HomeMy WebLinkAboutItem M - Special Tax RefundingQuint & Thimmig LLP 10/23/15
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19040.03:J13554
FISCAL AGENT AGREEMENT
by and between the
CITY OF SEAL BEACH, CALIFORNIA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Fiscal Agent
dated as of January 1, 2016
relating to:
$__________
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
2016 Special Tax Refunding Bonds
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TABLE OF CONTENTS
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. ........................................................................................................................3
Section 1.02. Agreement for Benefit of Bondowners. .........................................................................................................3
Section 1.03. Definitions. .........................................................................................................................................................3
ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation. ...................................................................................................................12
Section 2.02. Terms of 2016 Bonds .......................................................................................................................................12
Section 2.03. Redemption. .....................................................................................................................................................13
Section 2.04. Form of 2016 Bonds. .......................................................................................................................................15
Section 2.05. Execution of Bonds. ........................................................................................................................................16
Section 2.06. Transfer of Bonds. ...........................................................................................................................................16
Section 2.07. Exchange of Bonds. .........................................................................................................................................16
Section 2.08. Bond Register. ..................................................................................................................................................16
Section 2.09. Temporary Bonds. ...........................................................................................................................................17
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. ..............................................................................................17
Section 2.11. Limited Obligation. .........................................................................................................................................17
Section 2.12. No Acceleration ...............................................................................................................................................17
Section 2.13. Book-Entry Only System ................................................................................................................................18
Section 2.14. Issuance of Parity Bonds ................................................................................................................................19
ARTICLE III
ISSUANCE OF 2016 BONDS
Section 3.01. Issuance and Delivery of 2016 Bonds. ..........................................................................................................21
Section 3.02. Application of Proceeds of Sale of 2016 Bonds. ..........................................................................................21
Section 3.03. Validity of Bonds. ............................................................................................................................................22
Section 3.04. Special Tax Fund. ............................................................................................................................................22
Section 3.05. Administrative Expense Fund. .....................................................................................................................23
Section 3.06. Costs of Issuance Fund. ..................................................................................................................................23
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues. ...................................................................................................................25
Section 4.02. Bond Fund. .......................................................................................................................................................25
Section 4.03. Reserve Fund. ..................................................................................................................................................26
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. ..........................................................................................................................................28
Section 5.02. Limited Obligation. .........................................................................................................................................28
Section 5.03. Extension of Time for Payment. ....................................................................................................................28
Section 5.04. Against Encumbrances. ..................................................................................................................................28
Section 5.05. Books and Records. .........................................................................................................................................28
Section 5.06. Protection of Security and Rights of Owners. .............................................................................................28
Section 5.07. Compliance with Law. ...................................................................................................................................28
Section 5.08. Private Activity Bond Limitation ..................................................................................................................28
Section 5.09. Federal Guarantee Prohibition ......................................................................................................................29
Section 5.10. Collection of Special Tax Revenues. .............................................................................................................29
Section 5.11. Further Assurances. ........................................................................................................................................30
Section 5.12. No Arbitrage. ...................................................................................................................................................30
Section 5.13. Maintenance of Tax-Exemption ....................................................................................................................30
Section 5.14. Covenant to Foreclose. ...................................................................................................................................30
Section 5.15. No Additional Bonds ......................................................................................................................................30
Section 5.16. Yield of the 2016 Bonds ..................................................................................................................................31
Section 5.17. Continuing Disclosure ....................................................................................................................................31
Section 5.18. Reduction of Special Taxes ............................................................................................................................31
Section 5.19. State Reporting Requirements ......................................................................................................................31
Section 5.20. Limits on Special Tax Waivers and Bond Tenders .....................................................................................32
Section 5.21. City Bid at Foreclosure Sale ...........................................................................................................................33
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ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. ............................................................................................34
Section 6.02. Rebate of Excess Investment Earnings to the United States. ....................................................................35
Section 6.03. Liability of City. ...............................................................................................................................................35
Section 6.04. Employment of Agents by City. ...................................................................................................................36
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. .......................................................................................................................37
Section 7.02. Liability of Fiscal Agent. ................................................................................................................................38
Section 7.03. Information; Books and Accounts. ...............................................................................................................40
Section 7.04. Notice to Fiscal Agent. ...................................................................................................................................40
Section 7.05. Compensation, Indemnification. ..................................................................................................................40
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted. ................................................................................................................................41
Section 8.02. Owners’ Meetings. ..........................................................................................................................................42
Section 8.03. Procedure for Amendment with Written Consent of Owners. ................................................................42
Section 8.04. Disqualified Bonds. .........................................................................................................................................42
Section 8.05. Effect of Supplemental Agreement. .............................................................................................................43
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. ......................................................43
Section 8.07. Amendatory Endorsement of Bonds. ...........................................................................................................43
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties. ...................................................................................................44
Section 9.02. Successor is Deemed Included in All References to Predecessor. ...........................................................44
Section 9.03. Discharge of Agreement. ...............................................................................................................................44
Section 9.04. Execution of Documents and Proof of Ownership by Owners. ...............................................................45
Section 9.05. Waiver of Personal Liability. .........................................................................................................................45
Section 9.06. Notices to and Demands on City and Fiscal Agent. ..................................................................................45
Section 9.07. Partial Invalidity. ............................................................................................................................................46
Section 9.08. Unclaimed Moneys. ........................................................................................................................................46
Section 9.09. Applicable Law. ..............................................................................................................................................46
Section 9.10. Conflict with Act. ............................................................................................................................................46
Section 9.11. Conclusive Evidence of Regularity. .............................................................................................................46
Section 9.12. Payment on Business Day. .............................................................................................................................46
Section 9.13. Counterparts. ...................................................................................................................................................46
EXHIBIT A – FORM OF BOND
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FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”), dated as of January 1, 2016, 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. 2005-01 (Pacific Gateway Business Center) (the “District”),
and The Bank of New York Mellon Trust Company, N.A., a national banking association, duly
organized and existing under the laws of the United States of America, as fiscal agent (the
“Fiscal Agent”).
RECITALS:
WHEREAS, the City Council has formed the District under the provisions of the Mello-
Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the California
Government Code) (the “Act”) and Resolution No. 5423 of the City Council adopted on January
23, 2006;
WHEREAS, the City Council, as the legislative body with respect to the District, is
authorized under the Act to levy special taxes to pay for the costs of facilities eligible to be
financed by the District and to authorize the issuance of bonds, including bonds to refund any
bonds of the City for the District, secured by said special taxes under the Act;
WHEREAS, under the provisions of the Act, on May 24, 2006, the City, for and on behalf
of the District, issued $8,800,000 initial principal amount of its City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds, Series 2006
(the “Prior Bonds”), the net proceeds of which were used to finance facilities authorized to be
funded by the District;
WHEREAS, due to favorable interest rates in the financial markets, the City Council now
has determined to refund the Prior Bonds in full;
WHEREAS, under the provisions of the Act and Article 11, commencing with Section
53580, of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the
“Refunding Law”), on December 14, 2015, the City Council adopted its Resolution No. ____ (the
“Resolution”), which resolution, among other matters, authorized the issuance of the City of
Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) 2016
Special Tax Refunding Bonds (the “2016 Bonds”) to provide moneys to defease and currently
refund the Prior Bonds and provided that said issuance would be in accordance with this
Agreement, and authorized the execution hereof;
WHEREAS, it is in the public interest and for the benefit of the City, the District, the
persons responsible for the payment of special taxes to be levied in the District and the owners
of the 2016 Bonds that the City enter into this Agreement to provide for the issuance of the 2016
Bonds, the disbursement of proceeds of the 2016 Bonds, the disposition of the special taxes
securing the 2016 Bonds and the administration and payment of the 2016 Bonds; and
WHEREAS, the City has determined that all things necessary to cause the 2016 Bonds,
when authenticated by the City for the District and issued as in the Act, the Refunding Law, the
Resolution and this Agreement provided, to be legal, valid and binding and special obligations
of the City for the District in accordance with their terms, and all things necessary to cause the
creation, authorization, execution and delivery of this Agreement and the creation,
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authorization, execution and issuance of the 2016 Bonds, subject to the terms hereof, have in all
respects been duly authorized.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
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ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant
to the provisions of the Act, the Refunding Law and the Resolution.
Section 1.02. Agreement for Benefit of Bondowners. The provisions, covenants and
agreements herein set forth to be performed by or on behalf of the City shall be for the equal
benefit, protection and security of the Owners. All of the Bonds, without regard to the time or
times of their issuance or maturity, shall be of equal rank without preference, priority or
distinction of any of the Bonds over any other thereof, except as expressly provided in or
permitted by this Agreement. Any action by any Owner to enforce the provisions of this
Agreement shall be for the equal benefit and protection of all Owners of the Bonds.
The Fiscal Agent may become the owner of any of the Bonds in its own or any other
capacity with the same rights it would have if it were not Fiscal Agent.
Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and
of any certificate, opinion or other document herein mentioned, have the meanings herein
specified. All references herein to “Articles”, “Sections” and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein”,
“hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or subdivision hereof.
“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 hereunder (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 Section 6.02, 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 hereunder (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 hereunder or in connection with the
2016 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 Section
3.05(A) hereof.
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“Agreement” means this Fiscal Agent Agreement, as it may be amended or
supplemented from time to time by any Supplemental Agreement adopted pursuant to the
provisions hereof.
“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 (including by reason of the provisions of Section 2.03(A)(ii) providing for mandatory
sinking payments), 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 Section
2.03(A)(ii)).
“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
Authorized Officer to undertake the action referenced in this 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 Section 4.02(A) hereof.
“Bond Register” means the books for the registration and transfer of Bonds maintained
by the Fiscal Agent under Section 2.08 hereof.
“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, 2016.
“Bonds” means, collectively, the 2016 Bonds, and, if the context requires, any Parity
Bonds, at any time Outstanding under this Agreement 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 January __, 2016, being the date upon which there is a physical
delivery of the 2016 Bonds in exchange for the amount representing the purchase price of the
2016 Bonds by the Original Purchaser.
“Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the 2016 Bonds or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the 2016 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
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thereunder, dated as of January 1, 2016, 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 2016 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 2016 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,
municipal advisor fees, charges for execution, transportation and safekeeping of the 2016 Bonds
and other costs, charges and fees in connection with the foregoing.
“Cost of Issuance Fund” means the fund by that name established by Section 3.06(A)
hereof.
“County” 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 Section 2.03(A)(ii)) payable on the Bonds and the
scheduled amount of interest and amortization of principal payable on any Parity 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 Section 2.13.
“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. 2005-01
(Pacific Gateway Business Center), formed pursuant to the Act and the Resolution of Formation.
“Escrow Agreement” means the Escrow Agreement, dated as of January 1, 2016, 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,
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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
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 herein provided, its successors and
assigns, and any other corporation or association which may at any time be substituted in its
place, as provided in Section 7.01.
“Fiscal Year” 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.
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“Interest Payment Dates” means March 1 and September 1 of each year, commencing
September 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. 1542, adopted by the City Council on February 13,
2006, and any other ordinance of the City amending or supplementing said Ordinance.
“Original Purchaser” means the first purchaser of the 2016 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 Section 8.04) 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 Section 9.03; 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 this 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 Section 2.14 hereof.
“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’s 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
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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
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, (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
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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 (+) 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
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
pursuant to Section 9.06 hereof; 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. 2005-01
(Pacific Gateway Business Center) Special Tax Bonds, Series 2006.
“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 it may be 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 (15th) day is a Business Day.
“Refunding Bonds” means 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.
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“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
Section 2.08 for the registration and transfer of ownership of the Bonds.
“Regulations” means temporary and permanent regulations promulgated under the
Code.
“Reserve Fund” means the fund by that name established pursuant to Section 4.03(A)
hereof.
“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 hereunder. The Reserve Requirement as of the Closing Date is $__________.
“Resolution” means Resolution No. ____, adopted by the City Council on December 14,
2015, authorizing the issuance of the 2016 Bonds.
“Resolution of Formation” means Resolution No. 5423, adopted by the City Council of
the City on January 23, 2006.
“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 A” has the meaning given to such term in the Rate and Method of
Apportionment.
“Special Tax B” has the meaning given to such term in the Rate and Method of
Apportionment.
“Special Tax Fund” means the fund by that name established by Section 3.04(A) hereof.
“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 Bond
Fund established by Section 4.02(A) hereof.
“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.
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“Special Taxes” means the Special Tax A levied within the District pursuant to the Act,
the Ordinance and this Agreement. “Special Taxes” do not include any Special Tax B levied on
property in the District.
“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 this Agreement, but only if and to the extent that such
agreement is specifically authorized hereunder.
“2016 Bonds” means the City of Seal Beach Community Facilities District No. 2005-01
(Pacific Gateway Business Center) 2016 Special Tax Refunding Bonds at any time Outstanding
under this Agreement.
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ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation. 2016 Bonds in the aggregate principal
amount of __________ Million __________ Hundred __________ Thousand Dollars
($__________) are hereby authorized to be issued by the City for the District under and subject
to the terms of the Resolution, this Agreement, the Act, the Refunding Law and other applicable
laws of the State of California. The 2016 Bonds are hereby designated the “City of Seal Beach
Community Facilities District No. 2005-01 (Pacific Gateway Business Center) 2016 Special Tax
Refunding Bonds.”
Section 2.02. Terms of 2016 Bonds. The 2016 Bonds shall be issued in fully registered
form without coupons in denominations of $5,000 or any integral multiple in excess thereof.
The 2016 Bonds shall be dated the Closing Date, shall be in the principal amounts, shall mature
on September 1 in the years and shall bear interest (calculated on the basis of a 360-day year of
twelve 30-day months) at the rates per annum as follows:
Maturity Date
(September 1)
Principal
Amount Interest Rate
Interest on the 2016 Bonds shall be payable on each Interest Payment Date to the person
whose name appears on the registration books maintained by the Fiscal Agent as the Owner
thereof as of the Record Date immediately preceding each such Interest Payment Date, such
interest to be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, on
each Interest Payment Date to the Owner at the address of such Owner as it appears on the
registration books maintained by the Fiscal Agent as of the preceding Record Date. Principal of
and premium (if any) on any 2016 Bond shall be paid by check upon presentation and surrender
thereof, at maturity or the prior redemption thereof, at the Principal Office of the Fiscal Agent.
The principal of and interest and premium (if any) on the 2016 Bonds shall be payable in lawful
money of the United States of America.
Each 2016 Bond shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before
the following Interest Payment Date, in which event it shall bear interest from such Interest
Payment Date; or (b) it is authenticated on or before August 15, 2016, in which event it shall
bear interest from the Closing Date; provided, however, that if, as of the date of authentication of
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any 2016 Bond, interest thereon is in default, such 2016 Bond shall bear interest from the Interest
Payment Date to which interest has previously been paid or made available for payment
thereon.
“CUSIP” identification numbers shall be imprinted on the 2016 Bonds, but such
numbers shall not constitute a part of the contract evidenced by the 2016 Bonds, and any error
or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept
delivery of and pay for the 2016 Bonds. In addition, failure on the part of the City or the Fiscal
Agent to use such CUSIP numbers in any notice to Owners shall not constitute any violation of
the City’s contract with such Owners and shall not impair the effectiveness of any such notice.
If the City or the Fiscal Agent include CUSIP numbers in any notice to the Owners, such notice
may state that no representation is made as to the accuracy or correctness of the CUSIP numbers
printed therein or on the Bonds.
All 2016 Bonds paid by the Fiscal Agent pursuant to this Article shall be canceled by the
Fiscal Agent. The Fiscal Agent shall destroy the canceled 2016 Bonds and, upon written request
of the City, issue a certificate of destruction thereof to the City.
Section 2.03. Redemption.
(A) Redemption Dates for the 2016 Bonds.
(i) Optional Redemption. The 2016 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 2016 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 September 1,
2016 to and including March 1, ____
%
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest Payment Date
thereafter
(ii) Mandatory Sinking Payment Redemption. The 2016 Bonds maturing on
September 1, _____, are subject to mandatory sinking payment redemption in part on
September 1, ______, and on each September 1 thereafter to maturity, 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:
Redemption Date
(September 1)
Sinking Payments
The amounts in the foregoing table shall be reduced to the extent practicable so
as to maintain the same debt service profile for the Bonds as in effect prior to such
redemption, as a result of any prior partial redemption of the 2016 Bonds pursuant to
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Section 2.03(A)(i) above or Section 2.03(A)(iii) below, as specified in writing by the
Director of Finance/City Treasurer to the Fiscal Agent.
(iii) Mandatory Redemption From Special Tax Prepayments. The 2016 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 pursuant to clause (iii) of the second paragraph of Section
3.04(A) and Section 4.03(F), as a whole or in part, at a redemption price (expressed as a
percentage of the principal amount of the 2016 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 September 1,
2016 to and including March 1, ____
%
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest Payment Date
thereafter
(B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its
intention to redeem 2016 Bonds pursuant to subsection (A)(i) or (ii) above not less than forty-
five (45) days prior to the applicable redemption date, or such lesser number of days as the
Fiscal Agent shall allow.
(C) Priority of Redemption. Whenever provision is made in this Agreement for the
redemption of less than all of the 2016 Bonds or any given portion thereof, the Fiscal Agent shall
select the 2016 Bonds to be redeemed, from all 2016 Bonds or such given portion thereof not
previously called for redemption among maturities so as to maintain substantially level debt
service on the Bonds as directed in writing by the Director of Finance/City Treasurer, 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 Bonds shall be deemed to be comprised
of separate $5,000 portions and such portions shall be treated as separate Bonds which may be
separately redeemed.
(D) Purchase of Bonds in lieu of Redemption. In lieu of redemption under Section
2.03(A) above, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for
purchase of Outstanding 2016 Bonds, upon the filing with the Fiscal Agent of an Officer’s
Certificate requesting such purchase prior to the selection of 2016 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 2016 Bonds be purchased at a
price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
(E) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any
redemption to be sent by first class mail, postage prepaid, or sent by such other means as is
acceptable to the recipient thereof, at least thirty (30) days but not more than sixty (60) days
prior to the date fixed for redemption, to the Securities Depositories and to one or more
Information Services (or by such other means as permitted by such services), and to the
respective registered Owners of any 2016 Bonds designated for redemption, at their addresses
appearing on the 2016 Bond registration books in the Principal Office of the Fiscal Agent; but
such sending of the notice of redemption shall not be a condition precedent to such redemption
and failure to mail or to receive any such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of such Bonds.
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Such notice shall state the redemption date and the redemption price and, if less than all
of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP
numbers and Bond numbers of the 2016 Bonds to be redeemed by giving the individual CUSIP
number and Bond number of each 2016 Bond to be redeemed or shall state that all Bonds
between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2016
Bonds of one or more maturities have been called for redemption, shall state as to any 2016
Bond called in part the principal amount thereof to be redeemed, and shall require that such
2016 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the
said redemption price, and shall state that further interest on such 2016 Bonds will not accrue
from and after the redemption date.
