pre-Closing and Closing Activities,
Consultant shall assist in arranging for the closing of each financing.
Consultant shall assist counsel in assuming responsibility for such
arrangements as they are required, including arranging for or monitoring
the progress of bond printing, qualification of issues for book-entry status,
signing and final delivery of the securities and settlement of the costs of
issuance
B. Additional Services Upon City's Request.
At the City's discretion, the City may request that Consultant provide services in
connection with the refunding of the Prior Bonds and the issuance of Refunding Bonds
that are not ordinarily within the scope of the financial advisory services for a bond
transaction of similar nature in the State of California (the "Additional Services").
Consultant shall be compensated for the performance of Additional Services in
accordance with the provisions of Section B of Exhibit B, so long as Consultant
Exhibit A-4
S7296-0001\1818926v3.doc
specifies to the City in writing that such services are considered Additional Services
under this Agreement before the commencement of the work for the related Additional
Services. The Additional Services may include, but are not limited to, the following:
o Assisting the City in obtaining enabling legislation or conducting
referendum elections.
o Extraordinary services and extensive computer analysis in the structuring
or planning of any debt issue or financing program.
o Financial management services, including development of financial
policies, capital improvement plans, economic development planning,
credit analysis or review and such other services that are not ordinarily
considered within the scope of services described in Exhibit A to this
Agreement
o Services rendered in connection with any undertaking of the City relating
to a continuing disclosure agreement entered into in order to comply with
Securities and Exchange Commission Rule 15c2-12 or other similar rules.
o Services rendered to the City in connection with calculations or
determination of any arbitrage rebate liability to the United States of
America arising from investment activities associated with debt issued to
fund the Project
Exhibit A-5
S7296-0001\1818926v3.doc
EXHIBIT B
COMPENSATION AND EXPENSES
A. Compensation for Financial Advisory Services..
For financial advisory services within the scope described in Section A of
Exhibit A, Consultant's compensation shall be in accordance with the following
schedule:
Transaction Size Fees
$1 to $2,999,999 $20,500
$3,000,000 to $11,999,999 $31,500
$12,000,000 to $19,999,999 $35,000
$20,000,000 to $29,999,999 $40,000
$30,000,000 to $39,999,999 $43,000
$40,000,000 to $49,999,999 $45,000
$50,000,000 to $59,999,999 $48,000
$60,000,00 and above to be negotiated
Consultant's fee shall be contingent upon the successful issuance of the Bonds,
and shall be payable from the proceeds of the Bonds.
B. Compensation for Additional Services.
Subject to the provisions of Section 2 of Exhibit A, Consultant shall be
compensated for Additional Services, based on the following hourly rates:
Personnel Houriv Rate
Executive Officers ...........................................$300.00
Principals.........................................................$290.00
Senior Vice President......................................$275.00
Vice Presidents ...............................................$225.00
Assistant Vice President..................................$195.00
Senior Associate .............................................$150.00
Associate...............................„.........................$125.00
Analyst— .................... .......$85.00
Administrative Assistants-- ...,.........................$65.00
Clerical ..............................................................$35.00
If authorized by the City Manager and Bond Counsel in advance, the
compensation may be paid from proceeds of the Bonds upon closing of the refunding
transaction. Otherwise, Consultant shall submit to City monthly invoices for Additional
Services within 15 days of the end of the month during which such Additional Services
were performed. Each invoice shall describe in detail the services rendered during the
period, the days worked, number of hours worked, the hourly rates charged, the
Exhibit B -1
S7296-0001\1 818926v3.doc
services performed and the person who performed such services for each day within
the period covered by the invoice. To the extent that the charges listed in the invoice
are consistent with this Agreement, City shall pay Consultant within 30 days of receiving
such invoice.
C. Expenses.
In addition to the compensation described in Section A and Section B above,
City will reimburse Consultant for actual expenses incurred in connection with
Consultant's performance of services under this Agreement (including expenses for
travel, lodging, subsistence, overnight courier, long distance calls, charges for fax
transmission, telephone, postage, document reproduction), provided that such
expenses to be reimbursed, in the aggregate, shall not exceed $2,500.
