AGR-6997 - ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY (OCPFFA) - CONTRACT OF PURCHASE - $29,930,000 LEASE REVENUE BONDS SERIES 2020A - JULY 16, 2020Transcript Index
with reference to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 2020A
(Closing documents dated July 16, 2020, unless otherwise indicated.)
Authorizing and Basic Documents
1. Certificate of the Secretary of the Orange City Public Facilities Financing Authority (the
"Authority"), with attachments :
A. Resolution No. PFFA-002, adopted on June 9,2020,
B. Joint Exercise of Powers Agreement, dated as of March 19,2020, and Notice of a
Joint Powers Agreement, filed with the Secretary of State on May 1I,2020.
2. Resolution No. 11246, adopted on June 9, 2020, by the City Council of the City of
Orange, with a Certificate of the City Clerk of the City.
3. Indenture, dated as of July I,2020, by and between the Authority and U.S. Bank National
Association, as trustee (the "Trustee").
4. (Recorded) Lease Agreement, dated as of July l, 2020, by and between the City, as
lessor, and the Authority, as lessee.
5. (Recorded) Sublease, dated as of July 1,2020, by and between the Authority, as lessor,
and the City, as lessee.
6. (Recorded) Assignment Agreement, dated as of July l, 2020, by and between the
Authority and the Trustee.
7. Preliminary Official Statement, dated June 22, 2020, together with Certificates as to
Finality of Preliminary Official Statement.
8. Contract of Purchase, dated June 30, 2020, by and among the Authority, the City and
Raymond James & Associates, Inc., as the underwriter.
9. Official Statement, dated June 30, 2020.
10. Continuing Disclosure Agreement, dated July 1, 2020, by and between the City and
Urban Futures, Inc., as Dissemination Agent.
11. Certificate of Compliance Regarding Certain Tax Matters, with attachments:
I 128 l -0009\241 8204v6.doc
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B. Certificate of Assistant Public Works Director/City Engineer Regarding Average
Economic Life of Projects,
C. IRS Form 8038-G,
D. Certificate of the Underwriter,
E. Underwriter's Schedules,
F. Post Issuance Compliance Procedures.
12. Specimen Bonds, as certified by the Authority.
Other Authority Documents
13. Signature, Execution and Incumbency Certificate of the Authority.
14. Closing Certificate of the Authority.
15. Written Request of the Authority (to U.S. Bank National Association, as Trustee).
16. Requisition No. I (Costs of Issuance Fund).
Other City Documents
17. Signature, Execution and Incumbency Certificate of the City.
18. Closing Certificate of the City.
Other Municipal Advisor and Dissemination Document
19. Certificate of Urban Futures, Inc., as Municipal Advisor and Dissemination Agent.
Other Underwriter Document
20. Receipt for Bonds.
Other Trustee Documents
21. Receipt for Purchase Price.
22. Certificate of Trustee.
23. Authorized Signer(s) Certificate of Trustee, with excerpt of Bylaws.
Legal Opinions
24. Opinion of Bond Counsel.
I 128 l -0009\24 I 8204v6.doc
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25. Reliance Letter addressed to the Trustee.
26. Supplemental Opinion of Bond Counsel to Underwriter.
27. Opinion of Disclosure Counsel.
28. Opinion of Counsel to Underwriter.
29. Opinion of Counsel to Trustee.
30. Opinion of Authority Counsel.
31. Opinion of City Attorney.
Miscellaneous
32. Underwriter's Closing Memorandum (wiring instructions).
33. (Copy) Title Insurance Policy (original on file with Trustee).
34. Evidence of Compliance with Insurance Provisions of Section 8 of the Sublease.
35. Blanket Letter of Representations.
36. Evidence of Rating.
37. Acknowledgment of Report of Proposed Debt Issuance.
38. Report of Final Sale.
39. Notice of Public Hearing (including evidence of publication)
40. Appraisals of Leased Properties (Date of Value: May 20,2020), prepared by Hennessey
Group.
A. Water Street Fire Station Site
B. City Hall Site
C. Grijalva Park Site
41. Working Group List.
I 128 l -0009\24 I 8204v6.doc
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CERTIFICATE OF SECRETARY OF
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
with reference to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 2020A
July 16,2020
The undersigned hereby states and certifies as follows:
(a) The undersigned is the duly qualified and acting Secretary of the Orange City
Public Facilities Financing Authority (the "Authority"), a joint powers agency duly organized
and existing under and by virtue of the laws of the State of California and, as such, is familiar
with the facts herein and is authorized to certify the same.
(b) Attached hereto as Exhibit A is a true, correct and complete copy of Resolution
No. OCPFFA-O02, entitled ooA Resolution of the Board of Directors of the Orange City Public
Facilities Financing Authority Authorizing the Issuance, Sale and Delivery of Lease Revenue
Bonds and the Execution and Delivery of Documents Relating to such Bonds and Taking Related
Actions," which was adopted at a duly held meeting of the goveming board of the Authority on
June 9, 2020 (the "Authority Bond Resolution"). The Authority Bond Resolution has not been
amended, modified, supplemented, rescinded or repealed and remains in full force and effect as
ofthe date hereof.
(c) Attached hereto as Exhibit B is a true, correct and complete copy of the Joint
Exercise of Powers Agreement, dated as of March 19, 2020 (the "JPA Agreement"), by and
between the City of Orange and California Statewide Communities Development Authority
pursuant to which the Authority was created and a true and correct copy of the Notice of Joint
Powers Agreement relating to the JPA Agreement, which was duly filed with the California
Secretary of State on May II,2020. The JPA Agreement has not been amended, modified,
supplemented, rescinded or repealed and remains in full force and effect as of the date hereof.
I l28l-0009\2418204v5.doc
(Certificate of Secretary of Financing Authority)
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the date f,rrst
written above.
Pamela Coleman, CMC
Secretary of
Orange City Public Facilities Financing Authority
I 128 1-0009U418204
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RESOLUTION NO. PFFA.OO2
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE ORANGE CITY PTIBLIC FACILITIES
FINANCING AUTHORITY AUTIIORIZING THE
ISSUANCE, SALE AI\D DELIVERY OF' LEASE
REVENTJE BONDS AI\ID TIIE EXECUTION AIID
DELTVERY OF DOCUMENTS RELATING TO SUCH
BOFTDS AI{D TAICNG RELATED ACTIONS.
WIDREAS, the Orange City Public Facilities Financing Authority (the "Authority') is a
joint powers authority duiy organized and existing under and pursuant to Articles I tbrough 4
(commencing with Section 6500), Chapter 5, Division 7, Title I of the California Govemment
Code (the "Acf) and that certain Joint Exercise of Powers Agreement dated as of March 19,2024,
by and between the City of Orange (the "City") and the California Statewide Communities
Development Authority, and is authorized pursuant to Article 4 ofthe Act to issue bonds to provide
financing for public capital improvements; and
WHEREAS, the Authority proposes to issue and sell lease revenue bonds (the "Bonds'),
to be secued pursuant to an Indentr.re (the "Indentureo'), to be entered into by and between the
Authority and U.S. Bank National Association, as trustee (the "Trustee"); and
WIIEREAS, proceeds of the Bonds will used to assist the City with the financing of certain
public capital improvements (the "Projccts"), including: (i) the construction of a new Fire Station
No. 1 Headquaners, (ii) roof and related improvements at the Crty's police station headquarters,
(iii) roof and other improvements at the City's other fue stations, and (iv) installation of security
improvements at City facilities; and
WIIEREAS, inconnectionwiththe issuance ofthe Bonds, it isproposedthat the Authority
will enter into a Lease Agreement (the "Lease"), under which the Authority will lease certain real
properties, including the land and the improvements thereon (collectively, the "Leased
Properties") from the City, and a Sublease (the "Sublease"), under which the City will sublease
the Leased Properties from the Authority and make rental payrnents, calculated to be suffrcient to
allow the Authority to pay the principal and interest payments on the Bonds; and
WHEREAS, for the benefit of the holders of the Bonds, the Authority will enter into an
Assigrunent Agreement (the "Assignment Agreemenf') under which the Autbority wilt assign its
dght to receive the base rent and certain other rights of the Authority under the Lease and Sublease
to the Trustee; and
WIIEREAS, before the sale of the Bonds, the Authority's Executive Dirsctor (who is the
City Manager of the City), in consultation with Urban Futures, Inc., as the municipal advisor (the
"Municipal Advisor", and Raymond James & Associates, Inc. ("Raymond James"), as the
Underwriter or Placement Agent (each as defined below) and Richards, Watson & Gershon, A
Professional Co4poration, as bond counsel ("Bond Counsel'), will determine whether to sell the
Bonds through a public offering or a private placement transaction (pursuant to which the Bonds
will be sold to one or more, but in any event a limited number o4 financial instinrtions) or a
combination thereof; and
WIIEREAS, in connection with a public offering, the Authority, the City and Raymond
James, as underwriter (in such capacity, the "Underwriter") will enter into a Contract of Purchase
(the "Contract of Purchase") pwsuant to pursuant to which the Underwriter will purchase the
Bonds upon their issuance, from the Authority, and a.form of the Contract of Purchase has been
presented to the City and the Authority; and
WIIEREAS, in connection with a private placement transaction, Raymond James, as the
placement agent (in such capacity, the'?lacement Agent") will assist the Authority and the City
with the solicitation ofproposals (the 'oPurchaser Proposals") from prospective private placement
purchasers, and the Authority, the City and Raymond James (in such capacity, the "Placement
Agenf) will enter into a Placement Agent Agreement (the "Placement Agent Agreemenf'), a
form of which has been presented to the City and the Authority; and
WHEREAS, the City Council of the City, has made a finding, after a duly noticed public
hearing pursuant to Section 6586.5 of the Oovernment Code, that the issuance of the Bonds will
result in significant public benefit.
NOW TIIEREFORE, BE IT RESOLVED by the Board of Directors of the Orange
City Public Facilities Financing Authority as follows:
1. Recitals. The above recitals are tnre and correct and are a substantive part of this
Resolution.
2, Acknowledgement of City Findine:. Authorization of Bond Issuance. The
Authority hereby acknowledges and concurs with the City Council's finding of significant public
benefit. The Authority hereby authorizes the issuance and sale of the Bonds, subject to the
parameters set forth below.
3. Indenture. The Indenture, proposed to be entered into by andbetweenthe Authority
and the Trustee, in the form on file in the office of the Secretary of the Authority, is hereby
approved. Subject to Section 8 beloq each of the Chair, the Vice Chair, the Executive Director,
Assistant Executive Director and the Treasurer of the Authority (each, an "Authorized Ollicer"),
acting individuallS is hereby authorized and directed, for and in the name and on behalf of the
Authority, to execute and deliver the lndenture in substantially such form, with such additions or
changes as the Authorized Officer executing the same may approve (such approval to be
conclusively evidenced by such Authorized Offrcer's execution and delivery thereof).
4. Leasq. The Lease, proposed to be entered into by and between the City, as lessor,
and the Authority, as lessee, in the form on file with the Secretary of the Authority, is hereby
approved. Each Authorized Officer, acting individually, is hereby authorized, for and in the name
and on behalf of the Authority, to execute and deliver the Lease in substantially such form, with
such changes therein as such Authorized Officer may require or approve (such approval to be
conclusively evidenced by the execution and delivery thereof).
Resolution No. PFFA-002 a
5. Sublease. The Sublease, proposed to be entered into by and betweenthe Authority,
as sublessor, and the City, as sublessee, in the form on file with the Secretary of the Authority, is
hereby approved. Each Authorized OfiEcer, acting individually, is hereby authorized, for and in
the name and onbehalf of the Authority, to execute and deliver the Sublease in substantially such
form, with such changes therein as such Authorized Officer may require or approve (such approval
to be conclusively evidenced by the execution and delivery thereof).
6, Assignment Agreement. The Assignment Agreement, proposed to be entered into
by and between the Authority and the Trustee, in the form on file with the Secretary of the
Authority, is herebyapproved. EaohAuthorized Offrcer, acting individually, is hereby authorized,
for and in the name and on behalf of the Authority, to execute and deliver the Assignment
Agreement in substantially such form, with such changes therein as such Authorized Officer may
require or approve (such approval to be conclusively evidenced by the execution and delivery
thereof).
7. Contract of Pr:rchase. The Contract of Purchase, proposed to be entered into by
and among the Authority, the City and the Underwriter, in the form on file with the Secretary of
the Authority, is hereby approved. Subjectto the satisfaction ofthe parameters set forth in Section
8, each Authorized Officer, acting individuallyo is hereby authorized, for and in the name and on
behalf ofthe Authority, to execute and deliverthe Contract ofPurchase in substantially such form,
with such changes therein as such Authorized Officer may require or approve (such approval to be
conclusively evidenced by the execution and delivery thereof).
8. Parameterq. The Executive Director is hereby authorized to act on behalf of the
Authority to establish and determine: (i) the aggregate principal amount of the Bonds, which shall
not exceed $35,500,000; (ii) the ptrchase price of the Bonds and the interest rates thereon,
provided that the true interest cost shall not exceed 4.10 percent; and (iii) the Undennrriter's
compensation (discount) which shall not exceed 0.325 percent of the principal aurount of the
Bonds, exclusive of any original issue discount. The authorization and powers delegated to the
Authorized Officers by Sections 7, 8 and t hereof shall be valid for a period of one year from the
date of adoption of this Resolution.
9. Preliminary Ofiicial Statement. The Preliminary Official Staternent relating to the
Bonds (the "Preliminary Oflicial Statement"), in the form on file with the Secretary of the
Authority, is hereby approved. Each Authorized Offrcer, acting individually, is hereby authorized,
for and in the name and on behalf of the Authority, to cause the Preliminary Official Statement in
substantially such form, with such additions or ohanges therein as such Authorized Officer may
approve, to be deemed final for the purposes of Rule 15c2-12 promulgated pusuant to the
Securities Exchange Actof 1934. The distribution by the Underwriter ofcopies ofthe Preliminary
Official Statement to potential purchasers of the Bonds is hereby approved.
10. Official Statement. Each Authorized Officer, acting individually, is hereby
authorized, for and in the name and on behalf of the Authority, to cause the Preliminary Offrcial
Statement to be brought into the fomr of a final Official Statement (the "Offrcial Statement'), and
to execute the same for and in the name and on behalf of the Authority, with such additions or
changes therein as such ofEcer may approve (such approval to be conclusively evidenced by such
Resolution No. PFFA-002 -3-
Authorized Offrcer's execution and delivery thereof). The distribution and use of the Official
Statement by the Underwriter in connection with the sale of the Bonds are hereby approved.
11. Private Placement Purchaser Proposals. If the Authority's Executive Director (who
is the City Manager of the City), in consultation with the Municipal Advisor, Raymond James and
Bond Counsel, determines that it is in the best interest of the Authority and the City, he is
authorized to direct the sale of all or a portion the Bonds tluough a private placement transaction
in lieu of a public offering and, in that connection, select the Purchaser Proposal with the most
favorable terms for sale of ttre Proposed Bonds, subject to the parameters set forth in Section 8
regarding the maximum aggegate principal amount and true interest cost with respect to the
Bonds. Each Authorized Offrcer, acting individually, is authorized to, in the name of the
Authority, execute an acceptance to a terrn sheet (or similar instrument) based on such selection.
t2. Placement Agent Aqreement, The Placement Agent Agreement, proposed to be
entered into by and among the Authority, the City and the Placement Agent, in the form on file
with the Secretary of the Authority, is hereby approved. Each Authorized Offrcer, acting
individually, is hereby authorized, for and in the name and on behalf of the Authority, to execute
and deliverthe Placement Agent Agreement in substantially such forrn, with such changes therein
as such Authorized Officer may require or approve (such approval to be conclusively evidenced
by the execution and delivery thereof;.
13. Debt Policy. Reference is hereby made to the City's updated Debt Issuance and
Management Policy (the "City Debt Policy"), adopted by the City Council of the City by resolution
on the same date as this Resolution is adopted. The Board affirms the adoption of the City Debt
Policy (as maybe amended or otherwise updated bythe City fromtime to time) as the Authority's
policy. The Board hereby finds that the issuance of the Bonds is consistent with such policy.
1,4. Post-Issuance Tax Compliance Procedures. Reference is hereby made to the Tax-
Advantaged Bonds Post-Issuance Compliance Procedures (the "Post-Issuance Ta:r Compliance
Procedures") adopted pursuant to Resolution No. 10821, adopted on October 14,20l4,by the City
Council of the Crty. It is hereby affirmed that such Post-Issuance Tax Compliance Procedures are
applicable to the Bonds. The Executive Director, consultation with bond counsel, is authorized to
amend the Post-Issuance Tax Compiiance Procedures as applicable to the Authority from time to
time.
15. Municipal Advisor: Bond and Disslosure Counsel. In connection with the issuance
of the Bonds, the appointment of the following firms is hereby approved and affirmed: (i) Urban
Futures, Inc., as Municipal Advisor, (ii) Richardso Watson & Gershon, A Professional Corporation,
as Bond Counsel and Disclosue Counsel.
16. Other Acts. The Authorized Officers and all other officers of Authority, are hereby
authorized, jointly and severally, to execute and deliver any and all necessary instnrments and to
do all things which they may deem necessary or proper to effectuate the purposes of this
Resolution, the documents approved hereby, and the issuance, sale and delivery of the Bonds
(including, but not limited to, obtaining a debt service reserve policy, a bond insurance policy or
other types of credit enhancements :rs necessary or appropriate, and, if some or all of the Bonds
will be sold pursuant to a private placement transaction, making necessary or appropriate
Resolution No. PFFA-002 -4-
modifications to the documents and executing and delivering any supplemental indenture) and any
such actions previously taken by such officers are hereby ratified and confirmed.
N)OPTED this 9th day of June 2020.
ATTEST:
Pamela Coleman, Secretary of the
Orange City Public Facilities Financing Authority
Resolution No. PFFA-002 -5-
STATE OF CALIFORNIA )
couNTY oF oRAliGE )
CITY OF ORANGE )
I, PAMELA COLEMAN, Secretary of the Orange City Public Facilities Financing
Authority do hereby certifr that the foregoing Resolution was duly and regularly adopted by the
Board of Directors of the Orange City Public Facilities Financing Authority at a regular meeting
thereof held on the 9th day of June 2470, by the following vote:
AYES: BOARD MEMBERS: Nvtez,Murphy, Nichols, Monaco
NOES BOARD MEMBERS: None
ABSENT: BOARD MEMBERS: NONE
ABSTAIN: BOARD MEMBERS: NONC
Pamela Coleman, Secretary of the
Orange City Public Facilities Financing Authority
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E
JOINT EXERCISE OF POWERS AGREEMENT
THIS AGREEMENT, dated as of March Ig, 2020, by and between the CITY OF'
ORANGE, a municipal corporation duly organized and existing under and by virtue of the laws
of the State of California (the "Cify"), and CALIF'ORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY, a joint exercise of powers authority organized and existing
under and by virtue of the laws of the State of California ("CSCDA").
DECLARATION OF PURPOSE
A. Chapter 5 of Division 7 of Title I of the California Government Code (theooAct")
authorizes the City and CSCDA to create a joint exercise of powers entity which has the power
to exercise any powers common to the City and CSCDA and to exercise additional powers
granted to it under the Act. This Agreement creates such an agency, which shall be known as the
'oorange City Public Facilities Financing Authority" (the o'Authority") for the purposes and to
exercise the powers described herein.
B. The City is authorized to exercise all powers granted to a city, including the
powers to buy, lease and use property pursuant to the law of the State of California.
C. CSCDA is authorized to buy, sell and lease property and to issue bonds, expend
bond proceeds, and borrow and loan money for any of its corporate purposes pursuant to the Act
and an Amended and Restated Joint Exercise of Powers Agreement forming the California
Statewide Communities Development Authority, dated as of June 1, 1998, as amended, by and
among the cities, counties, districts and other political subdivisions that are parties to that
agreement.
D. Article 4 of the Act (known as the ooMarks-Roos Local Bond Pooling Act of
1985") authorizes and empowers the Authority to issue bonds and to purchase bonds issued by, or
to make loans to, the City or CSCDA for financing public capital improvements, working capital,
liability and other insurance needs, or projects whenever there are significant public benefits, as
determined by the City or CSCDA. The Marks-Roos Local Bond Pooling Act of 1985 further
authorizes and empowers the Authority to sell bonds so issued or purchased to public or private
purchasers at public or negotiated sale.
TERMS OF AGREEMENT
Section 1. Definitions. Unless the context otherwise requires, the terms defined in
this Section 1 shall for all pulposes of this Agreement have the meanings herein specified.
"Act" shall mean Articles l, 2 and 4 of Chapter 5 of Division 7 of Title I of the
California Government Code, as amended
"Agreemenf" shall mean this Joint Exercise of Powers Agreement, as it may be amended
from time to time, creating the Authority.
Orange City Public Facilittes Financing Authority
Joint Exercise of Powers Agreemenl
"Authority" shall mean the Orange City Public Facilities Financing Authority created by
this Agreement.
"Board" or "Board of Directors" shall mean the goveming board of the Authority.
"Brown Act" means the Ralph M. Brown Act (Chapter 9 of Part I of Division 2 of Title
5 of the California Government Code), or any successor legislation hereafter enacted.
"City" shall mean the City of Orange, California.
"CSCDA" shall mean California Statewide Communities Development Authority, a joint
exercise of powers authority, duly organized and existing under and by virtue of the laws of the
State.
"Indenture" shall mean each indenture, trust agreement, fiscal agent agreement, lease,
sublease, loan agreement, or other instrument pursuant to which Obligations are issued or incurred.
"Member" or "Member,s" means the members of the Authority from time to time as may
be modified in accordance with this Agreement. As of the date of this Agreement, the Members
are the City and CSCDA.
"Obligations" shall mean bonds and any other evidence of indebtedness of the Authority
authorized and issued pursuant to the Act.
"Stete " shall mean the State of Califomia.
Section 2. Purpose. This Agreement is made pursuant to the Act for the purpose of
assisting the financing and refinancing of capital improvement projects of the City and to finance
working capital for the City by exercising the powers referred to in this Agreement.
Section 3. Term. This Agreement shall become effective as of the date hereof and shall
continue in full force and effect until terminated by a supplemental agreement of CSCDA and the
City; provided, however, that in no event shall this Agreement terminate while any Obligations of
the Authority remain outstanding under the terms of any indenture, trust agreement, contract,
agreement, lease, sublease or other instrument pursuant to which such Obligations are issued or
incurred.
Section 4. The Authprity.
(a) Cr.eatign oJ the Authori\t, There is hereby created pursuant to the Act an
authority and public entity to be known as the "Orange City Public Facilities Financing Authority."
As provided in the Act, the Authority shall be a public entity separate from the Members. The
debts, liabilities and obligations of the Authority shall not constitute debts, liabilities or obligations
of the Members.
Qrange City Public Facilities Financing Authority
Joint Exercise of Powers Agreement
Within 30 days after the effective date of this Agreement or any amendment hereto,
the Authority will cause a notice of this Agreement or amendment to be prepared and filed with
the office of the Secretary of State of the State in the manner set forth in sections 6503.5 of the
Act. Such notice shall also be filed with the office of the Secretary of State.
In addition, as required by Section 53051 of the California Govemment Code,
within 70 days after the effective date of this Agreement, the Authority shall file with the Secretary
of State on a form prescribed by the Secretary of State and also with the County Clerk of Orange
County, a statement ofthe following facts: (1) the full, legal name ofthe Authority, (2) the official
mailing address of the Board, (3) the name and residence or business address of each member of
the Board, and (4) the name, title, and residence or business address of the chairman, president, or
other presiding officer, and clerk or secretary of the Board, and within 10 days after any change in
the facts required to be stated pursuant to the foregoingo an amended statemsnt containing such
information shall be filed with the Secretary of State on a form prescribed by the Secretary of State
and also with the County Clerk of Orange County,
(b) GQVerning Board. The Authority shall be administered by the Board which
shall consist of the members of the City Council of the City. The term of office as a member of
the Board shall terminate when such member of the Board shall cease to hold its respective office
at the City and the successor to such seat on the City Council shall automatically become a member
of the Board, upon assuming such office.
Members of the Board shall not receive any compensation for serving as such, but
shall be entitled to reimbursement for any expenses actually incurred in connection with serving
as a member if the Board shall determine that such expenses shall be reimbursed and there are
unencumbered funds available for such purpose.
(c) Meetiggs of Poard.
(1) The Board shall conduct regular meetings on the same date, at the
same time and at the same location as the regular meetings of the City Council of the City; provided
that the time and place for holding Board meetings may be changed at any time by resolution of
the Board. Such regular meetings may occur either during or after the regular meetings of the City
Council of the City, but may not commence earlier than the starting time for the regular meetings
of the City Council of the City. If the Secretary does not post an agenda for a regular meeting
pursuant to the Brown Act, then such lack of posting shall be deemed to be a determination by the
-Chair
that no items required discussion and, therefore, that the regular meeting has been cancelled,
except as otherwise provided in the Brown Act. The Board may hold special meetings at any time
and from time to time in accordance with law.
(2) All regular and special meetings of the Board shall be called,
noticed, held and conducted subject to the provisions of the Brown Act.
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(3) The Secretary of the Authority shall cause minutes of all meetings
of the Board to be kept and shall, as soon as practicable after each meeting, cause a copy of the
minutes to be forwarded to each member of the Board and to the Members.
(4) A majority of the members of the Board shall constitute a quorum
for the transaction of business, except that less than a quorum may adjourn meetings from time to
time. However, less than a quorum may adjourn a meeting from time to time. A vote of the
majority of a quorum at a meeting shall be sufficient to take action.
(d) Officers: Duties: Bonds.
(l) The officers of the Authority shall be the Chair, Vice Chair,
Executive Director, Secretary, Treasurer. The Chair shall be the person serving as the Mayor of
the City; the Vice-Chair shall be the person serving as the Mayor Pro Tem of the City; the Executive
Director shall be the person serving as the City Manager of the City; and the Secretary shall be the
person serving as the City Clerk of the City. The Assistant City Manager shall serve as the
Assistant Executive Director ofthe Authority. The officers shall perform the duties normal to their
respective offices and such other duties as may be imposed by the Board. The Chair or the
Exscutive Director shall sign all contraots on behalf of the Authority; provided, that the Board may,
by resolution, authorized other officers ofthe Authority to sign contracts on behalf ofthe Authority.
The Vice Chair shall act, sign contracts, and perform all of the Chair's duties in the absence of the
Chair, The Secretary shall perform such duties as may be imposed by the Board and cause a copy
of this Agreement to be filed with the California Secretary of State pursuant to the Act. These
officers shall have such additional powers and duties as may be determined by the Board from time
to time by resolution.
(2) The Treasurer of the city is hereby designated as the Treasurer of
the Authority, Pursuant to Section 6505,6 of the Act, the Treasurer of the Authority is designated
as the public officer or person who has charge of, handles, or has access to any property of the
Authority, and such officer shall file an official bond in the amount of $25,000 as required by
section 6505.1 of the Act;prov.ided, that such bond shall not be required if the Authority does not
possess or own property or funds with an aggregate value of greater than $500 (excluding amounts
ireld by a trustee or other fiduciary in connection with any Bonds). The cost of the bond, if
necessary, shall be paid by the City. The Finance Director of the City shall serve as the Assistant
Treasurer of the Authority.
(3; So long as required by section 6505 and section 6505.5 of the Act,
the Treasurer of the Authority shall prepare or cause to be prepared: (a) a special audit as required
pursuant to section 6505 of the Act every year during the term of this Agreement; and (b) a report
ln writing on the first day of July, October, January and April of each year to the Board, the City
and CSCDA which report shall describe the amount of money held by the Treasurer of the
Authority for the Board, the amount of receipts since the last such report, and the amount paid out
since the last such report (which may exclude amounts held by a trustee or other fiduciary in
connection with any dbligations to the extent that such trustee or other fiduciary provides regular
reports covering such amounts).
Orange City Public Facilities Financing Authority
Joint Exercise of Powers Agreement
(4) The City Attorney of the City shallserve as the General Counsel to
the Authority.
(5) The services of the officers shall be without compensation by the
Authority. The City will provide such other administrative services as required by the Authority,
and shall not receive economic remuneration from the Authority for the provision of such services.
(6) The Board shall have the power to appoint such other officers and
employees as it may deem necessary and to retain independent counsel, consultants and
accountants.
(7) All of the privileges and immunities from liability, exemptions from
laws, ordinances and rules, all pension, relief, disability, worker's compensation and other benefits
which apply to the activities of officers, agents or employees of the Members when performing
their respective functions within the territorial limits of their respective Member, shall apply to
them to the same degree and extent while engaged in the performance of any of their functions and
duties extraterritorially under the provisions of this Agreement.
(8) None of the officers, agents or employees, if any, directly employed
by the Authority shall be deemed, by reason of their employment by the Authority, to be employed
by any Member or, by reason of their employment by the Authority, to be subject to any of the
requirements of any Member.
(9) The Members hereby confirm their intent and agree that, as provided
in Section 4(A) hereof and in the Act, the debts, liabilities and obligations of the Authority shall not
constitute debts, liabilities or obligations of the City or CSCDA, and they do not intend by the
following sentence to impair this provision. Notwithstanding Section 4(A) hereof and the Act, the
City and the Authority shall indemni$,, defend and hold harmless CSCDA and each of CSCDA's
officers, directors, employees, attomeys, Commission members and agents (each, an "Indemnified
Party") from and against any and all costs, expenses, losses, claims, damages and liabilities directly
or indirectly arising out of or in connection with the activities of the Authority (including but not
limited to any transaction or series of transactions undertaken by or for the benefit of the City),
except to the extent that such costs, expenses,'losses, claims, damages or liabilities arise from the
gross negligence or wrongful act of an Indemnified Party. CSCDA may elect to defend itself in any
such action with counsel of its choice, the reasonable fees of such counsel to be paid by the City.
The Authority and the City shall be jointly and severally liable for any indemnity obligation owed
to CSCDA or any other indemnified party under this paragraph. Notwithstanding the provisions
of section 895.6 of the California Government Code, the City shall not have any right to
contribution from CSCDA. This paragraph (S) shall survive the termination of this Agreement'
(10) In any event, the Authority or the City shall cause all records
regarding the Authority's formation, existence, operations, any Obligations issued or inouned by
the Authority, obligations incurred by it and proceedings pertaining to its tetmination to be retained
for at least six (6) years following termination of the Authority or final payment of any Obligations
issued or incurred by the Authority, whichever is later'
Orange City Public Facilities Financing Authority
Joint Exercise of Powers Agreement
Section 5. Powers. The Authority shall have any and all powers which are common
powers of the Members, and the powers separately conferred by law upon the Authority. All such
powers, whether common to the Parties or separately conferred by law upon the Authority, are
specified as powers of the Authority except any such powers which are specifically prohibited to
the Authority by applicable law. Fxcept as otherwise set forth herein as permitted by law, the
Authority's exercise of its powers is subject to the restrictions upon the manner of exercising the
powers of the City.
The Authority is hereby authorized, in its own name, to do all acts necessary or
convenient,for the exercise of its powers, including, but not limited to, any or all of the following:
to sue and be sued; to make and enter into contracts; to employ agents, consultantsn attorneys,
accountants, and employees; to acquire, hold or dispose of property, whether real or personal,
tangible or intangible, wherever located; to issue bonds or otherwise incur debts, liabilities or
obligations to the extent authorized by the Act or any other applicable provision of law and to
pledge any property or revenues or the rights thereto as security for such Obligations.
Notwithstanding the foregoing, the Authority shall have any additional powers
conferred under the Act or under applicable law, insofar as such additional powers may be
necessary to accomplish the purposes set forth in Section 2 hereof.
Notwithstanding anything to the contrary in this Agreement, the Authority shall not
have the power or the authority to enter into any retirement contract with any public rgtirement
system (as defined in Section 6508,2 of the California Government Code) for any reason. The
provision in this paragraph is intended to benefit the Members and to be a confirming inevocable
obligation of the Authority which may be enforced by the Members, individually or collectively.
Section 6. Termin€rjion Qf Powers. The Authority shall continue to exercise the powers
herein conferred upon it until the termination of this Agreement in accordance with Section 3
hereof.
Section 7. E!.scal Yea{. Unless and until changed by resolution of the Board, the fiscal
year of the Authority shall be the period from July 1 of each year to and including the following
iune 30, except for the first fiscal year which shall be the period from the date of this Agreement
to June 30,2020.
Section 8. Pispos.ition of.Assets. Upon termination of this Agreement pursuant to
Section 3 hereof, any surplus money in possession of the Authority or on deposit in any fund or
account of the Authority shall be retumed in proportion to any contributions made as required by
section 6512 of the Rct. the Board is vested with all powers of the Authority for the purpose of
concluding and dissolving the business affairs of the Authority. After rescission or termination of
this Agreement pursuant io Section 3 hereof, all property of the Authority, both real and personal,
shall be distributed to the City, subject to Section t hereof.
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Section 9. Contributions and Adyances. Contributions or advances of public funds and
of personnel, equipment or property may be made to the Authority by the Members for any of the
purposes of this Agreement. Payment of public funds may be made to defray the cost of any such
contribution. Any such advance made in respect of a revenue-producing facility shall be made
subject to repayment, and shall be repaid, in the manner agreed upon by the City or CSCDA, as
the case may be, and the Authority at the time of making such advance as provided by section
6512.1of the Act. It is mutually understood and agreed that neither the City nor CSCDA has any
obligation to make advances or contributions to the Authority to provide for the costs and expenses
of administration of the Authority, even though either may do so. The Members may allow the use
of personnel, equipment or property in lieu of other contributions or advances to the Authority.
Section 10.Obligations.
(a) Authority to Issue or lncur Obligations. When authorized by the Act or
other applicable provisions of law and by resolution of the Board, the Authority may issue or incur
Obligations for the putpose of raising funds for the exercise of any of its powers or to otherwise
carry out its purposes underthis Agreement. Said Obligations shall have such terms and conditions
as are authorized by the Board.
(b) L.imitpd qbligations. The Obligations, including the principal and any
purchase price thereof, and the interest and premium, if any, thereon, shall be special obligations
of the Authority payable solely from, and secured solely by, the revenues, funds and other assets
pledged therefor under the applicable Indenture(s) and shall not constitute a charge against the
general credit of the Authority or any Member. The Obligations shall not be secured by a legal or
equitable pledge of; or lien or charge upon or security interest in, any property of the Authority or
any of its income or receipts except the property, income and receipts pledged therefor under the
applicable Indenture(s). The Obligations shall not constitute a debt, liability or obligation of the
State or any public agency thereol including any Member, other than the special obligation of the
Authority as described above. Neither the faith and credit nor the taxing power of the State or any
public agency thereof, including the Members, shall be pledged to the payment of the principal or
purchase price of, or the premium, if any, or interest on the Obligations nor shall the State or any
public agency or instrumentality thereof, including the Members, in any manner be obligated to
make any appropriation for such payment. The Authority shall have no taxing power.
No covenant or agreement contained in any Obligation or Indenture shall be
deemed to be a covenant or agreement of any director, officer, agent or employee of the Authority
or any Member, in his or her individual capacity and no director or officer of the Authority
executing a Obligation shall be liable personally on such Obligation or be subject to any personal
liability or accountability by reason of the issuance of such Obligation.
Section I l. Aqreement pot Exclusive, This Agreement shall not be exclusive and shall
not be deemed to amend or alter the terms of other agreements between the City and CSCDA,
except as the terms of this Agreement shall conflict therewith, in which case the terms of this
Agreement shall prevail.
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Section 12. Acc-g.unts_gnd Reports.
(a) Beoks.And Records, All funds of the Authority shall be strictly accounted
for in books of account and financial records maintained by the Authority, including a report of all
receipts and disbursements. The Authority shall establish and maintain such funds and accounts
as may be required by generally accepted accounting principles and by each Indenture for
outstanding Obligations (to the extent such duties are not assigned to a trustee for owners of
Obligations). The books and records of the Authority shall be open to inspection at all reasonable
times by the Members and their representatives.
(b) Indentures. The Authority shall require that each Indenture provide that the
trustee appointed thereunder shall establish suitable funds, furnish financial reports and provide
suitable accounting procedures to oarry out the provisions of such Indenture. Said trustee may be
given such duties in said Indenture as may be desirable to carry out the requirements of this Section
r2.
(c) A,udits. The Treasurer of the Authority shall cause an independent audit to
be made of the books of accounts and financial records of the Authority in compliance with the
requirements of the Act. Any costs of the audit, including oontracts with, or employment of,
certified public accountants or public aocountants in making an audit pursuant to this Section 12,
shall be bome by the Authority and shall be a charge against any unencumbered funds of the
Authority available for that purpose.
(d) Audit Reports. The Treasurer of the Authority, as soon as piacticable after
the close of each Fiscal Year but in any event within the time necessary to comply with the
requirements of the Act shall file a report of the auditperformed pursuantto this Section 12 as
required by the Act and shall send a copy of such report to public entities and persons in accordance
with the requirements of the Aot,
Section 13. lqnds. Subject to the provisions of eaoh Indenture for outstanding
Obligations providing for a trustee to receive, have custody of and disburse funds which constitute
Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse
Authority funds pursuant to accounting procedures approved by the Board and shall make the
disbursements required by this Agreement or otherwise necessary to carry out the provisions and
purposes of this Agreement.
Section 14. Conflict of l{rferest Qode. The Authority shall, by resolution, adopt a
Conflict of Interest Code to the extent required by law. Such Conflict of Interest Code may be the
conflict of interest code of the City.
Section 15. Breach. If default shall be made by the City or CSCDA in any covenant
contained in this Agreement, such default shall not excuse eitherthe City or CSCDA from fulfilling
its obligations under this Agreement and the City and CSCDA shall continue to be liable for the
performance of all conditions herein contained. The City and CSCDA hereby declare that this
Agreement is entered into for the benefit of the Authority created hereby and the City and CSCDA
Orange City Public Facilities Financing Authority
Joint Exercise of Powers Agreement
hereby grant to the Authority the right to enforce by whatever lawful means the Authority deems
appropriate all of the obligations of each of the parties hereunder. Each and all of the remedies
given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the
exercise of one right or remedy shall not impair the right of the Authority to any or all other
remedies.
Section 16. Notices. Notices and other communications hereunder to the parties shall
be sufficient if delivered to the clerk or secretary of the governing body of each party.
Section 17. Withdrawals and Additions of Members.
(a) Withdraqalg. Any Member may withdraw from the Authority by filing with
the Board a certified copy of a resolution ofthe governing body of the Member expressing its desire
to so withdraw, whereupon the withdrawing Member shall no longer be considered a Member for
any reason or purpose under this Agreement and its rights and obligations under this Agreement
shall terminate. The withdrawal of a Member shall not affect the existence of the Authority nor
the effectiveness of any Obligations of the Authority.
(b) Additional Members. Any public agency may be added as a party to this
Agreement, and become a Member, by filing with the Board a certified copy of a resolution of the
goveming body of such public agency whereby it agrees to the provisions of this Agreement and
requests to become a Member. The Board may accept or reject any such proposal in its sole
discretion, and if accepted, suoh public agency shall become a Member when: (i) its admission is
approved by a vote of a majority of the Board voting on the matter and (ii) such public agency
agrees to share public agency's future share of the costs and expenses incurred by the Authority in
the course of its activities. Upon satisfaction of the provisions of this clause (b), such public agenoy
shall be a Member for all puqposes of this Agreement. The effectiveness of such membership shall
not constitute an amendment or modification of this Agreement.
Section 18. Effectiveness. This Agreement shall become effective and be in full force
and effect and a legal, valid and binding obligation of CSCDA and the City, as the initial Members,
when each party has executed a counterpart of this Agreement.
Section 19. Severability. Should any part, term, or provision of this Agreement be
decided by the courts to be illegal or in conflict with any law of the State, or otherwise be rendered
unenforceable or ineffectual, the validity of the remaining parts, terms or provisions hereof shall
not be affected thereby.
Section 20. SuccessoJs: Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the successors ofthe parties. Except to the extent expressly provided herein,
neither party may assign any right or obligation hereunder without the consent of the other.
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!:!:i [::!;i:? ;';:#x'#':tr:x
Section 21. Amendment of Agreement. This Agreement may be amended by
supplemental agreement executed by the Members at any time; provided, however, that this
Agreement may be terminated only in accordance with Section 3 hereof and, provided further, that
such supplemental agreement shall be subject to any restrictions contained in any Obligations or
documents related to any Obligations to which the Authority is a party.
Section 22. Form of Applqypl.s. Whenever an approval is required in this Agrcement,
unless the context specifies otherwise, it shall be given, in the case of CSCDA, by resolution duly
adopted by the Board of Directors of CSCDA, and, in the case of the City, by resolution duly
adopted by the Board of Directors of the City, and, in the case of the Authority, by resolution duly
adopted by the Board. Whenever in this Agreement any consent or approval is required, the same
shall not be unreasonably withheld.
Section 23. Waiver of Personal Liability. No member, officer, employee, attorney,
agent, and, with respect to CSCDA, Commission member of the Authority, the City or CSCDA
shall be individually or personally liable for any claims, losses, damages, costs, injury and liability
of any kind, nature or description arising from the actions of the Authority or the actions undertaken
pursuant to this Agreement, and the City shall defend such members, officers, employees,
attorneys, agents, or, with respect to CSCDA, Commission member, against any such claims,
losses, damages, costs, injury and liability. Without limiting the generality of the foregoing, no
member, officer, employee, attorney, agent, or, with respect to CSCDA, Commission member, of
the Authority or of any Member shall be personally liable on any Obligations or be subject to any
personal liability or accountability by reason of the issuance of Obligations pursuant to the Act and
this Agreement. To the full extent permitted by law, the Board shall provide for indemnification
by the Authority of any person who is or was a member of the Board, or an officer, employee or
other agent of the Authority, and who was or is a party or is threatened to be made a party to a
proceeding by reason of the fact that such person is or was such a member of the Board, or an
officer, employee or other agent of the Authority, against expenses, judgments, fines, settlements
and other amounts actually and reasonably incuned in connection with such prooeeding, if such
person acted in good faith and in the course and scope of his or her office, employment or agency.
In the case of a criminal proceeding, the Board may provide for indemnification and defense of a
member of the Board, or an officer, employee or other agent of the Authority to the extent permitted
by law.
Section24. Misgellaneous.
(a) Notices. Notices to the City hereunder shall be sufficient if delivered to
the GeneralManager of the City, and notices to CSCDA hereunder shall be sufficient if delivered
to CSCDA staff.
(b) Segjion Hea4ings. All section headings contained herein are for
convenienoe of reference only and are not intended to define or limit the scope of any provision of
this Agreement.
t0
Orange City Public Facilities Financing Authority
Joint Exercise of Powers Agreement
(c) Pqfformance b), Authorize{Deputies- or As.sistants. Officers of .Member.
Where reference is made to duties to be performed for the Authority by a publio official or
employee, such duties may be performed by that person's duly authorized deputy or assistant.
Where reference is made to actions to be taken by a Member, such action may be exercised through
the officers, staff or employees of such Member, in the manner provided by law.
(d) Goveming Law. This Agreement is made in the State, under the
Constitution and laws of the state and is to be construed as a contract made and to be performed in
the State.
(e) CompJete Agreemqnt. This Agreement is the complete and exclusive
statement of the agreement among the parties with respect to the subject matter hereof, whioh
supersedes and merges all prior proposals, understandings, and other agreements, whether oral,
written, or implied in conduot, betweon the parties relating to the subject matter of this Agreement.
(f) Execution in Countemarts. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their proper officers or officials thereunto duly authorized.
CITY OF ORANGE
ll
Orange City Public Facilities Financing A*hority
Joinl Exercise of Powers Agreement
CALIF'ORNIA STATEWIDE
COMMUNITIES DEVELOPMENT
AUTHORITY
$" /J"L"e
Authorized Signatory
By:
t2
NOTICE OF A JOINT POWERS AGREEMENT
(Government Code section 6503,5)
Instructions:
1. Complete and mail to: Secretary of State, P.O. Box 942870,
2.
4.A copy of the full text of the joint powers agreement and amendments, if any, must be submitted to the State
Controller's office. For address information, contact the State Controller's office at wu ry.sco-gg.gov.
Name of the agency or entity created under the agreement and responsible for the administration of the agreement:
Orange City Public Facilities Financi
State of California
Secretary of State
Sacramento, CA 94277 -287 0.
Include filing fee of $1.00.
Do not include attachments, unless otherwise specified.
FILED
Sccretary of State$trt ofCalibmie
MAY | 1 2020
(Oftice Use Only)
Agency's or Entity's Mailing Address: 300 E. Chapman AYenue/ Orange, CA 92866
Title of the agreemenl' Joint Exercise of Powers Agreqment
The public agencies party to the agreement are (if more space is needed, continue on a separate sheet and attach it to
this form):
q1; City of Orange
q2; California Statewide Communitiqs Development Authority
(3)
Effective date of the agreement:March 11 , Jd)o
Provide a condensed statement of the agreement's purpose or the powers to be exercis"6 To finance public capital
imProvements and working capital by issuance of bonds by the AuthoriV or by the purchase of bonds by the
Authority issued by local agency; to exercise such other as may be permitted under the Joint Powers Act
RETURN ACKNOWLEDGMENT TO; (Type or print)
NAME
ADDRESS
lRi.hurdr, Watson & Gershon (Teresa Ho-Urano;1
350 S. Grand Avenue, 37th Floor
crry/srArE/ze [Los Angeles, CA 90071 Pamela Coleman, CMC, AuthoriV Secretary
Typed Name and Title
Signature
SEC/STATE NPSF 404A Rev 04/2015
Secretary of State
Registry of Public Agencies
fr{AY t | 2020(Government Code section 53051)
IMPORTANT - Read Instructlons before completing this form.
There is No Fee for a Registry of Public Agencies filing
Copy Fees - First page $1.00; each attachment page $0.501
Certification Fee - $5,00 Thls Space For Office Use Only
1. Type of Filing (Check one.)
f, tnitiat Filing (first Registry of Public Agencies fiting for an agency)
fl UpOat"O Filing (change to an existing Registry of Public Agencies record)
2. Agency Information
d. Official Mailing Address
300 E. Chapman Avenue, Or e, cA 92866
3. Ghairperson, President, or Other Presiding Officer
4. Clerk or Secretary
5. Other Members of the Governing Board (Enter as many as applicable. Attach additional pages for additional members.)
6- Date and Sign Below (Additional members set forth on attached pages, if any, are incorporatod herein by reference and made part of thi$
Form SF-405, Registry of Public Agencios.)
Pamela Coleman
2019 California Secretarrr of Stale
{-tLho
Secretery of State
$hte of Catifomia
/-\
Da
a. Full Legal Name of Public Agency
oranse City P u bl ic Faci I iti es .ti l Algllg i$lgllyu-N;ffi";iLr@
a. Name
Mark A. Murphy
c. Business or RBsidenc€ ACOre"s
300 E. Chapman Avenue,
b. Title
Chair
Orange, CA 92866
a. Name
Pamela Coleman
b. Title
Secreta
c. Business or Residence Address
300 E. Chapman Avenue, Orange, CA 92866
Name
Mark A. Murphy
Business or Residence Addrass
300 E. Chapman Avenue, Orange, CA 92866
Name
Mike Alvarez
Business of Residenc€ Addre$s
300 E. Chapman Avenue, Orange, CA 92866
Name
Kim Nichols
Business or Residence Address
300 E. Chapman Avenue, Orange, CA 92866
Name
Chip Monaco
Business or Residence Address
300 E. Chapman Avenue, Orange, CA 92866
Name Business or Residence Address
bizfile.sos.ca.gov
sF405 (RE
Signature Type or Print Name
2
CERTIFICATE OF CITY CLERK OF
CITY OF ORANGE
with reference to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 2020A
Julv 16.2020
The undersigned hereby states and certifies as follows:
(a) The undersigned is the duly appointed, qualified and acting City Clerk of the City
of Orange, a municipal corporation duly organized and existing under and by virtue of the
Constitution and laws of the State of California and, as such, is familiar with the facts herein and
is authorized to certify the same.