Notwithstanding the foregoing, in the case of any redemption of the 2016 Bonds under
Section 2.03(A)(i) or (ii) above, the notice of redemption may state that the redemption is
conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2016 Bonds on
the anticipated redemption date, and that the redemption shall not occur if by no later than the
scheduled redemption date sufficient moneys to redeem the 2016 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 2016 Bonds to be redeemed, the Fiscal
Agent shall send written notice to the owners of the 2016 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 2016 Bonds for which notice of redemption was given shall remain
Outstanding for all purposes of this Agreement.
Upon the payment of the redemption price of 2016 Bonds being redeemed, each check or
other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP
number identifying, by issue and maturity, the 2016 Bonds being redeemed with the proceeds
of such check or other transfer.
Upon surrender of 2016 Bonds redeemed in part only, the City shall execute and the
Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a
new 2016 Bond or 2016 Bonds, of the same maturity, of authorized denominations in aggregate
principal amount equal to the unredeemed portion of the 2016 Bond or 2016 Bonds.
(F) 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 2016 Bonds
so called for redemption shall have been deposited in the 2016 Bond Fund, such Bonds so called
shall cease to be entitled to any benefit under this Agreement other than the right to receive
payment of the redemption price, and no interest shall accrue thereon on or after the
redemption date specified in such notice.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be
canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and, upon
written request of the City, issue a certificate of destruction thereof to the City.
(G) Redemption of Parity Bonds. Redemption provisions, if any, pertaining to any
Parity Bonds shall be set forth in the Supplemental Agreement providing for such Parity Bonds.
Section 2.04. Form of 2016 Bonds. The 2016 Bonds, the form of Fiscal Agent’s certificate
of authentication and the form of assignment, to appear thereon, shall be substantially in the
forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated
herein, with necessary or appropriate variations, omissions and insertions, as permitted or
required by this Agreement, the Resolution and the Act.
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Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile signatures of the Mayor of the City and City Clerk who are in office on the date of
adoption of this Agreement or at any time thereafter, and the seal of the City shall be impressed,
imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears
on any Bond ceases to be such officer before delivery of the Bonds to the owner, such signature
shall nevertheless be as effective as if the officer had remained in office until the delivery of the
Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such
persons as at the actual date of the execution of such Bond shall be the proper officers of the
City although at the nominal date of such Bond any such person shall not have been such
officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the
form set forth in Exhibit A executed manually and dated by the Fiscal Agent, shall be valid or
obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of
authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered
hereunder have been duly authenticated, registered and delivered hereunder and are entitled to
the benefits of this Agreement.
Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 by the
person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument
of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any
expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the
City from any lawfully available funds of the District, including but not limited to amounts in
the Administrative Expense Fund. The Fiscal Agent shall collect from the Owner requesting
such transfer any tax or other governmental charge required to be paid with respect to such
transfer.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute
and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate
principal amount.
No transfers of Bonds shall be required to be made (i) fifteen days prior to the date
established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a
Bond after such Bond has been selected for redemption.
Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of
the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations of
the same series and of the same maturity. The cost for any services rendered or any expenses
incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City.
The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other
governmental charge required to be paid with respect to such exchange.
No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date
established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a
Bond after such Bond has been selected for redemption.
Section 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its
Principal Office sufficient books for the registration and transfer of the Bonds which books shall
show the series number, date, amount, rate of interest and last known owner of each Bond and
shall at all times be open to inspection by the City during regular business hours upon
reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such
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reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on said books, the ownership of the Bonds as hereinbefore provided.
The City and the Fiscal Agent will treat the Owner of any Bond whose name appears on
the Bond register as the absolute Owner of such Bond for any and all purposes, and the City
and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal
Agent may rely on the address of the Bondowner as it appears in the Bond register for any and
all purposes.
Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such authorized denominations as may be
determined by the City, and may contain such reference to any of the provisions of this
Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon
the same conditions and in substantially the same manner as the definitive Bonds. If the City
issues temporary Bonds it will execute and furnish definitive Bonds without delay and
thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the
definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal
Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such
temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized
denominations. Until so exchanged, the temporary bonds shall be entitled to the same benefits
under this Agreement as definitive Bonds authenticated and delivered hereunder.
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal
Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in
exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal
Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall
be canceled by it and destroyed by the Fiscal Agent.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft
may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity
for the City and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the City, at the
expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a new
Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost,
destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of
preparing each new Bond delivered under this Section and of the expenses which may be
incurred by the City and the Fiscal Agent for the preparation, execution, authentication and
delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to
be lost, destroyed or stolen shall constitute an original additional contractual obligation on the
part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time
enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this
Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11. Limited Obligation. All obligations of the City under this Agreement and
the Bonds shall be limited obligations of the City, payable solely from the Special Tax Revenues
and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power
of the City (except with respect to the levy of Special Taxes in the District, to the limited extent
set forth herein) or the State of California or any political subdivision thereof is pledged to the
payment of the Bonds.
Section 2.12. No Acceleration. The principal of the Bonds shall not be subject to
acceleration hereunder. Nothing in this Section shall in any way prohibit the prepayment or
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redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of
this Agreement under Section 9.03 hereof.
Section 2.13. Book-Entry Only System. DTC shall act as the initial Depository for the
2016 Bonds. One 2016 Bond for each maturity of the 2016 Bonds shall be initially executed,
authenticated, and delivered as set forth herein with a separate fully registered certificate (in
print or typewritten form). Upon initial execution, authentication, and delivery, the ownership
of the 2016 Bonds shall be registered in the Registration Books kept by the Fiscal Agent for the
Bonds in the name of Cede & Co., as nominee of DTC or such nominee as DTC shall appoint in
writing.
The representatives of the City and the Fiscal Agent are hereby authorized to take any
and all actions as may be necessary and not inconsistent with this Agreement to qualify the 2016
Bonds for the Depository’s book-entry system, including the execution of the Depository’s
required representation letter.
With respect to Bonds registered in the Registration Books in the name of Cede & Co., as
nominee of DTC, neither the City nor the Fiscal Agent shall have any responsibility or
obligation to any broker-dealer, bank, or other financial institution for which DTC holds Bonds
as Depository from time to time (the “DTC Participants”) or to any person for which a DTC
Participant acquires an interest in the Bonds (the “Beneficial Owners”). Without limiting the
immediately preceding sentence, neither the City nor the Fiscal Agent shall have any
responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or
any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any
DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with
respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of
the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the
Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other
person, other than DTC, of any amount with respect to the principal of or interest on the Bonds,
or (v) any consent given or other action taken by the Depository as Owner of the Bonds; except
that so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, any
Beneficial Owner of $1,000,000 or more in aggregate principal amount of any series of Bonds
who has filed a written request to receive notices, containing such Beneficial Owner’s name and
address, with the Fiscal Agent shall be provided with all notices relating to such Bonds by the
Fiscal Agent.
Except as set forth above, the Fiscal Agent may treat as and deem DTC to be the absolute
Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the
principal of and interest on such Bonds, for the purpose of giving notices of redemption and
other matters with respect to such Bonds, for the purpose of registering transfers with respect to
such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and
interest on the Bonds only to or upon the order of the Owners as shown on the Registration
Books, and all such payments shall be valid and effective to fully satisfy and discharge all
obligations with respect to the principal of and interest on the Bonds to the extent of the
amounts so paid.
No person other than an Owner, as shown on the Registration Books, shall receive a
physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that
DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the
transfer provisions in Section 2.06 hereof, references to “Cede & Co.” in this Section 2.13 shall
refer to such new nominee of DTC.
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DTC may determine to discontinue providing its services with respect to the 2016 Bonds
at any time by giving written notice to the Fiscal Agent during any time that the 2016 Bonds are
Outstanding, and discharging its responsibilities with respect thereto under applicable law.
The City may terminate the services of DTC with respect to the 2016 Bonds if it determines that
DTC is unable to discharge its responsibilities with respect to the 2016 Bonds or that
continuation of the system of book-entry transfers through DTC is not in the best interest of the
Beneficial Owners, and the City shall mail notice of such 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 hereunder 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 2016 Bonds that they be
able to obtain certificated Bonds, the 2016 Bonds shall 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 shall designate at that time, in
accordance with Section 2.06.
To the extent that the Beneficial Owners are designated as the transferee by the Owners,
in accordance with Section 2.06 the 2016 Bonds will be delivered to such Beneficial Owners as
soon as practicable.
Section 2.14. Issuance of Parity Bonds. The City may issue one or more series of Parity
Bonds, in addition to the 2016 Bonds authorized under Section 2.01 hereof, by means of a
Supplemental Agreement and without the consent of any Bondowners, upon compliance with
the provisions of this Section 2.14. Only Refunding Bonds that comply with the requirements of
this Section 2.14 shall be Parity Bonds, and such Parity Bonds shall constitute Bonds hereunder
and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment
of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder. The City may
issue the Parity Bonds subject to the following specific conditions precedent:
(A) Current Compliance; Refunding Bonds. The City shall be in compliance on
the date of issuance of the Parity Bonds with all covenants set forth in this Agreement
and all Supplemental Agreements, and the principal amount of the Parity Bonds shall
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.
(B) Payment Dates. The Supplemental Agreement providing for the issuance of
such Parity Bonds shall provide that interest thereon shall be payable on March 1 and
September 1, and principal thereof shall be payable on September 1 in any year in which
principal is payable (provided that there shall be no requirement that any Parity Bonds
pay interest on a current basis).
(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement
providing for the issuance of such Parity Bonds may provide for the establishment of
separate funds and accounts, and shall provide for 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 shall deliver to the Fiscal Agent an Officer’s
Certificate certifying that the proposed issue of Parity Bonds constitute Refunding
Bonds, and that the conditions precedent to the issuance of such Parity Bonds set forth
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in subsections (A), (B) and (C) of this Section 2.14 have been satisfied. In delivering such
Officer’s Certificate, the Authorized Officer that executes the same may conclusively rely
upon such certificates of the Fiscal Agent and others selected with due care, without the
need for independent inquiry or certification.
Nothing in this Section 2.14 shall prohibit the City from issuing bonds or otherwise
incurring debt secured by a pledge of Special Tax Revenues subordinate to the pledge thereof
under Section 4.01 of this Agreement.
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ARTICLE III
ISSUANCE OF 2016 BONDS
Section 3.01. Issuance and Delivery of 2016 Bonds. At any time after the execution of
this Agreement, the City may issue the 2016 Bonds for the District in the aggregate principal
amount set forth in Section 2.01 and deliver the 2016 Bonds to the Original Purchaser. The
Authorized Officers of the City are hereby authorized and directed to deliver any and all
documents and instruments necessary to cause the issuance of the 2016 Bonds in accordance
with the provisions of the Act, the Refunding Law, the Resolution and this Agreement, to
authorize the payment of Costs of Issuance and costs of the refunding of the Prior Bonds from
the proceeds of the 2016 Bonds and to do and cause to be done any and all acts and things
necessary or convenient for delivery of the 2016 Bonds to the Original Purchaser.
Section 3.02. Application of Proceeds of Sale of 2016 Bonds. (A) The proceeds of the
purchase of the 2016 Bonds by the Original Purchaser (being $__________) shall be paid to the
Fiscal Agent, who shall forthwith set aside, pay over and deposit such proceeds on the Closing
Date as follows:
(i) Deposit in the Reserve Fund $__________ (being an amount equal to the initial
Reserve Requirement).
(ii) Deposit in the Costs of Issuance Fund $__________.
(iii) Transfer to the Escrow Bank for deposit by the Escrow Bank in the
Refunding Fund $__________.
(B) In addition to the foregoing, on the Closing Date the Director of Finance/City
Treasurer shall transfer or cause to be transferred certain moneys held with respect to the Prior
Bonds as follows:
(i) Transfer from the administrative expense fund held with respect to the
Prior Bonds to the Director of Finance/City Treasurer for deposit by the Director of
Finance/City Treasurer in the Administrative Expense Fund, any amounts on deposit in
such administrative expense fund.
(ii) Transfer from the special tax fund held with respect to the Prior Bonds (a)
to the Escrow Bank for deposit by the Escrow Bank in the Refunding Fund $__________;
and (b) to the Director of Finance/City Treasurer for deposit by the Director of
Finance/City Treasurer in the Special Tax Fund, any remaining amounts on deposit in
such special tax fund.
(iii) Transfer from the reserve fund held with respect to the Prior Bonds to the
Escrow Bank for deposit by the Escrow Bank in the Refunding Fund $__________, being
all of the funds on deposit in such reserve fund.
(iv) Transfer from the bond fund and the redemption fund held with respect
to the Prior Bonds to the Director of Finance/City Treasurer for deposit by the Director
of Finance/City Treasurer in the Special Tax Fund, any amount on deposit in such
funds.
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(C) The Fiscal Agent may establish a temporary fund or account in its records to
facilitate any of the deposits or transfers referred to in this Section 3.02.
Section 3.03. Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be dependent upon the performance by any person of his obligation with
respect to the Project.
Section 3.04. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established as a separate fund
to be held by the Director of Finance/City Treasurer, the Community Facilities District No.
2005-01 (Pacific Gateway Business Center) 2016 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 expressly not including Special Tax B, which is to be
retained by the City) and any amounts required by Section 3.02(B)(ii)(b), Section 3.02(B)(iv), and
Section 3.05(B) hereof to be deposited therein.
Notwithstanding the foregoing,
(i) the first Special Tax Revenues collected by the City in any Fiscal Year (which
do not include Special Tax B, which is to be retained by the City in any event), 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 Section 3.04(B) below; and
(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 Section 3.04(B) below.
Moneys in the Special Tax Fund 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 disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
(B) 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 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 pursuant to clause (iii) of the second paragraph of Section 3.04(A), and Sections 4.03(C),
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(E) and (F), such that the amount in the Bond Fund equals the principal, 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 Section 2.03(A)), 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.
(C) Investment. Moneys in the Special Tax Fund shall be invested in accordance with
Section 6.01. 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.
Section 3.05. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established as a
separate fund to be held by the Director of Finance/City Treasurer, the Community Facilities
District No. 2005-01 (Pacific Gateway Business Center) 2016 Special Tax Refunding Bonds
Administrative Expense Fund, to the credit of which deposits shall be made as required by
Section 3.02(B)(i), clause (i) of the second paragraph of Section 3.04(A), the second paragraph of
Section 3.04(B) and Section 3.06(B). 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 below.
(B) Disbursement. 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
withdrawn, 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 Section 3.06(B) 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.
(C) Investment. Moneys in the Administrative Expense Fund shall be invested in
accordance with Section 6.01. 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.
Section 3.06. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established as a separate
fund to be held by the Fiscal Agent, the Community Facilities District No. 2005-01 (Pacific
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Gateway Business Center) 2016 Special Tax Refunding Bonds, Costs of Issuance Fund, to the
credit of which a deposit shall be made as required by clause (ii) of Section 3.02(A). Moneys in
the Costs of Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided
in subsection (B) of this Section.
(B) Disbursement. 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 2016 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.
(C) Investment. Moneys in the Cost of Issuance Fund shall be invested in accordance
with Section 6.01. 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.
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ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues. The Bonds shall be secured by a first
pledge of all of the Special Tax Revenues (other than the Special Tax Revenues to be deposited
to the Administrative Expense Fund pursuant to clause (i) of the second paragraph of Section
3.04(A)) and all moneys deposited in the Bond Fund, the Special Tax Prepayments Account, the
Reserve Fund and, until disbursed as provided herein, in the Special Tax Fund. Such Special
Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein)
are hereby dedicated to the payment of the principal of, and interest and any premium on, the
Bonds as provided herein 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 Section 9.03.
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 pursuant to clause (i) of the second paragraph of Section 3.04(A), 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 hereunder.
Section 4.02. Bond Fund.
(A) Establishment of Bond Fund and Special Tax Prepayments Account. There is
hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities
District No. 2005-01 (Pacific Gateway Business Center) 2016 Special Tax Refunding Bonds Bond
Fund to the credit of which deposits shall be made as required by the first subclause of clause
(ii) of the second paragraph of Section 3.04(A), Section 3.04(B) and Section 4.03, and any other
amounts required to be deposited therein by this Agreement or 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 clause
(iii) of the second paragraph of Section 3.04(A). 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 below, and, pending such disbursement, shall be subject to a lien in favor
of the Owners of the Bonds.
(B) Disbursements. (i) Bond Fund Disbursements. On each Interest Payment Date, and
following any transfers required pursuant to Sections 3.04(A), 3.04(B), 4.02(B)(ii) and 4.03(C), (E)
and (F) 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 Section 2.03(A)(ii), or a redemption of the Bonds
required by Section 2.03(A)(i) or (ii), 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 pursuant to clause (ii) of the second paragraph of Section 3.04(A) 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
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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 provided for in the first paragraph of this Section 4.02(B), 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.
(ii) Special Tax Prepayments Account Disbursements. 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 Section 2.03(A)(iii) can timely be given by
the Fiscal Agent under Section 2.03(E), and shall be used (together with any amounts
transferred pursuant to Section 4.03(F)) to redeem Bonds on the redemption date selected in
accordance with Section 2.03.
(C) Investment. Moneys in the Bond Fund and the Special Tax Prepayments Account
shall be invested in accordance with Section 6.01. 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.
(D) State Reporting. If at any time the Fiscal Agent fails to pay principal and interest
due on any scheduled payment date for the Bonds, the Fiscal Agent shall notify the Director of
Finance/City Treasurer in writing of such failure, and (in addition to any notice required under
the Continuing Disclosure Agreement) the Director of Finance/City Treasurer shall notify the
California Debt and Investment Advisory Commission of such failure within 10 days of the
failure to make such payment.
Section 4.03. Reserve Fund.
(A) Establishment of Reserve Fund. There is hereby established as a separate fund to be
held by the Fiscal Agent, the Community Facilities District No. 2005-01 (Pacific Gateway
Business Center) 2016 Special Tax Refunding Bonds Reserve Fund to the credit of which a
deposit shall be made as required by clause (i) of Section 3.02(A), which deposit is equal to the
initial Reserve Requirement, and deposits shall be made as provided in subclause second of
clause (ii) of the second paragraph of Section 3.04(A), and Section 3.04(B)(i). 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.