All expenses incurred in connection with provision of services under Section A
of Exhibit A (together with the fee for such services) shall be included, with reasonably
clear description thereof, in the invoice to be submitted at the closing of the Bond
transaction; provided, that if the Bonds are not successfully issued within the term of
this Agreement, Consultant shall submit an invoice to City listing such expenses prior to
the termination of this Agreement. To the extent that the expenses listed in such
invoice are consistent with this Agreement, City shall reimburse Consultant for the
expenses within 30 days of receiving such invoice.
Expenses incurred in connection with provision of Additional Services under
Section B of Exhibit A shall be listed on the invoice(s) to be submitted in accordance
with Section B above.
In addition, with the City's prior written authorization, Consultant may make
advances on behalf of the City for costs of preparing, printing or distributing disclosure
materials or related matter whether by postal services or electronic means. In such
event, Consultant shall keep accurate records of all such advances (including all related
invoices). The City shall reimburse Consultant for each such advance upon: (i) the
successful issuance and delivery of the Bonds from proceeds of the Bonds, or (ii) such
other time as agreed by the City and Consultant at the time of authorization of such
advance.
Exhibit B -2
S7296-0001\1818926v3.doc
SPECIAL TAX CONSULTANT SERVICES AGREEMENT
between
At
N^Avy
T
City of Seal Beach
211 - 8th Street
Seal Beach, CA 90740
Albert A. Webb Associates
3788 McCray Street
Riverside, California 92506
10000-0243\1825519v2.doe
This Special Tax Consultant Services Agreement ("the Agreement") is made as
of the 26th day of May, 2015 (the "Effective Date"), by and between Albert A. Webb
Associates ("Consultant"), a California corporation and the City of Seal Beach ("City"), a
California charter city, (collectively, "the Parties").
RECITALS
A. City has formed the City of Seal Beach Community Facilities District No.
2002-01 (Heron Pointe) (the "CFD") under the Mello-Roos Community Facilities Act of
1982, as amended (the "Act")
B. City is considering the issuance of bonds for the District (the "Bonds") for
the purpose of refunding and defeasing the outstanding City of Seal Beach Community
Facilities District No. 2002-01 (Heron Pointe) Special Tax Bonds, Series 2005 (the
"Prior Bonds").
C. In connection with the issuance of the Bonds, City desires to engage
Consultant to provide services described herein, including but not limited to the
compilation of certain information and preparation of tables for the Official Statement for
the Bonds.
D. Consultant represented that it is qualified and able to provide City with
such services.
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as follows:
AGREEMENT
1.0 Scope of Services
1.1. Consultant shall provide the services ("Services") set forth in the attached
Exhibit A, which is hereby incorporated by this reference. To the extent that there is any
conflict between Exhibit A and this Agreement, this Agreement shall control.
1.2. Consultant shall perform all Services under this Agreement in accordance
with the standard of care generally exercised by like professionals under similar
circumstances and in a manner reasonably satisfactory to City.
1.3. In performing this Agreement, Consultant shall comply with all applicable
provisions of federal, state, and local law.
2.0 Term
This term of this Agreement shall commence as of the Effective Date and shall
continue for a term of one year unless previously terminated as provided by this
Agreement.
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3.0 Consultant's Compensation; Method of Payment
For the Services provided under this Agreement, the City shall pay Consultant a
flat fee of$8,500, payable from proceeds of the Bonds upon the issuance of the Bonds.
4.0 Termination
4.1. This Agreement may be terminated by City, without cause, or by
Consultant based on reasonable cause, upon giving the other party written notice
thereof not less than 30 days prior to the date of termination.
4.2. This Agreement may be terminated by City upon 10 days' notice to
Consultant if Consultant fails to provide satisfactory evidence of renewal or replacement
of comprehensive general liability insurance as required by this Agreement at least 20
days before the expiration date of the previous policy.
5.0 Ownership of Consulting Products.
As between City and Consultant, all products of consulting (including without
limitation, all briefing memoranda, business analyses and other work products created)
under this Agreement, with the exception of computer models developed solely by
Consultant (i.e., without contribution by City or any member of the financing team for the
Bonds), shall become the property of City and shall be promptly delivered to City upon
request. Computer models remain the exclusive property of Consultant. Contractual
obligations do not include access to or ownership transfer of any electronic data
processing files, programs or models completed directly for or as by-products of any
research effort, unless explicitly so agreed as part of this Agreement.