(b) Attached hereto as Exhibit A is a true, correct and complete copy of Resolution
No. I1246, entitled "A Resolution of the City Council to the City of Orange Making a Finding of
Signif,rcant Benefit in Connection with the Orange City Public Facilities Financing Authority's
Issuance of Lease Revenue Bonds, Authorizing the Execution and Delivery of Documents
Relating to such Bonds and Taking Related Actions" ("Resolution No. 11246") which was
adopted at a duly and regularly held meeting of the City Council on June 9,2020. Resolution
No. 1 1246 has not been amended, modified, supplemented, rescinded or repealed and remains in
full force and effect as ofthe date hereof.
I l28l -0009\2418204v5.doc
(Certi/icate of City Clerk)
IN WITNESS WHEREOF. the undersisned has hereunto set her hand on the date first
written above.
Pamela Coleman, CMC
City Clerk of the City of Orange
I 128 1-0009\24 l 8204
Exhibit A
(Certificate of City Clerk)
Resolution No. 11246
(see attached)
I 128 I -0009\241 8204v6.doc
RESOLUTION NO. T1246
A RESOLUTION OF THE CITY COI'NCIL TO THE
CITY OF' ORANGE MAKING A FINDING OF
SIGMFICANT BEI\IEFIT IN CONNECTION WITH
THE ORANGE CITY PUBLIC F'ACILITIES
FINANCING AUTHORITY'S ISSUANCE OF
LEASE REVENTIE BONDS, AUTIIORIZING THE
DMCUTION AFID DELIVERY OX' DOCUMEI\TTS
RELATING TO SUCH BONDS A}[D TAKING
RELATED ACTIONS.
WHEREAS, the Orange City Public Facilities Financing Authority (the "Authority') is a
joint powers authority duly organized and existing under and prusuant to Articles I through 4
(commencing with Section 6500), Chapter 5, Division 7, Title I of the Califonria Govemment
Code (the "Act'o) and that certainJointExercise of Powers Agleement dated as ofMarch 19,2020,
by and between the City of Orange (the "City") and the Califomia Statewide Comrnunities
Development Authority, and is authorized pusuant to Article 4 of the Act to issue bonds to provide
financing for public capital improvements; and
WIIEREAS, the Authority proposes to issue and sell lease revenue bonds (the "Bondso'),
to be secured pursuant to an Indenture (the "Indenture'), to be entered into by and between the
Authority and U.S. Bank National Association, as trustee (the "Trustee"); and
WHEREAS'proceeds of the Bondswill usedto assistthe Citywiththe financing of certain
public capital improvements (the "Projects"), including: (t) the construction of a new Fire Station
No. 1 Headquarters, (ii) roof and related improvements at the City's police station headquarters,
(iii) roof and other improvements at the City's other fire stationso and (iv) installation of security
improvements at City facilities; and
WHEREAS, in connection with the issuance of the Bonds, it is proposed that the Authority
will enter into a Lease Agreement (the "Lease"), under whieh the Authority will lease certain real
properties, including the land and the improvements thereon (collectively, the ool,eased
Properties") from the City, and a Sublease (the "sublease"), under which the City will sublease
the Leased Properties from the Authority and make rental payments, calculated to be suffi.cient to
allow the Authority to pay principal and interest payments on the Bonds; and
WHEREAS, before the sale of the Bonds, the City Manager (who serves, ex-fficio, as the
Executive Director of the Authority), in consultation with Urban Futures, Inc., as the municipal
advisor (the "Munieipal AdvisoC', and Raymond James & Associates, Inc. ('Raymond James'),
as the Underwriter or Placemont Agent (each as defined below) and Richards, Watson & Gershon,
A Professional Corporation, as bond counsel ("Bond Counsel")o will determine whether to sell
the Bonds through a public offering or a private placement transaction (pursuant to which the
Bonds will be sold to one or more, but in any event a iimited number of, financial institutions) or
a combination thereof; and
WHEREAS, in connection with a public offering, the Authority, the City and Raymond
James, as underwriter (in such capacity, the "Underwriter") will enter into a Contract of Purchase
(the 'Contract of Purchase') pursuant to prrrsuant to which the Underuniter will purchase the
Bonds upon their issuance, from the Authority, and a forsr of the Contract of Purchase has been
presented to the City and the Authority; and
WHEREAS, in connection with a private placement hansaction, Raymond James, as the
placement agent (in such capacity, the "Placement Agenf') will assist the Authority and the City
withthe solicitationofproposals (the*Purchaser Proposals') fromprospective private placement
purchasers, and the Authority, the City and Raymond James (in such capacity, the "Placement
Agenf) will enter into a Placement Agent Agreement (the "Placement Agent Agreemenf'), u
form of which has been presented to the City and the Authority; and
WHEREAS, pursuant to Section 6586.5 of the California Govemment Code, after notice
duly published in accordance with law, the City Council held a public hearing on this date with
respect to the proposed issuance of the Bonds and the related financing and received evidence
concerning the public benefits therefrom.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange
as follows:
1. Recitals. The above recitals are true.and correct and are a substantive part of this
Resolution.
2. Findine of-Public Benefit: Approval of Bg)nd Issuance. The City Council hereby
finds that the Authority's issuance of the Bonds to finance the Projects will result in significant
public benefit to the constituents of the City, including more efficient delivery of local agency
services to residential and commercial development. The City Council hereby approves the
issuance ofthe Bonds.
3. Lease. The Lease, proposed to be entered into by and between the City, as lessor,
and the Authority, as lessee, in the form on file with the City Clerlq is hereby approved. The
Mayor (or in the Mayor's absence, the Mayor Pro Tem) is hereby authorized, for and in the name
and on behalf of the City, to execute and deliver the Lease in substantially said forn, with such
changes therein as the Mayor (or the Mayor Pro Tem, as the case may be) may require or approve
(such approval to be conclusively evidenced by the execution and delivery thereof).
4, Sublease. The Sublease, proposedto be entered into by and betweenthe Authority,
as sublessor, and the City, as sublessee, in the form on file with the City Clerk, is hereby approved.
The Mayor (or in the Mayor's absence, tlre Mayor Pro Tem) is hereby authorized, for and in the
narne and on behalf of the City, to execute and deliver the Sublease in substantially said form, with
such changes therein as the Mayor (or the Mayor Pro Tem, as the case may be) may require or
approve (such approval to be conclusively evidenced by the execution and delivery thereo$.
5. Contract of Purc,hase . The Contract of Purchase, proposed to be sntered into by
and among the Authority, the City and the Underwriter, in the form on file withthe City Clerk, is
hereby approved. Subject to the satisfaction of the pmameters set forth in the resolution of the
Authority authorizing the issuance of the Bonds (the "Authority Resolution"), the Mayor (or in
Resolution No. 11246 -2-
the Mayor's absence, the MayorPro Tem) is hereby authorized, for and in the name and on behalf
of the City, to execute and deliver the Contract of Purchase in substantially said form, with such
changes therein as the Mayor (or the Mayor Pro Tem, as the case may be) may require or approve
(such approval to be conclusively evidenced by the execution and delivery thereof).
6. Preliminary Offrcial Statement. The Preliminary Official Statement relating to the
Bonds (the "Preliminary Oflicial Statemenf'), in the form on frle with the City Clerk, is hereby
approved. Each of the Mayor, the Mayor Pro Tem, the City Manager, the Assistant City
Manager/Administrative Services Difector, acting individually, is hereby authorized, for and in
the name and on behalf of the City, to cause the Preliminary Official Statement in substantially
said form, with such additions or changes therein as such Authorized Officer may approve, to be
deerned final for the purposes of Rule l5c2-I2 promulgated pursuant to the Securities Exchange
Act of 1934. The distibution by the Underwriter of copies of the Preliminary Offrcial Statement
to potential purchasers of the Bonds is hereby approved.
7. Offrcial Statement. Each of the Mayor, the Mayor Pro Tem, the City Manager, and
the Assistant City Manager/Administrative Services Director, acting individually, is hereby
authorized, for and in the name and on behalf of the City, to cause the Preliminary Official
Statement to be brought into the form of afinal Official Statement (the "Official Statemenf'), and
to execute the same for and in the name and on behalf of the City, with such additions or changes
therein as such officer may approve (such approval to be conclusively evidenced by such City
officer's execution and delivery thereof). The distribution and use ofthe Official Statement by the
Underwriter in conuection with the sale of the Bonds are hereby approved.
8. Continuing Disclosure Agteement. The Continuing Disclonre Agreement,
proposed to be entered into by and between the City and a Dissemination Agent to be selected by
the City Manager or the Assistant City ManagerlAdministrative Services Director, in the form on
file with the City Clerk, is hereby approved. The Mayor (or in the Mayor's absence, the Mayor
Pro Tem) is hereby authorized, for and inthe name and onbehalf ofthe City, to execute and deliver
the Continuing Disclosure Agreement in substantially said form, with such changes therein as the
Mayor (or the Mayor Pro Tem, as the case may be) may require or approve (such approval to be
conclusively evidenced by the execution and delivery thereof).
9. Private Placement Puchaser Proposals. The City Manager (wlro selTes as the
Authority's Executive Director), in consultation with the Municipal Advisor, Raymond James and
Bond Counsel, may direct the sale of all or a portion the Bonds through a private placement
transaction in lieu of a public offering and, in that connection, select the Purchaser Proposal with
the most favorable terms for sale of the Proposed Bonds. The Mayor (or in the Mayor's absence,
the Mayor Pro Tem) and the City Manager, each acting individually, is authorized to, in the name
of the City, execute an acceptance to a term sheet (or similar instument) based on such selection.
10. Placement Aqent A$eement. The Placement Agent Agreernent, proposed to be
entered into by and among the Authority, the City and the Placernent Agent, in the form on file
with the City Clerk, is hereby approved. The Mayor (or in the Mayor's absence, the Mayor Pro
Tem) is hereby authorized, for and in the name and on behalf of the City, to execute and deliver
the PlacernentAgent Agreement in substantially said form, with such changes therein as the Mayor
Resolution No. I1246 -3-
(or the Mayor Pro Tem, as the case may be) may require or approve (such approval to be
conclusively evidenced by the execution and delivery thereof).
11. Municipal Advisor: Bond and Disclosure Counsel. In connection with the
issuance of the Bonds, the appointnent of the following firms is hereby approved and affrrmed:
(i) Urban Fuhres, Inc., as Municipal Advisor, (ii) Richards, Watson & Gershon, A Professional
Corporation" as Bond Counsel and Disclosure Counsel.
12. Other Acts. The Mayor, the Mayor Pro Tem, the City Manager, the Assistant City
Manager/Administrative Services Director, the Assistant Finance Director and all other oflicers of
Crty, are hereby authorized, jointly and severally, to execute and deliver any and all necessary
instruments and to do all things which they may deem necessary or proper to effectuate the
purposes of this Resolution, the documents approved hereby, and to assist the Authority with
respect to the issuance, sale and delivery of the Bonds (including, but not limited to, obtaining a
debt service resen/e policy, a bond insurance policy or other types of credit enhancements as
necessary or appropriate and, if sorne or all of the Bonds will be sold pr.rsuant to a private
placement transaction, making the necessary or appropriate modifications to the documents) and
any such actions previously taken by such officers are hereby ratified and confirmed.
ADOPTED this 9th day of June 2020.
ATTEST:
MarkA. Murphy, Mayor, City
PamelaColeman, City Clerk, City of
Resolution No. I1246 -4-
STATE OF CALIFORNIA
COTINTY OF ORANGE
CITY OF ORANGE
I, PAMELA COLEMAN, City Clerk of the City of Orange, Califomia, do hereby certifu
that the foregoing Resolution was duly and regularly adopted by the City Council of the City of
Orange at a regular meeting thereof held on the 9th day of June 202A, by the following vote:
AYES: COUNCILMEMBERS: Alvarez,Murphy,Nichols,Monaco
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ABSTAIN: COUNCILMEMBERS: None
\)
)
)
City Clerlq City of Orange
ResolutionNo. 11246 -)'
3
INDENTURE
by and between the
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
Dated as of July 1,2020
Relating to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 2020A
I 128 l -0009\2393696
TABLE OF CONTENTS
Page
DEFINITIONS; EQUAL SECURITY .............. .........2
ARTICLE II AUTHORZATION: GENERAL PROVISIONS ............ ..........12
Authorization; Designation......... ............12
Terms of Bonds... ..................12
Redemption of Bonds ...........13
Form of Bonds ...................... 16
Execution of Bonds... ............ 16
Transfer of Bonds ................. 16
Exchange of Bonds .....,....,....I7
Temporary Bonds...,... ...........17
Registration Books.... ............I7
Bonds Mutilated, Lost, Destroyed or Stolen....... ......I7
Book-Entry System...... .........18
ARTICLE III ISSUANCE; APPLICATION OF PROCEEDS; VALIDITY;
ADDITIONAL 8ONDS............... .........19
ARTICLE I
SECTION 1.01.
SECTION 1.02.
SECTION 1.03.
SECTION 2.01.
SECTION 2.02.
SECTION 2.03.
SECTION 2.04.
SECTION 2.05.
SECTION 2.06.
SECTION 2.07.
SECTION 2.08.
SECTION 2.09.
SECTION 2.10.
SECTION 2.11.
Punctual Payment.... ..............25
Extension of Payment of Bonds. .............25
Against Encumbrances............. ...............25
Power to Issue Bonds and Make Pledse and
Assignment ................ .................,:, .........25
Accounting Records and Financial Statements.................,.........25
Additional Obligations..............,. ............26
Sublease ..............26
Tax Covenants.......... ............26
Continuing Disclosure ..........26
Further Assurances ................26
ARTICLE IV REVENUES: FLOW OF FUNDS ..........22
SECTION 3.01.
SECTION 3.02.
SECTION 3.03.
SECTION 3.04.
SECTION 3.05.
SECTION 3.06.
SECTION 4.01.
SECTION 4.02.
SECTION 4.03.
SECTION 4.04.
SECTION 4.05.
SECTION 5.01.
SECTION 5.02.
SECTION 5.03.
SECTION 5.04.
SECTION 5.05.
SECTION 5.06.
SECTION 5.07.
SECTION 5.08.
SECTION 5.09.
SECTION 5.10.
ARTICLE V COVENANTS OF AUTHORITY............... ,,,,,,,,,.,,.25
r l28l-0009\2393696
TABLE OF CONTENTS
Page
ARTICLE VI TRUSTEE ...........27
Appointment of Trustee............... ...........27
Acceptance of Trusts... ..........27
Fees, Charges and Expenses of Trustee. ...................30
Notice to Bond Owners of Default .........30
Intervention by Trustee............... ............30
Removal of Trustee. ..............31
Resignation by Trustee ............... ............31
Appointment of Successor Trustee ............... ............31
Merger or Consolidation......... ................31
Concerning any Successor Trustee .........31
Appointment of Co-Trustee........... .........32
Indemnification; Limited Liability of Trustee ..........32
Trustee Acceptance of Electronic Instructions...........................33
ARTICLE VII MODIFICATION AND AMENDMENT OF INDENTURE........,,,.,.,,.......34
SECTION 6.01.
SECTION 6.02.
SECTION 6.03.
SECTION 6.04.
SECTION 6.05.
SECTION 6.06.
SECTION 6.07.
SECTION 6.08.
SECTION 6.09.
SECTION 6.10.
SECTION 6.1 1.
SECTION 6.12.
SECTION 6.13.
SECTION 7.01.
SECTION 7.02.
SECTION 7.03.
SECTION 8.01.
SECTION 8.02.
SECTION 8.03.
SECTION 8.04.
SECTION 8.05.
SECTION 8.06.
SECTION 8.07.
SECTION 8.08.
Amendment of Indenture.............. ..........34
Effect of Supplemental Indenture.........,. ..................35
Endorsement or Replacement of Bonds After
Events of Default ..................35
Remedies; No Acceleration......... ...........37
Application of Revenues and Other Funds after
Default...... ...........31
Power of Trustee to Control Proceedings ................ ...................37
Appointment of Receivers .......... ............37
Non-Waiver................ ...........38
Rights of Bond Owners..... ......................38
Termination of Proceedines.........
Limited Liability of Authority ............... ...................39
Benefits of Indenture Limited.. ...............39
Discharge of Indenture................ ............40
Trustee's Additional Acknowledgment of Certain
Provisions of the Sublease ......................40
Successor Deemed Included in All References to
Predecessor ............... ............40
Content of Certificates and Opinions... .....................40
Execution of Documents by Bond Owners...,. ..........40
Disqualified Bonds.... ........,...41
Waiver of Personal Liability. ..................41
Partial Invalidity.. ..................41
SECTION 9.01.
SECTION 9.02.
SECTION 9.03.
SECTION 9.04.
SECTION 9.05.
SECTION 9.06.
SECTION 9.07.
SECTION 9.08.
SECTION 9.09.
SECTION 9.10.
r r281-0009\2393696 -iii-
SECTION 9.1 1.
SECTION 9.12.
SECTION 9.13.
SECTION 9.14.
SECTION 9.15.
SECTION 9.16.
SECTION 9.17.
EXHIBIT A FORM OF BOND
EXHIBIT B FORM OF REQUISITION (COSTS OF ISSUANCE)
EXHIBIT C FORM OF REQUISITION (PROJECT FUND)
-iv-l 1281-0009\2393696
INDENTURE
This Indenture, dated as of July I, 2020, is made and entered into by and between the
Orange City Public Facilities Financing Authority, a joint powers authority organized and existing
under the laws of the State of California (the "Authority") and U.S. Bank National Association, a
national banking association duly organized and existing under the laws of the United States of
America, being qualified to accept and administer the trusts hereby created (the "Trustee").
RECITALS:
A. The Authority is a joint powers authority duly organized and existing under and
pursuant to that certain Joint Exercise of Powers Agreement, dated as of March 19,2020, by and
between the City and the California Statewide Communities Development Authority, and under
the provisions of Articles I through 4 (commencing with Section 6500), Chapter 5, Division 7,
Title 1 of the Government Code of the State of California, and is authorized pursuant to Article 4
of the Act to borrow money for the purpose of financing and refinancing public capital
improvements.
B. The Authority has determined to issue its Lease Revenue Bonds, Series 2020A (the
"Bonds") to assist the City with the financing of certain public capital improvements, including:
(i) the construction of a new Fire Station No. 1 Headquarters, (ii) roof and related improvements
at the City's police station headquarters, (iii) roof and other improvements at the City's other fire
stations, and (iv) installation of security improvements at City facilities.
C. In conjunction with the issuance of the Bonds, the Authority and the City are
entering into: (1) the Lease Agreement, dated as July I, 2020, by and between the City, as the
lessor, and the Authority, as the lessee, and(2) the Sublease, dated as July I,2020 (the "sublease"),
by and between the Authority, as the sublessor, and the City, as the sublessee.
D. The Authority has assigned, without recourse, all its rights to receive "Base Rental"
payments (the "Base Rental Payments") to be paid by the City under and pursuant to the Sublease
and certain other rights to the Trustee pursuant to an Assignment Agreement, dated as of even date
herewith, by and between the Authority and the Trustee.
E. Subject to and in accordance with the terms of this Indenture, the Base Rental
Payments to be received by the Trustee shall be held in a special fund pledged to the payment of
the debt service of the Bonds.
F. The Bonds shall be issued pursuant to and secured by this Indenture in the manner
provided herein.
G. In order to provide for the authentication and delivery of the Bonds, to establish
and declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof and interest thereon, and premium, if any, the Authority has
authorized the execution and delivery of this Indenture.
H. The Authority has determined that all acts and proceedings required by law
necessary to constitute this [ndenture a valid and binding agreement for the uses and purposes
1 1281-0009\2393696 -1-
herein set forth in accordance with its terms, have been done and taken, and the execution and
delivery of the Indenture have been in all respects duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time issued
and Outstanding under this Indentureo according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the terms
and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase
and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the
receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the
Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01 Definitions. Unless the context otherwise requires, the terms
defined in this Section shall for all pulposes of this Indenture and of any Supplemental Indenture
and of the Bonds and of any certificate, opinion, request or other document herein mentioned have
the meanings herein specified.
"Act" means Articles I through 4 (commencing with Section 6500), Chapter 5, Division
7, Title 1 of the Government Code of the State, as in existence on the Closins Date or as thereafter
amended from time to time.
"Additional Bonds" means additional bonds payable from and secured by Revenues on
parity with all other Outstanding Bonds issued pursuant to and in accordance with Section 3.06
hereof.
"Additional Rental Payments" means the additional rental payable by the City under and
pursuant to Section 3(b) of the Sublease.
"Annual Debt Service" means, with respect to any Bond Year, the sum obtained by totaling
the following:
(a)The principal amount of all Outstanding Bonds maturing in such Bond
Year; and
(b) The interest which would be due during such Bond Year on the aggregate
principal amount of Bonds which would be Outstanding in such Bond Year if the Bonds
Outstanding on the date of such computation were to mature in accordance with the applicable
maturity schedule. At the time and for the purpose of making such computation, the amount of
Bonds already retired in advance of the above- mentioned schedule or schedules shall be deducted
pro rata from the remaining amounts thereon.
"Assignment Agreement" means the Assignment Agreement, dated as of July I,2020,by
and between the Authority and the Trustee (as described in Section 4.01), as the same may be
amended, supplemented or otherwise modified from time to time.
1 128 l -0009\2393696 -2-
"Authority" means the Orange City Public Facilities Financing Authority, a joint powers
authority duly organized and existing under the JPA Agreement and the laws of the State.
"Authority Governing Board" means the Board of Directors of the Authority.
"Average Annual Debt Service" means the average Annual Debt Service over all Bond
Years.
"Base Rental" or "Base Rental Payments" means the base rental payable by the City under
and pursuant to Section 3(a) of the Sublease.
"Bond Counsel" means any attorney or firm of attorneys appointed by or acceptable to the
Authority of nationally recognized expertise in the issuance of obligations the interest on which is
excludable from gross income for federal income tax purposes under the Code.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article
4 of the Act, as in existence on the Closing Date or as thereafter amended from time to time.
"Bond Year" means each twelve-month period extending from November 2 in one calendar
year to November 1 of the succeeding calendar year, both dates inclusive, except that the first
Bond Year shall extend from the Closing Date to November I,2020.
"Bonds" means the Orange City Public Facilities Financing Authority, Lease Revenue
Bonds, Series 20204, issued pursuant to this Indenture.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day on which
commercial banks in the city in which the Trustee maintains its Trust Office are authorized or
required by law or executive order to close or (iii) a day on which the New York Stock Exchange
is closed.
"Certificate of the Authority" means a certificate in writing signed by the Chair, Executive
Director, the Assistant Executive Director or the Treasurer of the Authority or by any other officer
of the Authority duly authorized for that purpose by a resolution adopted by the Authority
Commission and filed with the Trustee.
"Certificate of the City" means a certificate in writing signed by the Mayor, the City
Manager, the Assistant City Manager, the Administrative Services Manager, the Finance Director
or by any other officer of the City duly authorized for that purpose.
"@" means the City of Orange, California.
"Closing Date" means July 16, 2020.
'(&&" means the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.
"Continuing Disclosure Agreement" means the continuing disclosure undertaking of the
City relating to the Bonds in connection with Rule 15c2-12(bX5) promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as originally executed and
1 1281-0009\2393696 -3-
as the same may be amended and supplemented from time to time in accordance with the terms
thereof.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority, the
City and the Trustee, compensation to any financial consultants or underwriters, legal fees and
expenses, filing and recording costs, costs of obtaining title insurance with respect to the l,eased
Properties, costs relating to conveyance of the Leased Properties, rating agency fees, costs of
preparation and reproduction of documents, costs of printing, bond insurance premiums and fees
and costs for any guaranty, surety bond, letter of credit or other credit facility.
..@,'meanSthefundbythatnameestablishedandheldbytheTrustee
pursuant to Section 3.03.
"Depository" means The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Bonds, or any other securities depository
acting as Depository under Section 2.1 1.
"Event of Default" means any of the events described in Section 8.01.
"Federal Securities" means any direct, noncallable obligations of the United States of
America (including obligations issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America), or other noncallable obligations for which the
faith and credit of the United States of America are pledged for the payment of principal and
interest.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the date
the contract to purchase or sell the investment becomes binding) if the investment is traded on an
established securities market (within the meaning of section 1273 of the Code) and, otherwise, the
term "fair market value" means the acquisition price in a bona fide arm's length transaction (as
referenced above) if: (i) the investment is a certificate of deposit the value of which is determined
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) the value of which is determined in accordance with applicable regulations under the
Code, (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, or (iv) the investment is the Local Agency Investment Fund of the State, but only if at all
times during which the investment is held its yield is reasonably expected to be equal to or greater
than the yield on a reasonably comparable direct obligation of the United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period
selected and designated by the Authority as its official fiscal year period.
I 128 l -0009\2393696 -4-
"Indenture" means this Indenture, as originally executed or as it may from time to time be
amended or supplemented in accordance herewith.
"Independent Certified Public Accountant" means any certified public accountant or firm
of certified public accountants appointed and paid by the Authority, and who, or each of whom:
(i) is in fact independent and not under domination of the Authority or the City; (ii) does not have
any substantial interest, direct or indirect, in the Authority or the City; and (iii) is not connected
with the Authority or the City as an officer or employee of the Authority or the City but who may
be regularly retained to make annual or other audits of the books of or reports to the Authority or
the City.
"Information Services" means the Electronic Municipal Market Access System (referred
to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at
www.emma.msrb.org; provided, however, in accordance with then current guidelines of the
Securities and Exchange Commission, Information Services shall mean such other organizations
providing information with respect to called bonds as the Authority may designate to the Trustee
in writing.
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Interest Paliment Date'o means May I and November 1 of each year, commencing
November I"2020.
"JPA_Agreeme4" means the Joint Exercise of Powers Agreement, dated as of March 19,
2020,by and between the City and the California Statewide Communities Development Authority,
together with any amendments thereof and supplements thereto.
"Lease" means the Lease Agreement, dated as of even date herewith, by and between the
City, as the lessor, and the Authority, as the lessee, as the same may be amended, supplemented
or otherwise modified from time to time.
"Lease Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02.
"Lg,ased_Prope4!es," has the meaning given to such term in the Sublease.
"Maximum Annual Debt Service" means, with respect to the Bonds, the largest Annual
Debt Service during the period from the date of calculation through the final maturity date of any
Outstanding Bonds.
"Moody's'o means Moody's Investors Service, Inc., and its successors and assigns, or if
such corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, any other nationally recognized securities rating agency designated by the
Authority.
"Nominee" means the nominee of the Depository, which initially will be Cede & Co., as
determined from time to time pursuant to Section 2.11.
l l28l-0009\2393696 -5-
"Qligi.dPurchaser" means Raymond James & Associates, Inc.
o'Qjqlslgldlqg" when used as of any particular time with reference to Bonds, means (subject
to the provisions of Section 9.08) all Bonds theretofore executed, issued and delivered by the
Authority under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section
9.03: and
(c) Bonds in lieu of which or in substitution for which other Bonds shall have
been executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
"Owner" or "Bond Owner" when used with respect to any Bond, means the person in
whose name the ownership of such Bond shall be registered on the Registration Books.
"Paqflgilro." means those broker-dealers, banks and other financial institutions from time
to time for which the Depository holds Bonds as securities depository.
"Permitted Investments" mean any of the following obligations if and to the extent that
they are permissible investments of funds of the Authority and/or the City, as applicable (provided,
that the Trustee shall be entitled to rely upon a Certificate of the Authority as conclusive
certification to the Trustee that the investments described therein are permissible investment of
funds of the Authority):
(a) Direct obligations of the United States (including obligations issued or held
in book-entry form on the books of the Department of the Treasury) or obligations the principal of
and interest on which are unconditionally guaranteed by the United States of America.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States (stripped securities are only permitted if they have
been stripped by the agency itself):
(1) U.S. Export-Import Bank (Eximbank) - Direct obligations or fully
guaranteed certificates of beneficial ownership;
(2) Federal Financing Bank;
(3) Federal Housing Administration Debentures (FHA);
(4) General Services Administration - Participation certificates;
(5) Government Mortgage Association (A) GNMA-guaranteed
mortgage backed bonds, and (B) GNMA-guaranteed pass-through obligations;
l t28t-0009\2393696 -6-
(6) U.S. Department of Housing and Urban Development (HUD) - (A)
Project Notes, (B) Local Authority Bonds, (C) New Communities Debentures - U.S. government
guaranteed debentures, and (D) U.S. Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds.
(c) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit United States government agencies
(stripped securities are only permitted if they have been stripped by the agency itself):
(1) Federal Home Loan Bank System - Senior debt obligations;
(2) Resolution Funding Corp. (REFCOPRP) obligations; and
(3) Farm Credit System - Consolidated system wide bonds and notes.
(d) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit United States government agencies
(stripped securities are only permitted if they have been stripped by the agency itself):
(1) Federal Home Loan Bank System - Senior debt obligations;
(2) Resolution Funding Corp. (REFCOPRP) obligations; and
(3) Farm Credit System - Consolidated system wide bonds and notes.
(e) U.S. Dollar-denominated certificates of deposit, bankers' acceptances or
interest-bearing time deposits that are made with the Trustee or with any member of the Federal
Deposit Insurance Corporation, provided that such investments are: (1) fully insured by the
Federal Deposit Insurance Corporation: (2) made with any bank (including the Trustee or any
Affiliate thereof) having undivided capital and surplus of at least $100,000,000, the debt
obligations (or in the case of the principal bank holding company, debt obligations of the bank
holding company) of which are rated in the top 2 tier categories by at least one of the recognized
rating agencies at the time of purchase; or (3) continuously secured as to principal , to the extent
not insured by the Federal Deposit Insurance Corporation, by items listed in (a) or (b) above, or
other marketable securities eligible as security for the deposit of trust funds under applicable
regulations of the Comptroller of the Currency of the United States of America, having a market
value (exclusive of accrued interest) not less than the amount of such deposit.
(0 Investments in money market mutual funds rated in the highest short-term
rating category for money market funds (without regard to qualifier) of at least one nationally
recognized rating agency including funds for which the Trustee and its affiliates provide
investment advisory or other services but excluding funds with a floating net asset value.
(g) Federal funds or bankers acceptances with a maximum term of one year of
any bank which has an unsecured, uninsured and unguaranteed obligation rating of Prime-1 or ,{3
or better by Moody's and A-1 or A or better by S&P.
(h) Repurchase Agreements for 30 days or less, subject to the following criteria:
I l28l-0009\2393696 -7-
(1) Repos must be between the municipal entity and a dealer bank or
securities firm;
(2) Primary dealers on the Federal Reserve reporting dealer list which
are rated A or better bv S&P and Moodv's: and
(3) Bank rated o'A" or above by S&P and Moody's.
(i) "State Obligations," which means:
(1) Bonds or notes issued by any state or municipality whose underlying
rating from Moody's or S&P is in the highest rating category assigned by such agency;
(2) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and credit of a state
the unsecured general obligation debt of which is rated "A3" by Moody's and "A" by S&P, or
better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency
whose unsecured general obligation debt is so rated;
(3) Direct general short-term obligations of any state agency or
subdivision or agency thereof described in (a) above and rated "A-1+" by S&P and "MIG-1" by
Moody's; and
(4) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (A) above and rated ((AA" or better by
S&P and "Aa" or better by Moody's.
0) Pre-refunded municipal obligations rated "AAA" by S&P and "Aaa" by
Moody's meeting the following requirements:
(1) the municipal obligations are (A) not subject to redemption prior to
maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions
concerning their call and redemption and the issuer of the municipal obligations has covenanted
not to redeem such municipal obligations other than as set forth in such instructions;
(2) the municipal obligations are secured by cash or direct obligations
(other than an obligation subject to variation in prineipal repayment) of the United States of
America ("United States Treasury Obligations") which may be applied only to payment of the
principal of, interest and premium on such municipal obligations;
(3) the principal of and interest on the United States Treasury
Obligations (plus any cash in the escrow) has been verified by the report of independent certified
public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due
and to become due on the municipal obligations ("Verification");
(4) the cash or United States Treasury Obligations serving as security
for the municipal obligations are held by an escrow agent or trustee in trust for owners of the
municipal obligations ;
l t28l-0009\2393696 -8-
(5) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery of a new
Verification: and
(6) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
(k) Any state administered pool investment fund in which the Successor
Agency is statutorily permitted or required to invest will be deemed a permitted investment,
including, but not limited to the Local Agency Investment Fund in the treasury of the State.
"Principal Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(b).
"Elg|eg!-b6." means, with respect to a Project, the costs, expenses and liabilities paid or
incurred or to be paid or incurred by the City or the Authority, all calculated in accordance with
generally accepted accounting principles, in connection with acquisition(s), financing, planning,
engineering, design, construction and installation(s) relating to such Project or any portion thereof,
and the obtaining of all governmental approvals, certificates, permits and licenses with respect
thereto, including but not limited to (a) the costs of acquisition, renovation or construction of real
or personal property or any interest therein, (b) any good faith or other similar payment or deposits,
(c) the costs of any demolitions or relocation necessary in connection therewith, (d) costs of
physical construction and costs incidental to such construction, renovation or acquisition, (e) all
costs relating to injury and damage claims, (0 the costs of any indemnity or surety bonds and
premiums on insurance, including obligations to a stock, mutual or reciprocal insurance company
or exchange, (g) preliminary investigation and development costs, (h) engineering fees,
contractors' fees, legal fees and expenses, and any other fees and expenses of professional
consultants and (i) the costs of labor, materials, equipment and utility services and supplies,
() administrative and general overhead expenses and costs of keeping accounts and making reports
required by the Indenture or the Sublease prior to or in connection with the completion of such
Project, (k) all federal, state and local taxes and payments in lieu of taxes legally required to be
paid in connection with such Project prior to or in connection with the completion of such Project.
It is intended that this definition of Project Costs be broadly construed to encompass all costso
expenses and liabilities of the City and the Authority which are chargeable to the capital accounts
of related Project in accordance with generally accepted accounting principles.
"Project Fund" means the fund by that name established and held by the Trustee pursuant
to Section 3.04.
"bjec1!q" means the following City projects (all of which constitute "public capital
improvements" as defined in the Act): (i) the construction of a new Fire Station No. I
Headquarters, (ii) roof and related improvements at the City's police station headquarters, (iii) roof
and other improvements at the City's other fire stations, (iv) installation of security improvements
at City facilities, and (v) such other public infrastructure improvements to be determined by the
Citv.
-9-r 1281-0009\2393696
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar
day of the month immediately preceding such Interest Payment Date, whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.03.
"Registration Books" means the records maintained by the Trustee pursuant to Section 2.09
for the registration and transfer of ownership of the Bonds.
"Rental Payments" means, together, the Base Rental Payments and the Additional Rental
Payments.
"Representation Letter" means the Blanket Issuer Letter of Representations, dated June 20,
2020, from the Authority to DTC, qualifying bonds issued by the Authority for the Depository's
book-entry system, as originally executed or as it may be supplemented or revised or replaced by
a letter to a substitute depository.
"Request of the Authority" means a request in writing signed by the Chair, the Executive
Director, the Assistant Executive Director or the Controller of the Authority, or by any other officer
of the Authority duly authorized for that purpose by a resolution adopted by the Authority
Commission and filed with the Trustee.
"Request of the Citlu" means a request in writing signed by the Mayor, the City Manager,
Assistant City Manager, the Administrative Services Director or by any other officer of the City
duly authorized for that purpose.
"Revenues" means: (a) all Base Rental Payments payable by the City pursuant to the
Sublease (including prepayments); (b) any proceeds of Bonds originally deposited with the Trustee
and held by the Trustee in the Lease Revenue Fund and the accounts thereof; (c) investment income
with respect to any moneys held by the Trustee in the Lease Revenue Fund and the accounts thereof
(other than amounts payable to the United States of America for arbitrage rebate purposes pursuant
to the Code); and (d) any insurance proceeds or condemnation awards received by or payable to
the Trustee with respect to the Leased Properties, including rental intemrption insurance.
((S&P" means S&P Global Ratings, its successors and assigns, or if such corporation shall
be dissolved or liquidated or shall no longer perform the functions of a securities rating agency,
any other nationally recognized securities rating agency designated by the Authority.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, New
York, New York 10041, Attn: Call Notification Department, Fax (2I2) 855-7232 and, in
accordance with then current guidelines of the Securities and Exchange Commission, such other
addresses and/or such other securities depositories as the Authority may designate in a Certificate
of the Authority delivered to the Trustee.
"State" means the State of California.
l 128 I -0009\2393696 -10-
"Sublease" means the Sublease, dated as of July 1, 2020, with respect to the Leased
Properties, by and between the Authority as sublessor and the City as sublessee, as the same may
be amended, supplemented or otherwise modified from time to time.
"Supplemental Inden 'o means any agreement supplemental to or amendatory of this
Indenture entered into in accordance with the provisions of Article VIL
"Tax Certificate" means the Certificate Regarding Compliance with Certain Tax Matters
(or similar instrument) dated the date of the original delivery date of the Bonds relating to the
requirements of certain provisions of the Code, as such certificate may from time to time be
modified or supplemented in accordance with the terms thereof.
"Tax-Exempt" means, with respect to interest on any obligations of a state or local
government, that such interest is excluded from gross income for federal income tax purposes
whether or not such interest is an item of tax preference for purposes of the alternative minimum
tax under the Code or otherwise taken into account in calculating tax liabilities under the Code.
"Term Bonds" means the Bonds maturing on November I,2045 and November 1, 2050.
"Trust Office" means the corporate trust office of the Trustee at the address set forth in
Article XI, or such other office designated by the Trustee from time to time; provided, however,
for transfer, registration, exchange, payment and surrender of Bonds, such term means the
corporate trust operations office of U.S. Bank National Association in St. Paul, Minnesota, or such
other office designated by the Trustee from time to time.
"Trus[ee,'means U.S. Bank National Association, and its successors and assigns, and any
other corporation or association that may at any time be substituted in its place as provided in
Article VI.
SECTION 1.02 Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words "herein," "hereof,'o "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
SECTION 1.03 Equal Securitli. In consideration of the acceptance of the Bonds by
the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between
the Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and proportionate
benefit, security and protection of all Owners of the Bonds without preference, priority or
distinction as to security or otherwise of any of the Bonds over any of the others by reason of the
number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause
whatsoever, except as expressly provided therein or herein.
1 128r-0009\2393696 -11-
ARTICLE II
AUTHORIZATION; GENERAL PROVISIONS
SECTION 2.01 Authorization: Designation. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result
of such review, and hereby finds and determines that all things, conditions, and acts required by
law to exist, to happen and to be performed precedent to and in the issuance of the Bonds do exist,
have happened and have been performed in due time, form and manner as required by law, and
the Authority is now authorized under the JPA Agreement and the Bond Law and each and every
requirement of law, to issue the Bonds in the manner and form provided in this Indenture.
Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant to the Bond Law
and this Indenture for the purposes described in the recitals hereof.
The Bonds are authorizedto be issued by the Authority under and subject to the Bond Law
and the terms of this Indenture and shall be designated the Orange City Public Facilities Financing
Authority Lease Revenue Bonds, Series 2020A, and shall be issued in the original aggregate
principal amount of Twenty-Nine Million Nine Hundred Thirty Thousand Dollars
($29,93o,ooo.oo).
SECTION 2.02 Terms of Bonds. The Bonds shall be dated the Closing Date, shall
mature on the dates and in the amounts, and shall bear interest (calculated on the basis of a 360-
day year of twelve 30-day months) at the rates, as follows:
Maturity Date Principal Interest Rate
(November 1) Amount Per Annum
Maturity Date Principal Interest Rate
(November 1) Amount Per Annum
202r
2022
2023
2024
2025
2026
2027
2028
2029
2030
2037
$520,000
550,000
570,000
595,000
620,000
645,000
670,000
695,000
725,000
755,000
785,000
4.00vo
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
2032
2033
2034
2035
2036
2037
2038
2039
2040
2045*
2050*
$820,000
850,000
885,000
920,000
960,000
1,000,000
1,040,000
1,080,000
1,125,000
6,355,000
7,765,000
4.00vo
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
4.00
* Term Bonds. See Section 2.03(c) (Redemption Resulting from Sinking Account Payments).
The Bonds shall be delivered in fully registered form, numbered from one upwards in
consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The
Bonds shall be executed and delivered in the denominations of $5,000 and any integral multiple
thereof.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (i) it is authenticated during the period from the day after the Record
Date for an Interest Payment Date to and includinq such Interest Payment Date. in which event it
I 1281-0009\2393696 -12-
shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or prior to the
Record Date for the first Interest Payment Date, in which event it shall bear interest from its dated
date; provided, however, that if, at the time of registration of any Bond, interest with respect to
such Bond is in default, such Bond shall bear interest from the Interest Payment Date to which
interest has been paid or made available for payment with respect to such Bond.
Interest with respect to any Bond shall be payable in lawful money of the United States of
America on each Interest Payment Date to the Owner thereof as of the close of business on the
Record Date. Subject to Section 2.1 1, interest on the Bonds shall be paid by check or draft of the
Trustee, mailed by first class mail no later than the Interest Payment Date to the Owner at such
Owner's address as it appears, on such Record Date, on the Registration Books maintained by the
Trustee; provided, however, that at the written request of the Owner of at least $1,000,000 in
aggregate principal amount of Outstanding Bonds filed with the Trustee prior to any Record Date,
interest on such Bonds shall be paid to such Owner on each succeeding Interest Payment Date
(unless such request has been revoked in writing) by wire transfer of immediately available funds
to an account in the United States designated in such written request. Payments of defaulted
interest with respect to the Bonds shall be paid by check or draft to the Owners as of a special
record date to be fixed by the Trustee, notice of which special record date shall be given to the
Owners of the Bonds not less than ten days prior thereto. The principal of and premium, if any,
on the Bonds are payable by check when due upon surrender thereof at the Trust Office in lawful
money of the United States of America.
SECTION 2.03 Redemption of Bonds
(a) Extraordinary Redemption. The Bonds are subject to redemption prior to
their respective maturity dates, upon notice as provided below, as a whole or in part on a pro rata
basis (as much as practicable) among the maturities, on any date, from amounts on deposit in the
Redemption Fund pursuant to Section 9 of the Sublease (from Net Proceeds received by the City
from insurance payments or condemnation awards with respect to the Leased Properties or any
portion thereof under the circumstances and upon the conditions and terms prescribed in the
Sublease, together with additional money, if any, transferred by the City at its discretion for such
purpose).
Redemption pursuant to this subsection (a) shall be made at a redemption
price equal to the sum of the principal of the Bonds to be redeemed plus accrued interest thereon
to the date fixed for redemption, without premium.
(b) Redemption Resulting from Prepalzments of Base Rental. The Bonds
maturing on or after November 1, 2029, shall be subject to redemption prior to their respective
maturity dates, as a whole or in part, from prepayments of Base Rental made at the option of the
City under Section 1 1(b) of the Sublease on any date with respect to which such prepayment have
been made (which shall be on or after November 1, 2028). The Bonds called for redemption
pursuant to this Section 2.03(b) shall be redeemed at a redemption price equal to 100 percent of
the principal amount of the Bonds to be redeemed, without premium, plus accrued interest thereon
to the date of redemption.
(c) Redemption Resulting from Sinking Account Paliments. The Bonds
maturing on November 1,2045 and November 1, 2050 shall be subject to redemption in part by
l 1281-0009\2393696 -13-
lot from sinking account payments made by the Authority, at a redemption price equal to the
principal amount thereof to be redeemed with accrued interest thereon to the redemption date,
without premium, in the aggregate respective principal amounts and on the respective dates as set
forth in the following tables; provided, however, if some but not all of the Term Bonds of a
maturity have been redeemed pursuant to Section 2.03(a) or 2.03(b), each future sinking account
payment with respect to such Term Bonds will be reduced on a pro rata basis (as nearly as
practicable) in integral multiples of $5,000, so that the total amount of sinking account payments
with respect to such Term Bonds to be made subsequent to a Section 2.03(a) extraordinary
redemption or a Section 2.03(b) optional redemption shall be reduced by an amount equal to the
principal amount of the Term Bonds so redeemed, all as shall be designated pursuant to written
notice filed by the Authority with the Trustee:
Bonds Maturine on November 1,.2045
Redemption Date
(November 1)
Principal Amount
to be Redeemed
* maturity
Bonds Maturing on November 1.2050
2041
2042
2043
2044
2045*
Redemption Date
(November 1)
$1,170,000
r,220,000
1,270,000
1,320,000
1,375,000
Principal Amount
to be Redeemed
2046
2047
2048
2049
2050*
$1,430,000
1,490,000
1,550,000
1,615,000
1,680,000
x maturity
In lieu of a redemption pursuant to this Section 2.03(c), the Trustee may apply amounts in
the Principal Account to purchase Term Bonds at public or private sale, as and when and at such
prices (including brokerage and other charges, but excluding accrued interest, which is payable
from the Interest Account) as may be directed by the Authority, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to such Bonds,
as set forth in writing by the Authority; ry4!9g!, however, that no Term Bonds shall be purchased
by the Trustee hereunder with a settlement date more than 60 days prior to the date on which the
Authority would otherwise redeem such Term Bonds pursuant to this Section 2.03(c). The
principal amount of any Term Bonds so purchased by the Trustee shall be credited towards and
shall reduce the Principal Account payment otherwise required to be made with respect to such
Term Bonds on the applicable redemption date.
l 128l-0009\2393696 -r4-
(d) Notice of Redemption. The Authority shall give written notice of its
intention to redeem Bonds under Section 2.03(a) or Section 2.03(b) to the Trustee at least 45 days
before the proposed redemption date; ryided, that the Trustee may accept a shorter notice period
or waive such notice requirement at the Trustee's sole discretion. The Trustee, on behalf and at
the expense of the Authority, shall send (by first class mail or if the Owner of such Bonds is a
depository, by such method as acceptable to such depository) notice of any redemption to the
respective Owners of any Bonds designated for redemption at their respective addresses appearing
on the Registration Books, and to the Securities Depositories and to one or more Information
Services by such manner of delivery as then acceptable to such entities, at least 30 but not more
than 60 days prior to the date fixed for redemption; ry!g!gi!, however, that neither failure to
receive any such notice so sent nor any defect therein shall affect the validity of the proceedings
for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice
shall state the date of the notice, the redemption date, the redemption place and the redemption
price and shall specify the CUSIP numbers, the Bond numbers and the maturity or maturities (in
the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds
to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the
Trustee for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date. Neither the Authority nor the Trustee
shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in
any redemption notice with respect thereto, and any such redemption notice may contain a
statement to the effect that CUSIP numbers have been assigned by an independent service for
convenience of reference and that neither the Authority nor the Trustee shall be liable for any
inaccuracy in such numbers.