(B) Use of Reserve Fund. Except as otherwise provided in this Section, 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 second paragraph of Section
4.02(B)(i)) 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. If at any time funds are withdrawn by the
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Fiscal Agent from the Reserve Fund for transfer to the Bond Fund due to a deficiency in the
amount in the Bond Fund needed to pay debt service due on the Bonds (as described in the
second paragraph of Section 4.02(B)), the Fiscal Agent shall notify the Director of Finance/City
Treasurer of the date of withdrawal and the amount so withdrawn, and the Director of
Finance/City Treasurer shall, in addition to any notice required under the Continuing
Disclosure Agreement, notify the California Debt and Investment Advisory Commission of
such withdrawal within 10 days of the date of such withdrawal.
(C) Transfer of Excess of Reserve Requirement. 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 Section 4.02.
(D) Transfer for Rebate Purposes. 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 Section 6.02.
(E) Transfer When Balance Exceeds Outstanding Bonds. 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 Section 4.02 or 2.03,
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 Finance/City Treasurer, to be retained
by the City, unencumbered by this 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
pursuant to this Section 4.03(E) until after (i) the calculation, pursuant to Section 6.02, of any
amounts due to the federal government following payment of the Bonds and withdrawal of any
such amount under Section 4.03(D) for purposes of making such payment to the federal
government, and (ii) payment of any fees and expenses due to the Fiscal Agent.
(F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and
Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii)
and 4.02(B)(ii), 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 Section 2.03(A)(iii).
(G) Investment. Moneys in the Reserve Fund shall be invested in accordance with
Section 6.01. 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, including as
provided in Section 4.03(C) above.
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ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. 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 this Agreement and any Supplemental Agreement, and it will faithfully
observe and perform all of the conditions, covenants and requirements of this Agreement and
all Supplemental Agreements and of the Bonds.
Section 5.02. Limited Obligation. 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 hereunder.
Section 5.03. Extension of Time for Payment. 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 hereunder, to the benefits of this
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.
Section 5.04. Against Encumbrances. 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 herein created for the benefit of the Bonds,
except as permitted by this Agreement.
Section 5.05. Books and Records. 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.
Section 5.06. Protection of Security and Rights of Owners. 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.
Section 5.07. Compliance with Law. 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 this Agreement.
Section 5.08. Private Activity Bond Limitation. The City shall assure that the proceeds
of the Prior Bonds and of the 2016 Bonds are not so used as to cause the Prior Bonds or the 2016
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.
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Section 5.09. Federal Guarantee Prohibition. 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
2016 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code.
Section 5.10. Collection of Special Tax Revenues. 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
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.
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The Director of Finance/City Treasurer is hereby authorized to employ consultants to
assist in computing the levy of the Special Taxes hereunder 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 hereunder shall be an Administrative Expense hereunder.
Section 5.11. Further Assurances. 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 this Agreement, and for the
better assuring and confirming unto the Owners of the rights and benefits provided in this
Agreement.
Section 5.12. No Arbitrage. 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 2016 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 2016 Bonds would have caused the 2016
Bonds to be “arbitrage bonds” within the meaning of section 148 of the Code.
Section 5.13. Maintenance of Tax-Exemption. The City shall take all actions necessary
to assure the exclusion of interest on the 2016 Bonds from the gross income of the owners of the
2016 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 2016 Bonds.
Section 5.14. Covenant to Foreclose. The City hereby covenants with and for the
benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter
provided, 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 provided 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 becomes aware of any delinquency in the payment
of any Special Tax due and owing, 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 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 shall 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.
The Director of Finance/City Treasurer is hereby authorized 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 hereunder.
Section 5.15. No Additional Bonds. Except as expressly permitted by Section 2.14
hereof, the City shall not issue any additional bonds secured by (A) a pledge of Special Taxes on
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a parity with or senior to the pledge thereof under Section 4.01 hereof; or (B) any amounts in
any funds or accounts established hereunder.
Section 5.16. Yield of the 2016 Bonds. In determining the yield of the 2016 Bonds to
comply with Section 5.12 and 6.02 hereof, 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 2016 Bonds, without regard to whether or not prepayments are received or
2016 Bonds redeemed.
Section 5.17. Continuing Disclosure. The City hereby 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 this 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 this 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.
Section 5.18. Reduction of Special Taxes. 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 hereby 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.
Section 5.19. State Reporting Requirements. The following requirements shall apply
to the 2016 Bonds, in addition to those requirements under Section 5.17:
(A) Annual Reporting. (A) Annual Reporting. Not later than October 30 of
each calendar year, beginning with the October 30, 2016, 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
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providing the foregoing information. The annual reporting shall be made using such
form or forms as may be prescribed by CDIAC.
(B) Other Reporting. 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 Section 4.03(B) for transfer to the
Fiscal Agent to be used to pay principal and interest on the Bonds, the Treasurer–Tax
Collector 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.
(C) Special Tax Reporting. The Director of Finance/City Treasurer shall file a
report with the City no later than January 1, 2017, 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
Section 3.02(A) 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 and 53411 of the California Government Code.
(D) Amendment. The reporting requirements of this Section 5.19 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 this Agreement.
(E) No Liability. 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
this Section 5.19.
The Director of Finance/City Treasurer shall provide copies of any reports prepared
pursuant to this Section 5.19 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 this Section
5.19 shall include any beneficial owner of the Bonds.
Section 5.20. Limits on Special Tax Waivers and Bond Tenders. 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
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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.
Section 5.21. City Bid at Foreclosure Sale. 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 imposed by the District and that the Special Taxes levied on
the property are payable while the City owns the property.
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ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. Moneys in any fund or
account created or established by this 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 this 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 this
Agreement for transfer of interest earnings and profits resulting from investment of amounts in
funds and accounts. Whenever in this 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 this Section.
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 this 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 this Agreement or the Code) at Fair Market Value. The
City shall direct or make investments hereunder 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 this 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.
The City acknowledges that regulations of the Comptroller of the Currency grant the
City the right to receive brokerage confirmations of security transactions to be effected by the
Fiscal Agent hereunder as they occur. The City specifically waives the right to receive such
notification to the extent permitted by applicable law and agrees that it will instead receive
monthly cash transactions statements which include detail for the investment transactions
effected by the Fiscal Agent hereunder; provided, however, that the City retains its rights to,
upon written request to the Fiscal Agent, receive brokerage confirmation on any investment
transaction requested by the City.
Section 6.02. Rebate of Excess Investment Earnings to the United States. The City
shall take any and all actions necessary to assure compliance with section 148(f) of the Code,
relating to the rebate of excess investment earnings, if any, to the federal government, to the
extent that such section is applicable to the Bonds.
The City may withdraw such amounts from the Reserve Fund pursuant to Section
4.03(D) as necessary to make any required rebate payments, and pay such amounts to the
federal government as required by the Code and the Regulations. In the event of any shortfall
in amounts available to make such payments under Section 4.03(D), the Director of
Finance/City Treasurer shall make such payment from any amounts available in the
Administrative Expense Fund or from any other lawfully available funds of the District or the
City. Any fees or expenses incurred by the City under or pursuant to this Section 6.02 shall be
Administrative Expenses.
In order to provide for the administration of this Section 6.02, the Director of
Finance/City Treasurer may provide for the employment of independent attorneys,
accountants and consultants compensated on such reasonable basis as the Director of
Finance/City Treasurer may deem appropriate and in addition the Director of Finance/City
Treasurer may rely conclusively upon and be fully protected from all liability in relying upon
the opinions, determinations, calculations and advice of such agents, attorneys and consultants
employed hereunder.
The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and
certifications required by this Section. The Fiscal Agent shall have no responsibility to
independently make any calculation or determination or to review the City’s calculations
hereunder.
Section 6.03. Liability of City. The City shall not incur any responsibility in respect of
the Bonds or this Agreement other than in connection with the duties or obligations explicitly
herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection
with the performance of its duties hereunder, 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
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of the terms, conditions covenants or agreements of the Fiscal Agent herein 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 thereunder.
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 this 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 this 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 hereunder, 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 hereunder 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 this Agreement the City 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 City, be 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 this 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.
Section 6.04. Employment of Agents by City. In order to perform its duties and
obligations hereunder, the City and/or the Director of Finance/City Treasurer may employ
such persons or entities as it deems necessary or advisable. The City shall not be liable for any
of the acts or omissions of such persons or entities employed by it in good faith hereunder, and
shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations,
determinations and directions of such persons or entities.
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ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. The Bank of New York Mellon Trust
Company, N.A., at its corporate trust office in Los Angeles, California is hereby 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 this Agreement, and no implied
covenants or obligations shall be read into this 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 of this
Section, 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 hereunder.
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 this Section 7.01, 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 hereunder without
any further act.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 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 hereunder, all such duties and all 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 hereunder, and shall assume all of the responsibilities
and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the
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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 hereunder.
Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements
herein 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 this Agreement or of the Bonds, or
shall incur any responsibility in respect thereof, other than in connection with the duties or
obligations herein 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 hereunder, 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 by the City to the Fiscal Agent and conforming to the requirements of this
Agreement; but in the case of any such certificates or opinions by which any provision hereof
are specifically required to be furnished 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 this
Agreement on their face. Except as provided 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 this 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 this 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 this 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
hereunder, 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 this Agreement at the request or direction of any of the Owners pursuant to this
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.
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 hereunder, 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.
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In order to perform its duties and obligations hereunder, 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. 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
except from arising from Fiscal Agent’s negligence or willful misconduct, including without
limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and the risk of
interception and misuse by third parties; (ii) that it is fully informed of the protections and risks
associated with the various methods of transmitting Instructions to the Fiscal Agent and 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 (iii) to notify the Fiscal Agent immediately
upon learning of any compromise or unauthorized use of the security procedures. In the event
of an ambiguity or a contradiction in such Instructions as determined by the Fiscal Agent in its
reasonable discretion, 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 Fiscal Agent shall not be liable hereunder
except for its negligence or willful misconduct.
The Fiscal Agent shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay (“unavoidable delay”) in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, acts of god or of the public enemy or
terrorists, acts of a government, 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.
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Section 7.03. Information; Books and Accounts. The Fiscal Agent shall provide to the
City such information relating to the Bonds and the funds and accounts maintained by the
Fiscal Agent hereunder 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.
Section 7.04. Notice to Fiscal Agent. 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 hereunder 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 this 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 this 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.
Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent
from time to time, promptly upon written request, reasonable compensation for all services
rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges,
counsel fees and other disbursements, including those of their attorneys, agents and employees,
incurred in and about the performance of their powers and duties under this Agreement, but
the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this
Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify
and save the Fiscal Agent, its officers, employees, directors and agents harmless against any
liabilities, reasonable expenses, including reasonable legal fees and expenses, which it may
incur in the exercise and performance of its powers and duties hereunder which are not due to
its negligence or willful misconduct. The obligation of the City under this Section shall survive
resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and
discharge of this Agreement, but any monetary obligation of the City arising under this Section
shall be limited solely to amounts on deposit in the Administrative Expense Fund.
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ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted. This 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
Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or
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 this
Agreement), or reduce the percentage of Bonds required for the amendment hereof. Any such
amendment may not modify any of the rights or obligations of the Fiscal Agent without its
written consent.
This 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 this 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 this
Agreement, or in regard to questions arising under this Agreement, as the City may
deem necessary or desirable and not inconsistent with this 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 2016 Bonds; and
(E) in connection with the issuance of Parity Bonds under and pursuant to
Section 2.14.
The Fiscal Agent may in its discretion, but shall not be obligated to, enter into any such
Supplemental Agreement authorized by this Section which materially adversely affects the
Fiscal Agent’s own rights, duties or immunities under this 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 this Section 8.01.
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Section 8.02. Owners’ Meetings. The City may at any time call a meeting of the
Owners. In such event the City is authorized to fix the time and place of said meeting and to
provide for the giving of notice thereof, and to fix and adopt rules and regulations for the
conduct of said meeting.
Section 8.03. Procedure for Amendment with Written Consent of Owners. The City
and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the
provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that
such amendment is permitted by the first paragraph of Section 8.01, to take effect when and as
provided in this Section. The City or the Fiscal Agent may obtain an opinion of Bond Counsel
that such Supplemental Agreement complies with the provisions of this Article VIII, and the
City and Fiscal Agent may rely conclusively upon such opinion. A copy of such Supplemental
Agreement, together with a request to Owners for their consent thereto, shall be mailed by first
class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies
of such Supplemental Agreement and request shall not affect the validity of the Supplemental
Agreement when assented to as in this Section provided.
Such Supplemental Agreement shall not become effective unless there shall be filed with
the Fiscal Agent the written consents 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
Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each
such consent shall be effective only if accompanied by proof of ownership of the Bonds for
which such consent is given, which proof shall be such as is permitted by Section 9.04. Any
such consent shall be binding upon the Owner of the Bonds giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by
filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this
Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to
the Supplemental Agreement, the City shall mail a notice to the Owners in the manner
hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in
substance that the Supplemental Agreement has been consented to by the Owners of the
required percentage of Bonds and will be effective as provided in this Section (but failure to
mail copies of said notice shall not affect the validity of the Supplemental Agreement or
consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A
record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent,
shall be proof of the matters therein stated until the contrary is proved. The Supplemental
Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing
of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except
as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of
all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final
decree of a court of competent jurisdiction setting aside such consent in a legal action or
equitable proceeding for such purpose commenced within such sixty-day period.
Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City,
excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of
any vote, consent or other action or any calculation of Outstanding Bonds provided for in this
Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided
for in this Article VIII, unless all of the outstanding Bonds are so owned or held. Upon written
request, the City shall specify to the Fiscal Agent in a certificate executed by an Authorized
Officer those Bonds disqualified pursuant to this Section 8.04. The Fiscal Agent may
conclusively rely upon such certificate of the City.
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Section 8.05. Effect of Supplemental Agreement. From and after the time any
Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall
be deemed to be modified and amended in accordance therewith, the respective rights, duties
and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall
thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental
Agreement shall be deemed to be part of the terms and conditions of this Agreement for any
and all purposes.
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The
City may determine that Bonds issued and delivered after the effective date of any action taken
as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form
approved by the City, as to such action. In that case, upon demand of the Owner of any Bond
Outstanding at such effective date and presentation of his Bond for that purpose at the Principal
Office of the Fiscal Agent or at such other office as the City may select and designate for that
purpose, a suitable notation shall be made on such Bond. The City may determine that new
Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action,
shall be prepared, executed and delivered. In that case, upon demand of the Owner of any
Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the
Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such
Bonds.
Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII
shall not prevent any Owner from accepting any amendment as to the particular Bonds held by
him, provided that due notation thereof is made on such Bonds.
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ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement,
expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and
the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants,
stipulations, promises or agreements in this Agreement contained by and on behalf of the City
shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 9.02. Successor is Deemed Included in All References to Predecessor.
Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal
Agent is named or referred to, such reference shall be deemed to include the successors or
assigns thereof, and all the covenants and agreements in this Agreement contained by or on
behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective
successors and assigns thereof whether so expressed or not.
Section 9.03. Discharge of 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;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money
which, together with the amounts then on deposit in the funds and accounts provided
for in Sections 4.02 and 4.03 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 fund and accounts provided for in Sections 4.02 and 4.03, 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 this 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 this Agreement and all other obligations of the
City under this 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 pursuant to
Section 7.05, 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.
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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.
Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any
request, declaration or other instrument which this Agreement may require or permit to be
executed by Owners may be in one or more instruments of similar tenor, and shall be executed
by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, declaration or other instrument, or of such writing
appointing such attorney, may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he purports
to act, that the person signing such request, declaration or other instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness of such execution,
duly sworn to before such notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and
the amount, maturity, number and date of holding the same shall be proved by the registry
books.
Any request, declaration or other instrument or writing of the Owner of any Bond shall
bind all future Owners of such Bond in respect of anything done or suffered to be done by the
City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05. Waiver of Personal Liability. No Councilmember, officer, agent or
employee of the City shall be individually or personally liable for the payment of the principal
of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law.
Section 9.06. Notices to and Demands on City and Fiscal Agent. Any notice or
demand which by any provision of this Agreement is required or permitted to be given or
served by the Fiscal Agent to or on the City may be given or served by being deposited postage
prepaid in a post office letter box addressed (until another address is filed by the City with the
Fiscal Agent) as follows:
City of Seal Beach, California
211 Eighth Street
Seal Beach, California 90740
Attention: Director of Finance/City Treasurer
Any notice or demand which by any provision of this Agreement is required or
permitted to be given or served by the City to or on the Fiscal Agent may be given or served by
being deposited postage prepaid in a post office letter box addressed (until another address is
filed by the Fiscal Agent with the City) as follows:
The Bank of New York Mellon Trust Company, N.A.
400 South Hope Street, Suite 400
Los Angeles, California 90071
Attn: Corporate Trust
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Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of
this Agreement shall for any reason be held illegal or unenforceable, such holding shall not
affect the validity of the remaining portions of this Agreement. The City hereby declares that it
would have adopted this Agreement and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of
the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this
Agreement may be held illegal, invalid or unenforceable.
Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of
the principal of, and the interest and any premium on, the Bonds which remains unclaimed for
two (2) years after the date when the payments of such principal, interest and premium have
become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by
the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent
shall thereupon be released and discharged with respect thereto and the Bond Owners shall
look only to the City for the payment of the principal of, and interest and any premium on, such
Bonds. Any right of any Owner to look to the City for such payment shall survive only so long
as required under applicable law.
Section 9.09. Applicable Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State of California applicable to contracts made and performed
in the State of California.
Section 9.10. Conflict with Act. In the event of a conflict between any provision of this
Agreement with any provision of the Act as in effect on the Closing Date, the provision of the
Act shall prevail over the conflicting provision of this Agreement.
Section 9.11. Conclusive Evidence of Regularity. Bonds issued pursuant to this
Agreement shall constitute conclusive evidence of the regularity of all proceedings under the
Act relative to their issuance and the levy of the Special Taxes.
Section 9.12. Payment on Business Day. In any case where the date of the maturity of
interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of
any Bonds or the date any action is to be taken pursuant to this Agreement is other than a
Business Day, the payment of interest or principal (and premium, if any) or the action need not
be made on such date but may be made on the next succeeding day which is a Business Day
with the same force and effect as if made on the date required and no interest shall accrue for
the period from and after such date.
Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
S-1
IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name
and the Fiscal Agent has caused this Agreement to be executed in its name, all as of January 1,
2016.
CITY OF SEAL BEACH, CALIFORNIA, for
and on behalf of CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO.