6.0 Confidentiality
Consultant may receive confidential information from City during the course of
Consultant's performance under this Agreement. To the extent that City provides
Consultant any confidential information, Consultant shall maintain such confidentiality,
shall not disclose or make available the information to third parties except under the
following circumstances: (i) Consultant has obtained City's prior written approval for the
disclosure, or (ii) Consultant is required by law to make the disclosure (in which case,
such disclosure shall be limited to the extent required by law and Consultant shall notify
City as soon as possible upon learning its obligation to disclose).
7.0 Party Representatives
7.1. The City Manager is the City's representative for purposes of this
Agreement.
7.2. Heidi Schoeppe is the Consultant's primary representative for purposes of
this Agreement.
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8.0 Notices
8.1. All notices permitted or required under this Agreement shall be deemed
made when personally delivered or when mailed 48 hours after deposit in the United
States Mail, first class postage prepaid and addressed to the party at the applicable
address below:
To City: City of Seal Beach
211-8th Street
Seal Beach, California 90740
Attn: City Manager
To Consultant: Albert A. Webb Associates
3788 McCray Street
Riverside, CA 92506
Attn: Shane T. G. Spicer
8.2. Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
9.0 Independent Contractor
9.1. Consultant is an independent contractor and not an employee of the City.
All services provided pursuant to this Agreement shall be performed by Consultant or
under its supervision. Consultant will determine the means, methods, and details of
performing the services. Any additional personnel performing services under this
Agreement on behalf of Consultant shall also not be employees of City and shall at all
times be under Consultant's exclusive direction and control. Consultant shall pay all
wages, salaries, and other amounts due such personnel in connection with their
performance of services under this Agreement and as required by law. Consultant shall
be responsible for all reports and obligations respecting such additional personnel,
including, but not limited to: social security taxes, income tax withholding,
unemployment insurance, disability insurance, and workers' compensation insurance.
9.2. Consultant shall indemnify and hold harmless City and its elected officials,
officers, employees, servants, designated volunteers, and agents serving as
independent contractors in the role of City officials, from any and all liability, damages,
claims, costs and expenses of any nature to the extent arising from Consultant's
personnel practices. City shall have the right to offset against the amount of any fees
due to Consultant under this Agreement any amount due to City from Consultant as a
result of Consultant's failure to promptly pay to City any reimbursement or
indemnification arising under this Section.
10.0 Subcontractors
No portion of this Agreement shall be subcontracted without the prior written
approval of the City. Consultant is fully responsible to City for the performance of any
and all subcontractors.
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11.0 Assignment
Consultant shall not assign or transfer any interest in this Agreement whether by
assignment or novation, without the prior written consent of City. Any purported
assignment without such consent shall be void and without effect.
12.0 Insurance
12.1. Consultant shall not commence work under this Agreement until it has
provided evidence satisfactory to the City that Consultant has secured all insurance
required under this Section. Consultant shall furnish City with original certificates of
insurance and endorsements effecting coverage required by this Agreement on forms
satisfactory to the City. The certificates and endorsements for each insurance policy
shall be signed by a person authorized by that insurer to bind coverage on its behalf,
and shall be on forms provided by the City if requested. All certificates and
endorsements shall be received and approved by the City before work commences.
The City reserves the right to require complete, certified copies of all required insurance
policies, at any time.
12.2. Consultant shall, at its expense, procure and maintain for the duration of
the Agreement, insurance against claims for injuries to persons or damages to property
that may arise from or in connection with the performance of this Agreement. Insurance
is to be placed with insurers with a current A.M. Best's rating no less than A:VIII,
licensed to do business in California, and satisfactory to the City. Coverage shall be at
least as broad as the latest version of the following: (1) General Liability: Insurance
Services Office Commercial General Liability coverage (occurrence form CG 0001);
(2) Automobile Liability: Insurance Services Office Business Auto Coverage form
number CA 0001, code 1 (any auto); and, if required by the City, (3) Professional
Liability. Consultant shall maintain limits no less than: (1) General Liability: $2,000,000
per occurrence for bodily injury, personal injury and property damage and if Commercial
General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this Agreement/location or the
general aggregate limit shall be twice the required occurrence limit; (2) Automobile
Liability: $1,000,000 per accident for bodily injury and property damage; and
(3) Professional Liability: $1,000,000 per claim/aggregate.