(e) Right to Rescind Optional Redemption. The Authority (upon direction by
the City, at the City's option) may rescind any optional redemption by written notice to the Trustee
on or prior to the date fixed for redemption. In addition, any notice of optional redemption shall
be cancelled and annulled if for any reason funds will not be or are not available on the date fixed
for redemption for the payment in full of the Bonds then called for redemption, and such
cancellation shall not constitute an Event of Default hereunder. The Authority, the City and the
Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission. The Trustee shall send notices of such rescission in the same manner as that prescribed
in Section 2.03(d) for notices of redemption.
(0 Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be
redeemed from all Outstanding Bonds or such given portion thereof not previously called for
redemption, on a pro rata basis among the maturities (unless the maturity or maturities are
otherwise specified in this Indenture or in writing by the Authority) and by lot within a maturity
in any manner which the Trustee in its discretion shall deem appropriate. 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.
(g) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the
Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new
Bond or Bonds of the same maturity date, of authorized denominations in aggregate principal
I t28l-0009\2393696 -15-
amount equal to the unredeemed portion of the Bond being redeemed. A partial redemption shall
be valid upon payment of the amount required to be paid to the Owner, and the Authority and the
Trustee shall be released and discharged from all liability to the extent of such payment.
(h) Effect of Redemption. From and after the date fixed for redemption, if
funds available for the payment of the principal of and interest (and premium, if any) on the Bonds
so called for redemption shall have been duly provided, such Bonds so called shall cease to be
entitled to any benefit under this Indenture other than the right to receive payment of the
redemption price, and no interest shall accrue thereon from and after the redemption date. All
Bonds redeemed pursuant to this Section 2.03 shall be canceled by the Trustee. All moneys held
by or on behalf of the Trustee for the payment of principal of or interest or premium on Bonds,
whether at redemption or maturity, shall be held in trust for the account of the Owners thereof and
the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any
interest earned on, moneys so held.
SECTION 2.04 Form of Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the
respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein,
with necessary or appropriate variations, omissions and insertions, as permitted or required by this
Indenture.
SECTION 2.05 Execution of Bonds. The Bonds shall be signed in the name and on
behalf of the Authority with the manual or facsimile signatures of its Chair or Vice Chair and
attested with the manual or facsimile signature of its Secretary or any Assistant Secretary, and
shall be delivered to the Trustee for authentication by it. In case any officer of the Authority who
shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall
have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issue, shall be as binding upon the Authority as though the individual who signed the same had
continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the
Authority by any individual who on the actual date of the execution of such Bond shall be the
proper officer although on the nominal date of such Bond such individual shall not have been such
officer.
Only such Bonds as shall bear thereon a certificate of authentication, manually executed
on behalf of the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of
this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so
authenticated have been dulv authenticated and delivered hereunder and are entitled to the benefits
of this lndenture.
SECTION 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the Registration Books, by the person in whose name it is registered, in person
or by his duly authorized attorney, upon presentation and surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer in a form approved by the Trustee,
duly executed. Whenever any Bond shall be surrendered for transfer, the Authority shall execute
and the Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of
like tenor, maturity and aggregate principal amount. The cost of printing any Bonds and any
services rendered or expenses incurred by the Trustee in connection with any such transfer shall
r 1281-0009\2393696 -r6-
be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting
such transfer of any tax or other governmental charge required to be paid with respect to such
transfer. The Trustee shall not be required to transfer, pursuant to this Section, (a) any Bond during
the period established by the Trustee for the selection of Bonds for redemption or (b) any Bond
selected for redemption pursuant to Section2.O3(0.
SECTION 2.07 Exchange of Bonds. Bonds may be exchanged at the Trust Office
of the Trustee for the same aggregate principal amount of Bonds of the same tenor and maturity
and of other authorized denominations. The cost of printing any Bonds and any services rendered
or expenses incurred by the Trustee in connection with any such exchange shall be paid by the
Authority, except that the Trustee shall require the payment by the Owner requesting such
exchange of any tax or other governmental charge required to be paid with respect to such
exchange. The Trustee shall not be required to exchange, pursuant to this Section, (a) any Bond
during the period established by the Trustee for the selection of Bonds for redemption or (b) any
Bond selected for redemption pursuant to Section2.03(f).
SECTION 2.08 Temporary Bonds. The Bonds may be issued initially in temporary
form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
Authority and may contain such reference to any of the provisions of this Indenture as may be
appropriate. Every temporary Bond shall be executed by the Authority and be registered and
authenticated by the Trustee upon the same conditions and in substantially the same manner as the
definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive
Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for cancellation,
in exchange therefor at the Trust Office of the Trustee, and the Trustee shall authenticate and
deliver in exchange for such temporary Bonds definitive Bonds of like tenor, maturity and
aggregate principal amount in authorized denominations. Until so exchanged, the temporary
Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated
and delivered hereunder.
SECTION 2.09 Registration Books. The Trustee will keep or cause to be kept at its
Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all
times during regular business hours be open to inspection by the Authority with reasonable prior
notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on said
records, Bonds as provided herein.
SECTION 2.10 Bonds Mutilated. Lost. Destroyed or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and aggregate
principal amount in an authorized denomination in exchange and substitution for the Bond so
mutilated, but only upon sunender to the Trustee of the Bond so mutilated. Every mutilated Bond
so surrendered to the Trustee shall be canceled by it. If any Bond issued hereunder shall be lost;
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee
and, if such evidence shall be satisfactory to it and indemnity satisfactory to it shall be given, the
Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon
authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so
lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for
l t28l-0009\2393696 -r7-
redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender
thereof upon receipt of indemnity satisfactory to the Trustee). The Authority may require payment
of a reasonable fee for each new Bond issued under this Section and of the expenses that may be
incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section
in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual
obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or
stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled
to the benefits of this Indenture with all other Bonds secured by this Indenture.
SECTION 2.11 Book-Entry SEtem.
(a) Book-E{rtr}i System: Limited Obligation of Authorit}'. The Bonds shall be
initially delivered in the form of a separate single fully registered Bond (which may be typewritten)
for each of the maturities of the Bonds (unless the Bonds of such maturity bear different interest
rates, then one Bond for each interest rate among such maturity). Upon initial delivery, the
ownership of each such Bond shall be registered in the registration books kept by the Trustee in
the name of the Nominee as nominee of the Depository. Except as provided in Section Z.II(c), all
of the Outstanding Bonds shall be registered in the registration books kept by the Trustee in the
name of the Nominee.
With respect to Bonds registered in the registration books kept by the Trustee in the name
of the Nominee, the Authority and the Trustee shall have no responsibility or obligation to any
Participant or to any person on behalf of which such a Participant holds an interest in the Bonds.
Without limiting the immediately preceding sentence, the Authority and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the
Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery
to any Participant or any other person, other than an Owner as shown in the registration books kept
by the Trustee, of any notice with respect to the Bonds, including any notice of redemption, (iii) the
selection by the Depository and its Participants of the beneficial interests in the Bonds to be
redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any Participant or
any other person, other than an Owner as shown in the registration books kept by the Trustee, of
any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds.
The Authority and the Trustee may treat and consider the person in whose name each Bond is
registered in the registration books kept by the Trustee as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium, if any, and interest with respect to such
Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond,
for the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Trustee shall pay all principal of, premium, if any, and interest due with respect
to the Bonds only to or upon the order of the respective Owners, as shown in the registration books
kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to satisfy and discharge fully the Authority's obligations with respect
to payment of the principal, premium, if any, and interest due with respect to the Bonds to the
extent of the sum or sums so paid. No person other than an Owner, as shown in the registration
books kept by the Trustee, shall receive a Bond evidencing the obligation of the Authority to make
payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by
the Depository to the Trustee and the Authority of written notice to the effect that the Depository
has determined to substitute a new nominee in place of the Nominee, and subject to the provisions
l 128 1-0009\2393696 -18-
herein with respect to Record Dates, the word Nominee in this lndenture shall refer to such new
nominee of the Depository.
(b) Representation Letter. In order to qualify the Bonds for the Depository's
book-entry system, the Authority has previously executed and delivered to such Depository the
Representation Letter. The Representation Letter does not in any way impose upon the Authority
or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds
other than the Owners, as shown on the registration books kept by the Trustee. The Trustee agrees
to take all action necessary to continuously comply with the Representation Letter to the extent
that such action is not inconsistent with this Indenture. In addition to the execution and delivery
of the Representation Letter, the Chair, the Executive Director, the Assistant Executive Director
and the Secretary and all other officers of the Authority are hereby authorized to take any other
actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository's book-entry
program.
(c) Transfers Outside of Book-Entry System. In the event (i) the Depository
determines not to continue to act as securities depository for the Bonds, or (ii) the Authority
determines that the Depository shall no longer so act, then the Authority will discontinue the book
entry system with the Depository. If the Authority fails to identify another qualified securities
depository to replace the Depository, then the Bonds so designated shall no longer be restricted to
being registered in the registration books kept by the Trustee in the name of the Nominee, but shall
be registered in whatever name or names persons transferring or exchanging Bonds shall designate,
in accordance with the provisions of Section 2.09.
(d) Payments to Nominee. Notwithstanding any other provisions of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all
payments with respect to principal, premium, if any, and interest due with respect to such Bond
and all notices with respect to such Bond shall be made and given, respectively, as provided in the
Representation Letter or as otherwise instructed by the Depository.
(e) Initial Depositorlz and Nominee. The initial Depository under this Article
shall be The Depository Trust Company, New York, New York. The initial Nominee shall be
Cede & Co., as Nominee of The Depository Trust Company, New York, New York.
ARTICLE III
ISSUANCE; APPLICATION OF PROCEEDS; VALIDITY; ADDITIONAL BONDS
SECTION 3.01 Issuance of Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver the Bonds to the Trustee for authentication and
delivery to or on the order of the Original Purchaser upon the Request of the Authority.
SECTION 3.02 Application of Proceeds of Sale of Bonds. On the Closing Date, the
Trustee shall receive, on behalf of the Authority, $34,230,627.25 from the Original Purchaser
(representing the par amount of the Bonds, plus an original issue premium of $4,375,452.25, less
an underwriter's discount of $74,825.00). The Trustee shall apply the Bonds proceeds as follows:
I 128 1 -0009\2393696 -r9-
(a) Deposit $230,627 .25 in the Costs of Issuance Fund;
(b) Deposit the remaining $34,000,000.00 in the Project Fund.
For record keeping purposes the Trustee may establish such funds and accounts as
may be necessary to reflect such deposits.
SECTION 3.03 Costs of Issuance Fund. The Trustee shall establish a fund known
as the "Costs of Issuance Fund." Pursuant to Section 3.02(a), the Trustee shall deposit a portion
of the proceeds of the sale of the Bonds into the Costs of Issuance Fund. The moneys in the Costs
of Issuance Fund shall be used from time to time to pay Costs of Issuance with respect to the Bonds
and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition, substantially in
the form attached hereto as Exhibit B, executed by an authorized officer of the Authority. Each
such requisition of the Authority shall be sufficient evidence to the Trustee of the facts stated
therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date that
is 180 days following the Closing Date, or upon the earlier receipt by the Trustee of a Request of
the Authority to do so, the Trustee shall transfer all remaining amounts in the Costs of Issuance
Fund to the Lease Revenue Fund.
SECTION 3.04 Project Fund. The Trustee shall establish and maintain a separate
fund to be known as the "Project Fund." On the Closing Date, the Trustee shall deposit a portion
of the sale proceeds of the Bonds into the Project Fund pursuant to Section 3.02(d). The Trustee
shall disburse or transfer amounts from the Project Fund, as stated in a Request of the City,
substantially in the form attached hereto as Exhibit C, for the payment of the Project Costs relating
to the Projects (including reimbursement to the City for any such costs paid by it). Upon receipt
of each such Request of the City, the Trustee shall pay the amount set forth in such Request as
directed by the terms thereof. When the Projects, or the portions thereof determined by the City
to be financed hereunder, have been completed, the Authority shall deliver or shall cause the City
to deliver to the Trustee a Certificate of the City stating the fact and date of such completion.
Following the delivery of such certificate, the Trustee shall transfer amounts then on deposit in the
Project Fund (or such portion thereof as may be specified in such Request of the City) to the Lease
Revenue Fund.
SECTION 3.05 Validity of Bonds. The validity of the authorization and issuance of
the Bonds shall not be affected in any way by any proceedings taken with respect to the application
of the proceeds of the Bonds, and the recital contained in the Bonds that the same are issued
pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of
their issuance.
SECTION 3.06 Additional Bonds.
(a) Subject to this Section 3.06, the Authority may from time to time issue one
or more series of Additional Bonds payable from and secured by Revenues on parity with all other
Outstanding Bonds. Bonds issued pursuant to this Section 3.06 shall be issued under and pursuant
to a Supplemental Indenture which shall specify:
(1) The maturity date or dates of such Additional Bonds, which shall be
November 1 in any given year;
l l28l-0009\2393696 -20-
(2) The interest payment dates, which shall be May 1 and November 1;
(3) The terms, if any, for call and redemption of such Additional Bonds
prior to maturity; and
(4) The interest rate or rates on such Additional Bonds and any other
matters deemed appropriate or necessary and not inconsistent with the provisions of this Indenture.
(b) All of the Additional Bonds shall be executed by the Authority for issuance
under the Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee
upon the Request of the Authority but only upon receipt by the Trustee of the following documents
or money or securities:
(1) A certified copy of the Supplemental Indenture authorizing the
issuance of such Additional Bonds:
(2)A Request of the Authority as to the delivery of such Additional
Bonds;
(3) An opinion of Bond Counsel substantially to the effect that: (i) the
Authority has the right and power under the Act to execute and deliver such Supplemental
Indenture, and such Supplemental Indenture has been duly executed and delivered by the
Authority, and the Indenture and such Supplemental Indentures are in full force and effect and are
valid and binding upon the Authority and enforceable in accordance with their terms (except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws
relating to the enforcement of creditors' rights and similar qualifications); (ii) such Additional
Bonds are valid and binding special obligations of the Authority, enforceable in accordance with
their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar laws relating to the enforcement of creditors' rights) and are subject to the terms of
the Indenture and all Supplemental Indentures and entitled to the benefits of the Indenture and all
such Supplemental lndentures and the Act, and such Additional Bonds have been duly and validly
issued in accordance with the Act and the Indenture and all such Supplemental Indentures; and
(iii) the obligation of the City to make the Base Rental Payments during the term of the Sublease
as amended pursuant to this Section 3.06 is a valid and binding obligation of the City.
(4) A Certificate of the Authority: (i) certifying that the Authority is in
compliance in all material respects with all agreement and covenants contained herein and that no
Event of Default has occurred or is continuing; (ii) stating that the Authority and the City have
entered into an amendment to the Sublease pursuant to which the City is obligated to make Base
Rental Payments at times and in amounts sufficient to provide for payment of the principal of and
interest on the Bonds (including such Additional Bonds) which will be Outstanding following the
sale and delivery of such Additional Bonds; and (iii) containing such additional statements as may
be reasonably necessary to show compliance with the requirements of the Indenture;
(5) An executed copy of the amendment to the Sublease; and
Such further documents, money and securities as are required by the provisions of
the Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds.
l l28l-0009\2393696 -2r-
SECTION 4.01
ARTICLE IV
REVENUES; FLOW OF FUNDS
Pledge of Revenues: Assignment of Rights. Subject to the
provisions of Section 6.03 (certain Trustee fees), the Bonds shall be secured by a first lien on and
pledge (which shall be effected in the manner and to the extent hereinafter provided) of all of the
Revenues and a pledge of all the moneys in the Lease Revenue Fund, including all amounts derived
from the investments of such moneys. The Bonds shall be equally secured by a pledge, charge
and lien upon the Revenues and such moneys without priority for number, date of the Bonds, date
of execution or date of delivery; and the payment of the interest on and principal of the Bonds and
any premiums upon the redemption of any portion thereof shall be and are secured by an exclusive
pledge, charge and lien upon the Revenues and such moneys. So long as any of the Bonds are
Outstanding, the Revenues shall not be used for any other purpose; except that out of the Revenues
and such moneys there may be apportioned such sums, for such purposes, as are expressly
permitted by Section 4.02.
Pursuant to the Assignment Agreement, the Authority has transferred in trust and assigns
to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues
and all of the right, title and interest of the Authority in (but not of its obligations under) the Lease
and the Sublease (other than its rights to indemnification and payment or reimbursement for any
costs or expenses), including its rights to receive the Base Rental scheduled to be paid by the City
under and pursuant to the Sublease and any and all of the other rights of the Authority under the
Lease and the Sublease as may be necessary to enforce payment of such Base Rental when due or
otherwise to protect the interest of the Owners of the Bonds, including its leasehold title to the
Leased Properties leased to the City pursuant to the Sublease. The Trustee accepts such
assignments. The Trustee shall be entitled to and shall receive all of the Revenues, and any
Revenues collected or received by the Authority shall be deemed to be held, and to have been
collected or received, by the Authority as the agent of the Trustee and shall promptly be paid by
the Authority to the Trustee.
SECTION 4.02 Lease Revenue Fund. All Base Rental Payments shall be deposited
by the Trustee in a special fund designated as the "Lease Revenue Fund,'o which the Trustee shall
establish, maintain and hold in trust hereunder.
On or before each Interest Payment Date, the Trustee shall transfer from the Lease Revenue
Fund and deposit into the following respective accounts (each of which the Trustee shall establish
and maintain within the Lease Revenue Fund), the following amounts in the following order of
priority, the requirements of each such account (including the making up of any deficiencies in
any such account resulting from lack of Revenues sufficient to make any earlier required deposit)
at the time of deposit to be satisfied before any transfer is made to any account subsequent in
priority:
(a) Interest Account. On or before each Interest Payment Date, the Trustee
shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit
in the Interest Account to equal the amount of interest becoming due and payable on such Interest
Payment Date on all Outstanding Bonds. No deposit need be made into the Interest Account if the
amount contained therein is at least equal to the interest becoming due and payable upon all
Outstanding Bonds on each succeeding Interest Payment Date within the then current Bond Year.
1 1281-0009\2393696 1n
All moneys in the lnterest Account shall be used and withdrawn by the Trustee solely for the
purpose of paying the interest on the Bonds as it shall become due and payable (including accrued
interest on any Bonds redeemed prior to maturity pursuant to Section 2.03).
(b) Principal Account. On or before each Interest Payment Date, the Trustee
shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit
in the Principal Account to equal the principal amount of the Bonds maturing or required to be
redeemed through mandatory sinking account redemption on such Interest Payment Date pursuant
to Section 2.OZ or Section 2.03 or pursuant to a Supplemental Indenture, as the case may be. All
moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose
of paying the principal of the Bonds.
(c) lReserved.l.
(d) Surplus. On or promptly after each Interest Payment Date, Trustee shall
determine the amount, if any, remaining in the Lease Revenue Fund after making the deposits
required by paragraphs (a) through (c) above and the transfers of investment earnings pursuant to
Section 4.04, and shall notify the City of the amount so determined. The Trustee shall apply such
amount as a credit against the next following Base Rental Payment; provided however, if directed
in a Request of the City, the Trustee shall, with respect to all or any portion of such amount, pay,
or set an amount aside for the payment of, any rebate requirement in accordance with a
computation made by the City pursuant to the Code, or if no such rebate requirement is then due,
release to the City for use for any lawful purpose.
SECTION 4.03 Redemption Fund. To the extent the Authority has provided the
Trustee with written notice of its intention to redeem Bonds in connection with an extraordinary
redemption pursuant to Section 2.03(a) or an optional redemption pursuant to Section 2.03(b) (or
the Trustee has received written notice from the City regarding a related repayment pursuant to
Section pf the Sublease), the Trustee shall establish a fund known as "Redemption Fund." At any
time the Trustee receives money from the City pursuant to Section 9 of the Sublease (Net Proceeds
of insurance payments or taking proceedings) or Section 11(b) of the Sublease (optional
prepayment by the City), the Trustee shall immediately deposit such money as follows: (i) an
amount equal to the interest on the Bonds to be redeemed pursuant to Section 2.03(a) or Section
2.03(b) accrued to the redemption date shall be deposited in the Interest Account; and (ii) the
balance of such moneys shall be deposited in the Redemption Fund. Amounts on deposit in the
Redemption Fund shall be applied solely for the purpose of paying the principal of the Bonds to
be redeemed pursuant to Section 2.03(a) or Section 2.03(b); provided, however, that at any time
prior to giving notice of redemption of any such Bonds, the Trustee may apply such amounts to
the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage
and other charges, but excluding accrued interest, which is payable from the Interest Account) as
shall be directed in writing by the Authority, except that the purchase price (exclusive of accrued
interest) may not exceed the redemption price then applicable to the Bonds.
SECTION 4.04 Investments. All moneys in any of the funds or accounts established
with the Trustee pursuant to this lndenture shall be invested by the Trustee solely in Permitted
Investments pursuant to the written direction of the Authority given to the Trustee at least two
Business Days in advance of the making of such investments; which Permitted lnvestments shall,
as nearly as practicable, mature (or be subject to redemption or disposition by the Trustee) on or
l 1281-0009\2393696 -23-
before the dates on which such money is anticipated to be needed for disbursement hereunder. In
the absence of any such direction from the Authority, the Trustee shall invest any such moneys in
money market funds described in clause (f) of the definition of Permitted Investments, so long as
such money market funds contain only United States Treasury or United States local government
obligations; provided, however, that any such investment shall be made by the Trustee only if,
prior to the date on which such investment is to be made, the Trustee shall have received a written
request of the Authority specifying a specific money market fund and, if no such request of the
Authority is so received, the Trustee shall hold such moneys uninvested. Obligations purchased
as an investment of moneys in any fund or account shall be deemed to be part of such fund or
account.
The Trustee shall transfer at least semiannually all investment earnings on amounts in the
Principal Account, and the Interest Account to the Lease Revenue Fund. Unless otherwise
specified in this Indenture, investment earnings on amounts in all other funds and accounts
established and maintained pursuant to this Indenture shall be retained in such respective funds
and accounts. For purposes of acquiring any investments hereunder, the Trustee may commingle
funds held by it hereunder. The Trustee or an affiliate of the Trustee may act as principal or agent
in the acquisition or disposition of any investment and may impose its customary charges therefor.
The Trustee shall incur no liability for losses arising from any investments made pursuant to this
Section.
The Authority acknowledges that regulations of the Comptroller of the Currency or other
applicable regulatory entity grant the Authority the right to receive brokerage confirmations of
security transactions to be effected by the Trustee hereunder as they occur. The Authority
specifically waives the right to receive such notification to the extent permitted by applicable law
and agrees that it will instead receive periodic cash transaction statements which include detail for
the investment transactions effected by the Trustee hereunder; provided, however, that the
Authority retains its right to receive brokerage confirmation on any investment transaction
requested by the Authority.
SECTION 4.05 Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund or account, Permitted Investments credited to such fund or
account shall be valued semiannually at the Fair Market Value thereof; provided that as to
certificates of deposits and banker acceptances, the value thereof shall equal the face amount, plus
accrued interest thereon. The Trustee shall have no duty in connection with the determination of
Fair Market Value other than to follow its normal practice in determining the value of Permitted
Investments, which may include utilizing computerized securities pricing services that may be
available to it including those available through its regular accounting system.
I 1281-0009\2393696 -24-
SECTION 5.01
ARTICLB V
COVENANTS OF THE AUTHORITY
Punctual Payment. The Authority shall punctually pay or cause to
be paid the principal and interest to become due in respect of all the Bonds, in strict conformity
with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof,
but only out of Revenues and other assets pledged for such payment as provided in this Indenture.
SECTION 5.02 Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for interest
shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default
hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the
principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not
have been so extended. Nothing in this Section shall be deemed to limit the right of the Authority
to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not
be deemed to constitute an extension of maturity of the Bonds.
SECTION 5.03 Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge
and assignment created by this Indenture, Subject to this limitation, the Authority expressly
reserves the right to enter into one or more other indentures for any of its corporate purposes,
including other programs under the Bond Law, and reserves the right to issue other obligations for
such purposes.
SECTION 5.04 Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and
to pledge and assign the Revenues, the Leaseo the Sublease and other assets purported to be pledged
and assigned, respectively, under this Indenture in the manner and to the extent provided in this
Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and
binding special obligations of the Authority in accordance with their terms, and the Authority and
the Trustee (subject to the provisions of Section 6.02 hereo| shall at all times, to the extent
permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other
assets and all the rights of the Bond Owners under this Indenture against all claims and demands
of all persons whomsoever.
SECTION 5.05 Accounting Records and Financial Statements. The Trustee shall at
all times keep, or cause to be kept, proper books of record and account, prepared in accordance
with corporate trust industry standards, in which complete and accurate entries shall be made of
all transactions by the Trustee relating to the proceeds of Bonds, the Revenues, the Sublease and
all funds and accounts established pursuant to this Indenture. Such books of record and account
shall be available for inspection by the Authority and the City during regular business hours with
reasonable prior notice.
I l28t-0009\2393696 -25-
SECTION 5.06 Additional Obligations. The Authority covenants that no additional
bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in
whole or in part, except as permitted under Section 3.06 of this Indenture.
SECTION 5.07 Sublease. The Trustee, as assignee of the Authority's rights under
the Sublease pursuant to Section 4.01 and under the Assignment Agreement, shall receive all
amounts due from the City pursuant to the Sublease (excepting any amounts due to the Authority
relating to the indemnification of the Authority).
The Authority will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terms contained in the Sublease required to be complied with, kept,
observed and performed by it and, together with the Trustee, will enforce the Sublease against the
City in accordance with its terms.
The Authority will not alter, amend or modify the Sublease without the prior written
consent of the Trustee, which consent shall be given only: (i) if the Trustee receives an opinion of
Bond Counsel that such alteration, amendment or modification will not result in any material
impairment of the security given or intended to be given for the payment of the Base Rental
Payments, or (ii) if the Trustee first obtains the written consents of the Owners of at least a majority
in aggregate principal amount of the Bonds then Outstanding to such alteration, amendment or
modification. Prior to any amendment or modification of the Sublease pursuant to this Section
5.07, the Trustee may require the Authority to deliver to the Trustee an opinion of Bond Counsel
to the effect that such amendment or modification has been adopted in accordance with the
requirements of this Indenture.
SECTION 5.08 Tax Covenants.
(a) The City shall not take any action, or fail to take any action, if any such
action or failure to take action would adversely affect the Tax-Exempt status of interest on the
Bonds under Section 103(a) of the Code or cause interest on the Bonds to be an item of tax
preference for purposes of the alternative minimum tax imposed on individuals and corporations
under the Code.
(b) In furtherance of the foregoing tax covenant, the Authority shall comply
with the provisions of the Tax Certificate, which is incorporated in this Indenture as if fully set
forth in this Indenture. These covenants shall survive payment in full or defeasance of the Bonds.
SECTION 5.09 Continuing Disclosure. In connection with the issuance of the
Bonds, the Authority shall cause the City to enter into a Continuing Disclosure Agreement. It is
hereby recognized that a failure of the City to comply with a Continuing Disclosure Agreement
shall not constitute a default under this Indenture or the Sublease; provided, however, the Original
Purchaser or the Owner or beneficial owner of the Bonds relating to such Continuing Disclosure
Agreement may take such actions as may be necessary and appropriate to compel performance,
including seeking mandate or specific performance by court order.
SECTION 5.10 Further Assuraqrces. The Authority shall adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and
I 1281-0009\2393696 -26-
for the better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
SECTION 6.01
ARTICLE VI
TRUSTEE
Appointment of Trustee. U.S. Bank National Association, a
national banking association duly organized and existing under and by virtue of the laws of the
United States of America, is hereby appointed Trustee by the Authority for the purpose of receiving
all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the
same as provided in this Indenture. The Authority agrees that, so long as any Bonds are
Outstanding, it will maintain a Trustee which is a bank, national banking association, banking
institution (state or federal) or trust company with a corporate trust office in California, having a
combined capital, exclusive of borrowed capital, and surplus (or whose parent holding company
has a combined capital, exclusive of borrowed capital, and surplus) of at least $75,000,000, and
subject to supervision or examination by federal or state authority. If such bank, banking
institution or trust company publishes a report of condition at least annually, pursuant to law or to
the requirements of any supervising or examining authority above referred to, then for the purposes
of this Section the combined capital and surplus of such bank, national banking association,
banking institution 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 Trustee is hereby authorized to pay the principal of and interest and redemption
premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption
prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate
records of all funds and accounts administered by it and of all Bonds paid and discharged.
SECTION 6.02 Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to
the following express terms and conditions:
(a) The Trustee shall not be liable for any error ofjudgment made in good faith
by a responsible officer of the Trustee, unless the Trustee was negligent in ascertaining the
pertinent facts.
(b) Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon a Certificate of the Authority.
(c) The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the Owners pursuant to
this Indenture, unless such Owners shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
l 1281-0009\2393696 -27-
direction, consent, facsimile transmission, electronic mail, order bond or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(e) The Trustee, prior to the occunence of an Event of Default and after the
curing or waiving of all Events of Default that may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture and no covenants of or
against the Trustee shall be implied in this Indenture. In case an Event of Default hereunder or
under the Sublease has occurred (which has not been cured or waived), the Trustee may exercise
such of the rights and powers vested in it by this Indenture and by the Sublease, and shall use the
same degree of care and skill in the exercise of such rights and powers as a prudent person would
exercise or use under the circumstances in the conduct of such person's own affairs.
(0 The Trustee may execute any of the trusts or powers hereunder and perform
the duties required of it hereunder either directly or by or through attorneys or agents, and shall be
entitled to advice of counsel concerning all matters of trust and its duty hereunder.
(g) The Trustee shall not be responsible for any recital herein, in the Sublease,
or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for
the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and
makes no representation as to the validity or sufficiency of the Bonds, this Indenture or the
Sublease. The Trustee shall not be bound to ascertain or inquire as to the observance or
performance of any covenants, conditions or agreements on the part of the Authority hereunder or
on the part of the Authority or the City under the Sublease. The Trustee shall not be responsible
for the application by the Authority or the City of the proceeds of the Bonds.
(h) The Trustee may become the Owner or pledgee of Bonds secured hereby
with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or
evidences of indebtedness of the Authority with the same rights it would have if it were not the
Trustee; and may act as a depositary for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights of
Owners of Bonds, whether or not such committee shall represent the Owners of the majority in
aggregate principal amount of the Bonds then Outstanding.
(i) The Trustee may rely and shall be protected in acting or refraining from
acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction,
request, consent, certificate, order, affidavit, letter, telegram, facsimile transmission, electronic
mail or other paper or document believed by it to be genuine and to have been signed or presented
by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good
faith and without negligence pursuant to this Indenture or the Sublease upon the request or
authority or consent of any person who at the time of making such request or giving such authority
or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of
the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall
not be bound to recognize any person as an Owner of any Bond or to take any action at such
person's request unless the ownership of such Bond by such person shall be reflected on the
Reeistration Books.
I l28l-0009\2393696 -28-
CI) The permissive right of the Trustee to do things enumerated in this
Indenture or in the Sublease shall not be construed as a duty and it shall not be answerable for
other than its negligence or willful misconduct. The immunities and exceptions from liability of
the Trustee shall extend to its officers, directors, employees and agents.
(k) The Trustee shall not be required to take notice or be deemed to have notice
of any Event of Default hereunder or under the Sublease except failure by the Authority or the City
to make any of the payments to the Trustee required to be made by the Authority or the City
pursuant hereto or thereto or failure by the Authority or the City to file with the Trustee any
document required by this Indenture or the Sublease to be so filed subsequent to the issuance of
the Bonds, unless the Trustee shall be specifically notified in writing of such default by the
Authority or by the Owners of at least 25 percent in aggregate principal amount of the Bonds then
Outstanding and all notices or other instruments required by this Indenture to be delivered to the
Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the
absence of such notice so delivered the Trustee mav conclusivelv assume there is no Event of
Default hereunder except as aforesaid.
(l) At any and all reasonable times the Trustee and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right fully to inspect all books,
papers and records of the Authority pertaining to the Bonds, and to make copies of any of such
books, papers and records which are not privileged by statute or by law.
(m) The Trustee shall not be required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of the premises hereof.
(n) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing
the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking
of any other action by the Trustee.
(o) All moneys received by the Trustee shall, until used or applied or invested
as herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(p) Whether or not expressly provided therein, every provision of this Indenture
and the Sublease relating to the conduct or affecting the liability of the Trustee shall be subject to
the provisions of this Section 6.02.
(q) The Trustee shall not be considered in breach of or in default with respect
to any obligations created hereunder, in the event of an enforced 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, acts of a government, acts of the
other party hereto, 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, litigation
I 128 l -0009\2393696 -29-
or arbitration involving a pafiy or others relating to governmental action or inaction pertaining to
the Leased Properties, 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 Trustee; provided, that in the event of any such enforced delay, the Trustee shall
notify the Authority in writing within five business days after: (i) the occurrence of the event giving
rise to such delay, (ii) the Trustee's actual knowledge of the impending enforced delay, or (iii) the
Trustee's knowledge of sufficient facts under which a reasonable person would conclude the
enforced delay will occur.
(r) The Trustee shall have no responsibility or liability with respect to any
information, statements or recital in any offering memorandum or other disclosure material
prepared or distributed with respect to the issuance of the Bonds.
(s) The Trustee shall not be liable in connection with the performance of its
duties under this Indenture, except for its own negligence or willful misconduct,
(t) With respect to moneys have been released or withdrawn in accordance with
the provisions hereof, the Trustee shall not be responsible for or accountable to anyone for the
subsequent use or application of such moneys.
(u) To the extent that the Authority or the City has caused to be furnished to the
Trustee an opinion from Bond Counsel or other counsel of the Authority or the City, with regard
to legal questions, the opinion of such counsel shall be full and complete authorization and
protection to the Trustee in respect of any action taken or suffered by it hereunder in good faith
and in accordance therewith.
SECTION 6.03 Fees. Charges and Expenses of Trustee. The Trustee shall be
entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and
all advances (with interest on such advances at the maximum rate allowed by law), counsel fees
(including expenses) and other expenses reasonably and necessarily made or incurred by the
Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder,
but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior
to payment of any Bond upon the amounts held hereunder for the foregoing fees, charges and
expenses incuned by it.
SECTION 6.04 Notice to Bond Owners of Default. If an Event of Default hereunder
or under the Sublease occurs with respect to any Bonds of which the Trustee has been given or is
deemed to have notice, as provided in Section 6.02(k) hereof, then the Trustee shall, within 30
days of the receipt of such notice, give written notice thereof by first class mail to the Owner of
each such Bond, unless such Event of Default shall have been cured before the giving of such
notice; provided, however, that unless such Event of Default consists of the failure by the Authority
to make any payment when due, the Trustee may elect not to give such notice if and so long as the
Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such
notice.
SECTION 6.05 Intervention by Trustee. In any judicial proceeding to which the
Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a substantial
bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of
l l28l-0009\2393696 -30-
such Bond Owners, and subject to Section 6.02(c), shall do so if requested in writing by the Owners
of at least 25 percent in aggregate principal amount of such Bonds then Outstanding.
SECTION 6.06 Removal of Trustee. The Trustee may be removed at any time by
an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners
of a majority in aggregate principal amount of the Outstanding Bonds. The Authority may also
remove the Trustee at any time upon 30 days' notice, except during the existence of an Event of
Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth
herein.
SECTION 6.07 Resignation by Trustee. The Trustee and any successor Trustee may
at any time give written notice of its intention to resign as Trustee hereunder, such notice to be
given to the Authority and the City in the manner prescribed by Section 9.14. Upon receiving such
notice of resignation, the Authority shall promptly appoint a successor Trustee. Any resignation
or removal of the Trustee and appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall
cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their
respective addresses set forth on the Registration Books.
SECTION 6.08 Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the Authority shall
promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever
fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the
instrument described in Section 6.06 or within 60 days following the receipt of notice by the
Authority pursuant to Section 6.07, the Trustee may, at the expense of the Authority, apply to a
court of competent jurisdiction for the appointment of a successor Trustee meeting the
requirements of Section 6.01. Any such successor Trustee appointed by such court shall become
the successor Trustee hereunder notwithstanding any action by the Authority purporting to appoint
a successor Trustee following the expiration of such 60-day period.
SECTION 6.09 Merger or Consolidation. Any company into which the Trustee may
be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided that
such company shall meet the requirements set forth in Section 6.01, shall be the successor to the
Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the execution or filing
of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 6.10 Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the
Authority an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee's successor,
execute and deliver an instrument transferring to such successor all the estates, properties, rights,
powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and monevs held bv it as the Trustee hereunder to its successor. Should anv instrument
I 1281-0009\2393696 -3 1-
in writing from the Authority be required by any successor Trustee for more fully and certainly
vesting in such successor the estate, rights, powers and duties hereby vested or intended to be
vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Authority.
SECTION 6.11 Appointment of Co-Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking corporations or associations to transact business
as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction in may not exercise
any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties,
in trust, as herein granted, or take any other action that may be desirable or necessary in connection
therewith, it may be necessary that the Trustee or the Authority appoint an additional individual
or institution as a separate trustee or co-trustee. The following provisions of this Section 6.1 1 are
adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution
as a separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of
action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by
and vest in such separate trustee or co-trustee but only to the extent necessary to enable such
separate trustee or co-trustee to exercise such powers, rights and remedies, and every covenant and
obligation necessary to the exercise thereof by such separate trustee or co-trustee shall run to and
be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee or
co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it
such properties, rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any
separate trustee or co-trustee, or a successor to either, shall become incapable of acting, shall resign
or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.
SECTION 6.12 Indemnification: Limited Liability of Trustee. The Authority
further covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee
and its officers, directors, agents and employees, harmless against any loss, expense (including
reasonable legal fees and expenses) and liabilities arising out of or in the exercise and performance
of its powers and duties hereunder, including the costs and expenses of defending against any
claim of liability, but excluding any and all losses, expenses and liabilities that are due to the
negligent or intentional act or omission of the Trustee, its officers, directors or employees. No
provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise
incur any financial liability hereunder if it shall have reasonable grounds for believing repayment
of such funds or adequate indemnity against such liability or risk is not assured to it. The Trustee
shall not be liable for any action taken or omitted to be taken by it in accordance with the direction
of the Owners of at least 25 percent in aggregate principal amount of Bonds Outstanding relating
to the time, method and place of conducting any proceeding or remedy available to the Trustee
I 128 1 -0009\2393696 -32-
under this Indenture or exercising any power conferred upon the Trustee under this Indenture. The
obligations of the Authority under this Section shall survive the resignation or removal of the
Trustee under this Indenture.
SECTION 6.13 Trustee Acceptance of Electronic Instructions. The Trustee shall
have the right to accept and act upon instructions, including funds transfer instructions
("Instructions") given pursuant to this Indenture and delivered using Electronic Means (being the
following communications methods: e-mail, facsimile transmission, secure electronic transmission
containing applicable authorization codes, passwords and/or authentication keys issued by the
Trustee, or another method or system specified by the Trustee as available for use in connection
with its services hereunder);provided, however, that the Authority and the City, as applicable shall
provide to the Trustee 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 Authority or the City, as applicable, whenever a person is to be added or
deleted from the listing. If the Authority or the City elects to give the Trustee Instructions using
Electronic Means and the Trustee elects to act upon such Instructions, the Trustee's reasonable
understanding of such Instructions shall be deemed controlling. The Authority understands and
agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and
that the Trustee shall conclusively presume that directions that purport to have been sent by an
authorized officer listed on the incumbency certificate provided to the Trustee have been sent by
such authorized officer. The Authority and the City shall be responsible for ensuring that only
authorized officers transmit such Instructions to the Trustee and that the Authority, 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 Authority
and the City.
The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly
from the Trustee's reasonable reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written instruction.
Subject to this Section 6.13 the Authority agrees: (i) to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the
Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third
parties; (ii) that the Authority has been informed of the protections and risks associated with the
various methods of transmitting Instructions to the Trustee and that there may be more secure
methods of transmitting Instructions than the method(s) selected by the Authority or the City;
(iii) that the security procedures (if any) to be followed in connection with its transmission of
Instructions provide to it a commercially reasonable degree of protection in light of its particular
needs and circumstances; and (iv) to notify the Trustee 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
Trustee in its reasonable discretion, the Trustee shall notify the Authority and request clarification
from the Authority, and the Trustee shall not be required to act on such ambiguous or contradictory
Instructions pending the Authority' s clarification.
The Trustee shall not be liable under this Section 6.13 except for its negligence or willful
misconduct.
1 1281-0009\2393696 -33-
ARTICLE VII
MODIFICATION AND AMENDMENT OF INDENTURE
SECTION 7.01 Amendment of Indenture. This Indenture and the rights and
obligations of the Authority and of the Owners of the Bonds may be modified or amended at any
time by a Supplemental Indenture which shall become binding upon adoption, without consent of
any Bond Owner, to the extent permitted by law but only for any one or more of the following
purposes:
(a) to add to the covenants and agreements of the Authority contained in this
Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any
rights or powers herein reserved to or conferred upon the Authority so long as such limitation or
sunender of such rights or powers shall not materially adversely affect the Owners of the Bonds;
(b) to cure any ambiguity, to supply any omission or to cure, correct or
supplement any defect or inconsistent provisions contained in the Indenture or in any Supplemental
Indenture;
(c) to grant to the Trustee for the benefit of the Owners additional rights,
remedies, powers or authority;
(d) to subject to the Indenture additional collateral or to add other agreements
of the Authority;
(e) to provide for the issuance of Additional Bonds pursuant to Section 3.06;
(0 to modify the Indenture or the Bonds to permit qualification under the Trust
Indenture Act of 1939, as amended, or any similar statute at the time in effect, or to permit the
qualification of the Bonds for sale under the securities laws of any state of the United States of
America;
(g) to maintain the exclusion of interest on the Bonds from gross income for
federal income tax purposes;
(h) to evidence the succession of a new Trustee; or
(i) for any other purpose that does not materially adversely affect the rights or
interests of the Owners.
Except as set forth in the preceding paragraph of this Section 7.01, this Indenture and the
rights and obligations of the Authority and of the Owners of the Bonds may only be modified or
amended at any time by a Supplemental Indenture which shall become binding when the written
consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding
are filed with the Trustee. No such modification or amendment shall: (I) extend the maturity of or
reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to
pay the principal, interest or redemption premiums (if any) at the time and place and at the rate
and in the currency provided therein of any Bond without the express written consent of the Owner
of such Bond, (II) reduce the percentage of Bonds required for the written consent to any such
I 128 1 -0009\2393696 -34-
amendment or modification, or (III) modify any of the rights or obligations of the Trustee without
its written consent thereto.
In executing, or accepting the additional trusts created by, any Supplemental Indenture
permitted by this Article or the modification thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully protected in relying upon, an opinion of Bond
Counsel stating that the execution of such supplemental indenture is authorized or permitted by
this Indenture and complies with the terms hereof.
SECTION 7.02 Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article 7, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions of any Supplemental Indenture shall
be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Prior to entering into any Supplemental Indenture pursuant to this Section I .02,the Trustee
may require the Authority to deliver to the Trustee an opinion of Bond Counsel to the effect that
such Supplemental Indenture has been adopted in accordance with the requirements of this
Indenture.
SDCTION 7.03 Endorsement or Replacement of Bonds After Amendment. After
the effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date
and presentation of such Owner's Bond for that purpose at the Trust Office of the Trustee, a
suitable notation as to such action shall be made on such Bond. If the Authority shall so determine,
new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such
Bond Owners' action, then new Bond certificates shall be prepared and executed, and in that case
upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall
be exchanged at the Trust Office of the Trustee, without cost to each Bond Owner, for Bonds then
Outstanding, upon surrender of such Outstanding Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01
hereunder:
Events of Default. The following events shall be Events of Default
(a) Default in the due and punctual payment of the principal of or premium on
any Bond when and as the same shall become due and payable, whether at maturity as therein
expressed, or by proceedings for redemption.
(b) Default in the due and punctual payment of any installment of interest on
any Bond when and as such interest installment shall become due and payable.
r 128 l -0009\2393696 -35-
(c) Failure by the Authority to observe and perform any of the covenants,
agreements or conditions on its part in this lndenture or in the Bonds contained, other than as
referred to in the preceding clauses (a) and (b), for a period of 30 days after written notice,
specifying such failure and requesting that it be remedied has been given to the Authority by the
Trustee, or to the Authority and the Trustee by the Owners of not less than 25 percent in aggregate
principal amount of the Outstanding Bonds; provided, however, that if in the reasonable opinion
of the Authority, the failure stated in such notice can be corrected, but not within such 30-day
period, the Trustee and such Owners shall not unreasonably withhold their consent to an extension
of such time if corrective action is instituted by the Authority within such 30-day period and
diligently pursued until such failure is corrected.
(d) The filing by the Authority of a petition or answer seeking reorganization
or arrangement under the Federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Authority, seeking reorganization under the Federal bankruptcy laws or any
other applicable law of the United States of America, or if, under the provisions of any other law
for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control
of the Authority or of the whole or any substantial part of the Leased Properties.
SECTION 8.02 Remedies; No Acceleration. Upon the occurrence of an Event of
Default, the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the Authority or any member, officer or employee thereof, in order to
compel the Authority or any such member, officer or employee to perform and carry out its or his
or her duties under law and the agreements and covenants required to be performed by it or him
or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the
Authority and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by
the Owners of at least 25 percent in aggregate principal amount of Outstanding Bonds and
indemnified as provided in Section 6.02(c), the Trustee shall be obligated to exercise such one or
more of the rights and powers confered by this Article VIII, as the Trustee, being advised by
counsel, shall deem most expedient in the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given to the Trustee or the Bond
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver or any such Event of
I l28l-0009\2393696 -36-
Default or acquiescence therein; such right or power may be exercised from time to time as often
as may be deemed expedient.
The Trustee shall have no right to declare the principal of or interest on the Bonds to be
due and payable immediately.
SECTION 8.03 Application of Revenues and Other Funds after Default. Following
the declaration of an Event of Default, all amounts then held or received by the Trustee pursuant
to any right given or action taken by the Trustee under the provisions of this Indenture shall be
applied by the Trustee, in the following order upon presentation of the several Bonds, and the
stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof
if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee, including reasonable
compensation to its agents, attorneys and counsel; and
Second, to the payment of the whole amount of interest on and principal of the Bonds then
due and unpaid; provided, however, that in the event such amounts shall be insufficient to pay in
full the full amount of such interest and principal, then such amounts shall be applied to the
payment of such principal and interest without preference or priority of principal over interest, or
interest over principal, or of any installment of interest over any other installment of interest,
ratably to the aggregate of such principal and interest.
SECTION 8.04 Power of Trustee to Control Proceedings. In the event that the
Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial
proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon
the request of the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise,
settlement or other disposal of such action; provided, however, that the Trustee shall not, unless
there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or
otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in aggregate principal amount of the
Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement
or other disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c),
Any suit, action or proceeding which any Owner of Bonds shall have the right to bring to enforce
any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection
of all Owners of Bonds similarly situated and the Trustee is hereby appointed (and the successive
respective Owners of the Bonds issued hereunder by taking and holding the same, shall be
conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective
Owners of the Bonds for the pu{pose of bringing any such suit, action or proceeding and to do and
perform any and all acts and things for and on behalf of the respective Owners of the Bonds as a
class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-
in-fact.
SECTION 8.05 Appointment _of Receivers. Upon the occurrence of an Event of
Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to
enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall
I 1281-0009\2393696 -37-
be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
SECTION 8.06 Non-Waiver. A waiver of any default or breach of duty or contract
by the Trustee or any Bond Owners shall not affect any subsequent default or breach of duty or
contract, or impair any rights or remedies on any such subsequent default or breach. No delay or
omission of the Trustee or any Owner of any of the Bonds to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to be a waiver of any
such default or an acquiescence therein; and every power and remedy conferred upon the Trustee
or Bond Owners by the Bond Law or by this Article 8 may be enforced and exercised from time
to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case
may be.