2005-01 (PACIFIC GATEWAY BUSINESS
CENTER)
By:
Ellery A. Deaton,
Mayor
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Fiscal Agent
By:
Mark A. Golder,
Vice President
19040.03:J13554
Exhibit A
Page 1
EXHIBIT A
FORM OF BOND
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
2016 SPECIAL TAX REFUNDING BOND
INTEREST RATE MATURITY DATE BOND DATE CUSIP
September 1, ____ January __, 2016 812032 ____
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Seal Beach, California (the “City”), for and on behalf of the City of Seal Beach
Community Facilities District No. 2005-01 (Pacific Gateway Business Center) (the “District”), for
value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) to be
collected in the District or amounts in the funds and accounts held under the Agreement (as
hereinafter defined), to the registered owner named above, or registered assigns, on the
maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the
principal amount set forth above, and to pay interest on such principal amount from the Bond
Date shown above, or from the most recent Interest Payment Date (defined below) to which
interest has been paid or duly provided for, semiannually on March 1 and September 1,
commencing September 1, 2016 (each, an “Interest Payment Date”), at the interest rate set forth
above, until the principal amount hereof is paid or made available for payment. The principal
of this Bond is payable to the registered owner hereof in lawful money of the United States of
America upon presentation and surrender of this Bond at the principal corporate trust office of
The Bank of New York Mellon Trust Company, N.A. (the “Fiscal Agent”). Interest on this Bond
shall be paid by check of the Fiscal Agent mailed on each Interest Payment Date to the
registered owner hereof as of the close of business on the 15th day of the month preceding the
month in which the Interest Payment Date occurs (the “Record Date”) at such registered
owner’s address as it appears on the registration books maintained by the Fiscal Agent, or (i) if
the Bonds are in book-entry-only form, or (ii) otherwise upon written request filed with the
Fiscal Agent prior to any Record Date by a registered owner of at least $1,000,000 in aggregate
principal amount of Bonds, by wire transfer in immediately available funds to the depository
for the Bonds or to an account in the United States designated by such registered owner in such
written request, respectively.
Interest on this Bond shall be payable from the interest payment date next preceding the
date of authentication hereof, unless (i) it is authenticated on an interest payment date, in which
event it shall bear interest for such Interest Payment Date, or (ii) such date of authentication is
after a Record Date but on or prior to an Interest Payment Date, in which event interest will be
Exhibit A
Page 2
payable from such Interest Payment Date, or (iii) such date of authentication is prior to the first
Record Date, in which event interest will be payable from the Bond Date shown above;
provided however, that if at the time of authentication of this Bond, interest is in default hereon,
this Bond shall bear interest from the Interest Payment Date to which interest has previously
been paid or made available for payment hereon.
This Bond is one of a duly authorized issue of bonds in the aggregate principal amount
of $__________ approved by a resolution of the City Council adopted on December 14, 2015 (the
“Resolution”), pursuant to provisions of the California Government Code (the “Act”) for the
purpose of refunding the City of Seal Beach Community Facilities District No. 2005-01 (Pacific
Gateway Business Center) Special Tax Bonds, Series 2006, and is one of the series of Bonds
designated “City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway
Business Center) 2016 Special Tax Refunding Bonds” (the “Bonds”). The creation of the Bonds
and the terms and conditions thereof are provided for in the Fiscal Agent Agreement, dated as
of January 1, 2016, between the City, for and on behalf of the District, and the Fiscal Agent (the
“Agreement”) and this reference incorporates the Resolution and the Agreement herein, and by
acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and
as more particularly provided in the Agreement, additional bonds may be issued by the City
from time to time secured by a lien on funds held under the Agreement on a parity with the lien
securing the Bonds. The Agreement is authorized under and this Bond is issued under, and
both are to be construed in accordance with, the laws of the State of California.
The Bonds are not general obligations of the City, but are limited obligations payable
solely from the revenues and funds pledged therefor under the Agreement. Neither the faith
and credit nor the taxing power of the City (except to the extent of the Special Tax A levy in the
District, as set forth in the Agreement) or the State of California or any political subdivision
thereof is pledged to the payment of the Bonds.
Pursuant to the Act, and the Agreement, the principal of and interest on this Bond are
payable solely from the annual Special Tax A authorized under the Mello-Roos Community
Facilities Act of 1982 to be collected within the District and certain funds held under the
Agreement. Any tax for the payment hereof shall be limited to the Special Tax A, except to the
extent that provision for payment has been made by the City, as may be permitted by law. The
Bonds do not constitute obligations of the City for which said County is obligated to levy or
pledge, or has levied or pledged, general or special taxation other than described hereinabove.
The City has covenanted for the benefit of the owners of the Bonds that it will commence
and pursue to completion appropriate foreclosure actions in the event of delinquencies of any
Special Tax A installments levied for payment of principal and interest as more particularly set
forth in the Agreement.
The Bonds are subject to optional redemption prior to their stated maturity on any
Interest Payment Date, as a whole, or in part among maturities as provided in the Agreement,
at a redemption price (expressed as a percentage of the principal amount of the Bonds to be
redeemed), as set forth below, together with accrued interest thereon to the date fixed for
redemption:
Exhibit A
Page 3
Redemption Dates Redemption Prices
any Interest Payment Date from September 1,
2016 to and including March 1, ____
%
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest Payment
Date thereafter
The Bonds maturing on September 1, _____, are subject to mandatory sinking payment
redemption in part on September 1, _____ and on each September 1 thereafter to maturity, 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:
Redemption Date
(September 1)
Sinking Payments
The Bonds are also subject to redemption from the proceeds of Special Tax Prepayments
and any corresponding transfers from the Reserve Fund pursuant to the Agreement, on any
Interest Payment Date, in whole, or in part among maturities as provided in the Agreement, at a
redemption price (expressed as a percentage at the principal amount of the Bonds to be
redeemed), as set forth below, together with accrued interest to the date fixed for redemption:
Redemption Dates Redemption Prices
any Interest Payment Date from September 1,
2016 to and including March 1, ____
%
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest Payment
Date thereafter
Notice of redemption with respect to the Bonds to be redeemed shall be given to the
registered owners thereof, in the manner, to the extent and subject to the provisions of the
Agreement. Notices of redemption may be conditioned upon receipt by the Fiscal Agent of
sufficient moneys to redeem the Bonds on the anticipated redemption date, and if the Fiscal
Agent does not receive sufficient funds by the scheduled redemption date the redemption shall
not occur and the Bonds for which notice of redemption was given shall remain outstanding for
all purposes of the Agreement.
The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the
charges, if any, provided in the Agreement, Bonds may be exchanged at the Principal Office of
the Fiscal Agent for a like aggregate principal amount and maturity of Bonds of other
authorized denominations.
Exhibit A
Page 4
Each registration and transfer of registration of this Bond shall be entered by the Fiscal
Agent in books kept by it for this purpose and authenticated by its manual signature upon the
certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the
registered owner, by execution of the form of assignment endorsed hereon, and authenticated
as herein provided, and the principal hereof, interest hereon and any redemption premium
shall be payable only to the registered owner or to such owner’s order. The Fiscal Agent shall
require the registered owner requesting transfer or exchange to pay any tax or other
governmental charge required to be paid with respect to such transfer or exchange. No transfer
or exchange hereof shall be required to be made (i) fifteen days prior to the date established by
the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such
Bond has been selected for redemption.
The Agreement and the rights and obligations of the City thereunder may be modified
or amended as set forth therein. The Agreement contains provisions permitting the City to
make provision for the payment of the interest on, and the principal of the Bonds so that such
Bonds shall no longer be deemed to be outstanding under the terms of the Agreement.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and manually signed by
the Fiscal Agent.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond
issued is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is made to Cede
& Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has
an interest herein.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of
this Bond have existed, happened and been performed in due time, form and manner as
required by law, and that the amount of this Bond does not exceed any debt limit prescribed by
the laws or Constitution of the State of California.
Exhibit A
Page 5
IN WITNESS WHEREOF, City of Seal Beach, California, has caused this Bond to be
dated the Bond Date shown above, to be signed by the facsimile signature of the Mayor of the
City and countersigned by the facsimile signature of the City Clerk.
CITY OF SEAL BEACH, CALIFORNIA
By:
Mayor
[S E A L]
Attest:
City Clerk
FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the Resolution and the Agreement which has been
authenticated on .
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,
as Fiscal Agent
By:
Authorized Signatory
Exhibit A
Page 6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer unto
(Name, address and Tax identification Number of Assignee)
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfer the same on the books of the Fiscal Agent with full power of substitution in the
premises.
Dated:
Signatures Guaranteed:
Note: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Fiscal Agent.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the
face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
Quint & Thimmig LLP 10/23/15
11/14/15
19040.03:J13552
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 January 1, 2016
relating to:
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Special Tax Bonds, Series 2006
-i-
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 ....................................................................... 2
Section 5. Application of Certain Terms of Prior Agreement ..................................................................... 3
Section 6. Proceedings for Redemption of Prior Bonds ............................................................................... 3
Section 7. 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
Section 11. Unclaimed Moneys ......................................................................................................................... 5
Section 12. Execution in Counterparts ............................................................................................................. 5
Section 13. Applicable Law ................................................................................................................................ 6
EXHIBIT A: SCHEDULE OF PAYMENTS ON PRIOR BONDS
EXHIBIT B: FORM OF NOTICE OF REDEMPTION
EXHIBIT C: NOTICE OF DEFEASANCE
-1-
ESCROW AGREEMENT
This ESCROW AGREEMENT (this “Agreement”), dated as of January 1, 2016, 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. 2005-01 (PACIFIC GATEWAY BUSINESS
CENTER) (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 $8,800,000
(the “Prior Bonds”), said Prior Bonds having been issued on May 24, 2006 pursuant to
Resolution No. 5458 of the City Council adopted on April 24, 2006, and Fiscal Agent Agreement,
dated as of May 1, 2006 (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 Refunding 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 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.
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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 $__________ 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 $__________, and (c) moneys on deposit in the special tax 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 premium 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 premium
and interest on, the Prior Bonds, all amounts on deposit in the Refunding Fund shall be
transferred by the Escrow Bank on March 2, 2016 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 District) in
substantially the form of Exhibit B hereto, as required under Section 2.03(D) of 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.
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.
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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 March 1, 2016, 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
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
-4-
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.
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.
-5-
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
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.
2005-01 (PACIFIC GATEWAY BUSINESS
CENTER)
By:
Ellery A Deaton,
Mayor
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Escrow Bank
By:
Mark A. Golder,
Vice President
19040.03:J13552
Exhibit A
EXHIBIT A
SCHEDULE OF PAYMENTS ON PRIOR BONDS
Redemption
Date Interest
Called
Principal
Redemption
Premium Total
March 1, 2016 $219,707.50 $8,325,000.00 $83,250.00 $8,627.957.50
Exhibit B
Page 1
EXHIBIT B
NOTICE OF FULL/FINAL REDEMPTION OF
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Special Tax Bonds, Series 2006
Maturity
Date
Principal
Amount Called
Redemption
Price(1)
Interest
Rate
CUSIP
Number
9/1/2016 $ 125,000 $126,250 5.00 812032 AJ9
9/1/2017 140,000 141,400 5.00 812032 AK6
9/1/2018 160,000 161,600 5.10 812032 AL4
9/1/2019 180,000 181,800 5.15 812032 AM2
9/1/2020 200,000 202,000 5.20 812032 AN0
9/1/2021 225,000 227,250 5.20 812032 AP5
9/1/2026 1,510,000 1,525,100 5.30 812032 AQ3
9/1/2036 5,785,000 5,842,850 5.30 812032 AR1
(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 March 1, 2016 (the “Redemption Date”), the outstanding
City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center)
Special Tax Bonds, Series 2006 originally issued on May 24, 2006 (the “Bonds”), as described
above, at a price equal to 101% 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:
The Bank of New York Mellon
Global Corporate Trust
P.O. Box 396
East Syracuse, NY 13057
Express Delivery Only:
The Bank of New York Mellon
Global Corporate Trust
111 Sanders Creek Parkway
East Syracuse, NY 13057
By Hand Only:
The Bank of New York Mellon
Global Corporate Trust
Corporate Trust Window
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
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.
Exhibit B
Page 2
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: January ___, 2016 The Bank of New York Mellon Trust
Company, N.A., as Escrow Bank
Exhibit C
EXHIBIT C
NOTICE OF DEFEASANCE
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
SPECIAL TAX BONDS, SERIES 2006
Maturity Amount CUSIP
Date Defeased Number
September 1, 2016 $ 125,000 812032 AJ9
September 1, 2017 140,000 812032 AK6
September 1, 2018 160,000 812032 AL4
September 1, 2019 180,000 812032 AM2
September 1, 2020 200,000 812032 AN0
September 1, 2021 225,000 812032 AP5
September 1, 2026 1,510,000 812032 AQ3
September 1, 2036 5,785,000 812032 AR1
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. 2005-01
(Pacific Gateway Business Center) Special Tax Bonds, Series 2006, 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 January 1, 2016, by and between the
City, for and on behalf of the City of Seal Beach Community Facilities District No. 2005-01
(Pacific Gateway Business Center) (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 interest due on the Bonds on March 1, 2016, and to redeem the Bonds maturing on or
after September 1, 2016 in full on March 1, 2016 at a redemption price equal to 101% of the
principal thereof plus accrued interest to such date.
DATED this ____ day of _____________, 2016
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Escrow Bank
$_________
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01 (PACIFIC GATEWAY BUSINESS CENTER) 2016 SPECIAL TAX REFUNDING BONDS
BOND PURCHASE AGREEMENT
_________, 2016
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. 2005-01 (Pacific Gateway Business Center) (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. 2005-01 (Pacific Gateway Business Center) 2016 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 1 in each year, commencing September 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.
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(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 January 1, 2016 (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 December 14, 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. 5423 adopted by the City Council on January 23, 2006 (the “Resolution of Formation”) and Ordinance No. 1542 adopted on February 13, 2006 (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. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds,
Series 2006 (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 January 1, 2016 (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 _________ (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
January 1, 2016, 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 January ___, 2016, 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
3
York, 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 January 30, 2006 in the real
property records of the County of Orange as Document No. 2006000066501, 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
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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
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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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(j) 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;
(l) 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
7
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;
8
(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
9
(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 2016 BONDS,” “SECURITY FOR THE
2016 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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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 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 December 10, 2015, pursuant to law, with all public
11
notice 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 2016 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 2016 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
13
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.]
14
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: ____
A-1
EXHIBIT A
MATURITY SCHEDULE
$_________ CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2005-01 (PACIFIC GATEWAY BUSINESS CENTER)
2016 SPECIAL TAX REFUNDING BONDS
Maturity Date (September 1) Principal Amount Interest Rate 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 $_________.
B-1
EXHIBIT B
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01 (PACIFIC GATEWAY BUSINESS CENTER) 2016 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 by the City of
the City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) 2016 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 _________ setting forth information concerning the Bonds and the
City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) (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 _________.
CITY OF SEAL BEACH
By:
Its: City Manager
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PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER 17, 2015
NEW ISSUE – BOOK ENTRY ONLY NOT RATED
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 2016 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
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 further opinion of Bond Counsel, interest on the 2016 Bonds
is exempt from personal income taxation imposed by the State of California. See “TAX MATTERS.”
$8,745,000*
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
2016 SPECIAL TAX REFUNDING BONDS
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.
2005-01 (Pacific Gateway Business Center) (the “District”), is issuing the above-captioned bonds (the “2016 Bonds”) to (i) refund
in full the City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds,
Series 2006 (the “Prior Bonds”), (ii) fund a reserve fund for the 2016 Bonds, and (iii) pay costs of issuing the 2016 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 serving the development in the District. The 2016 Bonds are being issued pursuant to a Fiscal Agent
Agreement, dated as of January 1, 2016 (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”).
The 2016 Bonds are payable from the proceeds of an annual Special Tax A (as defined in this Official Statement) being levied
on property located within the District (see “THE DISTRICT”), and from certain funds pledged under the Fiscal Agent
Agreement. The Special Tax A is being levied according to a rate and method of apportionment of Special Taxes approved in 2006
by the then-qualified electors of the District. See “SECURITY FOR THE 2016 BONDS – Special Tax A” and Appendix B – “Rate
and Method.”
Interest on the 2016 Bonds is payable on March 1 and September 1 of each year, commencing on September 1, 2016. The 2016
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 2016 Bonds.
Individual purchases of the 2016 Bonds will be made in book-entry form only. Purchasers of the 2016 Bonds will not receive
physical certificates representing their ownership interests in the 2016 Bonds purchased. The 2016 Bonds will be issued in the
principal amount of $5,000 and any integral multiple thereof. Principal of and interest on the 2016 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 2016 Bonds. See “THE 2016 BONDS” and Appendix F – “DTC and the Book-Entry Only System.”
The 2016 Bonds are subject to optional redemption, mandatory sinking payment redemption and mandatory redemption
from Special Tax Prepayments, prior to their respective maturities. See “THE 2016 BONDS—Redemption.”
The City may issue additional bonded indebtedness that is secured by a lien on the Special Tax Revenues and by funds
pledged under the Fiscal Agent Agreement for the payment of the 2016 Bonds on a parity with the 2016 Bonds (“Parity Bonds”),
but only for the purpose of refunding the 2016 Bonds and refunding any outstanding Parity Bonds. See “SECURITY FOR THE
2016 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 2016 BONDS. EXCEPT FOR THE SPECIAL TAXES,
NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2016 BONDS. THE 2016 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, PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR
UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
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 2016 Bonds. The purchase of
the 2016 Bonds involves significant risks, and the 2016 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
to the other matters set forth in this Official Statement, in evaluating the investment quality of the 2016 Bonds.
The 2016 Bonds are offered when, as and if issued, subject to approval as to their legality by Quint & Thimmig LLP,
Larkspur, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the 2016 Bonds will be
passed upon for the City and the District by Richards, Watson & Gershon, A Professional Corporation, 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. It is anticipated that the 2016 Bonds in definitive form will be available for delivery to
DTC on or about January __, 2016.
The date of this Official Statement is January __, 2016.
* Preliminary, subject to change.
$8,745,000*
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
2016 SPECIAL TAX REFUNDING BONDS
MATURITY SCHEDULE
$__________ Serial Bonds; CUSIP Prefix 812032†
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
Yield
Price
CUSIP
Suffix†
$__________ ______% Term Bonds Due September 1, 2036 Yield ______%, Price ______ CUSIP Number ______†
* Preliminary, subject to change.
† Copyright, American Bankers 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.
-i-
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 2016
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 2016 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 2016 Bonds may not be sold, and no offer to buy the 2016 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 2016 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 2016 Bonds, the Underwriter may overallot or effect
transactions that stabilize or maintain the market prices of the 2016 Bonds at levels above that which
might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at
any time.
The 2016 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 2016 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.