12.3. The insurance policies shall contain the following provisions, or Consultant
shall provide endorsements on forms supplied or approved by the City to state:
(1) coverage shall not be suspended, voided, reduced or canceled except after 30 days
prior written notice by certified mail, return receipt requested, has been given to the City;
(2) any failure to comply with reporting or other provisions of the policies, including
breaches of warranties, shall not affect coverage provided to the City, its directors,
officials, officers, (3) coverage shall be primary insurance as respects the City, its
directors, officials, officers, employees, agents and volunteers, or if excess, shall stand
in an unbroken chain of coverage excess of the Consultant's scheduled underlying
coverage and that any insurance or self-insurance maintained by the City, its directors,
officials, officers, employees, agents and volunteers shall be excess of the Consultant's
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insurance and shall not be called upon to contribute with it; (4) for general liability
insurance, that the City, its directors, officials, officers, employees, agents and
volunteers shall be covered as additional insureds with respect to the services or
operations performed by or on behalf of the Consultant, including materials, parts or
equipment furnished in connection with such work; and (5) for automobile liability, that
the City, its directors, officials, officers, employees, agents and volunteers shall be
covered as additional insureds with respect to the ownership, operation, maintenance,
use, loading or unloading of any auto owned, leased, hired or borrowed by the
Consultant or for which the Consultant is responsible.
12.4. All insurance required by this Section shall contain standard separation of
insureds provisions and shall not contain any special limitations on the scope of
protection afforded to the City, its directors, officials, officers, employees, agents, and
volunteers.
12.5. Any deductibles or self-insured retentions shall be declared to and
approved by the City. Consultant guarantees that, at the option of the City, either:
(1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as
respects the City, its directors, officials, officers, employees, agents, and volunteers; or
(2) the Consultant shall procure a bond guaranteeing payment of losses and related
investigation costs, claims and administrative and defense expenses.
13.0 Indemnification, Hold Harmless, and Duty to Defend
Consultant shall defend, indemnify, and hold the City, its officials, officers,
employees, volunteers and agents serving as independent contractors in the role of city
officials (collectively "Indemnities") free and harmless from any and all claims, demands,
causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to
property or persons, including wrongful death, to the extent arising out of or incident to
any negligent or wrongful acts or omissions of Consultant, its employees, or its agents
in connection with the performance of this Agreement, including without limitation the
payment of all attorneys' fees and other related costs and expenses, except for such
loss or damage arising from the negligence or willful misconduct of the City. With
respect to any and all such aforesaid suits, actions, or other legal proceedings of every
kind that may be brought or instituted against Indemnitees, Consultant shall defend
Indemnitees, at Consultant's own cost, expense, and risk, and shall pay and satisfy any
judgment, award, or decree that may be rendered against Indemnitees. Consultant
shall reimburse City and its directors, officials, officers, employees, agents and/or
volunteers, for any and all legal expenses and costs incurred by each of them in
connection therewith or in enforcing the indemnity herein provided. Consultant's
obligation to indemnify shall not be restricted to insurance proceeds, if any, received by
Consultant, the City, its directors, officials, officers, employees, agents or volunteers.
All duties of Consultant under this Section shall survive termination of this Agreement.
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14.0 Equal Opportunity
Consultant affirmatively represents that it is an equal opportunity employer.
Consultant shall not discriminate against any subcontractor, employee, or applicant for
employment because of race, religion, color, national origin, handicap, ancestry, sex,
sexual orientation, or age. Such non-discrimination includes, but is not limited to, all
activities related to initial employment, upgrading, demotion, transfer, recruitment or
recruitment advertising, layoff, or termination.
15.0 Labor Certification
By its signature hereunder, Consultant certifies that it is aware of the provisions
of Section 3700 of the California Labor Code that require every employer to be insured
against liability for Workers' Compensation or to undertake self-insurance in accordance
with the provisions of that Code, and agrees to comply with such provisions before
commencing the performance of the Services.
16.0 Entire Agreement
This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all prior negotiations, understandings, or
agreements. This Agreement may only be modified by a writing signed by both parties.
17.0 Severability
The invalidity in whole or in part of any provisions of this Agreement shall not
void or affect the validity of the other provisions of this Agreement.
18.0 Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
19.0 No Third Party Rights
No third party shall be deemed to have any rights hereunder against either party
as a result of this Agreement.