SECTION 8.07 Rights of Bond Owners. No Owner of any Bond issued hereunder
shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy
under or upon this Indenture, unless: (a) such Owner shall have previously given to the Trustee
written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate
principal amount of all the Bonds then Outstanding shall have made written request upon the
Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding
in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably
acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance
with such request; and (d) the Trustee shall have refused or omitted to comply with such request
for a period of 60 days after such written request shall have been received by, and said tender of
indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy
hereunder; it being understood and intended that no one or more Owners of Bonds shall have any
right in any manner whatever by such Owner's or Owners' action to enforce any right under this
Indenture, except in the manner provided herein, and that all proceedings at law or in equity to
enforce any provision of this Indenture shall be instituted, had and maintained in the manner
provided herein and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest and
premium (if any) on such Bond as provided herein or to institute suit for the enforcement of any
such payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.08 Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason, or shall have
been determined adversely, then and in every such case, the Authority, the Trustee and the Bond
Owners shall be restored to their former positions and rights hereunder, respectively, with regard
to the Leased Properties subject to this Indenture, and all rights, remedies and powers of the Trustee
shall continue as ifno such proceedings had been taken.
I l28r-0009\2393696 -38-
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Limited Liabilitlzof Authoritv. Notwithstanding anything contained
in this Indenture, the Authority shall not be required to advance any moneys derived from any
source of income other than the Revenues for the payment of the principal of or interest on the
Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants
herein contained (except to the extent any such covenants are expressly payable hereunder from
the Revenues or otherwise from amounts payable under the Sublease). The Authority may,
however advance funds for any such purpose, provided that such funds are derived from a source
legally available for such purpose and may be used by the Authority for such purpose without
incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds
as provided in this Indenture. The general fund of the Authority is not liable, and the credit of the
Authority is not pledged, for the payment of the interest and premiums (if any) on or principal of
the Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any
property of the Authority except the Revenues and other funds pledged to the payment of the
Bonds as provided in this Indenture. The principal of and interest on the Bonds, and any premiums
upon the redemption of any thereof, shall not be a legal or equitable pledge, charge, lien or
encumbrance upon any property of the Authority or upon any of its income, receipts or revenues
except the Revenues and other funds pledged to the payment thereof as provided in this Indenture.
SECTION 9.02 Benefits of Indenture Limited. Nothing in this Indenture, expressed
or implied, is intended to give to any person other than the Authority, the Trustee, the City and the
Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any
covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of
the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners of
the Bonds.
SECTION 9.03 Discharge of Indenture. If the Authority shall pay and discharge any
or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest
and premiums (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
money which, together with the available amounts then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture, is fully sufficient to pay such Bonds,
including all principal, interest and redemption premiums (if any); or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
Federal Securities in such amount as an Independent Certified Public Accountant (defined below)
shall determine in a written report filed with the Trustee (upon which report the Trustee may
conclusively rely) will, together with the interest to accrue thereon and available moneys then on
deposit in the funds and accounts established with the Trustee pursuant to this Indenture, 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; and if such Bonds are to
I 1281-0009\2393696 -39-
be redeemed prior to the maturity thereof notice of such redemption shall have been sent pursuant
to Section 2.03(d) or provision satisfactory to the Trustee shall have been made for the sending of
such notice, then, at the Request of the Authority, and notwithstanding that any of such Bonds
shall not have been surrendered for payment, the pledge of the Revenues and other funds provided
for in this Indenture with respect to such Bonds, and all other pecuniary obligations of the
Authority under this Indenture with respect to all such Bonds, shall cease and terminate, except
only the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so
surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid,
and all amounts due the Trustee. Any funds held by the Trustee following any payment or
discharge of the Outstanding Bonds pursuant to this Section 9.03, which are not required for said
purposes, shall after payment of amounts due the Trustee hereunder be paid over to the Authority.
SECTION 9.04 Trustee's Additional Acknowledgment of Certain Provisions of the
Sublease. Without limiting any other provisions herein, the Trustee hereby acknowledges and
agrees to comply with Sections 8(e) and 9 of the Sublease.
SECTION 9.05 Successor Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to,
such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in
this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
SECTION 9.06 Content of Certificates and Opinions. Any cefiificate made or given
by an officer of the Authority may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the certificate or opinion
or representations with respect to the matters upon which his certificate may be based, as aforesaid,
are erroneous, or in the exercise of reasonable care should have known that the same were
erroneous. Any such certificate or opinion or representation made or given by counsel may be
based, insofar as it relates to factual matters, on information with respect to which is in the
possession of the Authority, or upon the certificate or opinion of or representations by an officer
or officers of the Authority, unless such counsel knows that the certificate or opinion or
representations with respect to the matters upon which his certificate, opinion or representation
may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known
that the same were erroneous.
SECTION 9.07 Execution of Documents by Bond Owners. Any request, consent or
other instrument required by this Indenture to be signed and executed by Bond Owners may be in
any number of concurrent writings of substantially similar tenor and may be signed or executed
by such Bond Owners in person or by their agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing appointing any such
agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and of the Authority if made in the manner provided in this Section 9.07.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof
l r281-0009\2393696 -40-
to take acknowledgments of deeds, certifying that the person signing such request, consent or other
instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request, consent
or vote of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner
of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered
to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In lieu
of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and
hold a meeting of the Bond Owners upon such notice and in accordance with such rules and
obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such
action.
SECTION 9.08 Diswrlified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Indenture, Bonds which are owned or held by or for the account of
the City or the Authority (but excluding Bonds held in any employees' retirement fund) shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination,
provided, however, that for the purpose of determining whether the Trustee shall be protected in
relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee
knows to be so owned or held shall be disregarded. Upon the request of the Trustee, the Authority
and the City shall specify in a certificate to the Trustee those Bonds that are disqualified pursuant
to this Section and the Trustee may conclusively rely on such certificate.
SECTION 9.09 Waiver of Personal Liability. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or principal
of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from
the performance of any official duty provided by law.
SECTION 9.10 Partial Invalidity. If any one or more of the covenants or
agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the
Trustee) to be performed should be contrary to law, then such covenant or covenants, such
agreement or agreements, or such portions thereof, shall be null and void and shall be deemed
separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights and
benefits accorded to them under the Bond Law or any other applicable provisions of law.
SECTION 9.11 Destruction of Canceled Bonds. Whenever in this Indenture
provision is made for the surrender of any Bonds which have been paid or canceled pursuant to
the provisions of this Indenture, the Trustee shall cancel and destroy such Bonds and upon Request
of the Authority furnish to the Authority a certificate of such destruction.
SECTION 9.12 Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Authority or the Trustee may be established and
maintained in the accounting records of the Authority or the Trustee, as the case may be, either as
a fund or an account, and may, for the purpose of such records, any audits thereof and any reports
or statements with respect thereto, be treated either as a fund or as an account. All such records
with respect to all such funds and accounts held by the Authority shall at all times be maintained
in accordance with generally accepted accounting principles and all such records with respect to
I 1281-0009\2393696 -4r-
all such funds and accounts held by the Trustee shall be at all times maintained in accordance with
corporate trust industry practices; in each case with due regard for the protection of the security of
the Bonds and the rights of every Owner thereof.
SECTION 9.13 Payment on Business Days. Whenever in this Indenture any amount
is required to be paid on a day that is not a Business Day, such payment shall be required to be
made, without accruing additional interest thereby, on the Business Day immediately following
such day.
SECTION 9.14 Notices. Any notice, request, complaint, demand or other
communication under this Indenture shall be given by first class mail or personal delivery to the
party entitled thereto at its address set forth below, by overnight mail, as a .pdf attachment to
electronic mail, or by telecopy or other form of telecommunication, confirmed by telephone at its
number set forth below. Notice shall be effective either (i) upon transmission by telecopy or other
form of telecommunication, (ii) 48 hours after deposit in the United States mail, postage prepaid,
(iii) in the case of overnight mail, upon delivery to the addressed destination, or (iv) in the case of
personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may,
by written notice to the other party, from time to time modify the address, email address, or number
to which communications are to be siven hereunder.
If to the Authority:
If to the City:
If to the Trustee:
Orange City Public Facilities Financing Authority
300 E. Chapman Avenue
Orange, CA 92866
Attention: Executive Director
Tel: (714) 744-2222
City of Orange
300 E. Chapman Avenue
Orange, CA 92866
Attention: City Manager
Tel: (714) 144-2222
U.S. Bank National Association
LM-CA-T247
633 W. 5th Street, 24thFl
Los Angeles, CA 90077
Attention: Global Corporate Trust
Tel: (213) 615-6062
Any party listed above may designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
SECTION 9.15 Unclaimed Mone]'s. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of
the Bonds that remain unclaimed for two years after the date when such Bonds have become due
and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys
11281-0009\2393696 -42-
were held by the Trustee at such date, or for two years after the date of deposit of such moneys if
deposited with the Trustee after said date when such Bonds become due and payable, shall be
repaid by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee
shall thereupon be released and discharged with respect thereto and the Bond Owners shall look
only to the Authority for the payment of such Bonds; provided, however, that before being required
to make any such payment to the Authority, the Trustee shall, at the expense of the Authority,
cause to be mailed to the Owners of all such Bonds, at their respective addresses appearing on the
Registration Books, a notice that said moneys remain unclaimed and that, after a date named in
said notice, which date shall not be less than 30 days after the date of mailing of such notice, the
balance of such moneys then unclaimed will be returned to the Authority.
SECTION 9.16 Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
SECTION 9.17 Execution in Counterparts. This Indenture may be executed in any
number of counterparts. Each of such counterparts shall for all purposes be deemed to be an
original and all such counterparts shall together constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
I 1281-0009\2393696 -43-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by
their respective authorized representatives, all as of the day and year first above written.
ORANGE CITY PUBLIC FACILITIES
FINANCING AUTHORITY
ATTEST:
U.S. BANK NATIONAL ASSOCIATION.
as Trustee
By:
Print Name:
Title:
By:
Executive Director
Secretary
I l28l-0009\2393696 -44-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by
their respective authorized representatives, all as of the day and year first above written.
ORANGE CITY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
Rick Otto
Executive Director
ATTEST:
Secretary
U.S. BANK NATIONAL ASSOCIATION.
as Trustee ,4
By: , (1."* G"w'^^
Print Name: Ltt-\lvtn &i'tote .t'
Title: &ttiy^+ t/ice- Jrzsir{,rrr1*
l l28l-0009u393696 -44-
EXHIBIT A
IFORM OF BONDI
fUnless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Authority or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.l
No. R
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
LEASB REVENUE BOND
SERIES 2O2OA
INTEREST RATE MATURITY DATE
ORIGINAL ISSUE
DATE CUSIP
4.00Vo November I,20_July 16,2020
REGISTERED OWNER: ICEDE & CO.]
PRINCIPAL AMOUNT:DOLLARS
The ORANGE CITY PUBLIC FACILITES FINANCING AUTHORITY, a joint powers
authority organized and existing under the laws of the State of California (the "Authority"), for
value received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture
hereinafter referred to, and certain other moneys) to the Registered Owner identified above or
registered assigns (the "Registered Owner"), on the Maturity Date identified above or any earlier
redemption date, the Principal Amount identified above in lawful money of the United States of
America; and to pay interest thereon at the Interest Rate identified above in like money from the
Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this
Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the
fifteenth calendar day of the month preceding such Interest Payment Date, in which event it shall
bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to
the fifteenth calendar day of the month preceding the first Interest Payment Date, in which event
it shall bear interest from the Original Issue Date identified above; provided, however, that if, at
the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear
interest from the Interest Payment Date to which interest hereon has previously been paid or made
available for payment), payable semiannually on May I and November 1 in each year,
commencing November I,2O2O (each an "Interest Payment Date") until payment of such Principal
Amount in full.
l 1281-0009\2393696 AI
The Principal Amount of this Bond is payable by check upon presentation hereof upon
maturity or earlier redemption at the principal corporate trust office of U.S. Bank National
Association, as trustee (the "Trustee"), in St. Paul, Minnesota, or at such other office as the Trustee
may designate (the "Trust Office"). Interest hereon is payable by check or draft of the Trustee
mailed by first class mail on each Interest Payment Date to the Registered Owner hereof at the
address of the Registered Owner as it appears on the registration books of the Trustee as of the
fifteenth calendar day of the month preceding such Interest Payment Date (except that in the case
of a Registered Owner of at least $1,000,000 in aggregate principal amount of the Bonds, such
payment may, at such Registered Owner's option, be made by wire transfer of immediately
available funds in accordance with written instructions provided by such Registered Owner prior
to the 15th calendar day of the month immediately preceding such Interest Payment Date).
This Bond is one of a duly authorized issue of bonds designated the Orange City Public
Facilities Financing Authority Lease Revenue Bonds, Series 2020A (the "Bonds"), limited in
principal amount to Twenty-Nine Million Nine Hundred Thirty Thousand Dollars
($291930,000.00) secured by an Indenture, dated as of July I, 2020 (the "Indenture"), by and
between the Authority and the Trustee. Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights thereunder of the owners of the
Bonds, of the nature and extent of the Revenues (as that term is defined in the Indenture), of the
rights, duties and immunities of the Trustee and of the rights and obligations of the Authority
thereunder; and all of the terms of the Indenture are hereby incorporated herein and constitute a
contract between the Authority and the Registered Owner hereof, and to all of the provisions of
which Indenture the Registered Owner hereof, by acceptance hereof, assents and agrees.
The Bonds are authorizedto be issued pursuant to the provisions of the Marks-Roos Local
Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the Government
Code of the State of California (the "Act"). The Bonds are special obligations of the Authority
and, as and to the extent set forth in the Indenture, are payable solely from and secured by a first
lien on and pledge of the Revenues and certain other moneys and securities held by the Trustee as
provided in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and
lien upon, all of the Revenues and such other moneys and securities, and the Revenues and such
other moneys and securities constitute a trust fund for the security and payment of the principal of
and interest on the Bonds. The full faith and credit of the Authority are not pledged for the payment
of the principal of or interest on the Bonds. The Bonds are not secured by a legal or equitable
pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its
income or receipts, except the Revenues and such other moneys and securities as provided in the
Indenture.
The Bonds have been issued for the purpose of assisting the City with the financing of
certain public capital projects. In connection with the issuance of the Bonds, the Authority has
entered into the Sublease, dated as of July 1,2020 (the "Sublease") with the City, under which the
City is obligated to pay amounts which are anticipated to be sufficient to enable the Authority to
pay the principal of and interest on the Bonds.
The Bonds are subject to redemption prior to their respective maturity dates, upon notice
as hereinafter provided, as a whole or in part, on any date, from prepaid Base Rental Payments
made by the City from funds received by the City due to a taking of the Leased Properties (as
r l28l-0009\2393696 A-2
defined in the Sublease) or any portion thereof under the power of eminent domain or from net
proceeds of insurance received for material damage or destruction, defects in title to the lrased
Properties, under the circumstances and upon the conditions and terms prescribed in the Indenture
and in the Sublease, at a redemption price equal to the sum of the principal amount of the Bonds
to be redeemed plus accrued interest thereon to the date fixed for redemption, without premium.
The Bonds maturing on or after November I,2029, shall be subject to redemption prior to
their respective maturity dates, as a whole or in part, from prepayments of Base Rental made at
the option of the City under the Sublease on any date with respect to which such prepayment have
been made (which shall be on or after November 1, 2028). The Bonds called for such optional
redemption shall be redeemed at a redemption price equal to 100 percent of the principal amount
of the Bonds to be redeemed, without premium, plus accrued interest thereon to the date of
redemption.
The Bonds maturing on November 1,2045 and November 1,2050 shall be subject to
redemption in part by lot from sinking account payments made by the Authority, at a redemption
price equal to the principal amount thereof to be redeemed with accrued interest thereon to the
redemption date, without premium, in the aggregate respective principal amounts and on the
respective dates as set forth in the following tables; provided, however, if some but not all of the
Term Bonds of a maturity have been redeemed pursuant to the extraordinary redemption or
optional redemption described above, each future sinking account payment with respect to such
Term Bonds will be reduced on a pro rata basis (as nearly as practicable) in integral multiples of
$5,000, so that the total amount of sinking account payments with respect to such Term Bonds to
be made subsequent to an extraordinary redemption or an optional redemption shall be reduced by
an amount equal to the principal amount of the Term Bonds so redeemed, all as shall be designated
pursuant to written notice filed by the Authority with the Trustee:
I 128 t -0009\2393696 A-3
Bonds Maturine on November L.2045
Redemption Date
(November 1)
Principal Amount
to be Redeemed
x maturity
Bonds Maturins on November 1.2050
2041
2042
2043
2044
2045*
Redemption Date
(November 1)
$1,170,000
1,220,000
1,270,000
1,320,000
1,375,000
Principal Amount
to be Redeemed
2046
2047
2048
2049
2050*
$1,430,000
1,490,000
1,550,000
1,615,000
1,680,000
* maturity
The Trustee on behalf and at the expense of the Authority shall send by first class mail (or
if the registered owner of such Bond is a depository, by such method as acceptable to such
depository), notice of any redemption to the respective owners of any Bonds designated for
redemption, at their respective addresses appearing on the registration books maintained by the
Trustee, to the Securities Depositories and to one or more Information Services (as such terms are
defined in the Indenture), at least 30 but not more than 60 days prior to the redemption; provided,
however, that neither failure to receive any such notice so sent nor any defect therein shall affect
the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of
interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption
place and the redemption price and shall designate the CUSIP numbers, the serial numbers of each
maturity or maturities (except that if the event of redemption is of all of the Bonds of such maturity
or maturities in whole, the Trustee shall designate such maturities or the maturity in whole without
referencing each individual number) of the Bonds to be redeemed, and shall require that such
Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption
price, giving notice also that further interest on such Bonds will not accrue after the redemption
date.
The Bonds shall be issued 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 lndenture, this
Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount,
interest rate and maturity of fully registered Bonds of other authorized denominations.
r l28l-0009\2393696 A-4
This Bond is transferable by the Registered Owner hereof, in person or by such Registered
Owner's attorney duly authorized in writing, at the Trust Office of the Trustee, but only in the
manner, subject to the limitations and upon payment of the charges provided in the Indenture, and
upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or
Bonds, of authorized denomination or denominations, for the same aggregate principal amount
and of the same maturity will be issued to the transferee in exchange herefor. The Authority and
the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes,
and the Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee
shall not be required to register the transfer or exchange of any Bond during the period in which
the Trustee is selecting Bonds for redemption or any Bond selected for redemption.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond
or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
premiums at the time and place and at the rate and in the cuffency provided therein of any Bond
without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds
required for the written consent to any such amendment or modification, or (c) without its written
consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth
in the lndenture.
It is hereby certified that all things, conditions and acts required to exist, to have happened
and to have been performed precedent to and in the issuance of this Bond do exist, have happened
and have been performed in due time, form and manner as.required by the Constitution and statutes
of the State of California and by the Act and the amount of this Bond, together with all other
indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes
of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been signed by
the Trustee.
l l28l-0009\2393696 A-5
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name
and on its behalf, and attested, by the facsimile signatures of its Chair and Secretary as of the
Original Issue Date identified above.
ORANGE CITY PUBLIC FACILITIES
FINANCING AUTHORITY
Chair
Attest:
Secretary
By:
I 1281-0009\2393696 A-6
[TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture and registered on the
Bond Registration Books.
Date:U.S. BANK NATIONAL ASSOCIATION.
as Trustee
By:
Authorized Signatory
IFORM OF ASSTGNMENTI
For value received the undersigned do(es) hereby sell, assign and transfer unto, whose tax
identification number is , the within-mentioned registered 2O2OA
Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books
of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within 2020A Bond in every
particular without alteration or enlargement or
any change whatsoever
NOTICE: Signature must be guaranteed by
a member of an institution which is a
participant in the Securities Transfer Agent
Medallion Program (STAMP) or such other
similar program (STAMP) or such other
similar program approved by the Trustee.
l l28l-0009\2393696 A-7
EXHIBIT B
IFORM OF REQUTSTTTON (COSTS OF TSSUANCE)I
REQUTSTTTON NO. _
(Costs of Issuance Fund)
with reference to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 20201'
[Date]
I. The Orange City Public Facilities Financing Authority (the "Authority") hereby requests
U.S. Bank National Association, as trustee (the "Trustee") pursuant to the Indenture, dated as of
July 1, 2020 (the "Indenture"), by and between the Authority and the Trustee, under the terms of
which the above-captioned bonds, to pay from the moneys in the Costs of Issuance Fund
established pursuant to the Indenture, the amounts. shown on Schedule I attached hereto to the
parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount of the
disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper
charge against the Costs of Issuance Fund. None of the items for which payment is requested has
been reimbursed previously from the Costs of Issuance Fund.
All capitalized terms not defined herein have the meanings ascribed to them in the lndenture.
ORANGE CITY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
IName]
[Title]
B-1r 1281-0009\2393696
EXHIBIT C
IFORM OF REQUTSTTTON (PROJECT FUND)I
REQUTSTTTON NO. _
(Project Fund)
with reference to
$29,930,000
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 2020A
IDate]
I. Pursuant to Section 3.06 of the Indenture, dated as of July I,2020 (the "Indenture"), by
and between the Orange City Public Facilities Financing Authority (the "Authority") and U.S.
Bank National Association, as trustee (the "Trustee"), under the terms of which the above-
captioned bonds were issued, the undersigned, City of Orange, hereby requests the Trustee, to pay
from the moneys in the Project Fund the amounts shown on Schedule I attached hereto to the
parties indicated in Schedule I.
I The payees, the purposes for which the costs have been incurred, and the amount of the
disbursements requested are itemized on Schedule I hereto.
m. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper
charge against the Project Fund. None of the items for which payment is requested has been
reimbursed previously from the Project Fund.
All capitalized terms not defined herein have the meanings ascribed to them in the lndenture.
CITY OF ORANGE
By:
IName]
lTitlel
l 1281-0009\2393696
4
somilgrR@gt-rffiffittrtt"
Fr{r- tot:?sAl -$}1
Recording requested by and when
rscorded mail to:
City of Orange
clo Richards, Watson & Cershcn,
A Pro fessional Corporation
350 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Attention: Teresa Ho-Urano, Esq.
Recorded in Official Flecords, Orange County
llugh t'*lguye n, Cle rk -Ra corde r
t l||ll I I ffil| il ilffi lllll liru fifil llil II|| |ilil lilll lilll lffi I I lil illl ruo rrr
r,$R0011841156S.i.
202000033S067 10:25 am 071,|5120
2t7 h,cR2 L02 t4
0.00 0.00 0.00 0.00 39.00 0.00 0.000.000.00 0.00
Exemptfrom Recording Fees Parsuant to Gsvernment Code $$ 6/03 and 2738i
. frxemptfrom Documentery Transfer Tax: ' ' Pursubni io Revenue & Taxatian Code $$ t 1922 and I 1928
LEASE AGRNNMXNT
by and between
the
CITY Otr'SRANGE,
as lsssor
snd the
ORANG& CITY ?UBLIC TACILITIES rINANCING AUTHORITY,
as le$s€e
$eted as of July l' 2020
r rl&{00tu392r95
TABLE Or qOryTsrqTS (
' Page
:
SBCTTON r. DErrNrTr0NS..........".. ,....".."."......... I
SECTION 2. LEASE OF LEASED PROPERTIES.....,.... ..,.,,,2
SECTION 3. TERM ,....^..7
SECTION 4. REbITAL... ,...................3
SECTION 5. TITLE ....,.,.3
SECTION 6. DEFAULT...".....,.......,. ..".,"............".3
SECTTON ?. EMINENT nOMAIN .....,,.......,.......4
sEcrroN 8. RIGHT 0F ENTRY ...,..".....,.,...,....,.4
SECTION 9. EURRENDER OF PROPERTIES UPCIN TFR.MINATION ."....-.,..........4
SECTTON r0" QUIET ENJOYMENT BY THr AUTHCIRITY.,..., ......,...,...4
SECTION I I. ASSIGNMENTS AND SUBLEASES ,,.,,...,.......4
$ECTION 12. WAIVER OF PERSONAL LIA3ILITY......,, .."....."..,.....,......s
SECTION 13" TAXES..... ........,.......""...5
SECTION 14. COVERNINC LAW...". .....:'........'.,. .......,.,....'.'...5
SECTION 15, NOTTCES" .......,,.,,......."."5
SNCTION 16. VALIDITY AND SEVERABILITY ................"..5
SECTION r7, PURPOSE OF LEASE ,..................,5
sHCTl0N 18, WAIVER 0F DEFAULT....,........ ......,,,...,..........5
SECTICIN 19. SECTION HEADINGS.".,,........... .......................5
SECTION 20. AMSNDMENTS ,,...."",..., ....,...,,.....,6
sEcrroN 21. EXECUTTON .....,..........7
EXHIBIT A DESCRIPTION OF LSASEN PROPERTIES
I r?8r.0009u39?195 -i-
LEASE ACREEMSIYT
This LEase Agreement, dated *s of July 1,202A (this "Lease"), is made by and between
the CITY OF O&,ANGE, a municipnl corporation duly organized and existing undsr the laws of
the State of California (the "City"), as lessor, and the ORANGE CITY PUBLIC FACILITIE$
FINANCING AUTHORITY, a joint powers authority duly formed and existing under the laws
of the StatE of California (the "Authority"), as lessee.
RECITALST
A. Ths Authoriry is a joint powers authority duly organi vxd and existing under and
pursuant to that certain Jsint Hxercise of Powers Agreement, dated as of March t9,2074, by and
betwsen the City and ihe Califomia Statswids Communities Development Authority, and under
rhe provisions of Articles I through 4 (commencing with Section 6500), Chapter 5, Division 7,
Title 1 of the Coverrurent Cods of the Stats of California, and is authorized pursuant to Article 4
of the Act to borrow money for the purpose of linancing and refinancing public capital
improvements.
B. The Authority is issuing its Loase Revenue Sonds, Series ?020A {the "Bonds"),
pursuant to the Indenture, dated as of July l, 2020 (the "Indenture"), by and between ths
Authority and U.S. Bank National Assaciation, as trustee,
C. Froceeds from tlre sale of the Bonds will be used to assist the City with the
financing of certain public capital improvements, including: (i) the construction of a new Fire
Station No. 1 Headquarters, (ii) roof and rslated irnprovements at the City's police station
headquarters, {lii) roof and other improvements at the City's othcr fire stations, and
{iv) installation of security improvements at City facilities.
D. In connection with the issuance of the Bonds, the City and the Authority desire to
enter into this Lease, whereby the Authority wilt lease certain real property fram the City (the
ool,sased Properties").
g. Pursuant to the Sublease, dated as of even date herewith, by and between the City
and the Authcrity, the Authority will sr.rblease the Leased Properties to the City.
NOW, THEREFORS, [N CONSTDERATION OF THE TREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTI{ER
VALUABLE CONSINERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
strcrroN l. ps,FlNlrlolts.
Tsrfi$ used and not otherwise dsfined herein but which are defined in the Indenture shall
have the rneanings ascribed to them in ths Indenture. Unless the context otherwise requires, the
terms defined in this Section shall, for all purposes of this Lease, have the meanings specified in
this Section {the following definitions to be equally applicable to both the singr.rlar and plwal
fomrs of such defined terms):
l r28 r 4009u39? r 95
"Bonds" ffieans thc Authority's Lease Revenue Bonds, $eries ?024A.
"Commencement DAte" means the Closing Date with respect to the Bonds.
"l*eased i;gpg*k" rnean$ the real prcperty in the City described in Exhibit A of
this Lease, and incoqporated herein by reference, including irnprovemenls thereon, including the
following in the City:
(i) the properly identified in hibi!-A as Parcel No. l, including th*
addresses currently known as 105 South Water Street (th$ Fire HQ
Prope*y) and 189 S. Watsr Strset (City Water Division operation center),
(ii) the property identified in Exhibit A as Parc.el No. 2, including the address
cunlntiyknown as 300 Fast Chapman Avenue (City Civic Centei), and
(iii) rhe property identified in Exhibit A as Parcel Nos. 3 and 4, including the
address currently known as 368 North Prospect Street {Grijalva Park}.
"E:{piration Dats" rnean$ November l, 2050; nrgvided, however, if on such date,
the City is in default with resps.ct to any Base Rental paymsnt or an abaternent event has
occurred such that all Base Rental payments have not been made under the Sublease, then the
Expiration Date shall be automatically extended to Novsmber l, 2060.
'olgglentg*" means tho Indenture, dated as.July 1, 2020, by and between the
Authority and the Trustseo relating to the Bonds, as the sams rnay be amended, supplemented or
otherwise modified liorn time to tinre, pursuant to the terms thereof,
d6lre8-qe!' mean$ this Le*se, and as ths same may be amendedo supplemented or
otherwise modified {i'om time to tirne pursuant to the terms hereof.
*oSublg" msans the Sublease, dated as of JUly l, 2020, with respect to the
Leased Properties, by and between the Authority, as lessor, and the City, as lcssee, and as the
sarne may be amended, supplernented or otherwise mo{ified from tirne to titre pursuant to the
terms thereof.
"bSIKo' means U.S. Bank National Assosiation, its successors and assigns,
acting as the Trustee under the Indentwe.
SECTION 2. LEASE Sn m,{SnI}}ROPEnTISS.
The City hereby leases the Leased Properties to the Authority and the Authority hereby
leases the Leased Properties frcm the City, on the terms and conditions in this Lease.
SECTION 3. TERM,
The term of this Lease shall commence on ths Commencement Date and shall end on the
la$t day of the teffi of the Sublease; which is the earliest of: (i) the Expiration Date; (ii) thE date
I t28 | -S009U392r95 -2-
on which the Base Rental payments are paid (or prepaid) in frrll under the provisions of tho
Sublease; or (iii) the date of discharge of the Indenture.
SECTION 4. RENTAL.
The Authority agrees to pay to the Trustes on the Closing DatE the proceeds of the Bonds
as advance rental for the use and right to possession ofthe Leased Properties for the term ofthis
tease. The rental shall be applisd by the Trustee as provided in the Indenture.
SECTION 5. TITLE"
In accordance v/ith the Sublease, the City shall obtain one or more CLTA (or et the City's
sole discretion, ALTA) policies of title insurance at the tirne of and dated as of thp
Comrnencement Date in an amount not less than the aggregate principal amount of the
Outstanding Bonds, pcyable to the Trustee, insuring the respective interssts of the City and the
Authority .in the Leased Properties, and insuring the validity of this Lease and ths $ublease,
issued by a title insurance company qualified to do business in the State of Califomia and
acceptable to the Truntee. To the extent permitted under the Indenture, the costs of obtaining
such title insurance policy or policies may be paid out of the sale praceeds of the Bonds.
SECTION 6" I}EFAULT.
lr-
{a) the Authority shall fail to keep, obsewe or perforrn any term, covenant or
condition contained herein to be k*pt or perfurmed by the Authority, ar
{b) t}e Authority's interest in this Lease or any part thereof is assigned or
transferred without the written cCInsent of the City, either voluntarily or by operation of law or
otherwise, except as provided in Section I I hereof, or
(c) any proceeding under the United $tates Bankruptcy Code or any federal-or
state bankruptcy, insolvency or similar law or any law providing for the appointment of a
receiver, liqgidator, trustes or similar oflieial of the Authority or of all or substantially all of its
assets is instituted by or with the consent of the Autharity, or is instituted without its consent and
is not permanently stayed or dismissed within 30 days, or
td) the Authority offers to the Authority's creditors to ef&ct a composition or
extension of timE to poy the Authcrity's debtso cr ask$o sseks or prays fsr a reorganization or to
effrct a plan of reorganiz tion or for readjustment of the Authority's debls, or
(e) rhe Authsrity shalt maks, in connection with any proceedings related to
balrkruptcy, insolvency, liquidatian, winding up or sirnilar events a general assigtrmenl or any
assignment for the benefit of the Authority's creditors,
theu the Authority shall be deemed to bs in dsfault hereunder and it shall be lawful fcr the City
to exercise any and all rights and remediEs available pursuant to law; provided, however, that:
(i) no merger of this Leaie and the Sublease shall be deemed to ocrur as a result thereof and
I 1281{009U39?195 *J-
(ii) so long as any Bonds remain outstanding, the City shall havE no power to terminate this
Lease by reason of any default on the part of the Authority.
Neither the City nor the Authority shall in any event be in defuult in the
performance of any of its obligations hereunder or imposed by law unless and until the City or
the Authority {as the case may be) shall havs failed to perform such obligation within 30 days
after notice by the Authority or the City (as the case may be) to the nonperforming party properly
specifying wherein such party has failed to perform any such obligation.
sgcTIoN 7, aM[Nplir poMAIN.
If the whole or any part of the Leased Properties shall be taken under the power of
eminent domain, the intercst of the Authority shall be recognized and any condemnation award
shall be applied as provided in Section 9 of the Sublease.
sEcrr0N 8. BlsHr sr ENTRY.
The City and its assignees shall have ths right to enter any of the Leased Properties
during reasonable business hours {and in emergencies at all times) (a} to inspect the same, (b} for
any purpose connec.ted with the City's or the Authority's rights or obligations under this Lease
and (c) for all other lawful. pu.poses.
sECrroN 9. sIJnRr$D$q or PR{}FEETI,AS UPON TERMINATI0T.
The Authority agrees upon the termination of this Lease to quit and surrender the Lsased
Properties in the sarne good oyder and condition as the same were in at the time of
oommencsment of,the terrn hereunder* reasonable wear and tear excepted, and the Authority and
the City agree that any permanent impravements and structures existing upon th* Leased
Properties at ths time of the termination of this Lease shall renrain thereon and title thereto shall
be vested ir.r the City.
$ncrION I0. 0UIET ENJOYMANT BY THs *gTlr.ps$Y.
The Authority shall at all times during the term of this Lease peaceably and quietly have,
hold and enjoy the real property leased hereunder without suit, trouble or hindrance from the
City, subjeci to the righti granted to the City under the Subleasen and subject to the Authority's
compliance with the terms and provisions hereof.
SECTION ll. i4,$$JSNMANTS AND SUBLiH*$pS.
The parties understand that this LeasE and the rights of the Authority hereunder (except'
the Authoriiy's rights to give approvals and consents hereunder and to indernnification and
paymer$ or reim[ursernent for any c.osts or expenses of the Authority heleunder) will be
asiignea to the Trustee pursuant to thE Assignment Agreement for the benefit of the Owners of
the bonds. Except as provided in the foregoing sentencs, the Authority shall not assign,
mortgage, hypothecato or othcrwise encumber this Lease or any rights hereunder ol the leasehold
"rcut*A
ttu"Uy by trust agreement, indenture or decd of trust or otherwisE or sublet the Leased
I t2Sl-0009u392t95 -4-
Properties without ths unitten conssnt of the City except as provided by the Sublease and as
security for the Bonds.
SECTION 12. WAIVSn Or pAn$p$AL LrABrLrry.
All liabilities.hereunder on the part of the Authority shall be salely liabilities of the
Authority as a separat* legal entity, and no member, offiser or ernployee of the Authority shall at
any time or under any circum$ta$css be individually or personally liable hereunder for anything
done or omitted to be done by the Authority under this tr eese,
SECTION 13. TAXES,
The City shall be responsible for the payment of any and all assessments of any kind or
sharacter and also all taxes, including posse$sory interest taxesn levied or assessed upon the
Leased Properties.
$ECTION 14. GOYIIIINING LAW.
This Lease shall bp governed exclusively by fhe provisions hereof and by the laws of the
State of California.
sndrton ts. NP,,*il#E$.
Any notice, rsqusst, demand, or other comrnunicaticn under this Lea$e shall be govemed
by Section 10.13 of the Indenture, whieh is hereby incorporated"
SECTION 16. Y.AIiIUITY ANB SEVARABIIITI{.
lf for any re&son this Lease shall be held by a court cf cornpetent jurisdiction to be void,
voidablo, or unenforceahle by the City or by the Authority, or if for any reason it is held by such
a court that any of the covenants and conditions of the Authority hereunder is unenfrrceable fbr
the full term hereol thon'and in such evsnt this Lease is and shall be deemed to be a lease from
year tCI year and all of the rental and othsr terrns, provisions and conditions of this l-easeo excspt
to the extent that such terins, provisions and conditions nre csntrary to or inconsistent with such
holding, shall remain in firll force and effect.
sscTION 17, PvsPoss oF LnAsE.
The Authority covenants that during the term of this Lease, except to the extent that other
uses may be permitted under the $ublease, it will use, or causs the use of, the Leased Properties
to be consistent with the descriptions sEt forth in the Sublease or related public purposes.
sECrI(}N I8. WAIYER Or'.,p$,rrtilLr.
Failure of the City to t"ake advantage of any default on the part of the Authority shall not
be, or be construed as, a waiver thereo{ nor shall any custom or practice which may grow up
between the parties in the colrse of administering this Lease be construed to waive or to lessen
the right of the City to insist upon perCbrnrance by the Authority of any term, covenant or
I t?,8r400tu391193 -)-
condition hereo{ or to exerci$e any rights given the City on account of such default. A waiver of
a particular default shall not be deemed to be a wsiver of the sam€ or any subsequent default.
The acceptance of rent hereunder shall not be, nor be construed ,to be, a waiver of any terrn,
ccvenant or condition ofthis Lease.
sncrloN 19. SECTIO,Ii HEADINGS
All section headings contained are for convenience of reftrence only and are not intended
to define or lirnit the scope of any provision of this Lease,
sEcrroN 20. AMnNundENTq.
This Lease rnay not be brnended unless such amendment is agreed upon in writing by the
parties hereot orovidEd that, no such amendment shall rnaterially affest the intorests and rights
of the Owners of the sonds under the Indenture or the Sublease unless: (i) there shall have been
delivered to the Trustee an opinion of Bond Counsel that such arnendmenl, in and of itself, will
not adversely affect the tax-exempt status of the Bonds, or (ii) the Trustee shall have obtained
written consent of the Owners of at least a majority in aggregate principal amount of the affected
Bonds then Outstanding to such amendment. A substitution or releasa of any portion of the
Leased Froperties under this Lease and the $ublease, or an amendment to delete of a portion of
the Leared Properties in connection with a partial prepayment of Base Rental under the $ublease
from insurailce or condernnation proceeds, shall not be considered as naterially affbcting the
interests and rights of the Owners of the Bonds if such substitution, release or deletion complies
with the provisions of the $ublease.
{Remainder af Page Intentionally Lett Btan*l
r t2*r4009u39il95 -6.
SECTION 2T. EXECUTION.
This Lease may be executed in any number of counteqparts, each of whish shall be
deemed to be an original, but atl together shall constitute but one and the same instrument.
IN WITNESS V/HEREOF, the City and the Authority have caused this Lease to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
CITY OF ORA}IGE
Attest:
ORANGE CITY PUBLIC FACILITItrS
FINANCIF{G AUTHORITY
Atlest:
Pamela Coleman, City Clerk
Rick -Otto, Executive Director
r r28r-0009\2392t95 -7-
$tate of California )
County of Orange )
on Julu '1, 2o2o.- . ,before**,-. J{z*iL il-Qhffiqn .-. .,
J (inscrt narne 8nd title ofthc oflicer)
NotaryPublic,personallyappe*red MArlt -4, itnu*nU,whoprovedtomeon
the basis of satisfactory evidence to be the persoq{ef *fror*r* -iub* subscribed to the
within instrument and acknowledged to ms that hoAhe4hey executed the same in his&€nltheir
authorized capacity,liosf, and that by hisAerltheir signaturg(don the instrument the personldJ, or
the entity upon behalf of which the personJxJ asied, executed the insuument.
I certify under FENALTY OF PERJURY under the laws of the State of Cali
fbregoing paragraph is true and correst.
A notary pubtio or other olficer oompleting tl|is ce*ificote verifies only the
idsiltity ofthc indivi4u*l who $igncd ths documeilt to whish this certitiorfp is
atteched, and not lhc inrthftrlnisr. ac*uracy, or vnlidiry af thax documfn{.
WITNFSS my
Signature
JAB.II}IJ'HNSO}J
Notary fubla * Califonra
Q6r6e Ccunry
Corrnission # m?670
E Coilrn. g$iip5 Noy 10, 20?t
($eal)
A notary public or sther oflicsr eompleting thir *ertifroatc veiifies only tht
identity ofthe individual wtro signed the document to which this certificate is
anached, ond not the truthfulness, amuracn or validity ofthat docum$nt.
State of Califomia
County of Ordnge
0n Totn berore **, rl$?rnin JPhnSn n
J . - (igsert name ard titlc of the officcr)
Notary Public, personally appeared KiCK Dt|D --. ", who proved to me on
the basis of satisfactory evidence to be the persor(efwhose nam{*}is/sre subscribEd to the
within instrument and acknowledged to me that heA&€i{key executed the same in his/herAfich
authorized capacityffi, and that by his&errtheir signaturqfffon the i*skument the persdnfrJ, ar
the entity upon behalf of which the persoryfficted, executed the instrument.
I certify undEr PENA,LTY OF PERJURY underths laws of the State of Califpntq.{g13k
foregoing paragraph is true and qorect.
)
)
A-1
WITNESS mv hand and official seal.
I l28t{009u392r95
official seal,
($eal)
!ffi-rfrrfi:ii;i#., I
iW-g'#ff$3eri
EXHIB:T A
Description of Leased Properties
THE LAND REFERR-EN TO HEREIN BA,LOW I$ SITUATAD IN THE CITY OF ORANGE,
COUNTY OF ORANGA, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS,
TOCETHER WITH IMPROVEMENTS THERSON:
PARCEL r : APN,390;353-07
ft05 South Water S*eet (the Fire HQ Property) and 189 S. Water Street (City Water Divisian
aperation center)J
LOTS 1 THROUOH 22 INCLUSIVE IN BLOCK UB'' OF THE JAMESON TRACT, AS
SHOWN ON A MAP RECORDED IN BOOK 13, PACE 44 OF MISCELTANEOUS MAPS,
RECORDS OF ORANGE COT"NTY, CALIFORNIA.
EXCNPT$,IG THEREFROM THAT PORTION DESCRIBED IN A DEED TO THE CITY OF
ORANGE RECORDED MAY I?, I98? AS INSTRUMENT NCI, 82-092579 OY OFFICIAL
RECOR.DS OF SAID ORANCE COLTNTY.
ALSO EXCEPTING FROM SAID LOT$ I, 2, 3,4, 7 AND 8 ALL MINERAL DEPOSITS AS
DEFINED IN SECTION 6407 OF THE PUBLIC RESOURCES CODE BELOW A DEPTH OT
5OO FEET, WITHOUT SURFACE RIGHTS OT ENTRY, AS RESERVED IhI DEED TROM
THE STATE OF CALIFORNIA RHCORDED NOVEMBER 4, 1980 IN BOOK 13819, PACE
335 OF OFFICIAL RECORDS.
PA$SS*.3; AlN, le.h3[.bct
[30A East Chaprnan Avenue (City Civic Center)J
IOTS I THROUGH ?O INCLUSIVE IN BLCICK !IA'' OF P. J. SHAEFER'S ADDITION, IN
THE CITY OF ORANOE, COUNTY OP ORANGE, $TATE OF CALIFORNIA AS TER MAP
RECORDSD IN BOOK 10, PAOE 94 OF MISCELLANEOUS MAPS, RECORD$ Or LOS
ANOELES, CALIFORNIA
PARCEI,l :;SPN {}?3-03I -"Q?
fGrgalva ParkJ
PARCEL 3-A:
THAT PORTION OF LOT 9 IN BLOCK ''FU OF THE CHAPMAN TRACT, SURVEYED BY
FRANK LECOUVREUR IN DECEMBER 1870, AS PERMAP RECORDED IN BOOK 102,
PAGE 15 OF MISCELLANEOU$ MAPS IN THH OFFICE CIF THE COLNTY RECORDER
l r:8r"00#\2392t95 A-1
OF SAID COUNTY, INCLUDED WITHIN A STRIP OF LAND 5O,OO FEET WIDE, AS
DESCRIBED IN THE DEEDS ?O THE PACIFIC IMPROVEMENT COMPANY, A
CORPORATION, RECORDED JIINE 18, 1888 IN BOOK 454, PACES 90 AND 95 OF
DEEDS IN THE OF'FICE OF THE COLINTY RECORDHR OF LOS ANCFLES COLTNTY,
CALIFORNIA, BEING A PORTION OF A STRIP OF LAND 5O.OO FEET WIDE, THE
CENT3R LINE OT WHICH 15 DESCRIBXD AS FOLLOWS:
BEGiNNING AT A POINT ON THE SOUTHERLY LINE OF LOT S (NORTHERLY LINE
oF LOT 9) OF SAID CHAPMAN TRACT, DISTANT NORTH 89 DEGREES 54' 55. EAST
494.29 TEET ALONC SAID SOUTHERLY LINE FROM THE SOUTHWESTERLY CORNER
OF SAiD LOT 8, AS SHOWN ON THE MAP OT TRACT NO. 4626, AS PER MAP
RECORDPD IN tsOOK 169, PAGES 5 AND 6 OF SAID MISCELLANEOUS MAPS, BEING
ALSO ENCINEER STATION 330*30.3, AS SHOWN ON THE RIOHT OF WAY AND
TRACT MAP V-12-C, SHSET 2, OF THE SOUTHERN PACIFIC COMP,ANY, $TAh,IPED
DECEMBER 3I, 1923, AND ALSO THE SOUTHEASTHRLY TERMINUS OF THE CENTER
LINE OF THE sO.OO.FOOT STRIP OT. IAND LABELEA AS "SOUTHERN PACIFIC
RAILROAD R"1'W" ON SAID MAP OF TRACT NO. 4626; THENCE CONTINUING ALONG
SAID CENTER LINE., SOUTH 24 DEOREES 3?' 05" EAST TO ENGINEER STATION
330+30,8, BEINC THE BESINNING OF A TAPER 2 CURVP, CONCAVE
SOUTHWESTARLY, FOR A l0 DncREE CURVE; THENCE SOUTHEASTIRLY 270.04
FHET ATONC $AIN TAPER 2 CURVE, TO THE BECINNING OF SAIP IO DEGREE
CURVE CONCAVE WHSTERLY, HAYiNC A RADIUS OF 573.i4 FEET; THENCE
SOUTHERLY 373.30 T'EET ALONO SAID CURVH" THROUGH A CBNTRAL ANGLE OF
37 DECREE,S 19'05' TO THE BEGINNING OF A SIMILAR TAPER 2 CURVE, CONCAVE
NORTHWESTERLY, AT THE END OF SAID 10 DNCXEE CURVE; THENCE
SOUTHWESTERLY ?7O.OO FEET ALONG SAID TAPER 2 CURVH; THENCE TANGENT
TO SAID CURVp, SOUTH 39 DEGREES 47', 00" WEST TO ENGINEER STATION
34?*60.I, AS SHO$/N ON SAIN R.R. MAP, BEING THE BEOIN}{INO OT A TAPER 2
CURVE, CONCAVE SOUTHEASTERLY, FOR AN 8 DEGREE CURVEI THENCE
SOUTHWESTERLY 2TO.OO FANT ALONS $AID TAPER 2 CURVE, TO THE BEGTNNINC
OF $ATD S DNGREH CURYE CONCAVE SOUTHEASTERLY, HAVINC A RADru$ OF
716.34 FEET; THENCE SOUTHWESTERLY ALONG $AID CURVE, TO THE
NORTHERTY LINN OF ROBERT MCTHER"SON THIRD ADDITION, AS PHR MAPS
RECORDED IN BOOK 16, PAGE 39 OF MISCELLANNOUS RECORDS IN THE OFFICE
OF THg COIINTY RNCORDER OF SAID COTINTY OF LOS ANGELES; THE SIDE LINES
OF SAIN STRIF OF LAND $HOULN BE SHORTHNED OR ENLARGED AS TO
TERMINATE IN THE NORTHERLY LINE OF SAID THIR$ ADDITION"
EXCSPT THOSE FORTIONS THEREOF LYING WITHiN LOTS 17 AND 18 OF THE O,
HOWARD THOMPSON TRACT, AS SHOWN ON A MAP TILSD IN FOOK I, PAGE 22 OF
RECORD OF SURVEY$ IN THE OFFICE OF THE COLTNTY RFCORNER OF SAID
COUNTY OF ORANOE,
PARCEL 3-B: .'