-ii-
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
Robin L. Roberts, City Clerk
PROFESSIONAL SERVICES
City Attorney
Richards, Watson & Gershon,
A Professional Corporation
Los Angeles, California
Municipal 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
-iii-
TABLE OF CONTENTS
INTRODUCTION ............................................................ 1
General ............................................................................1
Authority for Issuance ..................................................1
The 2016 Bonds ...............................................................2
Security for the 2016 Bonds ..........................................2
Reserve Fund ..................................................................3
The District ......................................................................3
Limited Obligation ........................................................4
Issuance of Additional Bonds ......................................4
Bondowners’ Risks ........................................................4
Continuing Disclosure ..................................................4
Other Information ..........................................................5
PLAN OF REFUNDING ................................................. 5
Redemption of Prior Bonds ..........................................5
Estimated Sources and Uses of Funds ........................6
THE 2016 Bonds ............................................................... 6
Authority for Issuance ..................................................6
General Provisions .........................................................6
Redemption ....................................................................7
Transfer or Exchange of 2016 Bonds ...........................9
Discontinuance of DTC Services ................................10
Scheduled Debt Service ...............................................11
SECURITY FOR THE 2016 BONDS............................. 11
General ..........................................................................11
Limited Obligation ......................................................12
Special Tax A ................................................................12
Special Tax Fund ..........................................................13
Summary of Rate and Method ...................................14
Reserve Fund ................................................................17
Covenant for Superior Court Foreclosure ................18
No Teeter Plan ..............................................................19
Investment of Moneys .................................................19
Issuance of Additional Bonds ....................................19
THE DISTRICT ............................................................... 20
Location and Description of the District ..................20
Land Ownership ..........................................................23
Assessed Property Values ..........................................23
Value-to-District Lien Ratio ........................................24
Special Tax Delinquencies ..........................................25
Direct and Overlapping Governmental
Obligations .................................................................25
Projected Debt Service Coverage ...............................28
SPECIAL RISK FACTORS ............................................ 29
Payment of the Special Tax is not a
Personal Obligation ..................................................29
Concentration of Ownership ......................................29
No General Obligation of the City or the
District ........................................................................29
Property Value .............................................................29
Exempt Properties .......................................................30
Parity Taxes and Special Assessments ......................30
Insufficiency of Special Taxes ....................................31
Tax Delinquencies ........................................................31
Bankruptcy Delays .......................................................31
Proceeds of Foreclosure Sales ....................................32
Natural Disasters .........................................................33
Hazardous Substances ................................................33
Disclosure to Future Purchasers ................................33
FDIC/Federal Government Interests in
Properties ...................................................................34
No Acceleration Provision ..........................................35
Taxability Risk ..............................................................35
Enforceability of Remedies .........................................36
No Secondary Market .................................................36
Proposition 218 .............................................................36
Ballot Initiatives ...........................................................37
IRS Audit of Tax-Exempt Bond Issues ......................38
Recent Court Action Involving Landowner
– Voted Special Tax District ....................................38
TAX MATTERS .............................................................. 39
LEGAL MATTERS ......................................................... 41
MUNICIPAL ADVISOR ............................................... 42
NO RATING ................................................................... 42
NO LITIGATION ........................................................... 42
UNDERWRITING .......................................................... 42
FINANCIAL INTERESTS ............................................. 42
CONTINUING DISCLOSURE ..................................... 42
MISCELLANEOUS ........................................................ 44
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
-iv-
-1-
OFFICIAL STATEMENT
$8,745,000*
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
2016 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 2016 Bonds. The sale and
delivery of 2016 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 “2016 Bonds”).
The 2016 Bonds are being issued by the City of Seal Beach, California (the “City”), for and on
behalf of the City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway
Business Center) (the “District”), to (i) refund in full the City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds, Series 2006
currently outstanding in the aggregate principal amount of $8,325,000 (the “Prior Bonds”), (ii)
fund a reserve fund for the 2016 Bonds, and (iii) pay costs of issuing the 2016 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.
* Preliminary, subject to change.
-2-
Bond Authority. The 2016 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”), Resolution No. ____ adopted on December 14, 2015 by the City Council of
the City (the “City Council”) acting as the legislative body of the District, and the Fiscal Agent
Agreement dated as of January 1, 2016 (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 2016 Bonds, see “THE
DISTRICT – Authority for Issuance.”
The 2016 Bonds
General. The 2016 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 2016 Bonds will be dated the date of their issuance and interest on the
2016 Bonds, will be payable on March 1 and September 1 of each year (individually an “Interest
Payment Date”), commencing September 1, 2016. See “THE 2016 BONDS.” The 2016 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 2016 Bonds. See “THE 2016 BONDS—General
Provisions.”
Redemption Prior to Maturity. The 2016 Bonds are subject to optional redemption and
mandatory redemption from Special Tax prepayments prior to their respective maturities. See
“THE 2016 Bonds – Redemption.”
Security for the 2016 Bonds
Pledge Under the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, the
2016 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 Tax A levied on the Taxable Property in the District and 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 Tax A to the amount of said lien, but does not include interest and penalties, if any,
collected with the Special Tax A 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 2016 Bonds in accordance with the Fiscal Agent Agreement
until all of the 2016 Bonds have been paid or defeased. See “SECURITY FOR THE 2016
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 2016 Bonds. Proceeds of the 2016 Bonds and other amounts deposited to
the Refunding Fund under the Escrow Agreement (see “PLAN OF REFUNDING – Redemption
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of Prior Bonds”) are not pledged to, and will not be available for, the payment of the 2016
Bonds.
Special Tax A; Rate and Method. The Special Tax A to be used to pay debt service on the
2016 Bonds will be levied in accordance with the “Rate and Method” of apportionment of
Special Tax (as described under the heading “THE 2016 Bonds – Authority for Issuance”).
“Special Taxes” includes the Special Tax A levied on the Taxable Property within the District
pursuant to the Rate and Method and the Fiscal Agent Agreement. The Rate and Method also
allows for a Special Tax B to be levied on Taxable Property in the District to fund certain
municipal services authorized to be funded by the District (including the maintenance of parks,
parkways and open space benefiting property within the District), but proceeds of the levy of
Special Tax B are not pledged to, and will not be available for, the repayment of the 2016 Bonds.
See “SECURITY FOR THE 2016 BONDS – Special Tax A” and “– Summary of Rate and
Method.”
Limitations. The first Special Tax Revenues up to the amount of the Minimum
Administrative Expense Requirement received by the City in each Fiscal Year, as well as
amounts in the Administrative Expense Fund and the Costs of Issuance Fund, each of which is
established under the Fiscal Agent Agreement, are not pledged to the repayment of the 2016
Bonds. Proceeds of the Bonds and other amounts deposited to the Refunding Fund (see “PLAN
OF FINANCING – Redemption of Prior Bonds”) are not pledged to, and are not available for,
the repayment of the 2016 Bonds. Proceeds of the levy of Special Tax B are not pledged to the
repayment of the 2016 Bonds.
The Improvements are not pledged as collateral for the 2016 Bonds. The proceeds of
condemnation or destruction of any of the Improvements are not pledged to pay the debt
service on the 2016 Bonds. In the event that the Special Taxes are not paid when due, the only
sources of funds available to repay the 2016 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 2016 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
2016 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 2016 Bonds will be $__________. See “ SECURITY FOR THE 2016 BONDS—
Reserve Fund.”
The District
The District is located in the northern portion of the City, and includes ten separate
Orange County Assessor’s parcels comprising a ten building industrial/business park known
as Pacific Gateway Business Center. See “THE DISTRICT—Location and Description of the
District.” Based on the Orange County Assessor’s records for Fiscal Year 2015-16, each of the
ten parcels in the District has a separate owner. See “THE DISTRICT—Land Ownership.” On
the 2015-16 property tax roll, the Orange County Assessor valued the land and improvements
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comprising the property that is subject to the levy of Special Taxes in the District at
$107,659,755. 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 2016 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 2016 BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES
ARE PLEDGED TO THE PAYMENT OF THE 2016 BONDS. THE 2016 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
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 2016 Bonds on a parity with the 2016 Bonds (“Parity Bonds”), but only
for the purpose of refunding the 2016 Bonds or refunding any outstanding Parity Bonds. See
“SECURITY FOR THE 2016 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 2016 Bonds when due. Except for the Special Taxes, no other taxes are pledged to the
payment of the 2016 Bonds. See “SPECIAL RISK FACTORS” for a discussion of certain factors
that should be considered in evaluating an investment in the 2016 Bonds. The purchase of the
2016 Bonds involves significant risks, and the 2016 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.
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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 2016 Bonds, together with available funds
held under the Fiscal Agent Agreement, dated as of May 1, 2006, pursuant to which the Prior
Bonds were issued (the “2006 Prior Agreement”), will be deposited in an escrow account (the
“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 January 1, 2016 (the
“Escrow Agreement”), 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 March
1, 2016, at a redemption price of 101% of the principal amount thereof plus accrued interest to
the redemption date. Upon the deposit of proceeds of the 2016 Bonds and certain amounts held
under the 2006 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 2006 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 2016 Bonds.
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Estimated Sources and Uses of Funds
The sources and uses of funds in connection with the 2016 Bonds are expected to be as
follows:
Principal amount of 2016 Bonds $
Plus: Amounts relating to the Prior Bonds
Plus/Less: Original Issue Premium/Discount
Less: Underwriter’s Discount
Total Sources $
Deposit to Refunding Fund(1) $
Deposit to Reserve Fund(2)
Deposit to Costs of Issuance Fund(3)
Total Uses $
(1) See “PLAN OF REFUNDING—Redemption of Prior Bonds.”
(2) Equal to the initial Reserve Requirement. See “SECURITY FOR THE 2016 BONDS—Reserve
Fund.”
(3) Costs of issuance include, without limitation, Fiscal Agent fees and expenses; Municipal 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 2016 Bonds and
the redemption of the Prior Bonds.
THE 2016 Bonds
Authority for Issuance
Pursuant to the Act, on January 23, 2006, the City Council adopted Resolution No. 5423
establishing the District (“Resolution of Formation”). Also on January 23, 2006, the City
Council adopted Resolution No. 5424 calling an election to authorize the issuance of bonds and
the levying of a special tax within the District. On January 23, 2006, the then owners 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 (the “Rate and Method”). A copy of the Rate and Method is attached to this Official
Statement as Appendix B.
The 2016 Bonds are authorized to be issued pursuant to the Act, the Refunding Law,
Resolution No. ____ adopted on December 14, 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 2016 Bonds will be levied in accordance with the Rate and Method.
General Provisions
The 2016 Bonds will be issued only as fully registered 2016 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 2016 Bonds
will be dated the date of their issuance and interest will be payable on each Interest Payment
Date, commencing September 1, 2016.
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Each 2016 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 August 15, 2016, in which event it will bear
interest from the date of issuance of the 2016 Bonds; provided, however, that if, as of the date of
authentication of any 2016 Bond, interest thereon is in default, such 2016 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 2016 Bonds will be payable both 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 2016 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 will be computed using a year of 360 days comprised of twelve 30-day months.
The 2016 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 2016 Bonds. Individual purchases of the 2016 Bonds will be made in book-
entry form only. Purchasers of the 2016 Bonds will not receive physical certificates representing
their ownership interests in the 2016 Bonds purchased. Principal and interest payments
represented by the 2016 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 2016 Bonds. See Appendix F – “DTC and the Book-Entry Only System.” So long
as the 2016 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 2016 Bonds.
Redemption
Optional Redemption. The 2016 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 2016 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 September 1,
2016 to and including March 1, 2023
103%
September 1, 2023 and March 1, 2024 102
September 1, 2024 and March 1, 2025 101
September 1, 2025 and any Interest Payment
Date thereafter
100
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Mandatory Sinking Payment Redemption. The 2016 Bonds maturing on September 1,
2036, are subject to mandatory sinking payment redemption in part on September 1, ____, and
on each September 1 thereafter to maturity, 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:
Redemption Date
(September 1)
Sinking Payments
The amounts in the foregoing table shall be reduced as a result of any prior partial
redemption of the 2016 Bonds pursuant to the optional redemption or redemption from special
tax prepayments provisions of the Fiscal Agent Agreement, so as to maintain the same debt
service profile for the Bonds as in effect prior to such redemption, as specified in writing by the
Director of Finance/City Treasurer to the Fiscal Agent.
Mandatory Redemption From Special Tax Prepayments. The 2016 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 2016 BONDS – Reserve Fund”), as a
whole or in part, at a redemption price (expressed as a percentage of the principal amount of
the 2016 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 September 1,
2016 to and including March 1, 2023
103%
September 1, 2023 and March 1, 2024 102
September 1, 2024 and March 1, 2025 101
September 1, 2025 and any Interest Payment
Date thereafter
100
Since the formation of the District, there have been no prepayments of Special Tax A;
however, no assurance can be given that prepayments of Special Tax A will not occur in the
future. See “SECURITY FOR THE 2016 BONDS—Summary of Rate and Method – Prepayment
of the Special Tax Obligation.” Special Tax B is not subject to prepayment.
Purchase of 2016 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
of Outstanding 2016 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate
requesting such purchase prior to the selection of 2016 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 2016 Bonds be purchased at a price in
excess of the principal amount thereof, plus interest accrued to the date of purchase.
Selection of 2016 Bonds for Redemption. Whenever provision is made in the Fiscal
Agent Agreement for the redemption of less than all of the 2016 Bonds, the Fiscal Agent will
select the 2016 Bonds to be redeemed, from among the maturities of the 2016 Bonds or such
given portion thereof not previously redeemed, so as to maintain substantially level debt
service on the Bonds as directed in writing by the Director of Finance/City Treasurer, and
within a maturity by lot in any manner which the Fiscal Agent in its sole discretion shall deem
appropriate and fair; provided, however, that so long as the 2016 Bonds are registered in the
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name of Cede & Co., such 2016 Bonds or portion thereof to be called for redemption will be
selected in accordance with the operating procedures of DTC. For purposes of such selection, all
2016 Bonds shall be deemed to be comprised of separate $5,000 portions, and such portions
shall be treated as separate 2016 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 2016 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 2016 Bonds. The redemption notice will state the redemption date and
the redemption price and, if less than all of the then Outstanding 2016 Bonds are to be called for
redemption, will designate the CUSIP numbers and Bond numbers of the 2016 Bonds to be
redeemed by giving the individual CUSIP number and Bond number of each 2016 Bond to be
redeemed or will state that all 2016 Bonds between two stated Bond numbers, both inclusive,
are to be redeemed or that all of the 2016 Bonds of one or more maturities have been called for
redemption, will state as to any 2016 Bond called in part the principal amount thereof to be
redeemed, and will require that such 2016 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 2016 Bonds will not accrue after the redemption date.
Notwithstanding the foregoing, in the case of any redemption of the 2016 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 2016 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 2016
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 2016 Bonds to
be redeemed, the Fiscal Agent will send written notice to the owners of the 2016 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 2016 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 2016 Bonds so called
for redemption have been deposited in the Bond Fund, such 2016 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.
Tender of 2016 Bonds in Payment of Special Taxes. The City has covenanted in the
Fiscal Agent Agreement not to permit the tender of 2016 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 2016 Bonds that will remain Outstanding following such tender.
Transfer or Exchange of 2016 Bonds
So long as the 2016 Bonds are registered in the name of Cede & Co., as nominee of DTC,
transfers and exchanges of 2016 Bonds shall be made in accordance with DTC procedures. See
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Appendix F – “DTC and the Book-Entry Only System.” If the book-entry only system for the
2016 Bonds is ever discontinued, any 2016 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 2016 Bond for cancellation, accompanied by
delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent.
Whenever any 2016 Bond or 2016 Bonds are surrendered for transfer or exchange, the City will
execute and the Fiscal Agent will authenticate and deliver a new 2016 Bond or 2016 Bonds, for a
like aggregate principal amount of 2016 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 2016 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 2016 Bonds for
redemption, or (ii) with respect to any after such has been selected for redemption.
Discontinuance of DTC Services
DTC may determine to discontinue providing its services with respect to the 2016 Bonds
at any time by giving written notice to the Fiscal Agent during any time that the 2016 Bonds are
Outstanding, and discharging its responsibilities with respect to the 2016 Bonds under
applicable law. The City may terminate the services of DTC with respect to the 2016 Bonds if it
determines that DTC is unable to discharge its responsibilities with respect to the 2016 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 2016 Bonds that they obtain
certificated Bonds, the 2016 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 2016 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 2016 Bonds, assuming no
optional redemption of the 2016 Bonds and no redemption of the 2016 Bonds from Special Tax
Prepayments:
Bond Year
ending
September
1 Principal Interest Annual Debt Service
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Totals
* Indicates a mandatory sinking fund payment.
SECURITY FOR THE 2016 BONDS
General
Pursuant to the Fiscal Agent Agreement, the 2016 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, and do not include the proceeds of
any Special Tax B levied on Taxable Property in the District. The Special Tax Revenues and all
moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement)
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are dedicated to the payment of the principal of, and interest and any premium on, the 2016
Bonds in accordance with the Fiscal Agent Agreement until all of the 2016 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 2016 Bonds. The
Improvements are not pledged as collateral for the 2016 Bonds. The proceeds of condemnation
or destruction of any of the Improvements are not pledged to pay the Debt Service on the 2016
Bonds. Proceeds of the levy of Special Tax B are not pledged to the repayment of the 2016
Bonds.
Limited Obligation
The 2016 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 (other than the first Special
Tax Revenues in the amount of the applicable Minimum Administrative Expense Requirement
received by the City in each Fiscal Year, which are to be used to pay Administrative Expenses),
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 2016 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 A levies.
Special Tax A
In accordance with the provisions of the Act, the Rate and Method was approved in 2006
by the then qualified electors of the District. The Rate and Method is set forth in its entirety in
Appendix B. The Rate and Method provides for the levy of (a) a “Special Tax A” in order to
fund the annual “Special Tax Requirement for Facilities,” which includes the amounts needed
to pay the debt service on the Bonds, to pay a proportionate share of the costs of administering
the District, and to replenish any draws on the Reserve Fund; and (b) a “Special Tax B” in order
to fund the annual “Special Tax Requirement for Services” which includes amounts needed to
pay for services authorized to be funded by the District (see “THE DISTRICT—Location and
Description of the District” for a description of the services authorized to be funded by the
District) and a proportionate share of the costs of administering the District. Under the Fiscal
Agent Agreement, and as used in this Official Statement, the capitalized term “Special Taxes”
only includes the Special Tax A, and the capitalized term “Special Tax Revenues,” which are
pledged to the payment of the Bonds, only includes the Special Tax A levied and actually
collected by the City, subject in any event to the provisions of the Fiscal Agent Agreement
regarding the use of the Special Tax Revenues (see “SECURITY FOR THE 2016 BONDS—
Special Tax Fund”). The Special Tax B is not pledged to the payment of the debt service on the
2016 Bonds and will not be available for that purpose.
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 2016 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
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City. The Special Tax A levied on any parcel of Taxable Property (as defined in “SECURITY
FOR THE 2016 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
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; provided,
however, that the Special Taxes may be collected at a different time or in a different manner if
necessary to meet the District’s financial obligations.