20.0 Waiver
No waiver of any default shall constitute a waiver of any other default or breach,
whether of the same or other covenant or condition. No waiver, benefit, privilege, or
service voluntarily given or performed by a party shall give the other party any
contractual rights by custom, estoppel, or otherwise.
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21.0 Prohibited Interests; Conflict of Interest
20.1. Consultant covenants that it presently has no interest and shall not
acquire any interest, direct or indirect, which may be affected by the Services, or which
would conflict in any manner with the performance of the Services. Consultant further
covenants that, in performance of this Agreement, no person having any such interest
shall be employed by it. Furthermore, Consultant shall avoid the appearance of having
any interest, which would conflict in any manner with the performance of the Services.
Consultant shall not accept any employment or representation during the term of this
Agreement which is or may likely make Consultant "financially interested" (as provided
in California Government Code §§1090 and 87100) in any decision made by City on any
matter in connection with which Consultant has been retained.
20.2. Consultant further warrants and maintains that it has not employed or
retained any person or entity, other than a bona fide employee working exclusively for
Consultant, to solicit or obtain this Agreement. Nor has Consultant paid or agreed to
pay any person or entity, other than a bona fide employee working exclusively for
Consultant, any fee, commission, gift, percentage, or any other consideration contingent
upon the execution of this Agreement. Upon any breach or violation of this warranty,
City shall have the right, at its sole and absolute discretion, to terminate this Agreement
without further liability, or to deduct from any sums payable to Consultant hereunder the
full amount or value of any such fee, commission, percentage or gift.
20.3. Consultant warrants and maintains that it has no knowledge that any
officer or employee of City has any interest, whether contractual, noncontractual,
financial, proprietary, or otherwise, in this transaction or in the business of Consultant,
and that if any such interest comes to the knowledge of Consultant at any time during
the term of this Agreement, Consultant shall immediately make a complete, written
disclosure of such interest to City, even if such interest would not be deemed a
prohibited "conflict of interest" under applicable laws as described in this subsection.
22.0 Attorneys' Fees
If either party commences any legal, administrative, or other action against the
other party arising out of or in connection with this Agreement, the prevailing party in
such action shall be entitled to have and recover from the losing party all of its
attorneys' fees and other costs incurred in connection therewith.
23.0 Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this Agreement, the
terms of this Agreement shall control.
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24.0 Corporate Authority
The person executing this Agreement on behalf of Consultant warrants that he or
she is duly authorized to execute this Agreement on behalf of said Party and that by his
or her execution, the Consultant is formally bound to the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto, through their respective authorized
representatives have executed this Agreement as of the date and year first above
written.
CITY OF SEAL BEACH CONSULTANT
By: By:
Ellery A. Deaton, Mayor
Name:
Attest:
Its:
By:
Tina Knapp, City Clerk By:
Approved as to Form: Name:
By:
Its:
Craig A. Steele, Interim City
Attorney
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EXHIBIT A
SCOPE OF SERVICES
Consultant will provide services as Special Tax Consultant in connection with the
issuance of the Bonds, including the following:
1. Preparation and provisions of tables and information customarily provided by a
special tax consultant for Mello-Roos special tax bond issues similar to the
proposed Bonds, and as may be reasonably requested by the City or the City's
Bond Counsel and Disclosure Counsel, including but not limited to the following:
• Value-to-lien computations,
• Overlapping debt table,
• Maximum special tax coverage,
• Effective tax rate schedules.
2. Preparation of a location map and an area map, if requested by the City.
3. Review of relevant sections of the drafts of the Preliminary Official Statement and
Official Statement relating to the Bonds (provided that such drafts are furnished
to the Consultant) and provide comments to the City and the City's Disclosure
Counsel, so the information contained in such Preliminary Official Statement and
Official Statement, after the incorporation of the Consultant's comments, would
be fair and accurate based on the best of the Consultant's knowledge.
4, Execution of such closing certificates as requested by the financing team to:
(i) certify as to the fairness and accuracy of the description contained in the
Preliminary Official Statement and Official Statement with respect to information
furnished by Consultant and (ii) make such other certifications as may be
reasonably requested by the financing team;
5, Participate in meetings and conference calls with City staff and other members
of the financing team, at the City's discretion and request;
6. Perform such other services not described above but are customarily performed
by Special Tax Consultants for financings similar to the one described in the
recitals of this Agreement, at the City's discretion and request.
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