THAT TORTIOhI OF LOT 9 IN BLOCK UF" OF THE CHAPMAN TRACT, SURVEYEb EV
FRANK LECOUVREUR IN DECEMBER 1870, AS PER MAP RECORDED TN BOOK 102,
I t?81.0009u392t95 A-2
PACE 15 OF MISCELLANEOUS MAPS IN THE OT'FICE OF THE COLINTY R"ECORDER
OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNINS AT THg SOUTHWEST CORNHR OF SAID LOT 9; 'THENCE NORTHERLY
20.00 CHAINS TO THE NORTH\I/EST C0RNER Or $AID LOT 9; THENCE EASTERLY
TO THE NORTHEAST CORNER OF SAID LOT 9; THENCE ALONG T}IE
NORTHV/ESTERLY LINA OF S. HOWARD THOMPSON TRACT, AS PER MAP FILEP IN
BOOK I, PAGE 22 AF RECORD OF SURVEYS IN THE OFFICE OF SAID COUNTY
RECORDER, SOUTH'WESTERLY TO THE POINT OF BEOI}{NINC.
EXCEPTING THEREPROM. THAT PORTION INCLUDED WITHIN PARCEL 3-A ABCIVN.
PARCSI* a:,, 43{t{ S9}03146
{Grgalva ParkJ
THOSH PORTIONS OF LOTS 17 AND 18 OF THfi C" HOWARD THOMPSON TRACT, IN
THE CITY OF ORANGE, COIINTY OF ORANOX, STATS OF CALIFORNIA, AS SHOWN
ON A MAP RECORDED IN BOOK 1, PAGE 22 OT RECORD OF SURVEYS, IN THE
OFFICE OF THE COTINTY RECOR}ER OF SA1D COUNTY DESCRIBE} AS FOLLOWS,
BEGINNING AT THE POINT OT INTERSECTION OF THE WSST LTNE OF PROSPECT
STREET 8? FEET WIDE AS SHO$/N ON MAP OF TRACT NO, I384I, RECORDED IN
BCOK 674, PAOE 23 THRU 2? INCLUSIVfi OF MISCETLANEOUS MAPS, WITH THE
NORTH LINE OF THE SOUTH ?.OO FEET OF LOT 17 OF SAID C. HOWARD THOMPSON
TRACT, AS SHOWN ON RECORD OF SURVEYS; THENCE WESTERLY ALONO SAII)
NORTH LINE, NORTH 8'O 5?' 56' WEST 1211,25 FEET MORE OR IESS TO ITS
INTERSECTION WITil A CUR\IA IN THE SASTERLY AOI.JNDARY OF THE LAND
DESDED TO THN SOUTHERN PACIFIC RAILROAD COMPANY BY DEEN RECORDED
JUNT, 29, 1889 trN BOOK 570, PAGE 288, OF DEEDS OF LOS ANGELES COT1NTY
RSCORDS. SAIP EASIERLY SOUNDARY ALSO BEING THfi WESTERLY FOLTNDARY
OF LOT 17 OT SAID G, HOWARD THOMPSON TRACT, SAID POINT OF
INTERSECT}ON BSING ON A CURVS IN SAJD BOL'NDARY BEING CONCAVE
SOUTHEASTERLY AND HAVINC A RADIUS OF 750. OO FEHT, A RADIAL LINE OF
$AID CURVE TO SAID pOINT, BEAR$ NOR.TH 63o 54', 58" WEST; THENCE
NORTHSASTERLY ALONG THg $AID EASTERLY BOI"]NDARY OF SAID DEED
THROUGH A CENTRAL ANSLE OF 13O 43'06" AND ARC DISTANCE OF 179.57 FEET;
THENCB TANGNNT TO SATD CURVH NORTH 39O 48' O8'' EAST 456.V7 TUET TO THE
BEOINNiNS OF A TANGENT CURVE CONCAVE NORTHWESTERLY AND HAVING A
RADIUS OF 1025"00 FEET; THENCE NORTHEASTERLY ALONO SAID CURVE
THROUGH A Cf,NTRAL ANCLH OF lCIO 50'40" AN ARC DISTANCE OF 194.00 FEST TO
A POINT OF INTERSECTION WITH THE SOUTHEASTERLY LINE OF THg LAND
DEEDED TO THE SOUTHERN PACIFIC RAILROAD COMPANY BY DEED RECORDED
AUCUST 9, 1885 TN BOOK 4?3, PASE 154, OF DESDS OF LOS ANGELES COUNTY.
SAID SOUTHEASTERLY LINE ALSO BEING THE WE$TERLY LINE OF LOT 18 OF
SAID C. HOWARD THOMPSON TRACT A RADIAL LTNE OF SAID CURVE TO SAID
A-3l r28!-0009u39?t95
POINT BEARS $OUTH 6lo 02'3?" EAST; THENCE ALONC SAID SOUTHEASTERLY
LINE NORTH 40" 25' l3u EA,ST 198.66 FEET; THENCE I"EAVINC $AID
SOUTHHASTERLY LINE, SOUTH 49o 34'47" EA$T 110.22 FEET; THENCE SOUTH 84'
47' 59" EAST 91.79 FEET; THENCE SOUTH 51o 33' 39" EAST 39.50 FEET; THENCE
SOUTH 28o 55 '40 EAST 86.50 FEET: THENCE 51" 25' 38'EAST 39.00 FEET; THENCE
NORTH 86o 36' 15. EAST 42.12 FEET; THENCE NORTH 40" 25u 15' EAST ?7.73 FEET;
THENCE NORTH 2Ao 42'34. EAST 86.63 FFHT; THEI.{CE NORTH 80o 39'33' EAST 67.58
FEET; THENCE SOUTH 4lo 29'59* EAST 81.52 FEET;'THENCE SOUTH 89" 36'56' EAST
65.2? FEET TO SAID WEST LINX OF PROSPECT STRHET; THENCE SOUTHERLY
ALONC SAID V/EST LINE OT PROSPTCT STREET SOUTH OO 21'O4'' WEST 7A0,9' FEET
TO THE POINT OF BECINNINC.
I t28t4009U392t95 A-4
5
rgcotoiltgt8gtfttt0tr
Rn$ffiEmc${utuco
t{moMt coirME*dtt $mfi c[3
AJcs * tafibzr ^"$4 |
Recording requestsd by and when
recorded mailto:
City of Orange
c/o Richards, Wetson & Gershon,
A Frofessiona I Corporrt ion
350 $outh Grand Avsnue, 3?th Floor
Los Ange leg California 900?l
Attention; Teresa Ho-Urano, Esq.
Rerorded in Official Records, Orange County
Hugh ltlguyenn Clerk-Re corde r
lllllllllllllllilllilllllllilllfillllllil]lllllllllll|llilllllillllilllll ruo rrr
*sR0011841157$*
2020000336068 10:25 am 07/15i20
2?7 htcR2 Stl 26
0.00 0.00 0.00 0.00 76.00 0.00 0.000.000.00 0.00
Exemptfrom RecordingFees Pursusnt to Gsvernment Code $S6/0J and27383
Etrempt from Documentary Transfer Tax
Pursuani io Revenae &TaxntionCode $$ I 1922 and 11928
SUBLAASE
by and between
the
ORANGD CITY PUBLIC FACILITTES FINANCING AUTHORITY,
as lersoro
and the
CITY 0F'ORANGE,
ae lessee
Dated as of July 1,2920
I t28t {009u39250 |
. T#.pLp or c(}NTaNTs
Page
SECTION l. D8rINITI0NS.........,"..,.. ,,.,.."....1
SECTION 2. TERM .....................3
SECTION 3. RENTAL.. ...............3
SECTTON 4. USE OF PROCEEDS ........"....... ...................,5
SECTION 5. MAINTENANCE, UTILITIES, TAXES AND A$SESSMENTS..".,..........,........5
SECTION 6. CHAN0ES TO THE TEASED PROPERTIES.,....,....... ................,..5
SECTTON 7. TITLE rNSURANC8.,.,,.,,.....".. ...................6
SECTION 8. 0THER INSURANCE............... ..........,......6
SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION,,..................,..,,,,.,.,,,"..8
s3crroN 10. DEFAULT ,..........".......,............ .....""...,.......,9
sEcTr0N 11. PREPAYMENT AND CR8DITS....,......,. ..................." l0
SECTION 12. RICHT OF ENTRY ..."...".........11
SECTION 13. MECHANICS' LIENS .......,.... 1I
SECTTON 14, QUIET ENJOYMENT .............12
SgCTICIN 15. TNDEMNIFICATTON ,..,...,.....,12
SECTTON 16. ASSIGNMENT T0 TRUST88.,,,...,..... ...,...........".......12
SECTION 17. ABATEMENT OF R8NTAL...,,.,.,..".,,. ,,....13
SECTION 18. ADDITIONAL COVENANTS REGARDING TAX.TXS,MPT
BONDS ........."..".... 13
SECTION 19. SUBSTITUTION OR RELEASE OT PROPERTY ,,,,. 14
SECTION 20. WAIVER ...........,.,..,;. .........:......... ..............15
SE,CTION 2I, NET LEASE ,"..,...,15
SECTION 22. AMENDMENT$ ....".........."....15
SECTION 23. 0OVERNING LAW. ..,....,,.....,15
SECTION 24. NOT:C8S.,.............,...,......"."...; ..."...............15
SECTION 25. VALINITY AND SHVHRABILITY ....."...15
SECTTON 26. SECTION HEAnINOS ................ ..........."":6
SECTTON 27. EXECUTr0N........ ........"......."..16
gXHIBIT A DESCRIPTION OF LEASEN PROPERTISS
EXHIBTT S BASE RENTAL PAYMENT SCHEDULE
r r28r.0009u39?501 -1-
SUBLEASE
This Sublease, dated as of July 1,2020 (this "sublease"), is made by and between the
ORANGE CITY PUBLIC FACILITIES F'INANCtrNC AUTHORITY, a joint powers authority
duly formed and existing llursuant to the laws of the Stato of Califsmia (the "Authorityo'), as
lessor, and the CITY OF ORANGE, a municipal corporation duly organized and existing under
the laws of the State of California (the "Cify'), as lessee.
RECITALS;
A. The Authority is a joint powers authority duly arganized and existing under and
pursuant to that certain Joint Exercise of Powers Agreement, dated as of March 19,2024, by and
between the City and the Califomia Statewide Communities Developrnent Authority, and under
the provisions of Articles I through 4 (commencing with Section 6500), Chapter 5, Division 7,
Title I of the Government Code of the State of California, and is authorized pursuant to A*icle 4
of the Act to borrow money for the purpose of financing and refinancing public capital
improvements.
B. The Authority is issuing its Lease Revenue Bonds, Series 2A20A (the oo3onds"),
pursuant to the Indenture, dated as of July 1, 202A {the "Indenture')n by and between the
Authority and U.S" Bank National Association, &s trustee,
C. Proceeds frorn the sale of the Bonds will be used to assist the City with the
financing of certain pubtric capital improvements, including: (i) the construction of a new Fire
Station No. I Headqumters, {ii) roof and related improvements at the City's police station
headquarfers, (iii) raof and other improvements at the City's other fire stations, and
(iv) instaltation of sscurity improvernenls at City facilities.
D. In connection with the issuance of the Bonds, the City and the Authority are
entering into the Lease Agreement, d*ted as of July l, 2020 (the "Lease"), whereby the Authority
will lease certain properties from the City.{the "Leased Froperties").
E. Pursuant to this Sublease, ths Authority will sublease the Leased Properties to the
City.
NOW, THEREFCIRS, in consideration of the abovc premises and of the mutual
covenants hereinafter contained and for other good and valuable considerationo the parties hereto
agree as follows:
SECTION I. DEFINITIONS.
Terms used and not otherwise definEd herein but which are defined in the lndenture shall
have the meanings ascribed to them in the Indenture. Unless tle sontext otherwise requires, the
terms defined in this Section shall, for all purposes eif this Sublease, have the meanings sp*cified
in this Section (the follcwing definitions to bs equally applicable to both the singular and plural
forms of any of such de'fined terms):
"AdditionaJ-Rgntal" has the meaning assigned to that tcmr in $ection 3(b) hereof.
I I28t.000tu392501 -1-
"Assignmg,,,$lAgreeqre t" means the Assigument Agreemcnt, dated as of July l, 2020, by
and between the Authority and the Trustee, as the same may be amended, supplernented or
otherwise modified from time to time. f,
"BgsE-Ren]lgloo has the meaning assignpd to that term in Section 3(a) hereof.
'1ggg5!g" means the Authority's Lease Revenue Bonds, Series 2020A.
"Co{nr$png*r*efit Paje'o means the Closing Date with respgct to the Bonds.
"Expllatigg-Date" means November 1,2A50; prgvidEd, hglvsypr, if on such date, the City
is in default with respect to any Base Rental payment or an aba*ement event has occurred such
that all Base Reiltal payments have not been made, then the Hxpiration Date shall be
autornatically extended to November 1,2060.
"Eilg*HQ-lfgiggl" means the project to construct the City's new Fire $tation l.{o. I
Headquartets, at 105 South Water Streeto City of Orange, California.
"Fire*"H.O Propertyn'msans the real property located at 105 South Water Street, City of
Orange, Califomia together with improvements thereon.
"Leqsed.,P;e.np,*iEg" means the real property in the City desuibed in Exhi-bit A of this
$ublease, and incorporated herein by reference, including improvements thereon, including the
followingl
(i) the property idsntified in khjbiLj as Parcel No. 1, including the
addresses currently known as 105 South Water Street {the Fire }{Q
Property) and 189 S, Water Street (City Water Divisinn operalion center),
iii) the property identified in Fxhibit A as Parcel No. 2, including the address
currently known as 3CI0 East Chapman Avenue (City Civic Center), and
' (iii) the properiy identified in Exhibit A as Parsel Nos. 3 and 4, including the
address currently knswn as 368 North Prospeot Street (Grijalva Park)'
'*Inelen1ture'o means the Indenture, dated as July 1, 2020, by and between the Authority
and the Trustee relating to the 3onds, as the same may be amended and supplemented.from time
to time in accordance with the terms thereof.
"Ng!-Uocqeis" rneans any insurance or condemnation proceeds, paid with respect to the
Leased Properties remaining after payment therefrom of all expensss in the collection thereof"
"Pay&e4L-Pflt$" msans, with respect to a Base Rental payment, the date listed as its
related "Payment Dateo'in Exhibit B of this $ublease.
'*@" means {a) liens for general ad valorem t&xes, special taxes
and assessments, if any, not then delinqusnt, or which the City may, pur$usnt to this Sublease,
perrnit to remain unpaid; (b) liens created pursuemt to or permitted under the Lease or this
I r2frt4009u39250r
.,
Sublease; (c) easements, right of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions which exist of record as of the Commencsment
pate; (d) utility, &ccess and other easemcnts'and riglrts of way, restrictions and exceptions that
do nol interfere with or impair the use intended to bg made of the relevant Leased Property;
(e) the City's right to acce$s and exclusive right to use and maintain facilities essential to the
City's utilities system$; (0 any right or claim of any mechanico laborer, materialman, supplier or
vendor filed or perfected in the manner prescribed by law aftsr the Cornmencement Date;
{g} such minor defects, inegularities, encumbrances and slouds on title as normally exist with
re$pect to property similar in eharacter to the relevent Leased Property and as do not materially
impair the use intended to be made ofproperty affected.thersby; and (h) easements, right of way,
mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions
established following *re Cammencement Date which do not materially impair the City's use of
the Leased Properties and to which the Authorjry and the City" consent in writing.
o'Rent|g!-!gysg$!$" means, togethero Base Rental and Additional Rental.
"$gblgg$e" rneans this Sublease, as the seme may be amended and supplomented from
time ts time in accordance with the terms hereof.
SECTION 2. TryRM"
(a) The Authority hereby subleases to the City and the City hereby leases
from the Authority, the Leased Properties on the terms and conditions set forth in this Sublease.
{b) The term of this $ublease shall commence on the Commencement Date,
and shall end on the earligst of: (, the Expiration Date; (ii) the date on which the Base Rental
payments are paid (or prepaid) in full under the provisions the Sublease; or (iii) the date of
discharge of the Inderture.
(c) Throughout the term of this Sublease, fse title to the Leased Properties
shall remain in the City. While any Bonds remain Outstanding under the Indenture, there shall
be no merger of the subleasehsld estate in the Leased Properties created by this Sublease, the
leasehold estate in the Leased Froperties ereated by the Lease, and the fee estate in the Leased
Properties merely because such estates, or any cf them, have been acquired or become vested in
the same person or entity.
SECTION 3. REN.TAL.
Subject to the provisions of Sections 8{c) and 17 hereof, the City egree s to pay to the
Authority, its sxccessors or assigns, as rental for the use and possession of the Loased Properties,
the following arnounts at ths followingtimes:
(a) The City shall pay as u'Bose Rentaf'ta the Authority or to the irustee, as
hereinafter prtrvided, semiannually, the rental payments in ascordance with the Base Rental
payrnent Schedule attached hereto as Exhibit 3, less any amount medited against Base Rental
pursuant to Section 4.02(d) of &e Indenturs, agh Base Rental payment shall be payable in
affe&rs five days before its Fayment Date, and shall be made in consideration for the City's use
I r28 14009U392$01 -J-
and possession of the Leased Prope*ies for the six month period preceding the Payment Date of
such payment.
(b) The City shall also pay, as "Additional Rental" hereunder, in addition to
the Base Rental, to the Authority or to the Trustee, as hersinafter provided, such amounts in each
yeer as shall be required f,or the payment of all costs and expensss (not stherwise paid for or
pravided for out of the proceeds of sale of the Bonds) incuned by the Authority or the Trustee in
connection with the execution, performance or enforcement of this Sublease or the assignment
hereof. fhe Indenture, or the Authority's or the Trustee's respective interests in the Leased
Properties, including, but not limited to, all fees, costs and expenses, all administrative costs of
the Authority relating to the Leased Properties {including, without limiting the generality of the
foregoing, salaries and wages of employees, overhead, insurance premiurns, taxes and
assessments (if any), expe$ses: compensation and indemnification of the Trustee payable by the
Authority under the Indenturelo fees of auditors, accountants, attomeys or engineers, and all
other reasonable and necessary administrative costs of the Authority or charges required to be
paid by it to cornply with lhe tenns of the Bonds or of the Indenfure. The Authority or the
Trustee shall bill such Additional Rental to the City from time to time. The City shall pay
amounts so billed withirr 30 days after receipt of the bill by the City.
(c) Such paymsnts of Base Rental and Additional Renkl hr each rental
payment period shall constitute the total rontal for said rental payment period, and shall be paid
by the City in each rental payrnent period for and in consideration of the right of the use and
possession of, and ths continued quiet use and enjoyment ol; the Leased Properties during each
such period fur which said rental is to be paid. The parties hereto havo agreed and determined
that such total rental does nat exceed the fair rental value ofthe Leased Properties for eash such
pericd. In making such determination, congideration has been given fo other obligations of the
parties under this Sublease, the uses and purpbses which may be servsd by the Leased Properties
and ths benelits therefrom which will acuue to the City and the gensral public. The
determination of fair rental value of ths Leased Properties pur$uant to this paragraph shall not be
deemed to be controlling in connectisn with a defermination sf fair value of the Leased
Properties by the parties hereto for any other purpose.
td) Each installment of Sase Rental payable hereundsr shall bs paid in lawful
money af the United States of AmErica to the order of the Trustee.
{n) Notwit}rstanding any dispute between the City and the Authority, the City
shall make all Rental Payments when dueo without deduction or offset of any kind, and shall not
withhold any Rental Payments pending the final resoh.rtion of any such dispute. In the event of a
determination that the City was not liable for said Rental Payments or any portion thereof, said
paymsnt$ or excess of paymentso as the case rnay be, at the option of the City, shall be credited
against subseguent Rental Payments duc hereunder *r be refunded at the time of such
determination.
if) The City covenants to take such action as may be necessary to include all
such Rental Payments due hereunder in its annual budget and to make the n$gessary annual
appropriatians for all such Rentnl Fayments. If the City's adopted annual budget for any fiscal
year fails tn include sufficient appropriation for the scheduled Rental Payments for the such
r r281,0009u39?50r -4-
fiscal year, &e City shall give written notice to tlre Authority and the Trustee of such failure as
$oon as practical, but in any eve$t within ten Business Days of the adoption of such annual
budget. The covenants on the part of the City contained in this Sublease shall.be deemed to be
and shall be constrxed to be duties imposed by law and it shall be the duty of each and every
public official of the City to take such action and do such things as are required by law in the
performance of the official duty of such officials to enable the City to carry out and perform the
covenants and agreeinents in this Sublease agreed to be carried out and performed by the City;
providpd, the obligation of the City to make Base Rental or Additional Rental payments does not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any {brm of taxation. Neither the Bonds nor
the obligation of the City to rnnke Base Rental or Additional Rental payrnents constitutes an
indeo-tedness of the City, the $tate or any of its political subdivisions in contravention of any
constitutjonal or statutory dsbt limitation or restriction.
SECTrON 4. USF pF pROqSEpq.
The Authority and the City agree that the proceeds of the Bonds will be used to:
(i) {inance the Projects, and (ii) pay thc costs of issuing the Bonds and inEidental and related
expenses: as more fully set forth in the Indenture
sHCrroN s" MATNTENANqE. Urrtrrrss. TAx$s Afrp 4$$"p$sMFN.Ts.
(a) During such time as thE City or any assignee or sublessee thereof is in
possession of the Leased Propefiies, all maintsnancs and repair, ordinary or extraordinary, of the
Leased Properties shall ba the responsibility of the City, and tho City shall pay for or otherwise
arrange for the payment oE (i) all utility services snpplied to ths teased Properties, (ii) the cost
of operation of the Leased Properties, and (iii) the costs of maintenance of and repair to the
Leased Properties resulting from ordinary wear and tear or want of care on the part of the City.
The City shall, at the City's sole cost and expense, keep and maintain the Leased Properties clean
and in a safe and good condition and repair. The Authority shall have no obligation to alter,
remodel, irnprove, repair, decoraie, or paint the Leased Froperties or eny part thereof, and the
parties hereto affirm that the Authcrity has made no reprssentations or waranties to the City
respecting the condition of the Leased Prope*ies.
(b) The City shall cornply with all statutes, ordinances, regulations, and other
requirements of all govenunenhl e$tities that pertain to the occupailcy or use of the Leased
Properties. The Autlrority has no rEspbn$ibility or obligation whatsoever to construct any
inrprovements, modifications or alterations to the Leased Properties.
(c) The parties hereto contemplate that the City will use the Leased Properties
for public purpo$Es and, therefore, that the Leased Properties will be exempt fi'orn all iaxes
presently assessed and levied with respect to real and personal ,property, respectively. In the
sveht that the use, poss*ssion or ecquisition by the Authority or the City of any of the Leased
Properties is found to be subject to taxation in any form, the City will pay during the term hereof,
as the sams respeotively become due, all taxes'and governmental charges of any kind whatsoever
that may at any time be lawfully assessed or levied against or with respect to such Leased
Property and any other prnperty acquired by the City in substitution for, as a renewal or
l r?E 14009u392501 -5-
rcplacement o{ or a modification, improvement or addition to sush Leased Property; provided,
that with respect to any govemmental charges or taxes that may lawfully be paid in installments
over a period of years, the City shalt be obligated to psy only such installments as are accrued
during such tirne as this Sublease is in effect.
sEcfloN 6. CHANGES TO THE LEASEDSROFFRTTFq.
(a) The City shall have the right during the term of this Subleass to acquire
and construct improvements or to attach fixtures, structures or signs to any of the Leased
Properties if the improvsments, fixturesn structure$ or signs are nece$sary or beneficial for the
use of such Leased Properlies by the City; provided, howeyef, that no such acquisition or
construction shall result in a material reduction in the aggregat€ valus of the Leased Properties or
reduce the aggregate fair rental value thereof or result in an abatement of the Rental Payments.
{b) Upon termination of this Sublease, the City may remove any fixture,
sfnrcture or sign added by the City, but such remnval shall be aecornplished so e$ to leave the
Leased Properties, excopt for ordinary wear and tear and damage by c*sualtyo in substantially the
same condition as they were in before the fixture, strucfure or sign was attaehed,
SECTION ?. TITLE INSURANCE,
The City shall obtain one or more Califomia Land Title Assoeiation insurance
policies (or, at the City's sole discretion, American Land,Title Association insurance policies) at
lhe tims of and dated as cf ths Commencement Date in an aggregate amount not less than the
aggregate principal arncunt of the Bonds, payable to ihe Trustee, insuring the respective interests
of the City and the Autharity in the Lessed Properties, and insuring the validity of this Sublease"
subject only to Permitted Encumbrances, naming the TrusteE as an insured thersunder, issued by
a title insurance company qualified to do business in the $t*te of Califomia and acceptable to the
Trustee. To the extent pennitted under tha Indenture, the costs of obtaining such title insuranee
policy or policies may be paid out of the sale proceeds of the Bonds.
sEcTroN 8. pTHER INSUR.{}{CE.
(a) Fire and Extended-egverage Insur-ance- The City shall maintain or cause
to be rnaintained fire, lightning and extended coverage insurancs on thE Leased Properties in an
arnount equal to (i) 100 percent of the then current replacement cost of the Le*sed Properties,
excluding the then fair maiket value of the land as unimproved or (ii) the principal amount of all
outstanding Bsndso whichever is less (except that such insurance may be subject to a deductible
clause not to exceed 10 percent of the amount of such policy). gsrthquahs inswanse shall be
maintained on the Leassd Propsrti*s only if available on the open market from reputable
insurance cornpanies at a reasonable cost. Ths extended coverage enddrsernent shall, as nearly
as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damagen
smoke, v*ndalism, malicious mischiet dumping or other deposit of any pollutant or sther debris
and such other hazard$ as are normally covered by such endsrsement. Sash such policy of
insuranse shall be in forrn reasonably satis&ctory to the Authority, and shall contain a clause
narning the Trustee as an additional insured and making all losses peyeble to the Trustee, and all
I r28r-0{0Eut9?501 -6-
proceed$ thereof shall be paid over to the party conirectually responsible for making repairs of
casualty damage.
In the event of any damage to or destruction of the Leased Properties
caused by the perils covered by such in$urance, the proeeeds ofsuch insurance shall be utilized
to repair, reconstruct or replace the Leased Properties to the end that the pmject shall be restored
to at least the same condition that it was in prior to such damage or destruction. Any balance of
such proceeds not required for sueh repair, reconstruction or replacement shall be transfened to
the Authority and treated as Revenues and applied in the manner provided in the Indenture.
(b) Liability Insqranco. The City shall maintain or cause to be maintained
public liability insurance with lirnits of not less than $3,000,000 for one person and S5,000,000
for more than one person involved in oine ascident to protect the Authority and the Trustee from
all direct or contingent loss or liability for damages for bodily injury or death occasioned by
reason of the construction, condition or CIperation of the Leased Properties. The City will also
maintain or causs to be maintained insurance against liability for praperty damage resulting ftom
eny casualty attributable to the operation of the project in an amount not less than $1,000,000 for
each accident. The public liability insurance and property damage insurance may be subject to a
deductible clause for anyone accident of not to exceed $250,000. The insur*nce coverage
requir*d by this subsection may be effected by blanket policies covering the Leased Properties
issued to the party contracfually responsible for the maintenanc.e and operation of the project and
such insuraflce policy or policies shall name the Trustee as an additional insured.
(c) &ental lntemrption Insur{gpe. The City will maintain or c&use to be
maintainsd rental intemrption or use and occupancy insurtnce to cover loss, total or partial, of
the use of the Leased Properties as a result cf any of the hazards covered by the insurance
required by subsection (a) of this section in an smount not less than the greatest of the aggregate
Base Rental payable by the City under this Sublease for a period of any future 24 month*. Any
such insurance policy shall be in form satisfactory to the Authority and shall contain a clause
naming the Trustee as an additional insured and making any loss thereunder payable to the
Trustee as its interssts may appear. Any proceeds cf such insurance shall be used by the Trustee
to pay Annual Debt Service on the Outstanding Bonds for the period during which the payment
sf rental under the Sublease is abated, and any proceeds of such insurance not so used shall be
applied as provided in the Indenture to the extent required to pay administrative costs of the
Authority in connection with the Leared Properties,
(d) gelf-Insure4q.g-;" Altemative Plpn of Pqgtection. As an altemative to
providing the insurance required by paragraph (b) above, the City rnay provide or cause to be
provided a self-inswance method or plan of protectian if and to the extent such self-insurance
method or plan of proteetion shall afford reascnable protection to the City and the Authority, and
their directors, offic.ers, agsnts and employees and the Trustee, its director$, officer$n agents and
employees in light of all circumstances, giving consideration to cost, availability and sirnilar
plans or methods ofproteetion adopted by public entitiss in the State of California other than the
City; urovidpd that the obligation of the Autharity or City to make payments under such self-
insurance shall be llmited to money in a designated fund balance Established by the Authority or
City and that the Authority or City shall noi be obligated to replenish such designated fund
balance from the General Fund or be otherwise obligated to make payments except from sush
l l28r-0009u39?50r
designated firnd balance. After the Commencement Date, before any substitut* method or plan
may be provided by the City, there shall be filed with the Trustee a certificate of an actuary,
independent insurance consultant or other qualified psrson, stating that, in the opinion of the
signer, the substitute method or plan of protection is in acccrdance with the requirements af this
Section and, when effective, would afbrd adequate protection to the City and the AuthorjtY, and
their directors, officers, agents and employees and the,Trustee and its directors, officers, agents
and employees against loss and damage from the hazards and risks covered thereby; prpvided,
hor{e-v"S,{, that in the event the City provides a self-insurance rnethod or plfln of protection for the
insuranse required by paragraph (c) above, the designated fund balance established by the City
shall be firnded in an amount at least equal to tho greatest of the ag$egate Base Rental payable
by the City under this SublEase for a period of any future 24 months.
Moreover, as an alternative to providing the insurance required by
paragraph (b) above, the City may provide a self-insurans€ method or plan of protection through
the Calilbmia Insurance Pool Authority {or another insurancp risk sharing pool joint powers
authority formed in the State) or any successor entity as the City may reasonably determine.
(e) Eyiderlce, qf Inspfgpce. The Ciry shall deliver to the Trustee each year a
Certilicate of the City staring that all requirements of this Sublease rElated to insurance have
been complied with. Each such insurance policy shall require that the Trustee be given 30 days'
notice of any intended cnncellation thereof or reduction of the coverage provided thereby. The
Trustee shall have no responsibility as to the suffrciency of coverage or amounts of such policies,
If so requested in writing by the Trustee, the City shall also deliver to the Trustee duplicate
originals or certified copies of each insurance policy described in such schedule.
(S Advancgs, If ths City shall fail to perform any of its cbligations under this
Soction" then the Authority may, but shall not be obligated to, take such action as may be
necessary to cure such failure, including the advancement of money on behalf of the City, and
the City shall be obligated to repay all such advances as soon as possible, as Additional Rental
under Section 3{b}.
(g) Waive$ of S,qbrogatiQrr. Each of ths parties hereby waives any and all
rights to recovery against the other or against any other tenant or occupant of the Leased
Prnperties, or against lhe officers, employeos' agenLs, representativosn custotuers, and business
visitors of such o,ther party or of such other tenant or occupant of the Lea$ed Properties, for loss
or damage ts such waiving party or its property or the property of others under its control, arising
from any causs insured against under ths standerd form of prop€fiy damage insurance policy
with atl permissiblo extensions and endorsemont$ covering extended perils or under any other
policy of insuranos caried by such waiving party in lieu thEreof, to the extent such policies then
in force permit sush waiver.
SECTION 9. DAMAGE. D4$TRUCTION AND COlrllHIr4llATION: APPLICATION
0r'NEr PROCEEp.
If: (i) the whole, or any portion, of tho Leassd Properties is destroyed (in whole or in
part) or is damaged by fire of other casualty or taken by eminent domain proceedings (or sold to
r l2&l-0009v39?501 -8-
a govemment threatening to sxercise the power of eminent dornain), or (ii) the leasehold title in
all or a portion of the Leased Properties is materially impaired by reason of a defeet in title, then
(a) the City, but only to the extent permitted by law, shall substitute other
property for the portion of the Leased Properties that has been destroyed, or taken, or affected by
the defective title in accorddnce with Section 19 hereof; or
(b) the City shali require the Net Proceeds of any insurance payment (other
than the Net Proceeds of rental intemrption insurance which shall be applied pur$uant to Section
8(c)) or any condemnation award to be held by the Trustee in a special trust fund to be applied
and disbursed by the Trustee as,follows:
(il If less than all of the Leased Properties shall have been so
deshoyed or taken ar affested by defective title and the remainder is uwble, thsn this Sublease
shall continue in full force and eftct as to such rernainder and (A) if the portion taken or
deshoyed is replaced by one or morr properties of equal or greater fair market value (as
demonstrated by an MAI fair market appraisal), the Trustee upon unitten direction of the City
shall disburse such proceeds to the party that incurred the expense of making such replacement
and there shall not be any abatement of the Base Rental under ttris SublEass; or {B) failing the
making of such replacement, there shall be a partial abatement of the Base Rentat under this
Sublease (in accordance with Section 1?) and the Trustee shall apply such Net Proceeds, together
with any other money then available to it for such purpose, to the Redernption Fund under the
Indentsre for the redenrption of outstanding Bonds in accordanoe with Sections 4,03 and 2.03(a)
ofthe Indenture,
{ii) If less fhan all of the Leased Properties shall have bcen so
destroyed or laken or affected by deftctive title and the remainder is not usable, or if all of the
Leased Pr*perties shall have been so destroyed or taken or a{fected by the defective title, then
the term of this Sublease shall cease as of the day that possession shall be so taken; and the
Trustee shall apply such Net Proceeds, together with any other money then available to it for
such purpose, to the Redemption Fund under the lndenture for the redemption of outstanding
Bonds in accordance with Sections 4,03 and ?.03(a) of the Indenture.
SECTION 10. SFFAULT.
(a) If default shall be made by the City in the observance or perfommnce af
any agrsemeni, condition, covenant or term contained herein required to be observed or
p*inorit*O by it (including, without limitation, the payment of any Base REntal or Additional
Rentai due hereunder), subject to the provisions of subsection (c) below, the Authority may at
any time thereafter (with or without notise and demand and without limiting eny other rights or
remedies the Authority rnay have) recov*r rsnt and other monets"ry charges as they become due
hpreunder without terrninating the City's right to possession of the Leased Properties {regardless
of whether or not the City has abandoned ths teased Froperties). Furthermore, upon the
occ xrence of such a default, the Authority shall have the right, and the City hereby inevocably
*ppoints the Authority as its agent and attomey-in-fapt for such purpo$e, io attempt to relet the
teased Properties at such rent, upon such conditions and for such term (subject to then existing
Fermitted Encumbrances, including but not limited to the City's right to aoce$s and exclusive
l r2fi4009u19r501 -9-
right to maintain and use facilities essential to the City's utilities systems), and to do all other
acts to maintain or preserve the Leased Properties, including the removal of persons or property
therefrom or taking possession thereof, as the Authority deerns desireble ot necessary. The City
hereby waives any and all clairns for any damages that may result to the Leased Properties upon
any action taken by the Authority under this $ection 10(a). No action taken by the Authority
under this Section l0(a) shall be deemed to terminate the Leasb or the Sublease and the City
shall continue ta rsmain liable for any deficiency that may arise out of such reletting, taking into
acsount €xpsnses incurred by the Authority due to such reletting, payable at the same time and
manner as provided for Base Rental in Section 3(a).
The Authority expressly waives the right to receive any amount from the City
pursuant to Section 1951.?(a)(3) of the Catifomia Civil Code.
Each and all of the remediss given to the Authority hereunder or by any law now
existing or hereafter enasted are cumulative and the exercisq of any one remedy shall not impair
the right of the Authority to any or all other remsdies.
(b) In addition to any default resulting frorn breach by the City of any
agreemsnt, condition, covenant or ternr hereof, if -
{i) the City's interest herein or any part thereof is assigned or
transferred, either voluntarily or by operation of law, excepl as provided in Seption l6; or
. (ii) the City shall file sny petition or institute any proc€edings under
any act or acts, state or federal, dealing with or relating to the subject of bankruptcy or
insolvency or under any amendment of such act or acts, either as a bankrupt or as an insolvent or
as a debtor or in any similar capacity, wherein or whereby the City asks or sesks or prays to be
adjudicated a bankrupt, or is to be discharged from a$y or all ofit* debts or obligations, or ofJbrs
to its creditors to e{fect a composition or extension of time fo pay its debts, or asks, seeks or
prays for a reorganization or ts effect a plan of reorganizatioa or for a readjustment of its debts
or for eny othsr sirnilar relied or if the City shalt make a general or any assignmenl for the
benefit of its creditors in connectisn with any proceedings related to bankruptoy, insolvency,
liquidation, winding up or similar event; or
(iii) the City shall abandon the Leased Propertiss or any portion
theresf, then in each and every such case the City shall be deemed to be in default hereunder.
{c) Neither the Authorjty nor the City shall be in defeult in the performance of
any of its obligations hereunder (except for the obligation of the City ro pay Base Rental when
due pursuant to Sestion 3(a)) unless and until it shall havE failed to perform such obligation
within 30 days afler notice by the Authority or the City, as the case may be, to the other party
properly specifying wherein it has failEd to perform such obligation.
sEcTroN r l. PREPAYMENT ANp CRH,DITS,
(a) In the evs$t thet, pursuant to Section 9, the City determines that Base
Rcntal shall be abated and Net Proceedi from insurance or any condemnation award shall be
r rtnooogurgisor -10-
ussd to redeem Bonds, the City shall provide the Authority and the Trustee an amended
Exhibit B reflecting the new sshedule of Sase Rental payments.
(bi The City may, at its opion, prepay frorn any source of available moneys,
Base Rental then unpaid, in whole or in part, for the redemption of Bonds, which redemption
date(s) shall be on or after Novsmber 1, 2028. In such event, the Bonds shall be redeemed
pursuant to Section 2.03(b) of the Indenture. A prepayment under this Section I l{b) shal} be
deemed made upon the cccurrence of either of the following:
(i) The City shall havo deposited with the Trustee an amount equal to
the sum of (A) the principal components of Baie Rental being so prepaid, plus (F) the interest
components with rospect thereto accrued to the related redemption date(s) of the Bonds, plus
(C) a premium, if auy, in an a$ount equal to the redemption premium applicable to the Bonds
being so redeemed; or
(i0 There shall have been deposited, on bEhalf of the Authority, with
the Trustee or another fiduciary, Federal Securities in a sufficient amount to satis$ the
r*quirementn of $ection 9.03 of the Indenture to discharge the Bonds to be redeemed in
cannection with such prepayment.
Except in the case of a prspayment of Base Rental to redeem all of the then
Outstanding Bonds, a prepayment of principal oompsnents of Bass Rental pursuant to this
Section I t&) shall: (1) apply only to Base Rental previously unpaid and not yet due, and (2) be
applied to reduEe Base Rental so that, after such prepayment (and the related redemption of
Bonds), (A) each annual installment of principal components of Base Rental due hereunder shall
be an integral multiple of $5,000 and (B) the principal components of Base Rental due in any
year shall correspond with the principal amount of Bonds due and payable in such year.
(c) Before making any prepeyment pursuant to this Section 11, the City shall
give written notice to the Trustee specifying the date on which the prepayment will be made.
Such notice by the City shall be given at least 45 days before the prepayment dete; gXgytded, that
the Trustee may accept a shorter notic,s period or waive such notice requirement at the Trustee's
solE discrefiorr. The City shall have the right to rescind an optional prep&yrnent (exereised under
$ection I l(b)) by written notice to the Authority and the Trustee prior to the corresponding
redernption date of the Bonds, and the Trustee, upon reoeipt of such notice, shall promptly send
notices of rescission of such optional red*mption of the Bonds pursuant to Sectio* 2.03(e) of the
Indenture.
(d) In the event of a partial prepayment of Base Rental under this Section l l,
the City shall provide the Trustee with an arnendsd Xxhibit.S reflecting the new schedule of
Base Rental payments. . A prepayment made pwsuant to this $ection l1 shall not cause a
defeasance of Bonds unless the requirements of Section 9.03 of the Indenture ere satisfied.
(e) In the event of a prepaym€nt in futl of the principal component of Base
Rental under this $ection I l" such that this Sublease shall be terminated by its terms as provided
in $estion 2, al} amounts then on deposit usder th* indenture which are to be credited to the
I t2*r-0009u392501 -11-
City's obligations to make Base Rental payments shall be credited towards the amounts then
required to be so prepaid.
SECTION 12. SISI{:,P--{ P}'ITR-Y.
The Authority and its *ssignees shall have the right to enter any of the Leased Properties
during reasonable business hours (and in emergencies at all times), subject to ths City's
rexonable security mea$ures, (a) to inspect the s&me, (b) for any purpose connected with the
City's or the Authority's rights or ubligations under this Sublease, and (c) for all other lawftl
purp0ses.
SECTION 1 3. MECHAI".IICS' LIENS.
In the event the City shall et any tirne before or during the term of this Sublease cause
any improvernents or other work to be done or performed or materiels to be supplied, in or upon
the Leased Froperties, the Ciry shall pay, when du6, all sunrs of money that may becorne due for,
or purporting to be for, any labor, services, materials, supplies or equiprnent furnished or alleged
to have been furnished to or for the City in, upon or about the Leased Prop*rties and which may
be secured by any mechanics', materialmen's or other liens against the Leased Properties or the
Authority's interest therein, and will cau$e any such lien to be fully discharged and released at
the tirne the perfonnance of any obligation secured by any such lien matures sr becomes due,
except that, if ftre City desires to contest any such lien it rnay do so. If any such lien shall be
reduced to final judgment ar:d sueh judgment or sush process as may be issued f,or the
enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the
City shall promptly pay and discharge said judgment.
SFCTION 14. OUIET E}IJOYMENT"
The parti*s hsrsto rnutually covenant that the City, so long as it keeps and performs the
coven&nts and agreements herein contained, shall at all times during the tenn of this Sublease
peaceably and quietly have, hold and enjoy the Leased Properties without suit, trouble or
hindrance from the Authority.
SECTION 15, INDEMNIFICATION.
The City shdl, to the full extent then perrniued by law, indemnify, defend, protect and
hold harmless the Authority and its members, offieers and employees and the Trustee and its
officers, directors or employees from and against any and all liabilities, obligations, losses,
claims and damages whatsoevero regardless of the cause thereof (except for any liability,
obligation, loss, olaim or darnage arising out of the nagligent or intentional act or omission of the
Trustee, its officers, dirsctors or employees), and sxpen$Es in connection therewith, including,
without limitation, ssunsel fees and expensssr penalties and interest arising sut of or as the result
of the entering into of this Sublease and the Indentureo or the poyment of costs of (including any
ascident in cs$nection with) the operation, usel condition or possession of the Lea*Ed Proporties
or any partion thereof resulting in damage to property or injury to or death to any person. The
indemnification arising under this section shall continue in full force and effect notwithstanding
the full payment of all rent obligations hereunder or the termination hereof for any reason, and
with regard to the Trusteen the resignation or rernoval of the Trustee. The City agrees not to
I t28t-0009\?39tr0t -1?-
withhold or abate any portion of the payments required pursuant hereto by reason of any defects,
malfunctisns, breakdowrts or infirmities af the l.eased Properties. The Authority and the City
mutunlly agree to promptly give notice to each other of any claim or liability hereby indemnified
against following either's learning thereof.
SECTION t6. ASSIGNWNT TO TRUSTF.FT SUFTETTING BY CITY.
(a) The parties understand that this Sublease and the rights of the Authority
hereunder (except for the Authority's rights with respsct to approvals or consents hereunder, and
indemnification and payment or reimhursement for any costs or expe$sss of the Authority
hereunder) will be assigned to the Trustee pursuant to the Assignmenl Agreement and the
Indenture, and accordingly, the City agr€es to make all Rental Payments due ts the Authority
hereunder directly to the Trusfes, notwithstanding any claim, deftnse, setoff or counterclaim
whatsoever (wh.ether arising from a breach hereof or otherwise) that the City may havc from
time to time against the Authority, except as provided in Section 17,
(b) Neither this Sublease nor any inrcrest of the City hereunder shall be
mortgaged, pledged, assigned or transfered by the City by voluntary act or by operation of law
or otherwise; e,ril-vjded, subject to Section 18, that the City n:ay sublease all or any portion of the
Leased Properties, and may grant concessions to others involving the use of any portion of the
Leased Properties, whether such soncessions purport to convey a leasehold interest or a license
to use a portion of the Leased Properties. The City shall at all times remain liable for the
performance of the covenants and conditions on its part to be performEd under this Sublease,
notwithstanding any subletting or granting of concessions which may be made. Nothing
contained herein shall be co$strued to relieve the City frorn its abligation to pay Base Renfal and
Additional Rental as provided in this Sublease or to relieve the City from auy other obligations
ccntainsd herein.
{c) Without limiting the foregoing, to the extent that this Sublease or the
Assignment Agreement confer upor or grants the Trustee any right, remedy or claim under or by
rea$on of this Sublease, the Trustee is hereby further recognized as being a third party
beneficiary hereunder end may enforce such right, remedy or claim conferred, given or granted
hereunder.
SECTION 17. ABAT'EMENT OF RENTAL.
' (a) The obligation of the City to pay Base Rental and Additional Rental skall
be abated during any period in which, by reason of any darnage, destrustion, condemration or
impairment of leasehold interestn thers is substantial interference with the uss and occupancy of
tbE Leased Properties or any portion thereof by the City. Such abatement shall be in an amount
agreed upon by the City and the Authority such that the resulting Base Rentel in any year during
which such interfersseo continues does not exc.e€d the fbir rental value of the porticns of the
Leased Froperties as to which such damagen des8uction, taking or irnpainnent do not
substantially interfere with the City's use and right of possession. $uch abatement shall continus
for the period commencing with the date of such interference and ending with the rostoretion of
the rElevant Leased Properties to tenantable conditicn. Fnr clarification Furposes, to the extent
that any Base Rental is ts be paid or prepaid from insurance or condern$atian proceeds deposited
| 128r.00@\239?501 -1 3-
with the Trustee pwsuant to Section 8(c) of this Sublease, such Base Rental shall not be reduced
or abated pursuant to this Seetion.