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 2016 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 (and expressly not including Special Tax B, which
is to be retained by the City).
Notwithstanding the foregoing,
(i) the first Special Tax Revenues collected by the City in any Fiscal Year
(which do not include Special Tax B, which is to be retained by the City in any event), 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
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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
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, 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 A. The Rate and Method is
used to allocate the amount of the Special Tax A that is needed to be collected each fiscal year
to fund the Special Tax Requirement for Facilities, and the amount of the Special Tax B that is
needed to be collected each fiscal year to fund the Special Tax Requirement for Services, in each
case among the Taxable Properties within the District, based upon the development status of
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the Taxable Property and its size, subject to a maximum tax rate that may be levied against each
type 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 Rate and Method classifies the special taxes as Special Tax A and Special Tax B. The
Special Tax A is the Special Tax levied to fund the Special Tax Requirement for Facilities. The
Special Tax B is the Special Tax levied to fund the provision of certain services and is not
pledged to the payment of the Bonds. Only the proceeds of the levy of Special Tax A levied and
collected by the City are pledged to the payment of the Bonds.
The calculation of the Special Tax A 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 for Facilities” to be
funded from the Special Tax for the fiscal year. The Special Tax Requirement for
Facilities is comprised of five components – debt service on the 2016 Bonds,
periodic costs on the 2016 Bonds including rebate payments on the 2016 Bonds,
replenishment of the Reserve Fund, a portion of the annual cost of administering
the District, and a provision for tax delinquencies. The Special Tax Requirement
for Facilities 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 2016 Bonds, and (ii) any
other funds available to reduce the annual Special Tax A 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,” “Property Owner
Association Property” and “Public Property.”
The Rate and Method defines “Developed Property” as all Taxable Property in
the District, exclusive of Property Owner Association Property and Public
Property, for which a building permit for new construction was issued after
January 1, 2005 and as of March 1 of the preceding fiscal year. All ten parcels of
Taxable Property in the District are currently classified as Developer Property.
The Rate and Method defines “Undeveloped Property” as all Taxable Property
that is not Developed Property, Property Owner Association Property or Public
Property.
• Third, after classifying the parcels, the City identifies the Acreage of each parcel
of Taxable Property. The City then determines the Assigned Special Tax A for
each parcel of Developed Property, the Backup Special Tax A for each parcel of
Developed Property, and the Maximum Special Tax A for each parcel of
Undeveloped Property, Property Owner Association Property and Public
Property. The Assigned Special Tax A and Maximum Special Tax A for
Developed Property, and the Maximum Special Tax for Undeveloped Property,
Property Owner Association Property and Public Property are further described
below.
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• Fourth, the City determines if sufficient Special Tax A revenues are available by
taxing each parcel of Developed Property at 100% of its Assigned Special Tax. If
revenues are sufficient, the Special Tax A is reduced Proportionately against
parcels of Developed Property until the Special Tax A is set at an amount
sufficient to cover the Special Tax Requirement for Facilities.
• 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 A for
Undeveloped Property, as necessary to cover the Special Tax Requirement for
Facilities. However, there currently is no Undeveloped Property in the District.
• Sixth, if additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the Fourth and Fifth steps above have been completed, then the
levy of the Special Tax A 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 A for each such Assessor's Parcel.
• Seventh, if additional monies are needed to satisfy the Special Tax Requirement
for Facilities after the Fourth, Fifth and Sixth steps above have been completed,
then the Special Tax A will be levied Proportionately on each Assessor's Parcel
of Property Owner Association Property and Public Property at up to the
Maximum Special Tax A for Property Owner Association Property or 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.
However, there are no such residential parcels in the District.
The Maximum Special Tax A for each Assessor’s Parcel classified as Developed Property
is the greater of the Assigned Special Tax A for the Parcel or the Backup Special Tax A for the
Parcel. The Assigned Special Tax A rate per Acre of Developed Property for Fiscal Year 2015-
16 is $14,762.02, and the Backup Special Tax A rate per Acre of Developed Property for Fiscal
Year 2015-16 is $17,922.87. The Maximum Special Tax A for each Assessor’s Parcel classified as
Undeveloped Property, Property Owner Association Property or Public Property for Fiscal Year
2015-16 is $18,153.26 per Acre. The Assigned Special Tax A and the Backup Special Tax A for
Developed Property, and the Maximum Special Tax A for Undeveloped Property, Property
Owner Association Property and Public Property, are each subject to annual increases of two
percent (2%) on each July 1, commencing July 1, 2007.
Actual Special Tax Levy. Since the buildout of the property in the District (which
occurred in 2007), there has been no Undeveloped Property in the District and the Assigned
Special Tax A for Developed Property has exceeded the amount needed to be levied to fund the
Special Tax Requirement for Facilities. Accordingly, annual Special Tax A levies are not
expected to go beyond the Fourth step described under the subheading “Special Tax Formula –
Calculation of Annual Special Tax A” above.
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Set forth in Table 1 below are the respective owners of the parcels of Taxable Property in
the District, the County assessed value of each parcel of Taxable Property, and the actual Fiscal
Year 2015-16 Special Tax A levy and the projected Special Tax A levy for Fiscal Year 2016-17 for
each parcel of Taxable Property in the District.
Table 1
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Assigned Special Taxes and Special Tax A Levies
Parcel Owner(1)
Acreage
FY 2015-16
Assessed
Value
Percent
of Total
Assessed
Value
FY 2015-16
Special Tax
Per Parcel
FY 2016-17
Assigned
Special Tax
Per Parcel
Projected FY
2016-17
Special Tax
Per
Parcel(2),(3)
Percent
of Total(3)
Apollo Court Bldg LLC 3.242 $ 6,638,626 6.17% $ 42,325.24 $ 48,815.65 $ 39,476.92 7.21%
Shamrock Apollo LLC 3.321 7,034,694 6.53 43,370.30 50,005.17 40,438.88 7.39
NSHE CA Adams LLC 4.480 12,776,562 11.87 58,523.80 67,456.54 54,551.70 9.97
Magtek Inc 5.504 13,000,000 12.08 71,848.42 82,875.17 67,020.66 12.24
Apollo Bldg 2 LLC 4.278 10,410,099 9.67 55,911.12 64,414.97 52,092.01 9.53
Thor Athletics LLC 3.166 7,552,887 7.02 41,410.80 47,671.29 38,551.49 7.06
SML Socal Properties Inc 3.223 8,517,071 7.91 42,063.98 48,529.56 39,245.57 7.17
Rexford Industrial Realty 9.240 21,521,578 19.99 120,705.34 139,129.11 112,512.89 20.57
Original Investment Group LLC 5.412 12,000,000 11.15 70,803.34 81,489.91 65,900.41 12.06
Bank Farmers and Merchants of Long
Beach
3.064 8,208,238 7.62 39,973.84 46,135.45 37,309.47 6.81
Totals 44.930 $107,659,755 100.00% $586,936.18 $676,522.82 $547,100.00 100.00%
(1) Based on Orange County 2015/16 Secured Property Tax Roll (as of January 1, 2015, lien date).
(2) Based upon the initial principal amount of the 2016 Bonds, and includes the Minimum Administrative Expense
Requirement in the annual amount of $25,000.
(3) Preliminary, subject to change.
Source: Albert A. Webb & Associates.
Prepayment of the Special Tax A Obligation. The Special Tax A is subject to prepayment
in whole or in part. 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 Tax A. However, no assurance can be given that there
will not be prepayments of Special Tax A in the future, which if they occur will result in a
redemption of a portion of the 2016 Bonds prior to their stated maturities. See “THE 2016
BONDS—Redemption – Mandatory Redemption From Special Tax Prepayments.” The Special
Tax B is not subject to prepayment.
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 2046-47.
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 2016 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 2016 Bonds will be $__________.
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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
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 owing, 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.
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
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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 Reserve Fund has been depleted, there could be a delay in payments to
owners of the 2016 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 2016 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
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 2016 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 2016 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 2016 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
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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 2016 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 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.
(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 and to the south of Westminster Avenue.
Surrounding land uses include residential, commercial, industrial and governmental uses, as
well as large areas of open land. To the west of the District is a flood control channel, the
residential community of Island Village located in the City of Long Beach, and further to the
west, a large area of open space, the Los Alamitos Retarding Basin, wetlands and salt-marsh
preserve extending westerly to the San Gabriel River Channel; to the south of the District is an
industrial building, the City of Seal Beach Police Station, the City Public Works Facility and the
Seal Beach Animal Care Center; to the east is the existing Boeing Space and Communications
Headquarters facilities, and across Seal Beach Boulevard is the Seal Beach Naval Weapons
Station and the Seal Beach National Wildlife Refuge; and to the north, across Westminster
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Avenue, is the 533-acre retirement community Leisure World. The 405 freeway is
approximately 3 miles to the north and east of the District.
All of the property in the District has been developed for non-residential light industrial
and office uses. Each parcel within the District has been improved with a building, and has a
separate owner. See “THE DISTRICT—Land Ownership.”
The following page contains an aerial photo of the District:
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City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
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The District was established by the City Council of the City in 2006 pursuant to the Act
to finance the Improvements and certain municipal services. The Improvements include
generally, (i) certain sanitary sewer facilities, water facilities, roadway facilities, landscaping
and irrigation improvements, and dry utilities and (ii) sewer, water, park, storm drain, and
transportation improvements to be funded through development fees charged by the City in
connection with the development of real property within the District. All of the Improvements
to be funded by the District have been completed. The municipal services authorized to be
funded by the District include the maintenance of parks, parkways and open space on Seal
Beach Boulevard and Westminster Avenue within or benefiting the District.
Land Ownership
At the time of formation of the District, OMP Seal Beach, LLC, a Delaware limited
liability company (the “Developer”), owned all of the taxable property in the District. The
Developer first obtained building permits for the construction of six buildings on the property
in the District in February of 2006, with the final building permit for construction having been
issued by the City in August of 2006. By June of 2007, certificates of occupancy had been
provided by the City for all of the buildings constructed on the property in the District.
The Developer owned all of the property in the District at the time the District was
formed (it had acquired the property from Boeing Realty Corporation in December of 2005).
Based on continuing disclosure filings of the Developer, the Developer advised that in January
of 2007 it sold seven of the parcels to Knickerbocker Properties Inc. XLVI. The remaining three
parcels owned by the Developer were sold to their current owners between August of 2007 and
September of 2010. Knickerbocker Properties Inc. XLVI resold the parcels it had acquired to
their current owners between March of 2007 and November of 2010.
Each of the ten parcels of Taxable Property in the District has been developed with a
building for light industrial/business park commercial uses. Each parcel is separately owned.
See Table 1 under the heading “SECURITY FOR THE 2016 BONDS—Summary of Rate and
Method—Actual Special Tax Levy for a listing of the owners of the ten parcels as of January 1,
2015, the respective assessed value of each parcel, the fiscal year 2015-16 Special Tax A levy on
each parcel and the projected fiscal year 2016-17 Special Tax A levy on each of the parcels.
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 2016 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 2015-16.
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.
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According to the County Assessor’s records, as reported by the Special Tax
Administrator, the fiscal year 2015-16 total assessed value of 10 parcels of Taxable Property in
the District is $107,659,755.
Historical Assessed Values. The table below shows annual changes in assessed
valuations between fiscal years 2009-10 and 2015-16 with respect to the ten parcels of Taxable
Property in the District.
Table 2
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Historical Assessed Values
Fiscal Years 2009-10 through 2015-16
Fiscal Year
Land
Assessed Value
Improvement
Assessed Value
Total
Assessed
Valuation
Percent
Change
2009-10 $70,064,369 $50,745,727 $120,810,096 N/A
2010-11 54,716,704 51,703,406 106,420,110 -11.91%(1)
2011-12 50,544,121 49,986,441 100,530,562 -5.53
2012-13 49,272,920 50,857,567 100,130,487 -0.40
2013-14 50,258,378 51,891,014 102,149,392 2.02
2014-15 50,486,549 52,635,686 103,122,235 0.95
2015-16 47,706,493 59,953,262 107,659,755 4.40
(1) The City has advised that the primary cause of the decrease in Assessed Valuation was due to an appeal by the
Boeing Realty Corporation, or related entities, that were major tenants at that time in the buildings that were
constructed in the District.
Data sourced from City Annual Disclosure Reports for the District filed with the Municipal Securities Rulemaking
Board's Electronic Municipal Market Access website, 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 2016 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 2016 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 2015-16 County assessed values
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($107,659,755) and the initial principal amount of the 2016 Bonds ($8,745,000*) is 12.31:1*. There
is, however, overlapping debt, and the properties in the District are subject to a number of
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 value-to-
District lien ratio for each of the parcels of Taxable Property based on fiscal year 2015-16
assessed values and the initial principal amount of the 2016 Bonds.
Table 3
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Assessed Value-to-District Lien Ratios
Fiscal Year 2015-16
Parcel Owner
Parcel
Acreage
Total
Assessed
Value
FY 2015-16
Special
Tax Per
Parcel
Percent
of Total
Allocation
of Proposed
Debt(1)(2)(4)
Aggregate
Value-to-
Lien(3)(4)
Apollo Court Bldg LLC 3.242 $ 6,638,626 $ 42,325 7.21% $ 630,621 10.53:1
Shamrock Apollo LLC 3.321 7,034,694 43,370 7.39 646,192 10.89:1
NSHE CA Adams LLC 4.480 12,776,562 58,524 9.97 871,970 14.65:1
Magtek Inc 5.504 13,000,000 71,848 12.24 1,070,499 12.14:1
Apollo Bldg 2 LLC 4.278 10,410,099 55,911 9.53 833,042 12.50:1
Thor Athletics LLC 3.166 7,552,887 41,411 7.06 616,996 12.24:1
SML Socal Properties Inc 3.223 8,517,071 42,064 7.17 626,728 13.59:1
Rexford Industrial Realty 9.240 21,521,578 120,705 20.57 1,798,438 11.97:1
Original Investment Group LLC 5.412 12,000,000 70,803 12.06 1,054,928 11.38:1
Bank Farmers and Merchants of Long Beach 3.064 8,208,238 39,974 6.81 595,586 13.78:1
Totals 44.930 $107,659,755 $586,936 100.00% $8,745,000 12.31:1
(1) This column does not reflect any overlapping bond debt. See “THE DISTRICT – Direct and Overlapping
Governmental Obligations.”
(2) The principal amount of the 2016 Bonds is allocated based on each property’s fiscal year 2015-16 Special Tax levy
as a percentage of the total fiscal year 2015-16 Special Tax levy. Preliminary, subject to change.
(3) Aggregate Value-to-Lien is Total Assessed Value divided by Allocation of Proposed Debt.
(4) Preliminary, subject to change.
Source: Albert A. Webb & Associates
Special Tax Delinquencies
Special Taxes were first levied on the taxable properties in the District in fiscal year 2006-
07. The City is not aware of any delinquencies in the payment of Special Taxes levied in the
District in such fiscal year or in any subsequent fiscal year. No assurance can be given that the
property owners will continue to timely pay the Special Taxes levied in the District. See
“SPECIAL RISK FACTORS.”
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.
* Preliminary, subject to change.
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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 4
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Direct and Overlapping Bonded Debt
(as of November 1, 2015)
ASSESSED VALUE
2015-16 Secured Roll Assessed Valuation(1) $107,659,755
LAND SECURED BOND INDEBTEDNESS
Outstanding Direct and Overlapping Bonded Debt Type
Total
Parcels Issued Outstanding
%
Applicable
Amount
of Debt
CFD 2005-01 (PACIFIC GATEWAY BUSINESS CENTER) CFD 10 $8,800,000(2) $8,745,000(2) 100.000% $8,745,000
TOTAL OUTSTANDING LAND SECURED BONDED DEBT $8,745,000
Authorized and Unissued Direct and Overlapping Bonded Debt Type
Total
Parcels Authorized Unissued
%
Applicable Applicable
CFD 2005-01 (PACIFIC GATEWAY BUSINESS CENTER) CFD 10 $10,000,000 $1,200,000(3) 100.000% $1,200,000
TOTAL UNISSUED LAND SECURED INDEBTEDNESS $1,200,000
TOTAL OUTSTANDING AND UNISSUED LAND SECURED
INDEBTEDNESS(4)(5)
$9,945,000
GENERAL OBLIGATION BOND INDEBTEDNESS
Outstanding Direct and Overlapping Bonded Debt Type
Total
Parcels
Levied Issued Outstanding
%
Applicable
Amount
of Debt
Coast Community College District(6) GO 10 $570,000,000 $498,864,504 0.093614% $467,007
Los Alamitos School Infrastructure Financing #1(7) GO 10 101,390,124 99,790,124(8) 1.371118 1,368,240
Metropolitan Water District GO 10 850,000,000 110,420,000 0.004392 4,850
TOTAL GENERAL OBLIGATION BONDED DEBT $1,840,097
Authorized and Unissued Direct and Overlapping Indebtedness Type
Total
Parcels
Levied Authorized Unissued
%
Applicable Applicable
Coast Community College District(6) GO 10 $1,068,000,000 $498,000,001 0.093614% $466,198
Los Alamitos School Infrastructure Financing #1(7) GO 10 126,000,000 24,609,876 1.371118 $337,430
Metropolitan Water District GO 10 850,000,000 0 0.004392 $0
TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS $803,628
TOTAL OUTSTANDING AND UNISSUED GENERAL
OBLIGATION INDEBTEDNESS(5)
$2,643,725
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $10,585,097
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING INDEBTEDNESS $12,588,725
Ratios to 2015-2016 Assessed Valuation
Outstanding Land Secured Bonded Debt 12.31:1
Outstanding Direct and Overlapping Bonded Debt 10.17:1
(1) Exempt Property is not included in the assessed value of the District.
(2) Amount Issued reflects original issuance of District Special Tax Bonds, Series 2006. Outstanding Amount is equal to Initial Par Amount of 2016
Bonds. Preliminary, subject to change.
(3) Additional parity bonds may be issued for refunding purposes only. Subordinate Bonds may be issued in the future. See “SECURITY FOR THE
2016 BONDS—Issuance of Additional Bonds.”
(4) Los Alamitos CFD 90-1 levies a Special Tax overlapping the property in the District; however all CFD 90-1 Bonds have been retired early, and
there are no current 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 Federally Taxable and Federally Tax-Exempt Bonds, 2005 General Obligation Refunding Current Interest Bonds and Capital
Appreciation Bonds, Series 2006B Current Interest Bonds and Capital Appreciation Bonds, Series 2015 General Obligation Refunding, Series 2013A
Federally Tax-Exempt Bonds, Series 2013B Federally Taxable Bonds, 2013 General Obligation Refunding Series A Federally Tax-Exempt Bonds
and Series B Federally Taxable Bonds. Data sourced from Annual Disclosure Reports files with the Municipal Securities Rulemaking Board's
Electronic Municipal Market Access website.