(b) Upon the cessation of the occurrence of any abatement event during tbs
term of this Sublease, f}re City and the Authority shall, in good faith, determine the cunent fair
rental value of the Leassd Properties. If such fair rental value is greater than the fair rental value
of ths Leased Properties determinsd under Section 3 as of the Commen$ement Date, the Base
Rental shall be increased by the lesser of (i) such incremental value or (ii) the amount needed to
recoup all amounts abated during the remaining term of this Sublease.
(c) Except as set forth herein, in the event of any damage, destruction of
condemnation, this Sublease shall continue in full force and effsct and the City hereby waives
any right to terminate this $ublease by virtue of,such damage, destruction or condemnation, The
City further waives the benefit of Ssstions 1932(l), 1932Q)" 1933(4), l94l and 1942 of the
CaliforniaCivil Code.
SHCTION 1 L AqprrrONAL COVFNANTS RA€4R'plN,6, TA*pXEMPT. B ONDS.
The City covenants thaf during the term of this Sublease it shall not use or pennit the use
of the Leased Propertles or any proceeds of the Bonds, directly or indirestlyo in any manner, and
shall not taks or'omit to take any action, that would cause any of the Bonds to be treated as an
obligation not desuibed in Section 103{a) of the Code. The City shall compiy with the
provisicns of the Tax Certificate, which is incorporated in this SublEase.
S E CTION I 9. SU B $TiTU,P ON PKKNLEA $E.P-{. N APP3*TY.
(a) Notwithstanding anything herein to the contrary, the Leased Properfies
may be substituted, in whole or in par1, by other properties, or a portion of the Leased Properties
may be released from this $ublease, at the option of the City; provided, that the following
conditions shall have been satisfied:
(i) such substitution or release does not, in the opinion of Bond
Counsel, adversely a{fect the Tax'Exempt status of the Bondsi
{ii) The City shall have provided cErtification to the Authority and the
Trustee that thc fair market value of the Leased Properties, after the proposed substitution or
release, shall be equal to or grseter than ths aggregats amount of the prinbipal component of the
Base Rental {i.e., the principal amount of the Outstanding Bonds);
(iii) the City certifies to the Authority and the Trustee that, based on the
City's deterrnination, the annual fair rental value of the Leased Froperties, after such substitution
or release, is at least equal to the nraximunr annual Base Rental remaining unpaid under the
terrns of this Sublea*e, and the expected useful life of the Leased Properties, afcer such
substitution or rele&se, extend* at least ta the Expiration Date;
{iv) Except as provided in $ection 19(b), the City shall noti$ the rating
agency (ar *gencies) then rating the Bonds regarding such substitution or release;
I t28t-0009u39250r -14-
(v) in the event that the substituted property consists in whole or in
part of real property, a California Land Title Association insurance policy (or, at the City's sole
discretion, an American Land Title Association insurance policy) on the substituted real property
has besn obtained, along with evidence that, other than Permitted Encumbrances, no prior liens
exist as to the substituted property;
(vi) the City shatl provide to the Authority and the Trustee evidence
that any existing title insurance with respect to the portion of the Lsased Properties remaining
after such substitution or release is not affected; and
(vii) the parlies hereto shall amend this Sublease to properly reflect such
substitution or release.
(b) It is recognized that after the completion of the Fire HQ Project, the City
may choose to release a portion of the Leased Properties under the Lease and this Sublease; and
in that connection, so long as the Fire Station HQ Property will remain a$ among the Leased
Properties after such rslease, then the City, with respect to the conditions to be satis{ied under
Sestion l9(a), will not be required to provide notic.e to any rating agency pursuant to Section
l9{a)(iv).
SECTION 20. WAIVER.
Failure of the Authority to lake advantage of any default on the part cf the City shall not
be, or be construed as, a waiver thereof, nor shall any eustom or practice which may be
established between the parties in the course of administering this Sublease be construed to
waive or to lessen the right of the Authority to insist upon performance by the City of any term,
covenent ar condition hereo{ or to exercise any rights given the Authority on accounl of such
default. A waivsr of a particular default shnll not be deemed to be a waiver of the same or any
subsoquent default. The acceplance of rent hereunder shall not be, nor bs construed to be, a
waiver of any terrn, covenant or condition afthis Sublease.
SECTION 2I. NET LEA$F
' Subject to the provisions of Section 17 ("Abatement of Rentaf'), this $ublease shall be
deemed and construed to be a "Triple Net Lease" and the City hereby agrees that rsntal provided
for herein shall be an absolute net retum to the Authority, free and clear of any expetrss$, charges
or setoffs r.$hatsoever.
$ECrroN 22. AM,nNnM,SN:S
, This Sublease may only be amended to the extent pennitte.d by $ection 5,07 of the
Indenture.
sEcTroN 23. GOVERNTNC. LAW.
This $ublease shall be governed exclusively by the provisions hereof and by the laws of
the State of California"
l l28r-0009u392501 -15-
SECTION 24. NOTIqES.
Any notice, request, demand, or other communication under this Sublease shall be
governed by Section 10,13 of the Indenture, which is hereby incorporated.
SECTION 2s. VALIDIIY ANp SEVERABILIIY.
If for any reason thin Subleas*. shall be held by a court of competent jurisdiction to be
void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by
such a court that any of ths covenants of the City hereunder,.including the covenant to pay
rentals hereunder" is unenfirrceable for the full term hereo{ then and in sueh event this Sublsase
is and shall be deemed to be a lease from year to year under which the rentals are to be paid by
the City monthly in consideration of the right of the City to possess, oscupy and use the Leased
Properties, and all of the rental and other terms, provisians and conditions of this Sublease,
except to ths sxtent that such terms, provisions and sonditions are contrary to or inconsistent
with such holding, shall remain in full force and Effect.
SECTION 26. SECTLO.!'{ HPADINGS.
All section headings contained are for convenience of refsrence only and are not intended
to defino or limit the scope of any provision of this Sublease.
{Remainder of tltk page intentionally tefi btanl*J
r l38l "0009'039?501 -r6-
SECTTON 27. EXECUTION: RFCORDATION.
This $ublease may be executed in any number of counterparts, each of which shall be
desmed to be an original, but all together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Authority and the City have caused this Sublease to be
executed by their rsspective officers thereunto duly authorized, all as of the day and year first
above written.
ORANGE CITY PUBLIC FACILITIES
S'INANCING AUTHORITY
CITY OF ORANCtr
. Executive Director
Pamela Coleman, $ecretary
n Coleman, CiE Clerk
I t28l-0009U39e501 -t7-
A notafy publip or othrr of$csr completing this certiticate vcrilics only the
identity of thc individual who signed tlE dosumsnt to which this csrtifrcste is
attached, and aot the fruthfulnxe, accuracy, or v*lidity ofthrt dorumeot.
$tate of Califomia
County of Orange
o*@,beforeme,Jaernin r lohnson
(inssn ncms snd titls ofthe officer)
Notary Public, porsonally appeared *.. M*,fH . 4 . Mf r{hq - , who proved to me on
the basis of satisfactory evidence to be the persor{*} whosd nffie*,$ isfure subscribed to the
within instrument and acknowledged to me that he/*helthey executed the sams in hisfterltheir
authorized capacity{jeg, and that by his,&e*ltheir signaturg{rf on the instrument the persoqp), or
the entity upon behalf of which the personJ$ acted, executed the instrument.
I certify under PENALTY OF PERIURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
,rf*rur"
-
(Seal)
A notary public or othcr officsr completing this certilicatp v*rifres cnly the
ideri{ity of ths individual who signrd the dscument to rvhich this certificete is
attached, and not the trudrfulness, acctrtacy, or validity ofthat documeut,
State of California
County of Orange
o' JUI$ |1, eP*P , berore me,Jnerntn Juhnson -,
)
I
I
t
nanle s$d iitle 0f the offrcer)
Notary Public, personally appeared who proved t0 me on
the basis of satisfactory evidence fo be the persory[r/ w]mse nameJr] is/€re subscribed to the
within instrument and acknowledged to me that heAhelth*ry executed the same in hisr{retffiteir
authorized capacity{ffi and that by hisAsr/their signaturgfirfon the instrument the personJxf, cr
the entity upon behalf of which the perscryftfacted, exesuted the instnrment.
I cerriff under PHNALTY OF PERIURY under the laws of the $tate of California that the
foregoing paragraph is true and ccrrect.
WITNESS rny hand and official seal.
Signature
B-3I t?81-0009u39t50r
(Seal)
EXHIBIT A
Description of Leased Properties
THE LAND REFERRED TO HEREIN BELOW IS SITUATS,D IN THA CITY OF ORANGE,
COT'NTY OF ORANGE, STATE OF CALIFORNTA AND IS DESCRIBED AS FOLLOWS,
TOOETHER WITH TMPROVTMENTS THEREON:
PAFCEJ, tr ,tfN 39{*153-0?
flAS South Water S*eet {tlte Fire HQ Froperty) and }89 S. Water Street (Cfty Water Division
operation center)J
LOTS I THROUCH 22 INCLUSIVA IN BLOCK N'BN OF ?HE JAMESON TRACT, AS
SHOWN ON A MA} RECORDED IN BOOK 13, FASE 44 OT'MISCELLANEOUS MAPS,
R.PCORDS OF ORANOE COL}NTY, CAIiFORNIA.
EXCEPTINS THER.EFROM THAT PORTION DESCRIBED IN A DEED TO THO CITY OF
ORANCE RECORDED MAY I}, 1982 AS INSTRUMEN? NO. 8?-092579 OF OFTICIAI"
RECORDS OF SAID ORANCS COLINTY,
AL$O EXCEPTINC FROM SAID LOTS 1,2,3,4,7 AND 8 ALL MINERAL PEPOSTTS AS
DEFINED IN SECTION 6407 OF THE PUBLIC RESOURCES CODE BELOW A DEPTH OF
5OO FHET, WITHOUT SURFACN RIGHTS OF ENTRY, AS RESERVED IN DEED FROM
THE $TATN OT CALIFORNIA RECORDTD NOVEMBER 4, T98O IN BOOK I3819, PACE
335 OF OTFICIAL RECORDS.
PARCFJIST APN 3e0-383-.t1
[300 East ChaprnanAvenue (Ciry Civic Center)]
LOTS 1 THROUGH 20 INCLUSIVE IN BLOCK "AU OF P. J. SHAE,FER'S ADDITION, TN
THE CIry OF ORAN6E, COLTNTY OF ORANCE, STATE OF CALIFORNIA AS PgR MAP
RECORDED IN BOOK IO, PAGE, 94 OF MISCELLANEOUS MAPS, RECORDS OF LOS
ANGELES, CALIFORNIA
PARCEL 31 4rX,$***S*0*
{6rgalva Park}
PARCEL 3.A:
THAT PORTTON OF LOT 9 IN BLOCK UF" OF THE CHAPMAN TRACT, $URVEYED BY
FRANK LECOUVR"EUR IN DECEMBER 1870, AS PAR M,AP RECORDED IN BOOK 102,
PAGE 15 OF MISCEILANBOUS MAPS IN THE OFFICE OF THE COUNTY RECOR"DER
OF SAID COTihtrTY, INCLUDED WITHIN A STRIP OF LAND 5O.OO FEET WID3, AS
DESCRIBED IN THE DESI}S TO THE PACIFIC IMTROVEMHNT COMPANY, A
CORTORATION, RECORDED
'UNE
18, 1$88 IN BOOK 454, PAGES 90 AND 95 OF
r 128r4009\x9250r A-1
DFEDS IN THE OFFICE OF THE COLINTY RECORDER OF LOS ANOELES COLINTY,
CALIFORNIA, BEINC A PORTiON OF A STRIP OF LAND 5O.OO FEET WIDE, THE
CENTNR IINE OF WHICH I$ DHSCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF LOT 8 (TIORTT{ERLY LINE
oF LOT 9) OF SAID CHAPMAN TRACT, DISTANT NORTH 89 DEGREES 54', 55" EAST
494,29 FEST ATONC SAID SOUTHERLY LINE FROM THE SOUTHWESTEBJ"Y CORNER
OF SAID LOT 8, AS SHOWN ON THE MAF OF TRACT NO. 4626, AS PER MAP
RECORNED TN NOOK 169, PAGES 5 AND 6 OF SAID MISCELLANEOUS MAPS, BEINC
ALSO NNGINESR STATION 33S+30.3, AS SHOWN ON THE RIGHT OF WAY AND
TRACT MAP V-12-C, SHBET 2, OF THE SOUTHERN PACIFIC COMPANY, STAMpED
DECEMBER 3I, 1923, AND ALSO THE SOUTHEASTERLY TNRMiNUS OF THE CENTER
LINE OF THE sO.OO-FOOT STRIP OF LAND LABETED AS 'SOUTHERN PACIFIC
RAILROAD R./W" ON SAID MAP OF TRACT N0. 4626; THgNCg CONTINUING ALONG
SATD CENTER LINE. SOUTH 24 DEGREES 3?' O5'' EAST TO ENGINSER STATTON
330{30.8, BEINS THE BEGII.{NINC OF A TAPER 2 CURVE, CONCAVE
SOUTHWESTERLY, FOR A l0 DEGREE CURVE; THENCE SOUTHEASTERLY 27A.00
FEET ALONG SAID TAPFR 2 CURVE, TO THE BEGINNiNG OF SAID 10 DEGREE
CURVI CONCAVE WESTERLY, HAVING A RADruS OF 573.14 FEET; THENCE
SOUTHERLY 373.30 FEET ALONO SAID CURVN, THROUOH A CSNTRAL ANGLE OF
37 DEGREES 19'05- TO THE BEOINNINC OF A SIM1LAR ?APER 2 CURVE, CONCAYE
NORTHWESTERLY, AT THE END OF SA1D IO DECREE CLTRVE; THENCE
SOUTHWESTERLY ?7O.OO FEET ALONG SAID TAPER 2 CURV& TF{ENCE TANSENT
TO SAID CURVH, SOUTH 39 DEGRBES 47' OO" WEST TO ENGINEER STATION
342+6AJ, A$ SHOWN ON SAID R.R, MAP, BETNC THE BEGINNING OT A TAPER 2
CURVX, CONCAVE SOUTHEASTERLY, FOR AN 8 DEGREE CURVE; THENCE
SOUTHWE$TARLY 2IO,OO FEET ALONG SAID TAPER 2 CURVE, TO THE BEGI}INING
OF SAID 8 NNGREE CURVE CONCAVE SOUTI"IEASTERLY, HAVING A RADTUS OF
716.34 FFET; THENCE SOUTHWESTBRLY ALONG SA]D CURVE, T0 THE
NORTHARLY LINA OF ROBERT MCPHERSON THIRD ADDITTON, AS PER MAPS
RECORSED IN BOOK 16, PAOE 39 OF MISCEILANEOUS RSCORDS IN TT{E OFFICE
OF THE COIINTY RBCORDER OF SAID COUNTY OF LOS ANOEL$S; THE SIDE LINES
OF SAID STRTP OF LAND SHOULD FE SHORTENEN OR SNLAROED AS TO
TERMINATE IN THE NORTHERLY LINE OF SAID THIRD ADPITION.
EXCBPT THOSE PORTIONS THERNOF tYINfi WTTHIN LOTS 17 AND 18 OF THE 6.
HOWARD THOMPSON TRACT, AS SHO$/N ON A MAP FILEN IN BOOK 1, PACE 22 AF
RECORD OT SURVEYS IN THE OTFICE OT' THX COUNTY RECOR}ER OF SAID
COTINTY OF ORANGE.
PARCEL 3.8:
THAT PORTION OF LOT 9 IN BLCICK "F'' OF TH3 CHAPMAN TRACT, SURVEYED BY
FRANK LSCOUVREUR IN PECEMBER 1870, A$ PER MAP R.ECORDED IN BOOK IO2,
PAGE 15 OF MISCTLLANEOUS h{APS IN THE OFFICE OF THE COT"INTY RECORDAR
OF SAID COLINTY, DESCRIBED AS FOLLOWS:
BECINNINfi AT THE SOUTHWEST CORNER CIF SAID LOT 9; THENCE NORTHERLY
20.00 CHAINS T0 THE NORTHWEST CORNER OF SAID tOT g; THENCE EASTERLY
I 128r4009U393t01
A-2
T0 THE NORTHEAST CORNER OF SAID LOT 9; THENCE ALONG THE
NORTHWESTERLY LINE OF 6. HOWARD THOMPSON TRACT, AS TgR MAP FILED IN
BCIOK T, PASE 22 OF R.ECORP OF SURVEYS TN THE OFFICE OF SAID COUNTY
RHCORDNR, SOUTHWESTERLY TO THE POINT OF BFOINNING,
EXCEPTINC THEREFROM. THAT PORTION INCLUDED WIT}ITN PARCEL 3-A ABOVT"
PARCIL 4: APN 093-031:0{
{Grijalvu ParkJ
THCISg PORTIONS OF LOTS 17 AND 18 OF THE C. HOWARD THOMPSON TRACT, TN
THE CITY OT ORANGE, COUNTY OF ORANCE, STATE OF CALIFORNIA, AS SHOWN
oN A I,tAp RECORDED IN BOCIK r, PACE 22 Or RECORQ OF SURVHYS, rN THE
OTFICE OF THN COUNTY R"ECORDER OF SATD COLINTY DESCRIBED AS FOLLOWS.
BECINNING AT THE POINT OF INTERSHCTION OF THE WEST LINE OF PROSPECT
STRENT 82 F'EET WIDE AS SHOWN ON MAP OF TRACT NO, I384I, RNCORDED IN
BOOK 674, PAST 23 THRU 27 INCLUSIVE OF MISCELLANEOUS MAPS, WITH THE
NORTH LINE OT'THE SOUT}I 7.OO FEET OF LOT 17 OF SAID G. HOWARD THOMPSON
TRACT, AS SHOWN ON RECORD OF SURVEYS; THENCE WESTERTY ALCINC SAID
NORTH LINE, NORTH 89O 57' 56' WEST 1211.25 FEST MORE OR IESS TO ITS
INTSRSECTION WITH A CURVE IN THE EASTERLY BOLNDARY OF THE LAND
DEEDED TO THN SOUT}IBRN PACIFIC RAILROAD COMPANY BY DEED RSCORDEN
JTINE 29, :889 IN BOOK 570, PAOS 288, OF DEEDS OF LOS ANGELES COITNTY
RECORDS, SAID NASTERLY BOI"JNDARY ALSO BEING THE $/ESTERLY BOI.INDARY
OF LOT 17 OF SAID C. HOWARN THOMPSON TRACT, SAID POINT OF
INTERSECTiON BH.TNC ON A CURVE IN SAID BOUNDARY BEING CONCIA,VE
SOUTHEASTERLY AND HAVING A RADIUS OF 750. OO FEET, A RADIAL LINE OF
SAID CURVE T0 SAID POINT, BEARS NORTH 63o 54' 58" WEST; THENCE,
NORTHEASTERLY ALONG THE SAID HASTERLY BOLINDARY OF SAID DEAD
THROUGH A CENTRAL ANOLE OF 13U 43' 06" AND ARC DISTANCP OF 179.57 FHHT;
THENCE TANGENT TO SATD CURVE NORTH 39O 4S' 08* EAST 456,77 FEBT TO THE
BEGINNING OF A TANGENT CUft"VE CONCAVE NORTHWESTERLY AND HAVING A
ITADIUS OF 102s.00 FEET; THENCE NORTHEASTERTY ALONS SAID CURVE
THROUGH A CENTRAL ANGLE OF 10" 50'40" AN ARC DISTANCE OF l94.CI0 FEET TO
A POINT OF INTERSECTION V/ITH THE SOUTHEASTERLY LINE OF THE LAND
DNEDHD TO THg SOUTHHRN PACIFIC RAILROAD COMPANY BY DEED RECORDED
AUGUST 9, 1885 IN SOOK 473, PAOE I54, OF DSEDS OF LOS ANGELES COTINTY.
SAID SOUTHEASTERLY LINE ALSO BEING THE WESTERLY IINE OF LOT 18 OF
SATtr C. HOWARD THOMPSON TRACT A RADIAL L1NE OT' SAID CURVE TO SAID
POINT BEARS SOUTH 61" 02' 32'* EAST; THENCE ALONS SAID SOUTHEASTERLY
LINE NOR?H 40o 25n 13" fiAST 198"66 FEET; THENCE LEAVIN$ SAID
SOUTHEASTERLY LINB, SOUTH 49a 34'47" EAST 110.22 FEET; TH$NCE SOUTH S4'
47' 59u EAST 91.?9 FgnTl THENCE SOUTH 51o 33' 39" EAST 39.50 FEET; THENCE
SOUTH 28o 55 '40 EAST 85.50 FEET; THENCE 5lo 25' 38' EAST 39.00 SEET; THENCE
NORTH 86o 36' 15" EAST 42.1? FEET; THENCE NORTH 4A" 25u 15" IAST 77.73 FEFjf;
THENCH NORTH 78o 42'34" HAST 86.63 FEET; THENCE.NORTH 80o 39' 33" EAST 67.58
A-3
r 128r4009\?39?501
FEET; THENCE SOUTH 4lo 29' 59" EAST 81.52 FEET; THENCE SOUTH 89o 36'56" EAST
6s.27 FEET TO SAID WEST LINE OF PROSPECT STREET; THENCE SOUTHERLY
ALONG SAID WEST LINE OF PROSPECT STREST SOUTH A" 2I'04''WEST 7OO.9I FEET
TO THE POINT OF BECINNTNC"
r r2&l{009u39?t01
h-4
4:STIHIT -q
Base Rental Payment Schedule
Principal Component Intsrest Component Total,-. Psynnent $ate*
tuv2a20
5ltn02l
tvvzazr
5/t/2022
l1/t{?022
5ftn023
I 1/il2023
5/U2424
n/u2a24
sll/2425
ut1t2025
iltna26
lllu2a26
5ilt?027
tllt/2027
5/l/202S
1t/1t202&
3t1t2029
r r/l/2029
5ll/?030
l r/l/2030
511/2031
1lil t203I
5/u2032
lUv2012
'il/7033I llll?033
5lrna34' I lll/2034
5/rn035
rvv2a35
5/U2036
lvll7a36
3ilt2037
$5?0,000.00
550,000.00
5?0,000.00
595,000.00
6?0,000"00
6j15,000.0S
670,000,00
695,000"00
7?5,000.00
755,000.00
785,0S0.00
8?0,000.00
850"000.00
885,000.0s
920,000.00
960,000.00
$ 349,183.33
598,600.00
598,600"00
588,200.00
588,200,00
577,2*0.00
577,200.00
565,800.00
565,800,00
553,900.00
553,900.00
541,500.00
541,500.00
528,600.00
528,600.00
515,200.oCI
515,200.00
501,300.00
501,300.00
486,800.00
486,8S0,00
471,700.00
471,700.0s
456,000.00
456,000.00
439,600.00
439,600.00
422,600.0S
422,690.0A
404,900.00
404,900.00
386,500.00
386,500.00
35?,300.00
$ 349,183.33
598,600.00
I,118,600.00
588,200.0S
I,13*,100.00
s77J0*.00
1,147p00.00
563,800.00
I,160,80s.00
553,t00.00
1,173,900.00
54rS00.00
I,186,500.00
528,6S0.00
1,198,6S0.00
515,2*0.00
rJ10,200.00
50rJt}0,00
1t26"300.00
486,8f0.00
l;41,800.00
{?1,700.00
1,256,700.S0
456,000.00
t)16,88fi"00
439.600.00
1t89,600.00
421,600.s0
1J07,6$0.00
404,900.00
1314,900.S0
386,5S0.00
1346,5{}0.o0
367,3S0,00
* Payable five days before each payment.date.
l r28r-0009u39250r s-l
Psymsqt Pate*
tifinwt
5/tn038
r ilrnole
5lrna39
1Utna39
5lu2a40, r tnl2a40
sfina4r
Illll204l
5lv2a4z
n/u2442
silt2043
luU2043
5/VZA44
l1/u2044
5il/2045
tUU?045
silt2946
I l/t/?046
511/2047
t|/u2041
5/t/2048
I u1t2048
5lt/2449
,1.1v2049
5/u2050
I ri t/2050
ttil*!p{ cgryp_o_tn:$
1,000$00.00
. 1,040,00CI.00
1,080,000.00
.1,125,000.00
1,170,000.00
1,220,000.00
" 1,270,000.00
1,320,000.00
1,375,000,00
1,430,000,00
I,490,000,00
1,550,000.00
1,615,000,00
I,690,000.00
..,1 *.t*r*sL Sp-'* pglpl"{,,
, 367,300.00'
34?,300.00
347,300.00
326,500.00
326,500.00
304,900.00
304,900.00
282,400.44
282,400.00
259,000.00
259,000.00
234,600.00'
234,600.00
209,200.q0
?09,?00.00
t 82,800"00 '
182,800,00
155,300.00
I55,300.00
126,700.00
t 26,?00.00
. 96,900.00
96,900.00
65,900.00
65,900.00
33,600"00
33,600.00
11367,300.00
347300,00
I,387,300.00
326,500.00
I,406,500.00
3o4,9oo.oo
t,4tg,9{t0.00
2821r!0.00
1,452,400,00
259,000.00
1,4?9,000.00
234$00.00
1,5{}4,600,00
209;SS.00
1,529J00.{l*
182,800.00
1,557,80_0.00
r55,3S0"00
1,58$,300.00
126,700"00
1,616,?00.00
96800.00
1,646n900.00
63,900.00
1,680,900.00
33,6oo.oo
1,713,600.00
Tctal
TOTAL
* Payable five days before eaoh payment date.
$29,930,ooo"oo $22,410,783.33 $52"34S,783.33
@#
r r28r4009u3950t B.I
6
nCC-0mWCnK[nS|rDrf
rRstAMEFlC Nltluc0.
nmbilAr cc[rtilEncN^t stmfi cfs
NCS -tsD Ttoy-l-€R \
Recording requested by and when
recorded mail to:
City of Orange
c/o Richards, Watson & Gershon,
A Professional Corpomtion
350 South Grand Avenuen 37th Floor
Los Angeles, California 90071
Attention: Teresa Ho-Urano, Esq.
Recorded in Official Records, frange Ccunty
lhrgh l{guyen, Clerk-Re corde r
llllftllllllllN||llffilllliltl|llllllilillilllllllftllllillllllltllilllll ruo rrr
*5R0011841156$*
2020000330069 10:25 am 07/15120
227 tWR2 A31 11
s.00 0,00 0.00 0.00 30.00 s.00 0.000.000.00 0.00
Exempt lrom Recarding Fees Pursuant to Gavernment Code S$ 6J0J and 27383
Exempt from Do cumentary Tr ansfer Tax
Pursuant to Revenae &Taxation Code $$ Il92? and i,1928
ASSIGNMENT AGTEAMENT
by and between {he
ORANCA CITY PUBLIC FACILITIES FINANCING AUTIIORITY
and
U.S. BANK NATIONAL ASSOCIATION,
as Trusfee
Dated as of July I,2020
I r28r4009u392s73
ASSICNMNNT AGREEMENT
This Assignment Agreement (this'oAgreemenf'), dated as of July 1,2024, is made by and
between the Orange City Fublic Facilities Financing Authority, a joint pCIwers agency duly
organized and existing pursuant to the laws of the State of California (the o'Authorityo'), and U.S.
Bank National Association, a national banking association, duly organized and existing under
and by virtue of the laws of the United $tates of America, as Trustes (the o'Tru*tee").
$rcrT.{Ls:
A. The Authority is issuing $29,930,000 in aggregate principal amount of its Lease
Revenue Bonds, Series 2020A' (the "Bonds') pursuant to ail Indentureo dated as of July l,2428
(the "lndenture")o by and between the Authority and the Trustee.
B. Proceeds from the sale of the Bonds will be used to assist ths City with the
financing of cerJain public capital improvements, including: (i) the construction sf a new Fire
Station No. I Headquarters, (ii) roof end related.improvements at the City's police station
headquarters, (iii) roof &nd other improvements at thE City's other fire stations, and
{iv) installation of,security improvement$ at City facilities.
C. in connection with the Bonds, the Authority and the City of Orange, Califomia
{the "Ciy')n are entering in{o a Lease Agreement, dated as of July 1, 2020 (the "Lease'),
whereby ihe Authority leases from the Cityo as provided therein, certain real propertiss, including
improvements thereon, described in Exhibit A, attached hereto and incorporated by reference,
and improvement$ thereon (collectively, the "Lsased Properties").
D. The Autharity and the City are also entering into a Sublease, dated as of July 1,
2020 (the "sublease"), whereby the Authority subleases to the City, as provided therein, the
Leased Properties.
E, Pursuant to the Sublease, the City is obligated to make certain rental payments to
the Authority for the subleasing of the Leased Properties'
F" The Authority desires to assign to the Trusteen without tecsurse, all of the
Authority's rights to receive o'Base Rentalo' payr*ents scheduled or required to be paid by the
City under and pursuant to the Sublease.
G. Ths Authority has determined that atl acts, conditions and things required by law
to exist" to have happened and to have been perforrned precedent to and in connection with the
execution and entering inio of thi$ Agreement do exist, have happened and have been performod
in regular and dus timen form end maffrer as required by law, and the parties hereto are now duly
authorized to exseute and enter into this Agreement.
NOW, THERSFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MU?UAL AOREEMENTS AND COVENANTS CONTAINSD HEREIN AND FOR OTHER
VALUABLE CONSIDERATtrON, THE PARTIES HERETO DO HERSBY AGREE AS
FOLLOWS:
l l28r {$09U392S73 -t-
. Seotion l. Definitions
Unless context clearly requires otherwise, all capitalized tsnns used but not defined
herein shall have the rneanings giveir to them in the Indenture.
Section2. .ASsigqry"p,nt
The Authority hereby transfers in trust and assigns to the Trustee,.for the benefit of tha
Owners from time to time of the Bonds, all of the right, title and interest of the Authority in (but
nat of its obligations under) the Lease and the Sublease (excopt the Authority's rights to give
approvals and consents under the Leass and the Sublease and to indemnification and paymsnt or
reimbursement for any costr or expen$es thereunder), including the Authority's rights to receive
the Base Rental Payrnents scheduled to be paid by the City under and pursuant to the $ubleasE,
and ary and all of the other rights of the Authority under the Lsase and the Sublease as may be
necessary to enforce paymsnt of such Bsse Rental Payments when due sr otherwise to protect
the interest ofthe Owners of the Bonds,
. Section 3. Accqpt*nee
The Trustee hereby accepts the foregoing assignment for the benefit of the Bond Owners,
subject to tire conditions and terms of the lndenture, and all such Base Rental Payments shall be
applied and all such rights so assigned shall be exercised by the Trustee under and pursuant to
the Indenture. Excepting only the assignment and transfer of rights to the Trustes pursuant tc
Section 2 hereoi this Agreenrent shall confer no rights and shall impose no cbligations upon the
Trustee beyond those expressly provided in the Indenture'
Section 4, Miscellansogs
(a) This Agreernent shall be governed by and construed in accordance with
the laws of the $tate of California.
(b) This Agreement shall be binding on and inure to the benefit cf the parlies
her€to, and their suc.csssors and assigns"
{c) This Agreement may be executed in counterpartso and all such executed
counterparts shall constitute the sarne instrument. tt shall be necessary to account for only one
set of such counterparts in proving this Agreernent.
{Remainder of Page Intentionally Left BIankJ
r 1:s1.0009u3925?3
n
IN WITNESS WHEREOF, the parties hereto have executed and entored into this
Agreement by their outhorjzed signatories thereunto duly authorized as of the day and year {irst
above writtsn.
ORANGE CITY PUBLIC tr'ACILITIAS
FINANCING AUTHORITY
U.S" BANK NATIONAL ASSOCIATION'
as Trustee
Prlnt Name:
Tirle:
Executive Director
Pamela Coleman, Secretary
r r28r{009\1392573 -J-
A nst{ry public or othw ofic&r completing thi$ ccdincslc vsrin$ only thc
idenlity ofthc individual who oigncd the documefit to which rhis ccrtifipate is
rllsshed, tnd not tbc truthlllness, accuracy or validity ofthat documenl
Stste of California
Ccunty of Orange
)
)
a" Ju.lu. il,Ag?fi .beforEme,, *f{?m}n tloh${on ,
Notary pubric, p**o,,iny appeared - R,eK -ffillll.l]ll1ll1*'--1
who proved to me on the basis of safisfactory evidence to be the persory$fwhose nameJrJ is/ar
subscribed to the within instrument and acknowledged to me that he/*elthey executed the same
in hisAerAtrrir authorized capacity@, and that by hisA*ltheit signaturelo)r'on'the instrument
the persoqlirf, or the entity upon behalf of which the persoryfficted, executed the instrument.
I certify under PHNALTY OF PERIURY under the laws of the State sf Califomia that
the foregoing paragraph is true and correct
WTTNESS my hand and official seal.
$ignature (Seal)
-6-
ffi
I l28r {009u392J73
IN WITN$SS WHEREOF, the parties hereto have executed and entered into this
Agreement by their authorized signatories thereunto duly authoriznd as of the day and year first
above written.
ORANGE CITY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
Rick Otto
xecutive Director
ATTE$T:
Pamela Coleman, Secretary
u.s. BANK NATTONAL ASSOCIATION,
as Trustee
t1ll t1h Urt,k/-/ *@
Sy:.," " L x- \"-./' *- .-. . .
Print Narne, \-&ttvu. C"@{
Tirle: Ltli$o"r Vice ?rnidrt,rl*
r r28l-0009u392573 -3-
A notary public or olher ollicer cornplcting this certifieate veri{ies onty the
identity ofthc individuat who signcd the documsnt tb wlrich this ccrti{icote is
auached, and not $r xruthfulnosr, ac*rrracy, or validity of thel do$uncnt.
State of Cali
County of
o"? { tr Zo:o
Notary Public, personally appeared
l,/tttarzu {.esTeter
who proved to me on the basis of satisfactory evidence to be the person{s) whose nanre{s) is/are
subsEribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/irer/their authorized capacity(ies), and that by his/herltheir signature(s) ou the instrument
the person(s), or the entity upon behalf of which the person{s) *cted, executed the instrument.
I certifv under PENALTY OF PERIURY under the laws of the State of Califomia that
the foregoing paragraph is true and correct.
WITNESS my hend and official seal,
(Seal)MVCOUU|SS|ONA(pnE$ f
D€CEMBER 06.20?3
r r28r4009U345?3 A-5
EXHISIT A
Descripticn of Lea*ed Properties
THE LAND REFERRED TO HEREIN BELOW $ SITUATED IN THE CITY OF ORAN6E,
COTINTY OF ORANGE, STATH OF CALIFORNIA AND IS DESCRIBSD AS FOLLOWS,
TOCETHER WITH IMPROVNMENTS THEREON:
PABSEL I : .,S$. $90.;a$-07
{l0S South Water Street (the Fire HQ Property) snd /89 S. Water Street (City Water Division
opsration cenler)J
LOTS I THROUGH 22 INCLUSIVE IN BLOCK UB'' OT THE JAMESON TRACT, AS
SHOWN ON A MAP RECORDED IN BOOK 13, PACE 44 OP MISCSLTANEOUS MAPS,
RECORPS OF ORANCE COLINTY, CALIFORNIA.
EXCEPTINC THEREFROM THAT PORTION DTSCRIBED IN A DEED TO THH CITY OF
ORANGfi RECORDED MAY I?, 1982 AS INSTRUMENT NO. 82-092579 OF OFFICIAL
RECORDS OF SAID ORANOE COUNTY.
ALSO AXCEPTINO FROM $AID LOTS 1,2,3,4,7 AND 8 ALL MINERALNEPOSITS AS
DEFINEP IN SECTION 6407 OF THE FUtsLIC RESOURCES CODE BELOW A DEPTH OF
5OO FEET, WITHOUT SURFACE RIGHTS OF NNTRY, AS RESERVED iN DEED FROM
THH STATE OF CALIFORNIA RSCORDED NOVSMBER 4, 1980 IN BOOK I3819, PAGE
335 OF OFFICIAL RNCORDS
TARCEL & ApN 3?q#q?lgL
{300 Ealr Chapwan Avenue $ity Cixic Center)J
LOTS i THROUGH 20 INCLUSIVE IN BLOCK "AU OF P. J. $HATFER'S ADDITION, IN
THE CITY OF ORANCE, COI"INTY OF ORANGE, STATE OF CALIFORNIA AS PER MAP
RECORDED IN BOOK }0, PACE 94 OF MISCtsLLANEOUS MAPS, RHCORDS OF LOS
ANGELES, CALIFORNIA
PARCEL 3: APN 093-03r-02
{Grijalva ParkJ
PARCEL 3.A:
THAT PCIRTION OF LOT 9 IN BLOCK UFU OF THE CHAPMAN TRACT, SURVEYED BY
FRANK LSCOUVREUR IN DECEMBER 1870, AS PER MAP RTCORDED IN BQOK IO2'
PAS$ 15 OF MTSCELLANEOUS MAPS IN THE OFF1CE OF THA COUNTY RECORDAR
r l?$14009u392573 A-1
OP SAID COUNTY, INCLUDED WITHIN A STRIP OF LAND 5O.OO FTET WIDB, AS
DESCRIBED IN THE DEEDS TO TH3 PACIFiC IMPROVEMENT COMPANY, A
CORPORATION, RECORDED JUNE 18, 1888 IN BOOK 454, PAOES 90 AND 95 OF
DEEDS iN THE OFFICE OF THE COUNTY RECORDER OF LOS ANCELES COLINTY,
CATIFORNIA, BEINC A PORTION OF A STRIP OF LAND 5O.OO FEET WIDE, THE
CENTER LINE OF WHICH IS DNSCR]BED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF LOT 8 (NORTHERLY LINS
OF LOT 9) OT SAID CHAPMAN TRACT, DISTANT NORTH 89 DEOREES 54' 55" EAST
494"29 FEET ALONG SAID SOUTHERLY LI}IE FROM THg SOUTHWESTERLY CORNER
OT SAID LOT 8, AS SHOWN ON THE MAP OF TRACT NO. 4626, AS PER MAP
RECORDED IN BOOK 169, PASES 5 AND 6 OF SA{D MISCELLANEOUS MAPS, BEINO
ALSO ENcINEER STATION 330+30.3, AS SHO$TN ON THP RIGHT OF WAY AND
TRACT MAP V-12-C, SHEET 2, OF THE SOUTHERN PACIF'IC COMPANY, STAMPED
DECEMBER 3I, 19?3, AND ALSO THE SOUTHEASTERLY TgRMINUS OF THE CENTER
I,INE OF THE sO.OO-FOOT STRIP OF LAND LABELED A$ ''SOUTHERN PACIFIC
RAITROAD RlWu ON SAID MAP OF TRACT NO. 4626; THHNCH CONTINUING ALONG
SAID CANTER LINE, SOUTH 24 DECRSES 32' 05" EAST TO ENCINSER STATION
330+30.8, BEING THE BFCINNTNO OF A TAPER 2 CURVE, CONCAVE
SOUTHWHSTERLY, fOR A l0 DEGREE CURVE; THENCE SOUTHEASTERLY 27A"AA
FEET ALONO SAID TAPER 2 CURVE, TO T}.IN BEGINNING OF SAID IO DEGREE
CURVE CONCAVE WPSTERLY, HAVINC A RADIUS OF s73.r4 FEET; THENCE
SOUTHERLY 3?3.30 FEET ALONO SAID CURVE" THROUGH A CENTRAL ANOLE OF
3? DEOREES 19' O5'' TO THE BECINNINC OT A SIMILAR TAPER 2 CURVE, CONCAVE
NORTHWESTERLY, AT THE END OF SAID 10 DESREE CURVE; THENCE
SOUTHWESTERLY 27O.OO FEET ALONO SAID TAPER 2 CURVE,; THENCE TANGENT
TO SAID CURVE, SOUTH 39 DEGREES 47'. OO" WEST TO ENCINTER STATION
342+60.I, AS SHO$/N ON SAID R.R" MAP, BEING THE SEGINNING OF A TAPER 2
CURVE, CONCAVE SOUTHEASTRRLY, FOR AN 8 DEGREE CURVE; THENCE
SOUTHWESTERLY 2IO.OO FEET ALONG SAID TAPER 2 CURVA, TO THE BEGINNING
OF SAID 8 NHGREE CURVE CONCAVE SOUTHEASTERLY, HAVINO A RADIUS OT
716.34 FEET; THBNCE SOUTHWESTERLY ALON6 $AID CURVE, TO THE
NORTHERLY IINE OF ROBERT MCPHERSCI}{ THIRD ADDITION, AS PER MAPS
RECORDED IN BOOK 16, FACE 39 OF MISCH,LLANE,OUS RECORDS IT{ THE OF'FICE
OF THE COT]NTY RCCORDAR OF SAID COUNTY CIF LOS ANGELES; THE SIDE LINES
OP SAIO STRIP OT LAND SHOULN BE SHORTANED OR ENLAROED AS TO
TERMINATE IN THE NORTHERLY LINE OF SAI} THIRD ADDITION.
EXCEFT THOSE PORTIONS THEREOT' LYINC WITHIN LOTS 17 AND 18 OF THE G.
HOWARD THOMPSON TRACT, AS SHOWN ON A MAP FllTD IN FOOK 1, PA6E 22 AF
RECORD OF SURVEYS IN THE OFFICH OF THE COIINTY RECORDER OF SATD
COT'NTY OF ORANGE.
PARCEL 3.8:
THAT PORTION OF LOT 9 trN BLOCK UFU OT THE CHAPMAN TRACT, SURVEYED BY
FRANK LECOUVREUR IN DPCENTBER 1870, AS PER MAP RECORDHD IN BOOK IO2,
-?-r r2$l-0009\2392J73
PAOg 15 OF MTSCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY R:,CORDER
OF SAID COIINTY, DESCRIBED AS FOLLOWS:
BEOINNING AT THE SOUTHWEST CORNER OF. $AID LOT g; THENCE NORTHERLY
20.00 CHAINS TO THE NORTHWSST CORNER Op SAID LOT 9; THENCE EASTERLY
TO THE NORTHEAST CORNER OF SAID LOT 9; THENCE ALONG THE
NORTHWESTERLY LINE OF C. HOWARD THOMPSON TRACT, AS PER MAP FILED IN
BOOK I, PAGH 22 OF RHCORD OF SURVEYS IN THE OFFICE OF SAJD COLJNTY
RECCIRDE& SOUTHWESTERLY TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM. THAT PORTION INCLUDED WITHIN PARCPL 3.A ABOVE"
PARCHL l: APN 093'031-$S
{Grijalva Park}
THOSE PORTIONS OF LCITS I? AND 18 OF THE G. HOWARD THOMPSON TRACT, IN
THE CITY OF ORANOE, COTINTY OF ORANGE, STATE OF CALIFORNIA, AS SHOV/N
ON A MAP RECORDHN IN BOOK 1, PAGE 22 AF RFCORD OF SIJRVEYS, IN THE
OFTICN OF THE COIINTY Rf;CORDER OF SAID COTINTY DESCRIBED AS FOLLOWS.
BECINNING AT THE FOINT OT INTERSECTION OF THE WEST LTNE OF FROSPECT
STREET 82 TEET WIDS A$ SHOWN ON MAP OF TRACT NO. 1384I, RECORDEO IN
BOOK 674, PAGE 23 THRU 27 INCLUSIV$ OF MISCELLANEOUS MAPS, WITH THE
NORTH LINE OS'THA SOUTH 7,OO FEET OT LOT 17 OF SA:D G" HOWARD THOMPSON
TRACT, AS SHOWN ON RECORD OF SURVEYS; THENCE WESTERLY ALONG SAID
NORTH LINE" NORTH 89O 5?' 56' WSST 1211.25 FEET MORE OR LESS TO ITS
INTERSECTION WITH A CURVE IN THE EASTERLY BOUNDARY OF THE LAND
DEEDE,D TO THE SOUTHERN PACIFIC RATLROAD COMPANY BY DEED RECORDED
JUNE 29, 1889 IN BOOK 570, PAGE 288, OF DSEDS OF LOS ANGALES COUNTY
RFCORDS, SAID EASTERLY BO{"INDARY ALSO BEINO THE WESTERLY BOLINDARY
OF tOT 17 OF SAID G. HOWARD THOMPSON TRACT, SATD POINT OF
INTARSECTION BEING ON A CURVE IN SAID BOT]NDARY BH,TNG CONCA.VE
SOUTHEASTERLY AND HAVINO A RADIUS OF ?50. OO FEET, A RADTAL I.INN OF
sAIn cuRvE To SAID POINT, BEARS NORTH 636 54' 58', WES?; THENCB
NORTHSASTERLY ALONG THg SAIP NASTERLY EOUNDARY OF SAID DEED
THROUOH A CENTRAL AN6LE OF 13" 43' 06' AND ARC DISTANCE OF 179.57 FEET;
THENCE TANCEN? TO SAID CURVE NORTH 39O 48' 08- EAST 456.77 FEET TO THE
BEGINNINO OF A TANSENT CURVE CCINCAVE NORTHWESTERLY ANP HAVING A
RADIUS OF 1025.00 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE
THROUOH A CENTRAL ANSLS OF lOO 50'4OU AN ARC DISTANCH OF T94.OO FEET TO
A POiNT OF INTERSECTiCIN WITH THE SOUTHEASTERLY ITNE OF THE LA}{D
DEEDHP TO THE SOUTHERN PACIFIC RAILROAD COMPANY BY NEED RECORDED
AUGUST 9, 1885 IN BOOK 473, PAGE 154, OF DEENS OT LO$ ANGELE$ COLINTY.
SAID SCIUTHNASTERLY LINE ALSO BEINC THE WESTERLY IINP OF LOT 18 OF
SAID G. HOWARD THOMPSON TRACT A RADtrAL I,INE OF SAID CURVE TO SAID
I 123 r -0s09u3925?3 "J-
POINT BEARS SOUTH 610 02'32" EAST; THENCE ALONC SAID SOUTHEA$TERLY
LINE NORTH 40o 25' l}u EA$T 198.66 FEET; THENCE LEAVING SAID
SOUTHEASTERTY LINE, SOUTH 49o 34' 47' SAST 1rc.22 FEET; THENCE SOUTH 84o
47' 59u EAST 91.79 FEET; THENCE SOUTH 51" 33'39" FAST 39.50 FEET; THENCE
$OUTH ?8o 55 '40 EAST 86"50 FEET; THENCE 51o 25' 38. EAST 39.00 FEET; THENCD
NORTH 860 36' I5" EAST 42.12 FEET; TIIENCE NORTH 4A" 25" 15" EAST 77.73 FEET;
THENCE, NORTH 2Ao 42'34" EAST 86.63 FtsET; THHNCE NORTH 80n 39' 33'EAST 67.58
FEET; THENCE SOUTI{ 4f 29'59'EAST"8I.52 FEET; THENCE SOUTH 89o 36' 56" EAST
55.27 FEET TO SAID WEST LINE Or FROSPECT STREET; THENCE SOUTHERLY
ATONO SAID WEST LINE OF PROSPECT STREET SOUTH OO 2I'04'' WEST 7OO,9I TEET
TO THE POINT OF BEGINNING.
l 138r"0{09u3925?3 -4-
7
CERTIFICATE AS TO FINALITY
OF PRELIMINARY OFFICIAL STATEMENT
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2O2OA
The Orange City Public Facilities Financing Authority (the "Authority") and the City of
Orange (the "City"), acting through the undersigned authorized officer of the Authority and the
City, hereby certify and represent as follows:
(1) The undersigned is a duly appointed and acting representative of the Authority
and the City, and as such is duly authorized to execute and deliver this Certificate on behalf of
the Authority and the City.
(2) This Certificate is delivered in connection with the offering and sale of the above-
captioned bonds (the "Bonds") to enable Raymond James & Associates, Inc., as the underwriter
for the Bonds, to assist the Authority and the City in connection with this financing, in order to
comply with Rule l5c2-12 adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (the "Rule").
(3) In connection with the offering and sale of the Bonds, there has been prepared a
Preliminary Official Statement, dated June 22,2020 (including the front cover, the inside front
cover, the introduction and all appendices thereto, the "Preliminary Official Statement"),
setting forth information concerning the Bonds, the Authority and the City.
(4) The Preliminary Offrcial Statement is, except for Permitted Omissions (defrned
below), deemed final within the meaning of the Rule.
As used herein, 'oPermitted Omissions" shall mean the offering price(s), interest rate(s),
selling compensation, aggregate principal amount, principal amount per maturity, delivery dates
and other terms of the Bonds depending on such matters all with respect to the Bonds.
Dated: June22,2020
ORANGE CITY PUBLIC FACILITIES CITY OF ORANGE
FINANCING AUTHORITY
,,4/ffi,/* Bv
Assistant City ManagerAssistant Executive Director
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PRELIMINARY OFFICIAL STATEMENT DATED JUNE 22.2020
NEW ISSUE - BOOK.ENTRY ONLY RATING: S&P: "AA-"
See "RATING"
In the opinion of Richards, Ilatson & Gershon, A Professional Corporation, Bond Counsel, under existing law: (i) assuming continuing
compliance wilh certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal
income tax purposes and is not an item of tax preference for purposes of the federal alternatiye minimum tax, and (ii) interest on the Bonds is
exempt from State of Califtrnia personal income taxes. Interest on the Bonds may be subject to certain federal income taJces imposed only on
certain corporations. Bond Counsel expresses no opinion as to any other taJc consequences regarding the Bonds. For a more complete
discussion of the tarc aspects, see "TAX MATTERS" herein.
$29,445,000*
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2O2OA
Daied: Closing Date Due: November 1. as shown on the inside front cover
This cover page contains information for quick reference only. It is not a summary of this issue. Potential purchasers must
read the entire Official Statement to obtain information essential to making an informed investment decision. See the section of
this Olficial Statement entitled 'BOIIDOWNERS' RISKS" for a discussion of certain of the risk factors that should be
considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds.
The Orange City Public Facilities Financing Authority (the 'Authority") will issue its Lease Revenue Bonds, Series 20204 (the
"Bonds") pursuant to an Indenture, dated as of July 1,2020 (the "Indenture"), by and between the Authority and U.S. Bank National
Association, as Trustee. Proceeds of the Bonds will be used to: (i) finance the construction of a new fire station headquarters, roof and
other improvements to the City's police station headquarters and the City's other fire stations, and installation of security improvements
at various City facilities; and (ii) pay costs of issuance of the Bonds. See "PLAN OF FINANCE".
The Bonds will be payable from Revenues, which primarily consist of base rental payments ("Base Rental Payments") to be made
by the City to the Authority as rental for certain real properties as described herein (the "Leased Properties"), pursuant to a Sublease
Agreement, dated as of July l, 2020 (the "Sublease"), by and between the Authority and the City. Such Base Rental Payments will be
payable from any source oflegally available funds (subject to abatement under certain circumstances described in the Sublease) as more
fully described herein. See *THE LEASED PROPERTIES" and "SECURITY FOR THE BONDS."
The Bonds will be subject to optional redemption,* mandatory sinking account redemption* and extraordinary redemption
prior to their maturity as described herein. See "THE BONDS.'
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company, New York, New York ('DTC"). DTC will act as securities depository of the Bonds. Individual
purchases of th€ Bonds may be made in book-entry form only, in integral multiples of $5,000 each. Purchasers will not receive
certificates representing their interest in the Bonds purchased. Principal of and interest on the Bonds will be paid directly to DTC by the
Trustee. Principal of the Bonds is payable on their maturity dates set forth on the inside cover hereof. Interest on the Bonds is payable
on May I and November I of each year, commencing November 1,2020. Upon its receipt of payments of principal and interest, DTC is
in turn obligated to remit such principal and interest to DTC participants for subsequent disbursement to the beneficial owners ofthe
Bonds as described herein.
THE BONDS WILL BE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM REVENUES AND
CERTAIN FUNDS AND ACCOUNTS HELD TINDER THE INDENTURE. THE AUTHORITY IIAS NO TAXING POWER. THE
OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS TINDER THE SUBLEASE WILL NOT CONSTITUTE AN
OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR
FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE
OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS TINDER THE SUBLEASE CONSTITUTES AN
INDEBTEDNESS OF THE CIry, STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATIONS.
The Bonds are olfered, v'hen, as and if issaed" subject lo the approval as to their legality by Richards, Walson & Gerchon, A
Prufessional Corporation, Los Angeles, California, Bond Counsel In addition, cefrain legal matters will be possed on for the
Authority by Richards, \l/atson & Gerchon, A Professional Corporation, Los Angeles, Caffirnia, as Disclosure Counsel Cerlain
legal matten will be passed on for the Underwriter by its coansel, Stradling Yocca Carlson & Raath, A Professional Cotporation,
Newport Beach, Califurniu It is anticipated thal the Bonds will be available for delivery through the facilities of DTC on or aboat
Ju$ 16,2020.
Dated: .2020
*Preliminary, subject to change.
RAf,T{OIVDJAMTS'
$29,445,000*
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2O2OA
MATURITY SCHEDULE
$_ Serial Bonds
Maturity Date Principal Interest CUSIPI
(November l)* Amount Rate Yield Price (Base:_)
$- -
-|oTerm
Bonds due November l, 20- Yield:
-o/q
Price:
-Vo
CUSIPT
* Preliminary, subject to change.
t CUSIP@ is a registered trademark of the American Bankers Association. CUSP Global Services (CGS) is
managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright@ 2020
CUSIP Global Services. All rights reserved. CUSIP@ data herein is provided by CUSIP Global Services. This
data is not intended to create a database and does not serve in any way as a substitute for the CGS database.
CUSIP@ numbers are provided for convenience of reference only. None of the Authority, the City or the
Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
ORANGE, CALIFORNIA
CITY COT'NCIL/AUTHORITY BOARD
Mark Murphy Mayor/Chair
Michael Alvarez Councilmember,Member
KimberleeNichols Councilmember, Member
Chip Monaco Councilmember, Member
Vacant Councilmember. Member
CITY/AUTHORITY STAFF
Rick Otto, City Manager/Executive Director
Will Kolbow, Assistant City Manager/Administrative Services Director
Richard A. Rohm, City Treasurer
Pamela Coleman, City Clerk
Gary A. Sheatz, City Attomey/Authority Counsel
SPECIAL SERVICES
Bond Counsel and Disclosure Counsel
Richards, Watson & Gershon
A Professional Corporation
Los Angeles, California
Trustee
U.S. Bank National Association
Los Angeles, California
Municipal Advisor and Dissemination Agent
Urban Futures, Inc.
Tustin, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Preparation and Use of fficial Statement. Preparation of this Official Statement. The information
contained in this Official Statement has been obtained from sources that are believed to be reliable. This Official
Statement is submitted in connection with the offer and sale of the Bonds and may not be reproduced or used, in
whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the
purchasers of the Bonds. For purposes of compliance with Rule l5c2-12 of the United States Securities and
Exchange Commission, as amended ("Rule l5c2-12"), this Preliminary Official Statement constitutes an "official
statemenf' of the Authority with respect to the Bonds that has been deemed "final" by the Authority and the City as
of its date except for the omission of no more than the information permitted by Rule l5c2-12.
Estimates and Forecasls. Certain statements included or incorporated by reference in this Official
Statement and in any continuing disclosure by the City, any press release and in any oral statement made with the
approval ofan authorized officer ofthe City or any other entity described or referenced herein, constitute "forward-
looking statements." Such statements are generally identifiable by the terminology used such as "plan,o' "expect,"
'oanticipate," "estimate," *budget," or other similar words. The achievement of certain results or other expectations
contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements described to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements. While the City has
undertaken to provide certain on-going financial and other data pursuant to a Continuing Disclosure Agreement (see
*CONTINUING DISCLOSURE" and APPENDIX E), the City does not plan to issue any updates or revisions to
those forward-looking statements if or when their expectations or events, conditions or circumstances on which such
statements are based change.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Offrcial 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 completeness of such information.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or
the City to give any information or to make any representations in connection with the offer or sale of the Bonds
other than those contained in this Official Statement and if given or made, such other information or representation
must not be relied upon as having been authorized by the Authority, the City or the Underwriter. This Officiat
Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or
sale.
Information as of Dated Date of Oficial Staternent The information and expressions of opinions in this
Official Statement are subject to change without notice and neither delivery of this Official Statement nor any sale
made ofthe Bonds shall, under any circumstances, create any implication that there has been no change in the affairs
of the City or any other entity described or referenced in this Official Statement since the dated date shown on the
front cover. All summaries ofthe documents refened to in this Official Statement are made subject to the provisions
of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect
transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise
prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may
offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the
inside front cover and said public offering prices may be changed from time to time by the Underwriter.
No Incorporation of l(ebsites. References to internet websites in this Official Statement are shown for
reference and convenience only, and none ofthe content ofsuch internet websites (including, but not limited to, the
content of the City's website) is incorporated by reference. The City makes no representation regarding the
accuracy or completeness of information presented on such websites.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAW OF ANY STATE.
NOT FDIC INSURED NO BANKGUARANTEE
TABLE OF CONTENTS
Other Post-Employment Benefits Other
Than Pensions ..................................... 40
THE AUTHORITY .......,.,....,...,42
BONDOWNERS'RISKS. .........42
COVID-I9 Pandemic ..........42
Limited Obligations with Respect to the
Bonds.......... .....................43
Abatement ..,....43
Risk of Uninsured Loss .......44
City General Fund ...............44
Additional Obligations ........44
State Finances................ ......44
Natural or Manmade Disasters ................ 45
Hazardous Substances .........46
Cybersecurity ..,....................46
Limited Recourse on Sublease Default...47
Limitations on Remedies; Bankruptcy .... 47
Loss of Tax Exemption .......50
Early Redemption Risk............................ 50
Investment of Funds ............50
Future Initiative and Legislation ............. 5 1
Secondary Market........ ........51
LIMITATIONS ON REVENUES AND
APPROPRIATIONS ......................... 5 I
Property Tax Limitations - Article XIIIA 5l
Article XIIIA Implementing Legislation. 52
Challenges to Article XIIIA .................... 5 3
Appropriations Limitations:
Article XIIIB.......... .........53
Propositions 218 and 26: Article XIIIC
and Article XIID.................................. 53
Proposition 62................ ......54
Unitary Property...... ............54
Proposition 1A............... ......55
ABSENCE OF LTTTGATTON ....................... 5 5
CONTINUING DISCLOSURE ..................... 5 5
CERTAIN LEGAL MATTERS..................... 56
TAX MATTERS............... .........56
UNDERWRITING .......... ..........58
RATING ................59
FINANCIAL STATEMENTS ....................... 59
MrSCELLANEOUS........... .......59
APPENDIX A _ ADDITIONAL GENERAL INFORMATION REGARDING TFIE CITY OF ORANGE..........A-I
APPENDIX B _ FORM OF BOND COUNSEL OPINION... ......................B-I
APPENDIX C _ SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ..... C.I
APPENDIX D - DTC'S BOOK-ENTRY ONLY SYSTEM.... ....................D-I
APPENDIX E _ FORM OF CONTINUING DISCLOSURE AGREEM8NT.................. ................... E-1
APPENDIX F - CITY OF ORANGE COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR FISCAL YEAR ENDED JUNE 30"2019...... ........... F-l
[THIS PAGE INTENTIONALLY LEFT BLANK]
$29,445,000.
ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2O2OA
INTRODUCTION
This introduction does not purport to be complete, and reference is made to the body of this fficial
Statement, appendices and the documents referred to herein for more complete information with respect to
matters concerning the Bonds. Potential investors are encouraged to read the entire fficial Statement.
Capitalized terms used and not defined in the forepart of this fficial Statement shall have the meanings set
foTth in ,,APPENDIX D _ SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL
DOCUMENTS."
General
This Official Statement, including the cover page, inside cover page and appendices, is provided to
furnish information in connection with the sale by the Orange City Public Facilities Financing Authority (the
"Authority") of its $29,445,000* aggregate principal amount of Lease Revenue Bonds, Series 20204 (the
"Bonds"). The Bonds will be issued pursuant to the provisions relating to the joint exercise of powers found
in Chapter 5 of Division 7 of Title 1 of the Califomia Government Code, including the provisions of the
Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (the "Bond Law"), and an Indenture,
dated as of July 1,2020 (the "Indenture"), by and between the Authority and U.S. Bank National Association,
as trustee (the "Trustee"). hoceeds from the sale of the Bonds will be used to (i) finance the construction of a
new fire station headquarters, roof and other improvements to the City's police station headquarters and the
City's other fire stations, and installation of security improvements at various City facilities; and (ii) pay costs
of issuance of the Bonds. See "PLAN OF FINANCE."
The Bonds will be dated the Closing Date, and will mature on November I in the years and in the
amounts shown on the inside front cover of this Official Statement. Interest on the Bonds will be calculated at
the rates shown on the inside cover page of this Official Statement, payable semiannually on May I and
November I in each year, commencing on November 1,2020.
The Bonds will be executed and delivered as one fully-registered Bond for each maturity (unless the
Bonds of a maturity bear different interest rates, then one certificate for each interest rate among such
maturity), in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York
(*DTC"), as registered owner of all Bonds. See "THE BONDS - Book-Entry Only System" and
..APPENDIX D _ DTC'S BOOK-ENTRY ONLY SYSTEM."
Security for the Bonds
The Bonds will be payable from Revenues, which primarily consist of base rental payments ("Base
Rental Payments") to be made by the City to the Authority for leasing certain properties (collectively, the
"Leased Properties") pursuant to a Sublease Agreement, dated as of July 1,2020 (the "Sublease"), by and
between the City, as lessee, and the Authority, as lessor. See "LEASED PROPERTIES." Pursuant to the
Indenture and an Assignment Agreement, dated as of July 1,2020 (the "Assignment Agteement"), by and
between the Authority and the Trustee, the Authority will assign to the Trustee for the benefit of the Owners
of the Bonds, certain of its rights under the Sublease, including its rights to receive Base Rental Payments for
the purpose of securing the payment of debt service on the Bonds. The City will covenant under the Sublease
to take such action as necessary to include the Base Rental Payments and additional rental payments due
under the Sublease ("Additional Rental Payments") in its annual budget and to make all necessary
. Preliminary, subject to change.
appropriations therefor (subject to abatement under certain circumstances described in the Sublease). See
"SECURITY FOR THE BONDS" and "BONDOWNERS' RISKS."
THE BONDS WILL BE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY
FROM REVENUES AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE.
THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE BASE
RENTAL PAYMENTS UNDER THE SUBLEASE WILL NOT CONSTITUTE AN OBLIGATION OF THE
CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
The City
The City is located in the north-central portion of Orange County (the "County"), Californi4
approximately 32 miles southeast of Los Angeles and 94 miles north of San Diego. Incorporated on April 6,
1888 as a general law city, the City currently functions under a Council/\4anager form of govemment. All
five members of the City Council were elected at large. Starting with the November 2020 election, the City
will implement a by-district election. There will be six voting districts in the City. The Council seats for
three of the districts will be subject to election every four years starting with the November 2020 election. The
Council seat for one of the districts (District 1) will be elected with the November 2020 election and serve a
two-year term. For the two remaining districts and the district with a two-year term, the Council members
elected pursuant to the November 2022 election will serve for four years. The Mayor will remain a separately
elected office directly elected by the voters every two years. The City Treasurer and City Clerk are also
elected at large.
According to State of California Department of Finance estimates, the City has a population of
approximately 140,065 as of January 1,2020. See "THE CITY" and "APPENDIX A - ADDITIONAL
GENERAL INFORMATION REGARDING THE CITY OF ORANGE" foT more information aboutthe Citv.
COVID-l9Impact
A coronavirus disease, known as COVID-I9 ("COVID-I9") is an infectious disease caused by a
novel strain of the coronavirus known as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).
The disease was first identified in China in late 2019, and has spread globally. The first cases in Califomia
were confirmed in the end of January 2020. On March 11,2020, the World Health Organization declared the
COVID-l9 outbreak to be a pandemic. On March 13,2020, the President of the United States declared a
national state of emergency. In California, Governor Newsom declared a state of emergency on March 4,
2020. The County and the City have also declared local emergencies, on February 26,2020 and March 16,
2020, respectively. Throughout the State (including in the City and County), other parts of the country and
many nations, stay at home or similar orders (prohibiting social gatherings, closing of non-essential
businesses and public venues, and imposition of social distancing measures at locations that provide essential
services) have been imposed. This has caused major disruptions in the economy, at the local level as well as
globally. The COVID-I9 Dashboard by the Center for Systems Science and Engineering at Johns Hopkins
University reported that, as of June 22,2020, there have been2,281,903 confirmed cases of COVID-19 in the
United States, with 119,997 deaths attributable to the disease.
In late April, California Govemor Newsome presented a Pandemic Resilience Roadmap, as a
framework to reopen businesses, schools and activities statewide. The Roadmap consists of four stages:
Stage I - Safety and Preparedness: Stay at home with the exception of essential workforce.
Stage 2 - Lower Risk Workplaces: Creating opportunities for lower risk sections to adapt and re-
open (e.g. manufacturing, retail for curbside pick-up, offices where telework is not
possible) ; modified school programs and childcare re-open.
Stage 3 - Higher Risk Workplaces: Creating opportunities for higher risk sections to adapt and re-
open (e.g., hair salons, gyms, movie theatres, sports with no-live audience)
Stage 4 - End of Stay-at-Home Order: Retum to expanded workforce in highest risk workplace (e.g.,
concerts, convention centers, sports with live audience); require therapeutics.
On May 7,2020, California State Public Health Officer issued an order (the "State Order") allowing
local jurisdictions to begin gradual movements into Stage 2 and announced that there will be a progressive
designation of sectors, businesses, establishments or activities that may reopen with certain modifications
based on public health and safety needs. The State Order allows a local health jurisdiction to implement or
continue more restrictive public health measures if the local health officer believes that it is warranted by the
conditions in that jurisdiction. The State Public Health Officer also established a "variance" process through
which a county may implement the full extent of re-opening permitted within Stage 2 and beyond, based on
the county's ability to meet certain readiness criteria (including epidemiologic stability of COVID-I9,
protection of Stage I essential workers, testing capacity, containment capacity and hospital capacity). On
Saturday, May 23,2020, the County of Orange received approval by the State of Califomia to move Orange
County further into Stage 2, which allows the following businesses (in addition to essential businesses) to
open with appropriate social distancing and some capacity limitations: retail, restaurant takeout, delivery, and
dine-in, office-based businesses, outdoor museums, childcare, shopping malls, strip malls, logistics and
manufacturing. The Governor announced that certain businesses such as hair salons, barber shops, bars,
gyms, hotels, production studios can reopen on June 12, 2020, as the State begins to move into Stage 3. In
accordance with approval from the State, on June I1,2020, the County of Orange Health Officer issued a new
order allowing the County to enter Stage 3, which allows the opening of additional business sectors such as
movie theaters and family entertainment centers, wineries and bars, zoos and museums, gyms and fitness
centers, hotels, card rooms and racetracks, campgrounds and outdoor recreation, swimming pools, and hair
salons.
As of the printing of this Official Statement, scientists are still working to develop an effective
vaccine for COVID-I9. It is unclear how long various protective measures will remain in place to protect
public health and how they will change at each location as the situation evolves.
The information about the City's finances under "THE CITY" and "CITY FINANCIAL
INFORMATION" and elsewhere in this Official Statement is based on historical data. The City anticipates
significant negative impacts on its finances for the fiscal years 2019-20 and2020-21. However, at this time,
the City cannot predict the ultimate impact of this unprecedented episode and how long it will take for the
economy to fully recover, even after the COVID-I9 pandemic subsides. As of the date of this Offrcial
Statement, the City does not believe that the impacts of the spread of COMD-I9 will prevent the City from
making Base Rental Payments when due. See also "BONDOWNERS' RISKS * COVID-l9 Pandemic."
Continuing Disclosure
The City will covenant in a Continuing Disclosure Agreement, for the benefit of the beneficial
holders of the Bonds, to prepare and deliver an annual report of certain financial information and operating
data relating to the City and to provide certain other information in compliance with Rule 15c2-12 of the
Securities and Exchange Commission. See *CONTINUING DISCLOSURE" and "APPENDIX E - FORM
OF CONTINUING DISCLOSURE AGREEMENT."
Summaries of Documents
This Official Statement contains descriptions of the Bonds, the Indenture, the Sublease, and various
other agreements and documents. The descriptions and summaries of documents herein do not purport to be
comprehensive or definitive, and reference is made to each such document for the complete details of all
terms and conditions. All statements herein are qualified in their entirety by reference to each such document
and, with respect to certain rights and remedies, to laws and principles of equity relating to or affecting
creditors' rights generally. Capitalized terms not defined herein shall have the meanings set forth in the
Indenture or the Sublease. Copies of the Indenture and the Sublease are available for inspection during
business hours at the corporate trust office of the Trustee in Los Angeles, California.
Other Information
This Official Statement speaks only as of its date as set forth on the cover, and the information and
expressions of opinion herein are subject to change without notice, and neither the delivery of this Official
Statement nor any sale made hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Authority or the City since the date of this Official Statement.
Unless otherwise expressly noted, all references to internet websites in this Official Statement,
including without limitation, the City's website, are shown for reference and convenience only, and none of
their content is incorporated herein by reference. The City makes no representation to potential investors of
the Bonds regarding the accuracy or completeness of the information presented on such websites.
PLAN OF FINANCE
A portion of the proceeds of the Bonds, together with other moneys, are expected to finance: (i) the
construction of a new Fire Station No. I Headquarters (estimated to be approximately $34 million) (the "Fire
HQ Project"), and if there are sufficient bond proceeds after application toward the Fire HQ Project, (ii) roof
and related improvements at the Police Station Headquarters (estimated to be approximately $5 million); (iii)
roof and other improvements to the City's other fire stations (estimated to be approximately 5500,000); and
(iv) installation of security improvements at various City facilities (estimated to be approximately 5500,000).
The foregoing reflects the City's cunent expectations only. The City may spend proceeds of the Bonds on
other projects.
ESTIMATED SOURCES AIID USES
The following table shows the estimated sources and uses of the proceeds from the sale of the Bonds:
Sources:
Par amount of the Bonds
Net original issue [discount/premium]
Total Sources
Uses:
Project Fund
Costs of Issuance Fund (r)
Underwriter's discount
Total Uses
(l) Costs of Issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Trustee, title
insurance, printing expenses, rating fee and other costs.
THE LEASED PROPERTIES
Simultaneously with the delivery of the Bonds, the Authority will acquire a leasehold interest in the
Leased Properties from the City. The Authority will sublease the Leased Properties to the City pursuant to
the Sublease.
The Leased Properties will consist of the following three properties:
. $j$g!lS!!g: The site is rectangular and comprises an entire city block with a total area of
approximately 156,816 square feet (approximately .60 acres). The southern portion of the site is a parking lot,
and the northern portion of the site contains City Hall which consists of three office buildings. City Hall is an
approximately 46,771 square foot, single-story building and was built in 1965. The building has an
approximately 12,000 square-foot basement, for a total size of approximately 58,771square feet. The site has
a landscaped interior courtyard and perimeter landscaping. Based on an appraisal commissioned by the City
before the printing of the Official Statement, the estimated market value of the property as of May 20,2020
was $19,081,248.
. Water Street Fire Station: The property is irregular in shape and has a total area of
approximately 141,875 square feet (approximately 3.257 acres). The northerly portion of the site is vacant
(approximately 53,760 square feet), and will be the future location of the Fire HQ Project. The propefty is
improved with the municipal water facility. The water facility includes an asphalt parking lot, an office
building, a warehouse, a maintenance garage, a single wide mobile home converted to an office, a water well
and pumping facility, a back-up generator, and radio communications tower. The site has perimeter
landscaping and is surrounded by a tubular steel fence. Based on an appraisal commissioned by the City
before the printing of the Official Statement, the estimated market value of the property as of May 14, 2020
was $8,371,000.
.GI!i4@i!9:Thepropertyhasatotalareaofapproximatelyl,403,068squarefeet
(32.21acres). The property is improved with a municipal park and a community center. The balance of the
property is vacant, some of which lies within the Santiago Creek. Based on an appraisal commissioned by the
City before the printing of the Official Statement, the estimated market value of the property as of May 14,
2020 was $65,300,000.
For estimated market value of the each property stated above, the appraiser's determination is based
on a number of assumptions, including among others, that if the subject property were to be converted to
private use, the property would be subject to a change in land use - residential (medium density and
multifamily) for the Grijalva Park Site and mixed use (office, retail and multifamily residential) for the City
Hall Site and the Water Street Fire Station Site. Furthennore, the appraiser noted that as of May 2020, real
estate analysts and advisors were just beginning to assess the recent market changes brought about by
COVID-19-related stay-at-home orders, widespread business closures and the resulting levels of
unemployment, and the uncertainty as to how and when the virus may be contained, and there will be further
change as local economies begin to resume business operations with public health constraints. The appraiser
reported that, as of the date of value of the appraisals, the local real estate market did not reflect any
quantifiable change as a result of the COVID-I9 pandemic.
While the City is in possession of the Leased Properties, all maintenance and repair of the Leased
Properties is the responsibility of the City. The City has determined that the annual fair rental value of the
Leased Properties is in excess of the annual Base Rental Payments.
Pursuant to the Sublease, the City may substitute the Leased Properties, in whole or in part, by other
properties, or release a portion ofthe Leased Properties, upon the satisfaction ofcertain conditions. The City
contemplates that, after completion of the Fire HQ Project, it may have the Fire Station No. I Headquarters
(or the parcel that includes the Fire Station No. 1 Headquarters) as the sole Leased Property under the Lease
and the Sublease (and thereby releasing the City Hall Site, the Grijalya Park Site and the portion of the Water
Street Fire Station Site containing the municipal water facility from the Lease and the Sublease). For more
detailed discussion of the conditions for a substitution or release of Leased Properties see "SECURITY FOR
THE BONDS - Substitution or Release of Leased Properties" and "APPENDIX C - SUMMARY OF
CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS - Sublease."
ANNUAL DEBT SERVICE
The following table shows the annualized debt service for
redemption or extraordinary redemption prior to maturity:
the Bonds, assuming no optional
Bond Year
Ending
November 1 Principal (1)Interest
Total Annual
Debt Service
2020
202r
2022
2023
2024
202s
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
204s
2046
2047
2048
2049
2050
Total
Payments from November 1,20- through November 1,20-
Bond maturing on November l, 20_. See "THE BONDS
Redemption."
are Sinking Account Installments for the Term
- Redemption - Mandatory Sinking Account
(l)
THE BONDS
General
The Bonds will be issued in the aggregate principal amount and will mature on the dates and bear
interest at the rates per annum as set forth on the inside front cover of this Official Statement. The Bonds will
be issued in integral multiples of $5,000 and will be dated their date of delivery. Interest on the Bonds will be
calculated on the basis of a 360-day year of twelve 30-day months and will be payable on May I and
November I of each year, commencing November 1,2020 (each an "Interest Payment Date"), until maturity
or earlier redemption thereof.
The Bonds will be initially delivered as one fully registered certificate for each maturity (unless the
Bonds of such maturity bear different interest rates, then one certificate for each interest rate among such
maturity) and will be delivered by means of the book-entry system of DTC. See "-Book-Entry Only System"
below.
Redemption-
Optional Redemption * The Bonds maturing on or before November 1,2D_will not be subject to
optional redemption. The Bonds maturing on or after November 1,20- will be subject to redemption prior
to their respective maturity dates, as a whole or in part, from prepayments of Base Rental made at the option
of the City pursuant to the Sublease on any date with respect to which such prepayments have been made
(which will be on or afterNovember 1,20), at aredemptionprice equal to 100 percent of the principal
amount of the Bonds to be redeemed, without premium, plus accrued interest thereon to the date of
redemption.
Mandatory Sinking Fund Redemption * The Bonds maturing on November 7,2D_will be subject to
redemption in part by lot from sinking account payments made by the Authority, at a redemption price equal
to the principal amount thereof to be redeemed with accrued interest thereon to the redemption date, without
premium, in the aggregate respective principal amounts and on the respective dates as set forth in the
following table:
Term Bonds Maturins on November 1.20
Redemption Date
(November 1)
Principal Amount
to be Redeemed
(Maturity)
Extraordinary Redemption The Bonds will be subject to redemption prior to their respective
maturity dates, as a whole or in part on a pro rata basis (as much as practicable) among the maturities, on any
date, from amounts on deposit in the Redemption Fund pursuant to the Sublease (from Net Proceeds received
by the City from insurance payments or condemnation awards with respect to the Leased Properties or any
portion thereof under the circumstances and upon the conditions and terms prescribed in the Sublease,
together with additional money, if any, transferred by the City at its discretion for such purpose), at a
redemption price equal to the sum of the principal of the Bonds to be redeemed plus accrued interest thereon
to the date fixed for redemption, without premium.
'Preliminary, subject to change.
Notice of Redemption. The Trustee, on behalf and at the expense of the Authority, will send (by first
class mail or if the Owner of such Bonds is a depository, by such method as acceptable to such depository)
notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective
addresses appearing on the Registration Books, and to the Securities Depositories and to one or more
Information Services by such manner of delivery as then acceptable to such entities, at least 30 but not more
than 60 days prior to the date fixed for redemption; pleviidgd, however, that neither failure to receive any such
notice so sent nor any defect therein will affect the validity of the proceedings for the redemption of such
Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the
redemption date, the redemption place and the redemption price and will specify the CUSIP numbers, the
Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity
or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at
the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest
on such Bonds will not accrue from and after the redemption date. Neither the Authority nor the Trustee will
have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption
notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP
numbers have been assigned by an independent service for convenience of reference and that neither the
Authority nor the Trustee will be liable for any inaccuracy in such numbers.
Right to Rescind Optional Redemption. The Authority (upon direction by the City, at the City's
option) may rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for
redemption. In addition, any notice of optional redemption will be cancelled and annulled if for any reason
funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds
then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture.
The Authority, the City and the Trustee will have no liability to the Owners or any other party related to or
arising from such rescission. The Trustee will send notices of such rescission in the same manner as that
prescribed in the Indenture for notices of redemption.
Selection o.f Bonds for Redemption Whenever provision is made in the Indenture for the redemption
of less than all of the Bonds, the Trustee will select the Bonds to be redeemed from all Outstanding Bonds or
such given portion thereof not previously called for redemption, on a pro rata basis among the maturities
(unless the maturity or maturities are otherwise specified in the Indenture or in writing by the Authority) and
by lot within a maturity in any manner which the Trustee in its discretion will deem appropriate. For
purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 portions and such
portions will be treated as separate Bonds, which may be separately redeemed.
Partial Redemntion qf Bonds. In the event only a portion of any Bond is called for redemption, then
upon surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized
denominations in aggregate principal amount equal to the unredeemed portion of the Bond being redeemed.
A partial redemption will be valid upon payment of the amount required to be paid to the Owner, and the
Authority and the Trustee will be released and discharged from all liability to the extent of such payment.
Efect o.f Redemotion From and after the date fixed for redemption, if funds available for the payment
of the principal of and interest (and premium, if any) on the Bonds so called for redemption will have been
duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than the
right to receive payment of the redemption price, and no interest will accrue thereon from and after the
redemption date. All Bonds redeemed pursuant to the Indenture will be canceled by the Trustee. All moneys
held by or on behalf of the Trustee for the payment of principal of or interest or premium on Bonds, whether
at redemption or maturity, will be held in trust for the account of the Owners thereof and the Trustee will not
be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held.
Book-Entry Only System
The Bonds will be issued as one fully registered bond certificate without coupons for each maturity
(unless the Bonds of such maturity bear different interest rates, then one certificate for each interest rate
among such maturity) and, when issued, will be registered inthe name of Cede & Co., as nominee of DTC.
DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form
only, in integral multiples of $5,000. Purchasers will not receive certificates representing their interest in the
Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principal and
interest to its participants for subsequent disbursement to the beneficial owners of the Bonds as described
herein. So long as DTC's book-entry system is in effect with respect to the Bonds, notices to Owners of the
Bonds by the Authority or the Trustee will be sent to DTC. Notices and communication by DTC to its
participants, and then to the beneficial owners of the Bonds, will be governed by arrangements among them,
subject to then effective statutory or regulatory requirements. See "APPENDIX D - DTC'S BOOK-ENTRY
ONLY SYSTEM."
If such book-entry system is discontinued with respect to the Bonds, the Authority will execute and
deliver replacements in the form of registered certificates and, thereafter, the Bonds will be transferable and
exchangeable on the terms and conditions provided in the Indenture. In addition, the following provisions
would then apply: The principal o{ and redemption premium, if any, on the Bonds will be payable on the
surrender thereof at maturity or the redemption date, as applicable , at the corporate trust office of the Trustee
in St. Paul, Minnesot4 or such other office as the Trustee may designate. The interest on the Bonds will be
payable by check or draft mailed by first class mail on each Interest Payment Date to the registered owners
thereof as shown on the registration books of the Trustee as of the close of business on the Record Date (i.e.,
the l5th calendar day of the month preceding the Interest Payment Date); plqviidgd, that a registered owner of
$1,000,000 or more in aggregate principal amount of Bonds may specifr in writing to the Trustee on or before
the applicable Record Date that the interest payment payable on each succeeding Interest Payment Date be
made by wire transfer.
SECI.]RITY FOR THE BONDS
General
The Authority and the City will enter into a Lease, dated as of July 1,2020 ("Lease"), pursuant to
which the City will lease the Leased Properties to the Authority and concurrently will enter into a Sublease
pursuant to which the Authority will sublease the Leased Properties back to the City. As security for the
Bonds, the Authority will assign to the Trustee pursuant to the Assignment Agreement all of its right, title and
interest in the Sublease (with certain exceptions) for the benefit of the Owners, including the right to receive
Base Rental Payments to be paid by the City under the Sublease. Amounts of the scheduled Base Rental
Payments will be calculated to be sufficient in time and in amount to pay debt service on the Bonds. Base
Rental Payments will be paid by the City to the Trustee, as annual rental for the use and possession of the
Leased Properties, on each Payment Date.
Pursuant to the Indenture, the Bonds will be secured by a first lien on and pledge of all of the
Revenues and a pledge of all the moneys in the Lease Revenue Fund, including all amounts derived from the
investments of such moneys. The Bonds will be equally secured by a pledge, charge and lien upon the
Revenues and such moneys without priority for number, date of the Bonds, date of execution or date of
delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the
redemption of any portion thereof will be secured by an exclusive pledge, charge and lien upon the Revenues
and such moneys. See "BONDOWNERS' RISKS."
"Revenues" will be defined in the Indenture as follows: (a) all Base Rental Payments payable by the
City pursuant to the Sublease (including prepayments); (b) any proceeds of Bonds originally deposited with
the Trustee and held by the Trustee in the Lease Revenue Fund and the accounts thereof; (c) investment
income with respect to any moneys held by the Trustee in the Lease Revenue Fund and the accounts thereof
(other than amounts payable to the United States of America for arbitrage rebate purposes pursuant to the
Code); and (d) any insurance proceeds or condemnation awards received by or payable to the Trustee with
respect to the Leased Properties, including rental intemrption insurance.
The City will covenant under the Sublease to take such action as may be necessary to include all Base
Rental Payments and Additional Rental Payments due under the Sublease in its annual budget and to make
the necessary appropriations for any amount of Base Rental Payments and Additional Rental Payments.
THE BONDS WILL BE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY
FROM REVENUES AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE.
THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE BASE
RENTAL PAYMENTS UNDER THE SUBLEASE WILL NOT CONSTITUTE AN OBLIGATION OF THE
CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Abatement
The obligation of the City to pay Base Rental and Additional Rental will be abated during any period
in which, by reason of any damage, destruction, condemnation or impairment of leasehold interest, there is
substantial interference with the use and occupancy of the Leased Properties or any portion thereof by the
City. Such abatement will be in an amount agreed upon by the City and the Authority such that the resulting
Base Rental in any year during which such interference continues does not exceed the fair rental value ofthe
portions of the Leased Properties as to which such damage, destruction, taking or impairment do not
substantially interfere with the City's use and right of possession. Such abatement will continue for the
period commencing with the date of such interference and ending with the restoration of the relevant Leased
Properties to tenantable condition. To the extent that any Base Rental is to be paid or prepaid from insurance
or condemnation proceeds deposited with the Trustee pursuant to the Sublease, such Base Rental will not be
reduced or abated. In addition, if an abatement event has occurred such that all Base Rental payments have
not been made, the Expiration Date of the Sublease will be automatically extended to the date that is l0 yean
following the scheduled final lease payment.
Upon the cessation of the occunence of any abatement event during the term of the Sublease, the City
and the Authority shall, in good faith, determine the current fair rental value of the Leased Properties. If such
fair rental value is greater than the fair rental value of the Leased hoperties determined under the Sublease as
of the Commencement Date, the Base Rental will be increased by the lesser of (i) such incremental value or
(ii) the amount needed to recoup all amounts abated during the remaining term of the Sublease.
Except as otherwise set forth in the Sublease, in the event of any damage, destruction of
condemnation, the Sublease will continue in full force and effect and the City waives any right to terminate
the Sublease by virtue of such damage, destruction or condemnation. Under the Sublease, the City waives the
benefit of Sections 1932(l), 1932(2), 1933(4), l94l and 1942 of the California Civil Code. See also
"BONDOWNERS' RISKS -Abatement" and"- Risk of Uninsured Loss."
Additional Bonds
Subject to the provisions of the Indenture, the Authority may from time to time issue one or more
series of Additional Bonds payable from and secured by Revenues on parity with all other Outstanding
Bonds. Additional Bonds will be issued under a Supplemental Indenture at the request of the Authority but
only upon receipt by the Trustee of the following documents or money or securities:
(l) a certified copy of the Supplemental Indenture authorizing the issuance of such Additional
Bonds;
(2) a Request of the Authority as to the delivery of such Additional Bonds;
l0
(3) an opinion of Bond Counsel substantially to the effect that (i) the Authority has the right
and power under the Act to execute and deliver such Supplemental Indenture, and such Supplemental
Indenture has been duly executed and delivered by the Authority, and the Indenture and such
Supplemental Indentures are in full force and effect and are valid and binding upon the Authority and
enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights and
similar qualifications); (ii) such Additional Bonds are valid and binding special obligations of the
Authority, enforceable in accordance with their terms (except as enforcement may be limited by
bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of
creditors' rights) and are subject to the terms of the Indenture and all Supplemental Indentures and
entitled to the benefits of the Indenture and all such Supplemental Indentures and the Act, and such
Additional Bonds have been duly and validly issued in accordance with the Act and the Indenture and
all such Supplemental Indentures; and (iii) the obligation of the City to make the Base Rental
Payments during the term of the Sublease as amended pursuant to the Indenture is a valid and binding
obligation of the City; and
(4) a Certificate of the Authority: (i) certiffing that the Authority is in compliance in all
material respects with all agreement and covenants contained in the Indenture and that no Event of
Default has occurred or is continuing; (ii) stating that the Authority and the City have entered into an
amendment to the Sublease pursuant to which the City is obligated to make Base Rental Payments at
times and in amounts sufficient to provide for payment of the principal of and interest on the Bonds
(including such Additional Bonds) which will be Outstanding following the sale and delivery of such
Additional Bonds.
See .APPENDIX C _SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL
DOCUMENTS."
No Reserve Account
Neither the Authority nor the City is funding a debt service reserve for the Bonds.
Substitution or Release of Leased Properties
The City will have the option to substitute the Leased Properties, in whole or in part, by other
properties, or a portion of the Leased Properties may be released from the Sublease, at the option of the City,
provided that the following conditions have been satisfied:
(D such substitution or release does not, in the opinion of Bond Counsel, adversely affect
the Tax-Exempt status of the Bonds;
(iD the City provided a certificate to the Authority and the Trustee that the fair market value
ofthe Leased Properties, after the proposed substitution or release, is equal to or greater than the aggregate
amount of the principal component of the Base Rental (i.e., the principal amount of the Outstanding Bonds);
(iii) the City certifies to the Authority and the Trustee that, based on the City's
determination, the annual fair rental value of the Leased Properties, after such substitution or release, is at
least equal to the maximum annual Base Rental remaining unpaid under the terms of the Sublease, and the
expected useful life of the Leased Properties, after such substitution or release, extends to at least the
Expiration Date;
(iv) Except as provided in the Sublease, the City has notified the rating agency (or agencies)
then rating the Bonds regarding such substitution or release;
(v) in the event that the substituted property consists in whole or in part ofreal property, a
California Land Title Association insurance policy (or, at the City's sole discretion, an American Land Title
ll
Association insurance policy) on the substituted real property has been obtained, along with evidence that,
other than Permitted Encumbrances, no prior liens exist as to the substituted property;
(vi) the City will provide to the Authority and the Trustee evidence that any existing title
insurance with respect to the portion of the Leased Properties remaining after such substitution or release is
not affected; and
(vii) the City and the Authority will amend the Sublease to properly reflect such substitution
or release.
After the completion of the Fire HQ Project, the City may choose to release a portion of the Leased
Properties under the Lease and the Sublease; and in that connection, so long as the Fire Station HQ Property
will remain among the Leased Properties after such releaseo then the City will not be required to provide
notice to any rating agency as described in paragraph (iv) above.
Covenants to Maintain Insurance
Title Insurance. The Sublease will require the City to obtain one or more California Land Title
Association insurance policies (or, at the City's sole discretion, American Land Title Association insurance
policies) at the time of and dated as of the Closing Date in an aggregate amount not less than the aggregate
principal amount of the Bonds, payable to the Trustee, insuring the respective interests of the City and the
Authority in the Leased Properties, and insuring the validity of the Sublease, subject only to Permitted
Encumbrances, naming the Trustee as an insured thereunder, issued by a title insurance company qualified to
do business in the State of Califomia and acceptable to the Trustee.
Fire and Ertended Coverage Insurance. Under the Sublease, the City must maintain or cause to be
maintained fire, lightning and extended coverage insurance on the Leased Properties in an amount equal to (i)
100 percent of the then cunent replacement cost of the Leased Properties, excluding the then fair market
value of the land as unimproved, or (ii) the principal amount of all outstanding Bonds, whichever is less
(except that such insurance may be subject to a deductible clause not to exceed l0 percent ofthe amount of
such policy). Earthquake insurance will be maintained on the Leased hoperties only if available on the open
market from reputable insurance companies at a reasonable cost. The extended coverage endorsement will, as
nearly as practicable, cover loss or damage by explosion, windstorm, riot, urcraft, vehicle damage, smoke,
vandalism, malicious mischief, dumping or other deposit of any pollutant or other debris and such other
hazards as are normally covered by such endorsement. Each such policy of insurance must be in form
reasonably satisfactory to the Authority, and must contain a clause naming the Trustee as an additional
insured and making all losses payable to the Trustee, and all proceeds thereof will be paid over to the party
contractually responsible for making repairs of casualty damage.
In the event ofany damage to or destruction ofthe Leased Properties caused by the perils covered by
such insurance, the proceeds of such insurance will be utilized to repair, reconstruct or replace the Leased
Properties to the end that the project will be restored to at least the same condition that it was in prior to such
damage or destruction. Any balance of such proceeds not required for such repair, reconstruction or
replacement will be transferred to the Authority and treated as Revenues and applied in the manner provided
in the Indenture.
Liability Insurance. The Sublease requires the City to maintain or cause to be maintained public
liability insurance with limits of not less than $3,000,000 for one person and $5,000,000 for more than one
person involved in one accident to protect the Authority and the Trustee from all direct or contingent loss or
liability for damages for bodily injury or death occasioned by reason of the construction, condition or
operation of the Leased Properties. The City will also maintain or cause to be maintained insurance against
liability for property damage resulting from any casualty attributable to the operation of the project in an
amount not less than $1,000,000 for each accident. The public liability insurance and properly damage
insurance may be subject to a deductible clause for anyone accident of not to exceed $250,000. The insurance
coverage required by the Sublease may be effected by blanket policies covering the Leased Properties issued
t2
to the party contractually responsible for the maintenance and operation of the project and such insurance
policy or policies must name the Trustee as an additional insured.
Rental Intenaption Insurance. The Sublease requires the City to maintain or cause to be maintained
rental intemrption or use and occupancy insurance to cover loss, total or partial, of the use of the Leased
Properties as a result of any of the hazards covered by the insurance required by the Fire and Extended
Coverage Insurance section above in an amount not less than the greatest of the aggregate Base Rental
payable by the City under the Sublease for a period of any future 24 months. Any such insurance policy will
be in form satisfactory to the Authority and must contain a clause naming the Trustee as an additional insured
and making any loss thereunder payable to the Trustee as its interests may appear. Any proceeds of such
insurance must be used by the Trustee to pay Annual Debt Service on the Outstanding Bonds for the period
during which the payment ofrental under the Sublease is abated, and any proceeds ofsuch insurance not so
used will be applied as provided in the Indenture to the extent required to pay administrative costs of the
Authority in connection with the Leased Properties.
Self-Insurance; Alternative PIan of Protection. As an alternative to providing the liability insurance
described above, the City may provide or cause to be provided a self-insurance method or plan of protection if
and to the extent such self-insurance method or plan of protection will afford reasonable protection to the City
and the Authority, and their directors, officers, agents and employees and the Trustee, its directors, officers,
agents and employees in light of all circumstances, giving consideration to cost, availability and similar plans
or methods of protection adopted by public entities in the State of California other than the City; provided that
the obligation of the Authority or City to make payments under such self-insurance will be limited to money
in a designated fund balance established by the Authority or City and that the Authority or City will not be
obligated to replenish such designated fund balance from the General Fund or be otherwise obligated to make
payments except from such designated fund balance. After the Commencement Date, before any substitute
method or plan may be provided by the City, there must be filed with the Trustee a certificate of an actuary,
independent insurance consultant or other qualified person, stating that, in the opinion of the signer, the
substitute method or plan of protection is in accordance with the requirements of the Sublease and, when
effective, would afford adequate protection to the City and the Authority, and their directors, officers, agents
and employees and the Trustee and its directors, officers, agents and employees against loss and damage from
the hazards and risks covered thereby; provided, however, that in the event the City provides a self-insurance
method or plan of protection for the required rental interruption insurance described above, the designated
fund balance established by the City will be funded in an amount at least equal to the greatest of the aggregate
Base Rental payable by the City under the Sublease for a period of any future24 months.
Moreover, as an altemative to providing the required liability insurance described above, the City
may provide a self-insurance method or plan of protection through the California Insurance Pool Authority
(or another insurance risk sharing pool joint powers authority formed in the State) or any successor entity as
the City may reasonably determine.