(7) Reflects Los Alamitos Unified School District School Infrastructure Financing District #1 2015 General Obligation Refunding Bonds, 2008 Election
Series 2010B Bank Qualified, 2008 Election, Series 2010C Federally Taxable- Build America Bonds, 2008 Election, Series D Federally Taxable Direct
Pay Qualified School Construction Bonds, and 2008 Election, Series E Bonds. Data sourced from Official Statement 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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Projected Debt Service Coverage
Set forth in Table 5 below is the projected Maximum Special Tax A from the ten parcels
in the District subject to the levy of Special Tax A, assuming no delinquencies in the payment of
Special Tax A , that could be available to pay the debt service on the Bonds. Note that the debt
service due on the 2016 Bonds on September 1, 2016, will be payable from Special Taxes
included on the County Assessor’s tax roll for fiscal year 2015-16 not otherwise deposited to the
Refunding Fund to pay a portion of the costs to redeem the Prior Bonds.
Table 5
City of Seal Beach
Community Facilities District No. 2005-01
(Pacific Gateway Business Center)
Estimated Maximum Taxing Capacity
Year Ending
September 1st
Assigned
Special Taxes
Net of Admin(1)
2016 Bonds
Debt Service(2)
Estimated Maximum
Taxing
Capacity(2)(3)
2017 $651,522.82 $522,100.00 124.79%
2018 665,053.28 532,900.00 124.80
2019 678,854.34 546,150.00 124.30
2020 692,931.43 553,800.00 125.12
2021 707,290.06 571,000.00 123.87
2022 721,935.86 577,450.00 125.02
2023 736,874.58 593,450.00 124.17
2024 752,112.07 603,293.75 124.67
2025 767,654.31 617,081.25 124.40
2026 783,507.40 624,593.75 125.44
2027 799,677.54 640,943.75 124.77
2028 816,171.09 650,718.75 125.43
2029 832,994.52 664,587.50 125.34
2030 850,154.41 676,775.00 125.62
2031 867,657.49 692,837.50 125.23
2032 885,510.64 702,587.50 126.04
2033 903,720.86 719,787.50 125.55
2034 922,295.27 730,387.50 126.27
2035 941,241.18 748,781.25 125.70
2036 960,566.00 765,318.75 125.51
(1) Reflects Assigned Special Tax on Developed Property based on fiscal year 2015-16 status under the Rate and
Method less $25,000, which is the Minimum Administrative Expense Requirement that may be deposited into
the Administrative Expense Fund before Special Tax Revenues are available for prepayment of the 2016 Bonds.
Assumes 0% delinquency. The Maximum Special Tax A that can be levied on Taxable Property in the District in
any fiscal year increases by two percent (2%) over the Maximum Special Tax A for the prior fiscal year. See
“SECURITY FOR THE 2015 BONDS—Special Tax A” and “—Summary of Rate and Method.”
(2) Preliminary, subject to change.
(3) Assigned Special Taxes less Minimum Administrative Expense Requirement, divided by 2016 Bonds Debt
Service.
Source: Albert A. Webb & Associates.
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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 2016
Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the
purchase of the 2016 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 2016 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 owner of the parcels in the District is 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.
Concentration of Ownership
Three of the parcels of Taxable Property in the District are currently responsible for the
payments of approximately 45% of the annual Special Tax A levy in the District. See “THE
DISTRICT – Land Ownership.” While there has never been a delinquency in payment of the
Special Taxes levied in the District, no assurance can be given that the owners of the three
subject parcels, or any other or subsequent owner of property in the District, will continue to
timely pay Special Taxes levied in the future.
No General Obligation of the City or the District
The City’s obligations under the 2016 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 2016 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 2016 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.”
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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.”
Exempt Properties
The Act provides 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.”
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Insufficiency of Special Taxes
In order to pay debt service on the 2016 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 2016 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 2016 BONDS—Reserve Fund” and
Appendix C – “Summary of the Fiscal Agent Agreement—Reserve Fund.” Under the Fiscal
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 2016 BONDS—Summary of Rate and Method – Special Tax
Formula – Calculation of Annual Special Tax A.” 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 2016 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 2016 Bonds. See “SECURITY FOR THE 2016 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 2016 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 2016 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 2016 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
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California relating to judicial foreclosure. Legal opinions to be delivered concurrently with the
delivery of the 2016 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
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
2016 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 2016 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 2016 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.”
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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
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.
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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
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 2016 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
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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 taxes (including interest) on FDIC-owned property are secured by a
valid lien (in effect before the property 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. In addition, the FDIC
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 2016 Bonds.
No Acceleration Provision
The 2016 Bonds and the Fiscal Agent Agreement do not contain a provision allowing for
the acceleration of the 2016 Bonds in the event of a payment default or other default under the
terms of the 2016 Bonds or the Fiscal Agent Agreement or in the event interest on the 2016
Bonds becomes included in gross income for federal income tax purposes.
Taxability Risk
As discussed herein under the caption “TAX MATTERS,” interest on the 2016 Bonds
could become includable in gross income for purposes of federal income taxation retroactive to
the date the 2016 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 2016
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 2016 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 2016 Bonds. Prospective purchasers of the 2016 Bonds should consult their
own tax advisors regarding any pending or proposed federal tax legislation. The City can
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provide no assurance that federal tax law will not change while the 2016 Bonds are outstanding
or that any such changes will not adversely affect the exclusion of interest on the 2016 Bonds
from gross income for federal income tax purposes. If the exclusion of interest on the 2016
Bonds from gross income for federal income tax purposes were amended or eliminated, it is
likely that the market price for the 2016 Bonds would be adversely impacted.
Enforceability of Remedies
The remedies available to the Fiscal Agent and the registered owners of the 2016 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 2016 Bonds will be qualified to
the extent that the enforceability of the legal documents with respect to the 2016 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 2016 Bonds. There
can be no assurance that any secondary market will develop for the 2016 Bonds. Investors
should understand the long-term and economic aspects of an investment in the 2016 Bonds and
should assume that they will have to bear the economic risks of their investment to maturity.
An investment in the 2016 Bonds may be unsuitable for any investor not able to hold the 2016
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 2016 Bonds as described below.
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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
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 2016 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 2016 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 2016 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 2016 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
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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 2016
Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the
market value of the 2016 Bonds might be affected as a result of such an audit of the 2016 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
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 under
the provisions of the Act. While the CCFD is comprised of all of the real property in the entire
City, the special tax was to be levied only on 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 time 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. 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 2016
Bonds and the Fiscal Agent Agreement be filed within 60 days of the date the Fiscal Agent
Agreement and the 2016 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 2006; and the 2016 Bonds were authorized to be issued and
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the Fiscal Agent Agreement and the 2016 Bonds were approved by a Resolution adopted by the
City Council, as the legislative body of the District, on December 14, 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 2016 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
2016 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 2016 Bonds to be excludable from gross income for federal income tax purposes. Failure to
comply with certain of such covenants could cause interest on the 2016 Bonds to become
includable in gross income for federal income tax purposes retroactively to the date of issuance
of the 2016 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 2016 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 2016 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 2016 Bonds.
Ownership of the 2016 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 2016 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 2016 Bonds is the price at
which a substantial amount of such maturity of the 2016 Bonds is first sold to the public. The
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Issue Price of a maturity of the 2016 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 2016 Bonds is less than the principal amount
payable at maturity, the difference between the Issue Price of each such maturity, if any, of the
2016 Bonds (the “OID 2016 Bonds”) and the principal amount payable at maturity is original
issue discount.
For an investor who purchases an OID in the initial public offering at the Issue Price for
such maturity and who holds such OID 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 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 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 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 2016 Bonds
should consult their own tax advisors with respect to the state and local tax consequences of
original issue discount on such OID 2016 Bonds.
Owners of 2016 Bonds who dispose of 2016 Bonds prior to the stated maturity (whether
by sale, redemption or otherwise), purchase 2016 Bonds in the initial public offering, but at a
price different from the Issue Price or purchase 2016 Bonds subsequent to the initial public
offering should consult their own tax advisors.
If a is purchased at any time for a price that is less than the ’s stated redemption price at
maturity or, in the case of an OID , 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 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 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 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 . Purchasers should consult their own tax advisors regarding
the potential implications of market discount with respect to the 2016 Bonds.
An investor may purchase a 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 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 . Investors who purchase a at a premium should consult their own tax
advisors regarding the amortization of bond premium and its effect on the ’s basis for purposes
of computing gain or loss in connection with the sale, exchange, redemption or early retirement
of the .
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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 2016 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 2016 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
2016 Bonds. If an audit is commenced, under current procedures the Service may treat the City
as a taxpayer and the holders may have no right to participate in such procedure. The
commencement of an audit could adversely affect the market value and liquidity of the 2016
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 2016 Bonds, are in certain cases required to be reported to the Service.
Additionally, backup withholding may apply to any such payments to any 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 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 2016 Bonds is exempt from
California personal income taxes.
Ownership of the 2016 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 2016 Bonds. Prospective purchasers of the 2016 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 2016 Bonds is set forth in Appendix D.
LEGAL MATTERS
Concurrent with the issuance of the 2016 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 2016 Bonds will be passed
upon for the City and the District by Richards, Watson & Gershon, A Professional Corporation,
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 2016 Bonds.
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MUNICIPAL ADVISOR
The City has retained Fieldman, Rolapp & Associates, Irvine, California, as Municipal
Advisor in connection with the issuance of the 2016 Bonds. The Municipal Advisor is not
obligated to undertake, and has not undertaken to make, an independent verification or assume
responsibility for the accuracy, completeness or fairness of the information contained in this
Official Statement. The Municipal Advisor is an independent financial advisory firm and is not
engaged in the business of underwriting, trading or distributing municipal securities or other
public securities. Compensation paid to the Municipal Advisor is contingent upon the
successful issuance of the 2016 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 2016 Bonds.
NO LITIGATION
The City is not aware of any pending or threatened litigation challenging the validity of
the 2016 Bonds, the Special Taxes securing the 2016 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 2016 Bonds.
UNDERWRITING
The 2016 Bonds are being purchased through negotiation by Stifel, Nicolaus &
Company, Incorporated (the “Underwriter”). The Underwriter agreed to purchase the 2016
Bonds at a price of $___________ (which is equal to the par amount of the 2016 Bonds, plus/less
net original issue premium/discount of $__________ 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 2016 Bonds to certain
dealers and others at prices lower than the public offering prices set forth on the inside cover
page hereof.
FINANCIAL INTERESTS
The fees being paid to the Underwriter, the Municipal Advisor, and Bond Counsel and
Disclosure Counsel are contingent upon the issuance and delivery of the 2016 Bonds. From
time to time, Bond Counsel and Disclosure Counsel represents the Underwriter on matters
unrelated to the 2016 Bonds.
CONTINUING DISCLOSURE
The City has covenanted in a Continuing Disclosure Agreement for the benefit of the
Owners of the 2016 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
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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 2016 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 recommending the purchase or sale of the 2016 Bonds. Therefore, a
failure by the City to comply with the provisions of the Continuing Disclosure Agreement may
adversely affect the marketability of the 2016 Bonds on the secondary market.
Before the date of this Official Statement, the City requested that Willdan Financial
Services conduct an examination (the “Examination”) of the filings during the five year period
ending May 15, 2015 by the City and the former Redevelopment Agency of the City of Seal
Beach (as succeeded by the Successor Agency to the Seal Beach Redevelopment Agency)
required under their continuing disclosure undertakings with respect to the Rule in connection
with various bond issues, including those related to the Prior Bonds. The Examination found
that three notices (a notice of rating change and notices of defeasance and termination of
reporting termination) relating to certain Certificates of Participation executed and delivered on
behalf of the Seal Beach Public Financing Authority in 2000 were filed late. The Examination
also found that two required notices of rating changes (relating to rating upgrades) had not
been filed as of May 15, 2015. Supplemental filings regarding those rating upgrades have been
made by the City. Except as noted above, the Examination found that the City, the former
Redevelopment Agency and the Successor Agency materially complied with their relevant
continuing disclosure undertakings during the five years preceding November 1, 2015.
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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 2016 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.
2005-01 (PACIFIC GATEWAY BUSINESS
CENTER)
By:
City Manager
A-1
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 2016 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 Beach 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
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over 3 million. It represents the third most populous county in the state, and ranks sixth in the
nation.
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
2011 24,212 3,028,846
2012 24,371 3,057,875
2013 24,514 3,085,269
2014 24,591 3,113,991
2015 24,684 3,147,655
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2011-2015,
with 2010 Census Benchmark.
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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(1)
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.
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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 (1)
2010 Orange County 1,592,500 1,441,500 151,000 9.5%
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 8.8%
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(2) 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-6
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)
2010 2011 2012 2013 2014
Permit Valuation:
New Single-family $ 1,259 $ 5,688 $ 3,250 $ 1,868 $ 3,790
New Multi-family - - - 158 -
Res. Alterations/Additions 9,087 10,085 4,866 9,065 11,698
Total Residential $10,347 $15,773 $ 8,116 $11,092 $15,488
Total Nonresidential $32,750 $ 5,124 $ 6,831 $23,189 $13,476
Total All Building $43,098 $20,898 $14,948 $34,281 $28,965
New Dwelling Units:
Single Family 4 5 7 4 6
Multiple Family - - - 2 -
Total 4 5 7 6 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)
2010 2011 2012 2013 2014
Permit Valuation:
New Single-family $ 492,529 $ 518,681 $ 752,931 $1,237,994 $1,234,498
New Multi-family 208,046 378,599 438,118 994,873 985,454
Res. Alterations/Additions 328,830 450,105 363,854 363,674 413,518
Total Residential $1,029,406 $1,347,386 $1,554,904 $2,596,542 $2,633,471
Total Nonresidential $1,151,928 $1,188,199 $1,271,034 $4,208,209 $2,000,167
Total All Building $2,181,334 $2,535,586 $2,825,938 $6,804,752 $4,633,639
New Dwelling Units:
Single Family 1,553 1,908 2,438 3,889 3,646
Multiple Family 1,538 2,897 3,725 6,564 6,990
Total 3,091 4,805 6,163 10,413 10,636
Source: Construction Industry Research Board: “Building Permit Summary.”
Note: Totals may not add due to independent rounding.
A-7
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(2)
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.
A-8
ORANGE COUNTY
Taxable Sales, 2009-2013
(Dollars in thousands)
2009 2010 2011 2012 2013(2)
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 $38,372,456 $40,025,929
All Other Outlets 14,550,164 15,115,073 16,143,344 16,858,156 17,565,288
Totals All Outlets(1) $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-9
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
Year
Area
Total Effective Buying
Income (000’s Omitted)
Median Household
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 6,737,867,730 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 6,982,757,379 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.
B-1
APPENDIX B
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF SEAL BEACH
COMMUNITY FACILITIES DISTRICT NO. 2005-01
(PACIFIC GATEWAY BUSINESS CENTER)
A Special Tax as hereinafter defined shall be levied on all Assessor’s Parcels in City of Seal
Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) (“CFD No.
2005-01 “) and collected each Fiscal Year commencing in Fiscal Year 2006-2007, in an amount
determined by the Council through the application of the appropriate Special Tax for
“Developed Property,” “Property Owner Association Property,” “Public Property,” and
“Undeveloped Property” as described below. All of the real property in CFD No. 2005-01,
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. 2005-01: 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. 2005-01 or any designee thereof of
complying with arbitrage rebate requirements; the costs to the City, CFD No. 2005-01 or
any designee thereof of complying with City, CFD No. 2005-01 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. 2005-01 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. 2005-01 for any other
administrative purposes of CFD No. 2005-01, 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 on an Assessor’s Parcel Map with an
assigned Assessor’s Parcel number.
B-2
“Assessor’s Parcel Map” means an official map of the Assessor of the County
designating parcels by Assessor’s Parcel number.
“Assigned Special Tax A” means the Special Tax A for each Land Use Class of
Developed Property, as determined in accordance with Section C.1 below.
“Backup Special Tax A” means the Special Tax A applicable to each Assessor’s Parcel of
Developed Property, as determined in accordance with Section C.1 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 CFD No. 2005-01 under the Act.
“CFD Administrator” means an official of the City, or designee thereof, responsible for
determining the Special Tax Requirement for Facilities and the Special Tax Requirement
for Services, and providing for the levy and collection of the Special Taxes.
“CFD No. 2005-01” means City of Seal Beach Community Facilities District No. 2005-01
(Pacific Gateway Business Center).
“City” means the City of Seal Beach.
“Council” means the City Council of the City, acting as the legislative body of CFD No.
2005-01.
“County” means the County of Orange.
“Developed Property” means, for each Fiscal Year, all Taxable Property, exclusive of
Property Owner Association Property, or Public Property, for which a building permit
for new construction was issued after January 1, 2005 and as of March I of the previous
Fiscal Year.
“Fiscal Year” means the period starting July I 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.
“Maximum Special Tax” means the Maximum Special Tax A and/or Maximum Special
Tax B, as applicable.
“Maximum Special Tax A” means the Maximum Special Tax A, determined in
accordance with Section C.1 below, that can be levied in any Fiscal Year on any
Assessor’s Parcel.
“Maximum Special Tax B” means the Maximum Special Tax B, determined in
accordance with Section C.2 below, that can be levied in any Fiscal Year on any
Assessor’s Parcel.
“Outstanding Bonds” means all Bonds which are deemed to be outstanding under the
Indenture.
“Property Owner Association Property” means, for each Fiscal Year, any Assessor’s
Parcel within the boundaries of CFD No. 2005-01 that was owned by or irrevocably
B-3
offered for dedication to a property owner association, including any master or sub-
association, as of January 1 of the previous Fiscal Year.
“Proportionately” means for Developed Property that the ratio of the actual Special Tax
A levy to the Assigned Special Tax A is equal for all Assessor’s Parcels of Developed
Property and that the ratio of the actual Special Tax B levy to the Maximum Special Tax
B is equal for all Assessor’s Parcels of Developed Property. For Undeveloped Property,
“Proportionately” means that the ratio of the actual Special Tax A levy per Acre to the
Maximum Special Tax A per Acre is equal for all Assessor’s Parcels of Undeveloped
Property and that ratio of the actual Special Tax B levy per Acre to the Maximum Special
Tax B per Acre is equal for all Assessor’s Parcels of Undeveloped Property. For Public
Property and Property Owner Association Property,
“Proportionately” means that the ratio of the actual Special Tax A levy per Acre to the
Maximum Special Tax A per Acre is equal for all Assessor’s Parcels of Public Property
and Property Owner Association Property, as applicable.
“Public Property” means, for each Fiscal Year, any property within CFD No. 2005-01
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.
“Special Tax” means the Special Tax A and/or Special Tax B, as applicable.
“Special Tax A” means the special tax to be levied in each Fiscal Year on each Assessor’s
Parcel of Developed Property, Undeveloped Property, Property Owner Association
Property, and Public Property to fund the Special Tax Requirement for Facilities.
“Special Tax B” means the annual special tax to be levied in each Fiscal Year on each
Assessor’s Parcel of Developed Property to fund the Special Tax Requirement for
Services.
“Special Tax Requirement for Facilities” means that amount required in any Fiscal Year
for CFD No. 2005-01 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 a portion of the Administrative Expenses as
determined by the CFD Administrator; (iv) pay any amounts required to establish or
replenish any reserve funds for all Outstanding Bonds; and (v) pay for reasonably
anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes
levied in the previous Fiscal Year; less (vi) a credit for funds available to reduce the
annual Special Tax A levy, as determined by the CFD Administrator pursuant to the
Indenture.
“Special Tax Requirement for Services” means that amount required in any Fiscal Year
for CFD No. 2005-01 to: (i) pay directly for maintenance of parks, parkways, and open
space benefiting property within CFD No. 2005-01; (ii) pay a portion of the
Administrative Expenses as determined by the CFD Administrator; less (iii) a credit for
B-4
funds available to reduce the annual Special Tax B levy, as determined by the CFD
Administrator.
“State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD
No. 2005-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
“Trustee” means the trustee or fiscal agent under the Indenture.
“Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified
as Developed Property, Property Owner Association Property, or Public Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within CFD No. 2005-01 shall be classified as
Developed Property, Property Owner Association Property, Public 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 RA TE
1. Special Tax A
a. Developed Property
(1) Maximum Special Tax A
The Maximum Special Tax A 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 A or (ii) the
amount derived by application of the Backup Special Tax A.
(2) Assigned Special Tax A
The Fiscal Year 2006-2007 Assigned Special Tax A shall equal
$12,352.20 per Acre.
(3) Backup Special Tax A
The Fiscal Year 2006-2007 Backup Special Tax A shall equal
$14,997.06 per Acre.
(4) Increase in the Assigned Special Tax A and Backup Special Tax A
On each July 1, commencing on July 1, 2007, the Assigned Special
Tax A and the Backup Special Tax A shall be increased by an
amount equal to two percent (2%) of the amount in effect for the
previous Fiscal Year.
B-5
b. Undeveloped Property, Property Owner Association Property, and Public
Property
(1) Maximum Special Tax A
The Fiscal Year 2006-2007 Maximum Special Tax A for
Undeveloped Property, Property Owner Association Property,
and Public Property shall equal $15,189.84 per Acre.
(2) Increase in the Maximum Special Tax A
On each July 1, commencing on July 1, 2007, the Maximum Special
Tax A for Undeveloped Property, Property Owner Association
Property, and Public Property shall be increased by an amount
equal to two percent (2%) of the amount in effect for the previous
Fiscal Year.
2. Special Tax B
a. Developed Property
(1) Maximum Special Tax B
The Fiscal Year 2006-2007 Maximum Special Tax B shall equal
$2,369.46 per Acre.
(2) Increase in the Maximum Special Tax B
On each July 1, commencing on July 1, 2007, the Maximum Special
Tax B for Developed Property shall be increased by an amount
equal to two percent (2%) of the amount in effect for the previous
Fiscal Year.
b. Undeveloped Property
(1) Maximum Special Tax B
The Fiscal Year 2006-2007 Maximum Special Tax B shall equal
$2,369.46 per Acre.
(2) Increase in the Maximum Special Tax B
On each July 1, commencing on July 1, 2007, the Maximum Special
Tax B for Undeveloped Property shall be increased by an amount
equal to two percent (2%) of the amount in effect for the previous
Fiscal Year.
c. Property Owner Association Property and Public Property
No Special Tax B shall be levied on an Assessor’s Parcel classified as
Property Owner Association Property or Public Property.
B-6
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax A
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the Council
shall determine the Special Tax Requirement for Facilities and shall levy the Special Tax
A as follows:
First: The Special Tax A shall be Proportionately levied on each Assessor’s Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax A as needed to
satisfy the Special Tax Requirement for Facilities;
Second: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first step has been completed, the Special Tax A shall be levied
Proportionately on each Assessor’s Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax A for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax A Requirement for
Facilities after the first two steps have been completed, then the levy of the Special Tax A
on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is
determined through the application of the Backup Special Tax A shall be increased in
equal percentages from the Assigned Special Tax A up to the Maximum Special Tax A
for each such Assessor’s Parcel;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first three steps have been completed, then the Special Tax A shall be
levied Proportionately on each Assessor’s Parcel of Property Owner Association
Property and Public Property at up to the Maximum Special Tax A for Property Owner
Association Property or Public Property.
2. Special Tax B
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the Council
shall determine the Special Tax Requirement for Services and shall levy the Special Tax
B as follows:
First: The Special Tax B shall be Proportionately levied on each Assessor’s Parcel of
Developed Property at up to 100% of the applicable Maximum Special Tax B as needed
to satisfy the Special Tax Requirement for Services;
Second: If additional monies are needed to satisfy the Special Tax Requirement for
Services after the first step has been completed, the Special Tax B shall be levied
Proportionately on each Assessor’s Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax B for Undeveloped Property.
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 CFD No. 2005- 01.
B-7
E. EXEMPTIONS
1. Special Tax A
Public Property and Property Owner Association Property are not exempt from
the Special Tax.
2. Special Tax B
No Special Tax B shall be levied on Public Property and 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 City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) December 6, 2005 Page
7 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.
G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary
ad valorem property taxes; provided, however, that CFD No. 2005-01 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 A
The following definition applies to this Section H:
“CFD Public Facilities Cost” means either $7.7 million in 2005 dollars, which shall
increase by the Construction Inflation Index on July 1, 2006, 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. 2005-01 under the
authorized bonding program for CFD No. 2005-01, 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.
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“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. 2005-01
prior to the date of prepayment. City of Seal Beach
1. Prepayment in Full
The obligation of an Assessor’s Parcel to pay the Special Tax A may be prepaid and
permanently satisfied as described herein; provided that a prepayment may be made
only for Assessor’s Parcels for which there are no delinquent Special Taxes with respect
to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel
intending to prepay the Special Tax A obligation shall provide the CFD Administrator
with written notice of intent to prepay. Within 30 days of receipt of such written notice,
the CFD Administrator shall notify such owner of the prepayment amount 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:
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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 Maximum Special
Tax A for the Assessor’s Parcel to be prepaid. For all other Assessor’s Parcels,
compute the Maximum Special Tax A for that Assessor’s Parcel as though it was
designated as Developed Property.
3. Divide the Maximum Special Tax A computed pursuant to paragraph 2 by the
total estimated Maximum Special Tax A for the entire CFD No. 2005-01 based on
the Developed Property Special Tax A which could be charged in the current
Fiscal Year on all expected development through buildout of CFD No. 2005-01,
excluding any Assessor’s Parcels which have been prepaid.
4. Multiply the quotient computed pursuant to paragraph 3 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”).
6. Compute the current Future Facilities Costs.
7. Multiply the quotient computed pursuant to paragraph 3 by the amount
determined pursuant to paragraph 6 to compute the amount of Future Facilities
Costs to be prepaid (the “Future Facilities Amount”).
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 Tax A 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. 2005-01, 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. The reserve fund credit (“Reserve Fund Credit”) shall equal the lesser of: (a) the
expected reduction in the reserve requirement (as defined in the Indenture), if
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any, associated with the redemption of Outstanding Bonds as a result of the
prepayment, or (b) the amount derived by subtracting the new reserve
requirement (as defined in the Indenture) in effect after the redemption of
Outstanding Bonds as a result of the prepayment from the balance in the reserve
fund on the prepayment date, but in no event shall such amount be less than
zero.
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 quotient computed pursuant to paragraph 3 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 A prepayment is equal to the sum of the amounts computed
pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to
paragraphs 13 and 14 (the “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. 2005-01.
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 A levy as determined
under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal
Year’s Special Tax A levy for such Assessor’s Parcel from the County tax rolls. With
respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice
to be recorded in compliance with the Act, to indicate the prepayment of Special Tax A
and the release of the Special Tax A lien on such Assessor’s Parcel, and the obligation of
such Assessor’s Parcel to pay the Special Tax A shall cease.
Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless
the amount of Maximum Special Tax A that may be levied on Taxable Property within
CFD No. 2005-01 both prior to and after the proposed prepayment is at least 1.1 times
the maximum annual debt service on all Outstanding Bonds.
The Special Tax B may not be prepaid.
2. Prepayment in Part
The Special Tax A on an Assessor’s Parcel 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 -A) x F +A
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These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1s
F = the percentage by which the owner of the Assessor’s Parcel(s) is
partially prepaying the Special Tax A
A = the Administration Fees and Expenses from Section H.1
The owner of any Assessor’s Parcel who desires such prepayment shall notify the
CFD Administrator of such owner’s intent to partially prepay the Special Tax A
and the percentage by which the Special Tax A shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount required
for the partial prepayment of the Special Tax A for an Assessor’s Parcel within
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. 2005-01 that there has been a partial
prepayment of the Special Tax A and that a portion of the Special Tax A with
respect to such Assessor’s Parcel, equal to the outstanding percentage (1.00 - F) of
the remaining Maximum Special Tax A, shall continue to be levied on such
Assessor’s Parcel pursuant to Section D.
I. TERM OF SPECIAL TAX
The Special Tax A shall be levied for the period necessary to fully satisfy the Special Tax
Requirement for Facilities, but in no event shall it be levied after Fiscal Year 2046-47. The
Special Tax B shall be levied as long as necessary to meet the Special Tax Requirement
for Services.
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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.
[insert Summary here]
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
January __, 2016
City Council
City of Seal Beach
211 Eighth Street
Seal Beach, California 90740
OPINION: $__________ City of Seal Beach Community Facilities District No. 2005-01
(Pacific Gateway Business Center) 2016 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. 2005-01 (Pacific Gateway Business Center) (the “District”), of its
$__________ City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway
Business Center) 2016 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 January 1, 2016 (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 December 14, 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.
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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,
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APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”), dated
as of January 1, 2016, is by and between WILLDAN FINANCIAL SERVICES, as dissemination
agent (the “Dissemination Agent”), and the CITY OF SEAL BEACH, CALIFORNIA, a
municipal corporation and political subdivision of the State of California (the “City”).
RECIT ALS:
WHEREAS, the City has issued, for and on behalf of the City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) (the “District”), its City of Seal
Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center), 2016
Special Tax Refunding Bonds (the “Bonds”) in the initial principal amount of $__________; and
WHEREAS, the Bonds have been issued pursuant to a Fiscal Agent Agreement, dated as
of January 1, 2016 (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 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 underwriter of the Bonds in complying with S.E.C. Rule 15c2-12(b)(5).
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and mutual covenants
herein contained, and for other consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. 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 used 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” means any Annual Report provided by the City pursuant to,
and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person who (a) has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond
(including persons holding any Bonds through nominees, depositories or other
intermediaries), or (b) is treated as the owner of any Bond for federal income tax
purposes.
“Disclosure Representative” means the Director of Finance/City Treasurer, or such
person’s designee, or such other officer or employee of the City as the City shall
designate as the Disclosure Representative hereunder in writing to the Dissemination
Agent from time to time.
“Dissemination Agent” means Willdan Financial Services, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in
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writing by the City and which has filed with the City a written acceptance of such
designation.
“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 January __, 2016, 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
E-3
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
Section 3, the City shall send a notice in a timely manner 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 in a timely manner to EMMA in
substantially the form attached hereto as Exhibit A in a timely manner.
(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
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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.
(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
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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
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).
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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
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,
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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.
If this Disclosure Agreement is amended or any provision of this Disclosure Agreement
is waived, the City shall describe such amendment or waiver in the next following Annual
Report and shall include, as applicable, a narrative explanation of the reason for the amendment
or waiver and its impact on the type (or in the case of a change of accounting principles, on the
presentation) of financial information or operating data being presented by the 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:
Ellery A Deaton,
Mayor
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.
2005-01 (Pacific Gateway Business Center), 2016 Special Tax
Refunding Bonds
Date of Issuance: January __, 2016
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 January 1, 2016, 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 2016 Bonds or (b) certificates
representing ownership interest in or other confirmation of ownership interest in the 2016 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 2016 Bonds, payment of principal, interest and other payments on the 2016
Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership
interest in the 2016 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 2016 Bonds (the “Issuer”) nor the fiscal agent or paying
agent appointed with respect to the 2016 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 2016
Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in
the 2016 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the
registered owner of the 2016 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 2016 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
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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-3
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.
Quint & Thimmig LLP 10/23/15
19040.03:J13579
CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”), dated
as of January 1, 2016, is by and between WILLDAN FINANCIAL SERVICES, as dissemination
agent (the “Dissemination Agent”), and the CITY OF SEAL BEACH, CALIFORNIA, a municipal
corporation and political subdivision of the State of California (the “City”).
RECIT ALS:
WHEREAS, the City has issued, for and on behalf of the City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) (the “District”), its City of Seal
Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center), 2016 Special
Tax Refunding Bonds (the “Bonds”) in the initial principal amount of $__________; and
WHEREAS, the Bonds have been issued pursuant to a Fiscal Agent Agreement, dated as
of January 1, 2016 (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 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 underwriter of the Bonds in complying with S.E.C. Rule 15c2-12(b)(5).
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and mutual covenants
herein contained, and for other consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. 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 used 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” means any Annual Report provided by the City pursuant to, and
as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person who (a) has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond
(including persons holding any Bonds through nominees, depositories or other
intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.
“Disclosure Representative” means the Director of Finance/City Treasurer, or such
person’s designee, or such other officer or employee of the City as the City shall designate
as the Disclosure Representative hereunder in writing to the Dissemination Agent from
time to time.
“Dissemination Agent” means Willdan Financial Services, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in
writing by the City and which has filed with the City a written acceptance of such
designation.
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“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 January __, 2016, 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.
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(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
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 in a timely manner.
(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.
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(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.
(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
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officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or business of the obligated
person, or if such jurisdiction has been assumed by leaving the existing governmental
body and officials or officers in possession but subject to the supervision and orders of a
court or governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the obligated
person.
(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.
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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
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
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owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially
impair the interests of the Bond owners or Beneficial Owners.
If this Disclosure Agreement is amended or any provision of this Disclosure Agreement
is waived, the City shall describe such amendment or waiver in the next following Annual Report
and shall include, as applicable, a narrative explanation of the reason for the amendment or
waiver and its impact on the type (or in the case of a change of accounting principles, on the
presentation) of financial information or operating data being presented by the 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:
Ellery A Deaton,
Mayor
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
By:
Its:
19040.03:J13579
A-1
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. 2005-
01 (Pacific Gateway Business Center), 2016 Special Tax Bonds
Date of Issuance: January __, 2016
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 January 1, 2016, 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
S7296-0001\1898369v1.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
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This Financial Advisor Services Agreement (the “Agreement”) is made as of the ___ day of _________, 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.
2005-01 (Pacific Gateway Business Center) (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 CFD (the “Bonds”) for the purpose of refunding and defeasing the outstanding City of Seal Beach Community
Facilities District No. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds,
Series 2006 (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
By: _________________________
Ellery A. Deaton, Mayor
Attest:
By: _________________________
Robin Roberts, City Clerk
Approved as to Form:
By: _________________________
Craig A. Steele, City Attorney
CONSULTANT
By: _________________________
Name: _________________________
Its: _________________________
By: _________________________
Name: _________________________
Its: _________________________
Exhibit A-1
S7296-0001\1898369v1.doc
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-2
S7296-0001\1898369v1.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-3
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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-4
S7296-0001\1898369v1.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-5
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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 B -1
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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 Hourly 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 -2
S7296-0001\1898369v1.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.
S7296-0001\1898346v1.doc
BOND COUNSEL AND DISCLOSURE COUNSEL
SERVICES AGREEMENT
between the
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
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This Bond Counsel and Disclosure Counsel Services Agreement (the "Agreement”) is made as of the ____ day of _________, 2015 (the “Effective Date”), by
and between Quint & Thimmig LLP (“Attorneys”), a California limited liability partnership,
and the City of Seal Beach (the “City”), a California charter city (the “Parties”).
RECITALS
A. The City has formed the City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) (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. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds, Series 2006 (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. The City understands and acknowledges that, in performing the Services
pursuant to this Agreement, 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 $45,000, 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
By: _________________________
Ellery A. Deaton, Mayor
Attest:
By: _________________________
Robin Roberts, City Clerk
Approved as to Form:
By: _________________________
Craig A. Steele, City Attorney
QUINT & THIMMIG, LLP
By: _________________________
Paul J. Thimmig,
Partner
Exhibit A-1
S7296-0001\1898346v1.doc
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-2
S7296-0001\1898346v1.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-3
S7296-0001\1898346v1.doc
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:
S7296-0001\1898366v1.doc
SPECIAL TAX CONSULTANT SERVICES AGREEMENT
between
City of Seal Beach
211 - 8th Street
Seal Beach, CA 90740
&
Albert A. Webb Associates
3788 McCray Street
Riverside, California 92506
Page 1 S7296-0001\1898366v1.doc
This Special Tax Consultant Services Agreement (the “Agreement”) is made as of the ___ day of ____________, 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.
2005-01 (Pacific Gateway Business Center) (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 CFD (the “Bonds”) for the
purpose of refunding and defeasing the outstanding City of Seal Beach Community Facilities District No. 2005-01 (Pacific Gateway Business Center) Special Tax Bonds,
Series 2006 (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.
Page 2 S7296-0001\1898366v1.doc
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.
Page 3 S7296-0001\1898366v1.doc
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.
Page 4 S7296-0001\1898366v1.doc
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
Page 5 S7296-0001\1898366v1.doc
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.
Page 6 S7296-0001\1898366v1.doc
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.
Page 7 S7296-0001\1898366v1.doc
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.
Page 8 S7296-0001\1898366v1.doc
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
By: _________________________
Ellery A. Deaton, Mayor
Attest:
By: _________________________
Robin Roberts, City Clerk
Approved as to Form:
By: _________________________
Craig A. Steele, City Attorney
CONSULTANT
By: _________________________
Name: _________________________
Its: _________________________
By: _________________________
Name: _________________________
Its: _________________________
S7296-0001\1898366v1.doc
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:
o Value-to-lien computations,
o Overlapping debt table,
o Maximum special tax coverage,
o 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.