Damage, Destruction And Condemnation; Application of Net Proceeds
If: (i) the whole, or any portion, of the Leased Properties is destroyed (in whole or in part) or is
damaged by fire of other casualty or taken by eminent domain proceedings (or sold to a government
threatening to exercise the power of eminent domain), or (ii) the leasehold title in all or a portion of the
Leased Properties is materially impaired by reason of a defect in title, then
(a) the City, but only to the extent permitted by law, must substitute other property for
the portion ofthe Leased Properties that has been destroyed, or taken, or affected by the defective title
in accordance with the Sublease; or
(b) the City will require the Net Proceeds of any insurance payment (other than the Net
Proceeds of rental intenuption insurance which will be applied pursuant to the Sublease) or any
condemnation award to be held by the Trustee in a special trust fund to be applied and disbursed by
the Trustee as follows:
13
(D If less than all of the Leased Properties has been destroyed or taken or
affected by defective title and the remainder is usable, then the Sublease will continue in full force and effect
as to such remainder and (A) if the portion taken or destroyed is replaced by one or more properties of equal
or greater fair market value (as demonstrated by an MAI fair market appraisal), the Trustee upon written
direction of the City will disburse such proceeds to the party that incurred the expense of making such
replacement and there will not be any abatement of the Base Rental under the Sublease; or (B) failing the
making of such replacement, there will be a partial abatement of the Base Rental under the Sublease and the
Trustee will apply such Net Proceeds, together with any other money then available to it for such purpose, to
the Redemption Fund under the Indenture for the redemption of outstanding Bonds in accordance with the
Indenture.
(ii) If less than all ofthe Leased Properties is destroyed or taken or affected by
defective title and the remainder is not usable, or if all of the Leased Properties has been so destroyed or taken
or affected by the defective title, then the term of the Sublease will cease as of the day that possession will be
so taken; and the Trustee will apply such Net Proceeds, together with any other money then available to it for
such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds in
accordance with the Indenture.
THE CITY
General
The City was incorporated on April 6, 1888 as a general law city and is located in the north-central
portion of Orange County (the "County"), approximately 32 miles southeast of Los Angeles and 94 miles
north of San Diego. The City encompasses an area of approximately 24 square miles with an average
elevation of 197 feet above sea level.
The City provides a full range of services for its citizens. These services include police, fire,
paramedic, emergency transportation, library, recreation and parks, senior services, planning and
development, street improvements and lighting, and general administration. The City also operates a water
utility and contracts for refuse collection services. In addition, the City provides aid to its citizens in the form
of residential and commercial rehabilitation loans and economic development.
See ..APPENDIX A . ADDITIONAL GENERAL INFORMATION REGARDING THE CITY OF
ORANGE" and "CITY FINANCIAL INFORMATION."
City Government
The City operates under a Council-Manager form of govemment. The current members of the City
Council were elected at large. Starting with the November 2020 election, the City will implement a by-
district election. There will be six voting districts in the City. The Council seats for three of the districts will
be subject to election every four years starting with the November 2020 election. The Council seat for one of
the districts (District l) will be elected with the November 2020 election and serve a two-year term. For the
two remaining districts and the district with a two-year term, the Council members elected pursuant to the
November 2022 election will serve for four years. The Mayor will remain a separately elected office directly
elected by the voters every two years. The City Treasurer and City Clerk are also elected at large. The City
Council is responsible for, among other things, passing ordinances, adopting the budget, and appointing the
City Manager.
t4
There is currently one vacant Councilmember seat.
dates of their respective terms are as follows:
Council Member
MarkA. Murphy, Mayor
Mike Alvarez, Councilmember
Kim Nichols, Councilmember
Chip Monaco, Councilmember
Vacant
The members of the City Council and expiration
Term
20t8-2020
20r6-2020
2018-2022
20t8-2022
In addition to sitting as the governing board of the City, the Mayor and the City Council act as the
Board of Directors for various component units of the City, including the Authority and the Successor
Agency to the Redevelopment Agency of the City of Orange. The City Manager is responsible for carrying
out the policies and ordinances of the City Council and for appointing heads of the City's various departments.
City fulltime employees numbered 729 as of June 30,2019, of which 386 are assigned to the Police
Department. The following are short biographies of the City Manager and the Administrative Services
Director:
Rick Otto, City Manager. Mr. Otto has served as the City Manager for the City of Orange since
March 2015. During Mr. Otto's 22 years at the City, he has served in a number of different capacities
including Assistant City Manager, Community Development Director, Economic Development Manager, and
Assistant to the City Manager. Mr. Otto has 3l years of local government experience having worked for four
different cities in Orange County and Los Angeles County. Mr. Otto has experience in multiple areas of local
governrnent, including economic development, public works, planning, human resources, public informatiorl
finance, information technology and public safety. Mr. Otto also serves on a number of regional boards and
committees including the Metro Cities Fire Authority, the County Solid Waste Committee, and the North
County Service Planning Area Committee, for which he serves as Chair. Mr. Otto has a Bachelor's degree in
Public Administration and a Master's degree in Public Policy from California State University, Long Beach.
Ilill Kolbow, Assistant City Manager and Administrative Services Directon Mr. Kolbow has been
the Assistant City Manager and Administrative Services Director for the City since 2018. Prior to this, he
was the Crty's Finance Director for approximately 4 years. His prior work experience includes Director of
Finance of the City of San Bemardino Municipal Water Department and Finance Officer of the Cucamonga
Valley Water District. Mr. Kolbow has a Bachelor's Degree in Business Administration from California
State University, Fullerton, and a Master's Degree in Public Administration from California State University,
Dominguez Hills. Mr. Kolbow is a member of the Government Finance Officers Association and the
California Society of Municipal Finance Officers. Mr. Kolbow is a Certified Public Accountant in the State
of California.
l5
Employee Relations
As of June 30, 2019, the City had 729 full-time equivalent employee positions. The following table
identifies the employee unions and the number of employees covered, as well as the expiration date of the
current contract.
Employee Group
Orange Management Association
Orange Municipal Employees' Association
Orange City Firefighters,Inc. Local2384 of the
International Association of Firefighters, AFL-CIO
Orange Fire Management Association
Orange Police Association
Orange Police Management Association
Water Division Employees' Association
Orange Maintenance and Crafts Employees' Association
Namber of
Employees Covere6t)
47
140
tt7
Termof MOU
December 31,2022
December 31,2022
June30,2022
June30,2022
June30,2022
Jtne30,2022
December 31,2022
December 31,2022
5
183
34
2l
58
(l) Number is approximate and includes vacant funded positions.
Risk Management
The City is exposed to various risks of loss related to tortso theft, damage and desfuction of assets,
errors and omission, road and walkway design hazards, vehicle accidents, and natural disasters for which the
City maintains various insurance programs. The City has entered into contracts with outside vendors to
supervise end eliminate these programs. In addition, the City completes an annual actuarial for the Workers'
Compensation and Liability Funds to determine appropriate funding levels.
General Liabilit.v. The City is self-insured for General and Auto Liability claims up to $350,000 per
occunence. For amounts in excess of S350,000 and up to $3,000,000 the City participates in a public entity
risk pool maintained through the California Insurance Pool Authority (CIPA). CIPA is a consortion of
California cities under one joint powers authority agreement, which was established to pool resources, share
rislg purchase excess insurance, and to share costs for professional risk management and claims
administration. For amounts in excess of $3,000,000, the pool purchases commercial insurance and has
coverage up to $33,000,000.
Workers' Compensation. The City has a self-insurance program for any liability to City employees
arising under the Workers' Compensation laws of the State of California. The City pays up to $500,000 per
occurence. For amounts in excess of $500,000 and up to $2,000,000, the City participates in CIPA. For
amounts in excess of $2,000,000, the pool purchases commercial insurance and has coverage up to
$52,000,000 per occurrence.
Liabilities are recorded when it is probable that a loss has occurred and the amount of the loss can be
reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported
(IBNR). The liability for claims and judgments is reported in the appropriate Intemal Service Fund. An
amount for current claims payable is calculated based on the current year expenses and the remainder is
shown as noncurrent claims payable. The table below shows changes in claims payable for the year ended
June 30, 2018 and June 30, 2019, which are expected to be paid from the self-insurance program:
l6
General Workers'Liability Compensation Totals
Unpaid claims, July 1,2017
Incurred claims
Less claim payments
Unpaid claims, June 30, 2018
Less current portion of unpaid claims
Noncurrent unpaid claims, June 30, 2018
Unpaid claims, July 1, 2018
Incurred claims
Less claims payments
Unpaid claims, June 30, 2019
Less current portion of unpaid claim
Noncurrent unpaid claims, June 30, 2019
$2,295,959 515,642,812 $17,928,670
(1,040,871) (4,375,480) (5,416,351)
____912!!287_ __$ll26ry2 _jp;p;te_
$2,243,126
l,03g,3gg
(681,441)
$2,601,084
(728,272)
____$1{11J12
$2,601,084
881,960
(1,197,186)
$13,368,633
3,542,762
(2,462,145)
$14,449,250
(3,195,91l)
__$194qf11
st4,449,250
3,963,426
(2,769,864)
$15,611,759
4,592,161
(3,143,586)
$17,050,334
(3,924,183)
$12,230,763
$17,050,334
4,845,386
(3,967,050)
CITY FINANCIAL INFOR]ITATION
Budgetary Processl General Fund Budget
The annual budget is typically adopted by July 1 for all funds of the City on a basis consistent with
generally accepted accounting principles. The budget is monitored to ensure compliance with legal provisions
embodied in the appropriated budget as approved or amended by the City Council throughout the year. City
staff is responsible for monitoring the appropriated budgets for all funds. The budget is prepared by fund,
department (e.g. police), and activity (e.g. patrol). Transfers of appropriations between funds, between
departments within a fund, and between capital outlay or debt service and another object group classification
within a deparhnent, require City Council approval. All other transfers of appropriations can be made with
City management approval.
Budget Summary
The table below shows the City's budget and actual results for General Fund revenues and
expenditures for the fiscal years shown, and the City's budget for fiscal year 2019-20. The City's budget for
fiscal year 2019-20 has not been revised to reflect anticipated impacts of the COVID-l9 pandemic. See "--
Potential Impacts of COVID-I9 Pandemic" and Table 2 below.
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Table I
City of Orange
General Fund Budget Summary
Fiscal Years 2017-18 through 2019-20
Revenues' (10)
Taxes (l)
Franchise fees
Licenses and permits
Use of money and property
Intergovemmental
Charges for services and fees
Fines and forfeitures
Miscellaneous (2)
Total revenues
Exnenditures:
Current:
General government
Public safety
Public works
Community development
Parks and library
Economic development
Debt Service - Principal t3)
Capital outlay
Total expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out (a)
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balances, Beginning of Year
Fund Balances (Deficits), End of Year
Fiscal Year Fiscal Year2017-18 2017-18Adopted Audited
Budget (s) Actual (6)
$88,128,083 $88,183,2902,s42,619 2,54r,850
4,679,970 4,807,460t,537,243 1,148,474
1,894,873 1,905,719
7,050,360 7,374,837
1,820,000 1,852,674
1,974,077 3,293,t71
sr0e,627,22s _$11_ll9zlzl_
$13,706,289 $10,897,704
73,427,623 72,433,022
8,367,221 7,397,919
4,881,881 4,488,092
14,570,420 13,492,079186,287 r73,r9r
165,950 t23,6r2
$t*J*s" -arp*st,
Fiscal Year
2019-20
Adopted
Budget (g)
s95,272,616
2,597,495
4,645,460
2,083,860
t,412,403
8,076,890
2,012,000
1,46s,810
$117,560,534
$18,578,076
79,596,057
8,592,752
4,813,579
t4,785,450
20r,670
237,'178
114,770
s126,920,132
$(9Js9,s98)
$(1,800,000)
$(1-800"000)
(r 1,159,598)
38,771,518
$27,611,920
$2,101,856
Fiscal Year
2018-19
Adopted
Budget (7)
$91,469,540
2,609,432
4,744,425
2,084,353
1,932,184
7,286,892
1,658,000
2,420,313
_$r1129uq
$13,012,819
76,799,776
8,487,165
4,788,594
15,131,064
20s,971
92,339
209,333
s118,727,061
s(4,521,922)
Fiscal Year
2018-19
Audited
Actual (8)
s96,937,045
2,55t,456
5,770,360
3,279,397
t,963,642
8,393,003
2,194,948
3,151,409
_$tu'4r260_
$12,709,494
76,141,504
7,779,267
4,479,327
r3,903,r60
196,787
92,339
76,420
_!1lsJ?&?2q.
$8,862,962$(5,678,446)
$(3,r42,26r\
5AJ4'26D
(8,820,707)
35,898,961
s27,078,254
$(3,142,261)
s(3,142,261)
(1,040,405)
35,898,961
$34,858,556
$(4,950,000) s(4,950,000)
$(4,950,000)
(9,47r,922)
34,858,556
$25,386,634
$(4,950,000)
3,912,962
34,858,556
$38,771,518
Source: City of Orange, Finance Department
(l) Consists of sales taxes, property taxes and transient occupancy taxes. See *CITY FINANCIAL INFORMATION -
Sales Taxes and - Property Taxes" below. Also see "-Potential Impacts of COVID-19 Pandemic" and Table 2 below.
(2) Miscellaneous revenues in the General Fund consist mainly of reimbursement for the annual street fair and
reimbursements from other agencies for emergency services provided.
(3) See *CITY FINANCIAL INFORMATION - Long-Term Liabilities" below.
(4) Transfers from the General Fund to the Capital Improvement Fund or Internal Service Funds. Interfund transfers are
used to (l) fund general funded capital projects, vehicle replacements, information systems, computer replacements,
and liability claims; (2) fund improvements to City facilities, and (3) to provide funding for liability claims expense.
(5) As provided in the City's Annual Adopted Budget for fiscal year ended June 30, 2018.
(6) As provided in the City's Comprehensive Annual Financial Report for fiscal year ended June 30, 2018.
(7) As provided in the City's Annual Adopted Budget for fiscal year ended June 30, 2019.
(8) As provided in the City's Comprehensive Annual Financial Report for fiscal year ended June 30, 2019.
(9) As provided in the City's Annual Adopted Budget for fiscal year ended June 30, 2020.
(10) See "-Potential Impacts of COVID-I9 Pandemic" and Table 2 below.
l8
Potential Impacts of COWD-|9 Pandemic At this time, the City does not plan to amend the budget
for fiscal year 2019-20 as a result of the COVID-I9 pandemic, but is evaluating the expected impacts to the
City's finances as the situation progresses. As of May 26,2020, the City estimates a recession through fiscal
year 2020-21 as a result of the COVID-I9 pandemic, with a revised projected revenue estimate of
approximately $114.0 million for fiscal year 2019-20 and estimated expenditures of approximately $114.9
million, resulting in a deficit of approximately $900,000 for fiscal year 2019-20. The decrease in revenues is
largely due to the stay at home orders, resulting in severe declines in retail, travel, manufacturing, and service
industries, and their resulting tax revenues. The City projects declines in sales tax and transient occupancy tax
revenues during this period.
For fiscal year 2020-21, the City is projecting approximately $106.6 million in revenues (a decrease
of 6.6%o from fiscal year 2019-20), and $122.4 million in expenditures, resulting in a 515.8 million deficit.
The decrease of 6.60/o in revenues is based on annualizing half of the second half of the second calendar
quarter 2020 sales tax loss projections, in addition to no increases in property tax revenue due to potential
non-payments from residents. The increase in expenditures for fiscal year 2020-21 is in part due to increases
in CalPERs retirement costs, labor cost increases, general municipal election costs, contractual obligations for
various maintenance agreements and sales tax sharing agreements and departmental operating budgets. The
City will be considering implementing several budget reduction measures to reduce the expenditures,
including but not limited to, reducing summer hiring for summer programs, freezing vacant positions,
operational budget reductions and renegotiating labor agreements. Assuming budget reduction measures
include a decrease of $3.6 million in renegotiated labor costs and $4.2 million in operating savings, the
projected deficit for fiscal year 2020-21 would be $8.1 million, which the City plans on funding through use
of catastrophic reserves and transfers from the capital projects fund and CaIPERS set-aside. See
'INTRODUCTION - COVID-I9Impact" and "BONDOWNERS' RISKS -- COVID-l9 Pandemic." See also
"CITY FINANCIAL INFORMATION -- Pension Plans."
The following table shows the City's revised revenue projections for fiscal year 2079-20 and fiscal
year2020-27 as of May 26,2020:
Table 2
City of Orange
General Fund Revenue Projections for Fiscal Years 2019-20 and2020-21
(as of May 26,2020)
Type ofRevenues Fiscal Year 2019-20 Fiscal Year 2020-21
Sales Tax
Property Tax
Transient Occupancy Tax
Franchises
Licenses & Permits
Use of Money & Property
Fees for Services(l)
Interfund Revenue(l)
Other Revenues(2)
Total Revenues
$42,705,369
43,958,186
3,800,000
2,545,036
5,264,962
2,003,288
5,399,921
2,460,903
5,905,258
$38,965,165
43,958,186
2,960,000
2,290,532
4,739,376
7,602,630
5,129,925
2,510,121
4,407,971
$114,042,823 $106,562,717
Source: City of Orange
(l) Included in Charges for services and fees in Table l.
(2) Consists of property transfer tax ($678,900), Fines & Forfeitures ($ 1,940,009), intergovernmental
revenue from other agencies ($1,103,833), and miscellaneous revenue ($685,038).
l9
Financial Statements
Set forth in the following pages are the City's General Fund balance sheets and statements of
revenues, expenditures and changes in General Fund balance for the years shown, based on the City's audited
financial statements. The balance sheets and statements presented in this Official Statement are subject to the
various notes attached to the City's audited financial statements for the respective years. The City's
Comprehensive Annual Financial Report for fiscal year ended June 30, 2019, which includes the City's 2018-
19 audited financial statements, are set forth in APPENDIX F. See also "INTRODUCTION - COVID-l9
Impact" and *BONDOWNERS' RISKS - COVID-l9 Pandemic."
Table 3
City of Orange General Fund Balance Sheets
Fiscal Years 2014-15 through 2018-19
ASSETS:
Cash and investrnents (r)
Receivables:
Accounts receivable
Taxes (2)
Interest
Intergovernmental
Inventories
Prepaid costs
Total Assets
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Due to other agencies
Uneamed revenues
Total Liabilities
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenues
Total defened inflows ofresources
FUND BALANCES:
Nonspendable:
Inventories
Prepaids
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances
$38,420,540 542,606,761
$3 1,616,748
1,068,639
5,505,688
t19,734
109,731
Fiscal Year
20r4-r5
Fiscal Year
2015-16
s29,46r,0r7
872,932
12,035,131(3)
r30,276
19,051
88,354
Fiscal Year
20r6-17
$3 1,882,704
r,179,496
7,992,231
2l 1,388
40,000
88,269
$41,394,088
$2,360,009
1,850,216
50,803
179,638
338,33 l
s4,778,997
$716,130
$88,269
35,810,692
Fiscal Year
2017-r8
s29,842,077
2,257,97r
7,533,198
239,460
95,178
Fiscal Year
20r8-r9
$33,242,359
r,829,734
9,862,480
356,644
82,345
78,415
$39,987,884 545,460,977
$1,873,595
4,308,789
41,234
1t4,979
403,654
___sqJ422sr
s74,995
$2,047,707
4,998,s17
184,810
t42,357
347,549
s7,720,940
s64,970
$1,698,953
2,170,557
54,431
225,469
360,395
$4,5(x1,805
s619,s23
$2,498,006
2,994,553
67,384
279,474
40r,752
____$!J21J{l
$498,920
$74,995 64,970 716,130 619,523 498,290
$95,178 $82,345
78.415/ o'1r J
34,763,378 38,610,758
$38,420,540 $42,606,761
$35,898,961 $34,858,556 $38,77r,5r8
$41,394,088 $39,987,984 545,460,977
Source: City of Orange Comprehensive Annual Financial Reports for Fiscal Years 2014-15 through 2018-19.
(l) See *CITY FINANCIAL INFORMATION - Investment Portfolio" below. See also Note 2 to APPENDIX F - CITY OF
ORANGE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30. 2019.
(2) Consists of sales taxes, property taxes and transient occupancy taxes. See *CITY FINANCIAL INFORMATION - Sales
Taxes and - Properly Taxes" below.
(3) The increase in fiscal year 2015-16 was due to the City's receipt of a final sales tax triple flip payment of $4.8 million.
$109,731
3t,493,563
t3r,6032r4
$88,354
34,732,497
$34,820,851
20
Table 4
City of Orange
Statements of Revenues, Expenditures and Changes in General Fund Balance
Fiscal Years 2014-15 through 2018-19
Fiscal Year
2014-15
$68,727,586
2,962,006
4,080,299
931,732
13,081,439
7,092,877
2,138,246
1,511,705
-$199,42s,8e9_
$9,471,637
63,389,991
7,120,026
3,687,909
11,940,452
67,108
727,918
$!r6l0sp41
$4,020,849
s73,120,967
2,785,987
5,443,388
1,364,340
13,353,941
7,000,239
1,725,795
3,423,544
_u08e$421_
$10,802,528
67,591,325
7,210,762
3,971,673
11,675,323
62,992
858,888
ylLrJir,,4n
$6,044,700
$86,752,001
2,505,636
4,966,017
1,005,391
1,964,941
7,478,765
1,706,291
6,368,251
_fln;?een-
$10,888,617
69,493,282
7,330,102
4,319,703
13,042,652
97,669
r32,898
$trst0rB*
$7,443,370
$88,183,290
2,541,950
4,807,460
1,149,474
l,g05,7lg
7,374,837
1,852,674
3,293,171
__$!lJ!ZlZr_
$10,897,704
72,433,022
7,397,919
4,488,092
13,492,079
173,l9l
123,612
--q1q491q1r
$2,1010856
Fiscal Year
20r8-19
$96,937,045
2,551,456
5,770,360
3,279,397
1,963,642
8,393,003
2,lg4,g4g
3,151,409
$t24241,260
$12,709,494
76,141,504
7,779,267
4,479,327
13,903,160
196,7g7
92,339
76,420
_$1EfZq?2L
s8,862,962
Fiscal Year Fiscal Year Fiscal Year
2015-16 2016-17 2017-18
Revenues:
Taxes (l)(2)
Franchise fees
Licenses and permits
Use of money and property
Intergovernmental (2)
Charges for services and fees
Fines and forfeitures
Miscellaneous (3)
Total revenues
Expenditures:
Cunent:
General govemment
Public safety
Public works
Community development
Parks and library
Economic development
Debt Service - Principal(a)
Capital outlay
Total expenditures
Excess (Deliciency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out (s)
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balances, Beginning of Year
Fund Balances (Deficits), End of Year
$(6,735,3;)
$(6,78sJ9s)
(2,764,546)
34,367,840
$31,603,294
s(z,gzt,tii)
$(2,827,143)
3,217,557
31,603,294
$34,820,851
$(6,365,26;)
$(6t6s"260)
1,078,1 10
34,820,85 I
$35,898,961
sfi,t+z,zii) $(4,950,00;)
$(3,142,261 $(4,950,000)
(1,040,405) 3,912,962
35,898,961 34,858,556
$34.858.556 $38,771,518
Source: City of Orange Comprehensive Annual Financial Reports for Fiscal Years 2014-15 through 2018-19.
(1) Consists of sales taxes, property taxes and transient occupancy taxes. See "CITY FINANCIAL INFORMATION - Sales
Taxes and - Property Taxes" below.
(2) Effective Fiscal Year 2016-17, the City began accounting for Property Taxes in lieu of Motor Vehicle License Fees in
the Taxes category. There is a corresponding increase in Taxes and a decrease in Intergovernmental revenues.
(3) Miscellaneous revenues in the General Fund consist mainly of reimbursement for the annual street fair and
reimbursements from other agencies for emergency services provided.
(4) See *CITY FINANCIAL INFORMATION - Long-Term Liabilities" below.
(5) Transfers from the General Fund to the Capital Improvement Fund or Internal Service Funds. Interfund transfers are
used to (l) fund general funded capital projects, vehicle replacements, information systems, computer replacements, and
liability claims; (2) fund improvements to City facilities, and (3) to provide funding for liability claims expense.
2l
Major Revenues
The City derives its General Fund revenues from a variety of sources including sales taxes, ad
valorem property taxes, transient occupancy taxes, licenses, permits, charges for services provided by the City
and other miscellaneous revenues. Sales taxes and property taxes constitute the two top major sources of
General Fund revenues, with sales taxes consisting of approximately 38.88% of the City's Fiscal Year 2018-
19 General Fund revenues, and property taxes comprising approximately 33.39% of Fiscal Year 2018-19
General Fund revenues. See Table 4 above and "-Sales taxes" and "-Property Taxes" in Table 5 below. See
also "LIMITATIONS ON REVENUES AND APPROPRIATIONS." The City's total General Fund
revenues for selected major revenue sources for the past five fiscal years are set forth below.
Table 5
City of Orange
Selected Major Revenue Sources
(Fiscal Years 2014-lS through 2018-19)
Revenue Category
Sales Taxes
Property Taxes(r)
Transient Occupancy Taxes
Charges for Services and fees
Licenses and Permits
2014-t5 2015-16 2016-17 2017-18 2018-19
$40,446,744
34,334,982
4,544,477
4,994,008
4,080,299
$42,161,349
36,945,749
5,200,107
4,899,239
5,443,388
s42,415,659
38,109,664
5,412,976
5,377,765
4,966,016
$41,316,133
40,433,610
5,475,877
5,275,587
4,907,460
s48,304,886
41,481,360
5,399,684
5,955,233
5,770,360
rotal _qq9,40049-s94,649,832 $96,292,090 s97,308,667 $106,911,523
(r) Inclusive of Califomia Motor Vehicle Vehicle-In-Lieu Payments. See "--Properg Taxes".
Source: CityofOrange.
As discussed above under "--Budget Summaryr" the City anticipates a decline in general fund
revenues (including most, if not all, of categories of revenues described below) beginning in March 2020
as a result of the COVID-l9 pandemic. Due to the ongoing and evolving nature of the COVID-I9
pandemic, at this time, the City cannot predict how long, or to what extent, the decline in general fund
revenues will be. See "INTRODUCTION-{OVID-19 Impact", "--Budget Summary" and
'BONDOWNERS' RISKS--COVID- I 9 Pandemic."
The following tables shows a comparison of the selected major revenues for fiscal year 2018-19 as
compared to the projected major revenues for fiscal years2019-20 and2020-21:
Table 6
City of Orange
Selected Major Revenue Sources
(Fiscal Year 2018-19 actual, Fiscal Years 2019-20 and2020-21projected)
Revenue Category
Sales Taxes
Property Taxes(r)
Transient Occupancy Taxes
Charges for Services and fees
Licenses and Permits
Total
2019-20 2020-21
Projected(z) Projected(2)
20t8-19
Actual
$48,304,886
41,481,360
5,399,684
5,955,233
5,770,360
$42,705,369
43,958, I 86
3,800,000
5,399,921
5,264,962
$38,965,165
43,958,186
2,960,000
5,129,925
4,738,376
$ 101,128,338 995,751,652
(r) Inclusive of Califomia Motor Vehicle Vehicle-In-Lieu Payments.
(2) Projections are as of May 26,2020 and are subject to change as the COVID-19 Pandemic evolves.
Source: CityofOrange.
_q064u4
Sales Taxes
Sales Tax is the largest source of General Fund revenue. A sales tax is imposed on retail sales or
consumption of personal property. The sales tax rate in the City is 7.75Yo.In fiscal year 2018-19, the City's
sales tax increased by 57.2 million or 16.90/o from Fiscal Year 2017-18, primarily due to SC Fuels (a fuel
distribution and service company and a major sales tax revenue producer) increase in service stations through
several regional wholesale fuel distributor acquisitions.
The City entered into a participation agreement to abate sales tax with a local business under the City
of Orange Municipal Code Section3.25 Sales Tax Sharing Program. Under the Municipal Code, the City may
grant sales tax abatements of the amount of sales tax a business generates within the City, for the purpose of
attracting or retaining business within their jurisdictions. For the year ended June 30,2019, the City abated
sales taxes totaling $3,701,913.
Potential Impacts of COWD-I9 Pandemic. The City anticipates a decline in sales tax revenues
beginning in the month of March 2020 due to the COVID-l9 pandemic. In addition, the City anticipates a
delay in the receipt of sales tax revenues due to the COVID-I9 Pandemic. Effective April2, 2020, the Sta|e
is allowing small business taxpayers (i.e., those with less than $5 million in taxable annual sales), to
participate in a l2-month, interest-free, payment plan for up to $50,000 of sales and use tax liability. For
fiscal year 2019-20, the City's adopted budget projected $45.3 million in sales tax revenue, which is $250,000
(0.5o/o) below the fiscal year 2018-19 estimate. Due to the COVID-19 pandemic, as of May 26,2020, the City
projects sales tax revenue to be 542.7 million for fiscal year 2019-20 and $39.0 million for fiscal year-' 2020-
21. However, due to the ongoing and evolving nature of the COVID-l9 pandemic, at this time, the City
cannot predict how long, or to what extent, the decline in sales tax revenues will be. See "INTRODUCTION
- COVID-l9 Impact," '.-Budget Summafy," "-Major Revenues" and "BONDOWNERS' RISKS - COVID-I9
Pandemic."
The valuation of taxable transactions in the City is presented in the following table.
Table 7
City of Orange
Taxable Retail Sales
Valuation of Taxable Transactions
(Calendar Years 2015-2019')
Calendar
Year
Retail and Food
Services
Taxable Transactions
All Other
Outlets
Taxable Transactions
$1,239,390,114
1,243,640,936
1,289,138,034
1,410,509,132
1,766,554,556
Total
s3,574,280,879
3,601,966,374
3,765,583,409
3,874,819,809
4,233,363,665
2015
2016
2017
2018
2019
$2,334,890,765
2,358,325,438
2,476,445,375
2,464,310,677
2,466,809,709
Source: California Department of Tax and Fee Administration, Taxable Sales in California (Taxable Sales, by City).
23
Largest Sales Toxpayers. The 25 largest payers of sales taxes in the City for calendar year 2019
comprised 47Yo of sales tax revenue in the City. The following is a table of the 25 largest sales taxpayers in
the City in alphabetical order for calendar year 2019:
Table 8
City of Orange
25 Largest Sales Taxpayers
Calendar Year 2019
Arco Food Mart
Best Buy
Chevron
Claflin Medical Equipment
DMG Corporation
Enterprise Rent-a-car
Ford of Orange
Foundation Building Materials
Home Depot
L&W Supply
Mazda of Orange
MS International
Nike Factory Store
Source: City of Orange
Property Taxes
The City's second largest revenue source, property tax, is imposed on real property (land and
permanently attached improvements, such as buildings) and tangible personal property (moveable property)
located within the City. Property is initially assessed by the County Assessor at atax rate of 1.0%o of the
assessed value subject to inflationary increases of no more than 2.0Vo each year plus adjustments resulting
from reassessment upon transfers and new construction.
The City's adopted budget for fiscal year 2019-20 estimates property tax revenues to be $43.8
million, generating an additional $1.7 million, or a 4.1o/oincrease over fiscal year 2018-19, due to expected
increases in home assessed values, and commercial properties sold at higher property values. Property tax
revenue consists of two primary sources. First, a portion of the lo/o ad valorem tax, of which the City's share
is approximately l3.6Yo. The fiscal year 2019-20 adopted budget projects this to be approximately $29.6
million. The second source is Property Tax in lieu of Motor Vehicle License Fees, which is expected to be
$14.1 million according to the City's fiscal year 2019-20 adopted budget. The State of California swapped
this revenue source in2004 as part of a budget saving measure. As a result, the City receives a share of the
Education Revenue Augmentation Fund, which is also part of the l%o ad valorem tax, instead of Vehicle
License Fees.
Tax Levies and Delinquencics. Taxable valuation within the City is established by the Orange
County Assessor, except for utility property, which is assessed by the State Board of Equalization. Taxes are
levied by Orange County for each fiscal year on taxable real and personal property which is situated in the
County as ofthe preceding January l. Effective July 1, 1983, real property that changes ownership or is
newly constructed is reassessed at the time the change in ownership occurs or the new construction is
completed. If the property is reassessed at a higher value, one or more supplemental tax statements will be
added to the annual tax bill. If the property is reassessed at a lower value, the property owner may receive a
refund.
Ralph's
SC Fuels
Selman Chevrolet
Source North America Corp.
Stadium Nissan
Target
Thompson Building Materials
Toyota Lease Trust
Toyota of Orange
Villa Ford
Verco Decking
Walmart
24
Property taxes on the secured roll are due in two installments, on November I and February I of each
fiscal year, and if unpaid become delinquent on December 10 and April 10, respectively. If the first
installment is not paid by December 10, a ten percent delinquent penalty is added to any unpaid balance. If
the second installment is not paid by April 10, a ten percent penalty plus a charge of $10 is added to the
unpaid balance. Since supplemental tax bills are mailed throughout the year, they may or may not be due or
delinquent at the same time as annual tax bills. The same penalties and charges accrue for delinquent
supplemental taxes as for delinquent annual taxes.
The County of Orange bills and collects the property taxes, and subsequently remits the amount due
to the City of Orange in installments during the year. For counties that have adopted the Teeter Plan (an
Altemative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds, pursuant to
Sections 4701 through 4717 of the California Revenue and Taxation Code), local agencies would receive 100
percent ofthe amount ofthe taxes due to such agencies regardless ofany default in payment ofsuch taxes
from property owners. Orange County has adopted the Teeter Plan. However, the City does not participate in
the County's Teeter Plan. Historically, the City has received substantially all of the taxes levied within two
years from the date they are levied. However, the City cannot predict how the COVID-19 pandemic will
affect Orange County's ability to collect property taxes in a timely manner, and whether there will be any
impact on the County's remittance of property taxes to the City. See "-Potential Impacts of COVID-I9
Pandemic" below.
Economic and other factors beyond the City's control, such as economic recession, deflation or land
values, or the complete or partial destruction of taxable property caused by, among other eventualities,
earthquake, flood or other natural disaster could cause a reduction in the assessed value oftaxable property in
the City.
Potential Impacts of COWD-I9 Pandemic. In response to the COVID-l9 outbreak described under
the caption "BONDOWNERS' RISKS-{OVID-19 Pandemic," the Orange County Treasurer-Tax Collector
has stated that the County will waive penalties for failure to timely pay property taxes on or before April 10,
2020, if a property owner can demonstrate significant economic hardship due to COVID-I9. After June 30,
property owners that do not meet such criteria for significant economic hardship, can participate in a five year
payment plan, which requires a 20 percent deposit of the amount of the property taxes due plus a set-up fee of
$25, and annual payments of20 percent by April 10 ofeach year until paid. Interest is charged at 1.5 percent
monthly (18 percent annually) with no prepayment penalty. The waiver of late payment penalties and
resulting property tax delinquencies could have an adverse impact on the timely payment of property taxes
with respect to property in the City. The City cannot predict whether the COVID-I9 pandemic will have an
effect on the remittance by the County of the City's property tax revenues. However, to date, the City has not
experienced any significant declines in property tax revenues resulting from the County's potential waiver of
late payment penalties. See "-Budget Summary," "-Major Revenues" and "-Tax Levies and Delinquencies"
above. See also "INTRODUCTION - COVID-l9 Impact" and "BONDOWNERS' RISKS- COVID-l9
Pandemic."
ERAF. In response to past severe financial and budgetary distress of California, the State Legislature
adopted legislation impacting the City's allocation of revenues from property taxes, including, in particular,
provisions relating to the Education Revenue Augmentation Fund ("ERAF"). Beginning in Fiscal Year 1992-
93 and in various fiscal years thereafter, the State required local governments to remit a portion of their
property tax revenues to ERAF. The Fiscal Year 2005-06 state budget required a $13 billion shift from local
govemments to ERAF. While the State budgets for each of Fiscal Years 2006-07 through 2019-20 did not
contain provisions for additional ERAF property tax shifts from cities (although the 2008-09, 2009-10, and
2010-ll State Budgets contained provisions for additional ERAF property tax shifts from redevelopment
agencies), there can be no assurance that future State Budgets will not require additional ERAF property tax
shifts from the City.
Proposition 13 Limitations. Article XIIIA of the State Constitution provides that, beginning with the
1978-79 Fiscal Year, property taxes in California are limited to one percent of full cash value, except for taxes
25
to pay debt service on indebtedness approved by the voters prior to July l, 1978. Article XIIIA defines full
cash value as the County Assessor's valuation of real property as shown on the 1975-76 tax bill ("base yetr"),
except in the case of newly-constructed property or property which undergoes a change in ownership. Yearly
taxable value increases following the base year are limited to the growth in the consumer price index, but may
not exceed two percent annually. For assessment and collection purposes, property is classified either as
oosecured" or 'ounsecured," and is listed accordingly on separate parts of the assessment roll. The oosecured
roll" is that part of the assessment roll containing State assessed property and property the taxes on which are
a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other
property is assessed on the o'unsecured roll." See "LIMITATIONS ON REVENUES AND
APPROPRIATIONS - Property Tax Limitations - Article XIIIA."
lRemainder of Page Intentionally Left Blankl
26
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A summary of the City's property tax levies and collections for the last ten fiscal years is as follows:
Table 10
City of Orange
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within Fiscal
Year of Lew
Taxes Levied
Fiscal Year for the Fiscal
Ended June 30 Yeaf)
Collections in
Percent of SubsequentAmount Lew Fiscal Y-ears(2)
20t0
20ll
2012
2013
2014
20t5
20r6
2017
20r8
2019
$33,846,120
33,281,667
33,642,208
34,034,193
35,409,021
36,798,892
38,795,999
40,013,475
41,745,695
43,559,522
s29,976,047 88.57%
32,633,605 98.05%
33,002,184 98.10%
33,480,125 98.37%
34,931,104 98.650/o
36,291,294 98.620/o
38,103,619 98.22%
39,374,323 98.40%
41,237,300 98.78%
42,987,182 98.69%
$857,893
567,671
380,718
349,943
269,749
221,433
215,265
184,816
185,252
176,111
Source: Urban Futures, Inc. based on data from Orange County Auditor-Controller
(l) Includes secured, unsecured, and supplemental property tax revenues as well as Vehicle License Fee in lieu amounts.
(2) Includes the total amount of delinquent taxes collected in each fiscal year. The Orange County Auditor-Controller tax
ledger does not provide detailed information regarding the levy yeax to which delinquent tax collections pertain.
Excludes penalties and interest amounts.
(3) Total collections may not tie to the amounts reflected in the City's audited financial statements due to timing of
collections and delinquent payments.
Redevelooment Dissolution The State's Community Redevelopment Law (codified in Part I of
Division 24 of the Califomia Health and Safety Code) authorized the redevelopment agency of any city or
county to receive an allocation oftax revenues resulting from increases in assessed values ofproperties within
designated redevelopment project areas (the "incremental value") occurring after the year the project area is
formed. In effect, local taxing agencies, such as the City, rcalize tax revenues only in the assessed value of
such property at the time the redevelopment project is created for the duration of such redevelopment project.
Although Assembly Bill No. 26 (*AB X7 26"), enacted on June 29, 20ll as Chapter 5 of Statutes of 2011,
statutorily dissolved redevelopment agencies as of February 1,2012, the enforceable obligations of dissolved
redevelopment agencies, continue to be paid from property taxes derived from such incremental value until
the enforceable obligations are paid in full in accordance with Parts 1.8 (commencing with Section 34161)
and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as
amended on June 27,2012 by Assembly Bill No. 1484 (*AB 1484"), enacted as Chapter 26, Statutes of 2012,
and as such statutory provisions may further be amended from time to time (as amended, the "Dissolution
Act"). Under the Dissolution Act, taxing entities, such as the City, are to receive distributions (in proportion
to such taxing entity's share of property tax revenues in the tax rate arca for the applicable fiscal year) of
residual amounts of property taxes attributable to incremental value on each June I and January 2,
commencing June 1, 2012, after payment of (i) tax sharing obligations established previously pursuant to the
Community Redevelopment Law, (ii) enforceable obligations of the successor agency to the former
redevelopment agency, and (iii) an administrative cost allowance to such successor agency. As enforceable
Total Collections within
the Fiscal y"*(z)(:)
Percent ofAmount Lerry(txzl
$30,833,940 91.10%
33,201,276 99.76%
33"382,902 99.23%
33,830,069 99.40%
35,200,852 99.41%
36,572,727 99.22%
38,318,884 98.770/o
39,559,139 98.86%
41,422,552 99.23o/o
43,163,293 99.09%
28
obligations of the former redevelopment agency and its successor agency are paid and retired, residual
amounts of property tax revenues attributable to redevelopment project area incremental value are expected to
increase over time.
Top Tax Pwers. The top ten property taxpayers, based on local secured assessed values of taxable
property in the City for the fiscal year 2019-20 are set forth in the following table:
Table 11
City of Orange
Top Ten Property Taxpayers
Fiscal Year 2019-20
Industry/Type
of Business
Taxable
Assessed
Value
Percentage of Total
Taxable Assessed
ValueTaxpayer
Orange City Mills LP
Irvine Company LLC
KBS Sor City Tower LLC
Children's Hospital of Orange
Bex Portfolio Inc.
St. Joseph Hospital of Orange
OC OET Owner LLC
Orange County Realty Investors
The Village at Orange LLC
Windsor at Main Place I LLC
Retail
Apartments
Real Estate
Medical
Apartments
Medical
Office Tower
Real Estate
Retail
Apartments
s771,532,848
764,766,350
150,195,000
137,476,045
135,730,778
128,822,366
1 17,338,180
110,762,837
104,467,450
98,059,303
0.75o/o
0.72
0.66
0.60
0.s9
0.s7
0.52
0.49
0.46
0.43
Total $1,318,551,157 5.79o/o
Source: Urban Futures, Inc., based on fiscal year 2019-20 combined tax rolls from the Orange County Assessor's
Office and City total taxable assessed value of $22,770,774,554.
Transient Occupancy Tax
A transient occupancy tax is imposed on persons staying 30 days or less in a hotel, motel, inn or other
lodging place within the City. The current transient occupancy tax rate is 10.00% of the room rate.
Payments are made to the City on a monthly basis and are deposited to the City's General Fund. In fiscal year
2018-19, transient occupancy tax receipts were $5,399,864, providing5.6Vo of General Fund tax revenues and
approximately 4.3% of total General Fund revenues. Transient occupancy tax receipts decreased by
approximately S76,000 (1.4%) in fiscal year 2018-19 over fiscal year 2017-18 year-end results. The City's
Adopted Budget forecasted an increase of approximately 0.9Vo in transient occupancy tax receipts in fiscal
year 2079-20. However, the City now anticipates a decline in transient occupancy tax revenues
beginning in March 20200 due to the COVID-l9 pandemic. As of May 26, 2020, the City projects
transient occupancy tax revenues for fiscal year 2019-20 to be $3.8 million, a substantial decrease from $5.4
million in fiscal year 2018-19. The City projects further declines in transient occupancy tax revenues to $3.0
million for fiscal year 2020-21 . Due to the ongoing and evolving nature of the COMD- 1 9 pandemic, at this
time, the City cannot predict how long, or to what extent, the COVID-l9 pandemic and the federal, state, and
local responses thereto will cause declines in transient occupancy tax. See *INTRODUCTION - COVID-19
Impact" and "BONDOWNERS' RISKS- COVID- I 9 Pandemic."
29
Reserve Policies
Historically, the City's Reserve Policy provided for as much as a 25%o set-aside of budgeted General
Fund operating expenditures as a designation of fund balance (Designated for Contingencies), which is
included in Unassigned fund balance. This policy was established to provide a contingency in case of a
catastrophic, or other severe economic event. The current set-aside is 17.3% of Fiscal Year 2019-20 budgeted
General Fund operating expenditures. The City intends to use a portion of these reserves to fill budget gaps
due to loss of revenues resulting from the COVID-19 pandemic. See "CITY FINANCIAL INFORMATION -
Budget Summary - Potential Impacts of COVID-l9 Pandemic."
Investment Portfolio
The City invests all idle cash in various investment instruments pursuant to the City's Statement of
Investment Policy, as authorized by California Govemment Code 53601.
Cash and investments at June 30,2019 consisted of the following:
Petty Cash
Bank Balance (net of outstanding checks)
Investments
812,200
(1,632,415)
152,870,146
Total $151,249,931
As of June 30,2019 the City had the following investments:
Investment Type Fair Value
Federal Home Loan Bank
Federal National Mtg. Assn.
Federal Farm Credit Bank
Medium Term Note:
Apple
Microsoft
Toyota
Local Agency Investment Fund
Money Market Mutual Funds
Held by trustee:
Money Market Mutual Funds
U.S. Treasury Bond
Federal National Mtg. Assn.
Total
$15,595,336
40,856,277
14,952,754
1,980,646
3,995,241
9,932,427
57,297,914
4,532,857
285,012
7,538,703
1,543,979
$152,870,146
Minimum Rating
Not applicable
Not applicable
Not applicable
AA-
AA-
AA-
Not rated
Not applicable
Not applicable
Exempt
Not applicable
S&P Rating
AA+
AA+
AA+
AA+
AAA
AA-
Not rated
AAA
AAA
Exempt
AA+
o/o of investments
10.44o/o
26.73
9.78
1.30
2.6r
6.50
37.48
2.97
0.19
1.00
1.00
100.00%
FINANCIAL REPORTSee ..APPENDIX F - CITY OF ORANGE COMPREHENSIVE ANNUAL
FOR FISCAL YEAR ENDED JUNE 30.2019 - Note 2."
30
Long-Term Liabilities
The following table shows the City's long term liabilities for Fiscal Year ended June 30, 2019:
Beginning
Balance Additions Deletions
Amounts Amounts
Due Within Due Beyond
One Year One Year
Ending
Balance
Govemmental Activities
Direct borrowing
Loans Payable
Other liabilities:
Compensated absences
Claims payable
Total Govt. activities
Business-type activities
Compensated absences
Total
8,062,555 3,495,019 3,646,640
77,050,334 4,845,386 3,967,050
25,651,622 8,911,024 7,706,029
7,910,934 3,578,063 4,332,871
17,928,670 5,416,351 12,512319
26,856,617 9,232,192 17,624,425
s538,733 $570,619 s92,339 $1,017,013 $237,778 s779,235
555,444 158,970 120,776 593,638 729,168 464,470
s26,207,066 $9,069,994 $7826,805 $27,450,255 $9,361,360 $18,088,895
In April 2018 and May 2019, the City entered into a series of loan agreements with Southern
California Edison for LED retrofit of city-owned streetlights. The loans are payable from the General Fund
and total 51,682,026 with a zero percent interest rate. The outstanding balance at June 30, 2019 is
$1,017,013. The annual payments are as follows:
Fiscal Year
2079-20
2020-21
2021-22
2022-23
2023-24
2024-2s
2025-26
Total
See ..APPENDIX F _ CITY OF ORANGE COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR FISCAL YEAR ENDED JUNE 30.2019 - Note 9."
Capital Improvement Plan
The City's preliminary budget for Fiscal Year 2020-21 proposes a five year capital improvement plan
("CIP') for Fiscal Year 2020-21 through 2024-25. In total, the City plans to invest about $67.0 million in
capital improvements in Fiscal Year 2020-21 and $143.8 million over the five-year planning horizon. Funding
for the CIP comes from different sources including Gas Taxes, Measure "M", Development Impact Fees,
State and Federal Grants, former Redevelopment Bond Proceeds, and Community Development Block
Grants, anticipated revenue over the next seven years and private donations.
The Fiscal Year 2020-21 Five-Year Capital Improvement Plan (CIP) identified 160 proposed
projects. For Fiscal year 2020-21, there are 23 newly budgeted projects and 137 projects that are either a
continuation ofpreviously approved plans, or anticipated to start during the out-years.
Payment
s237,778
237,778
237,778
156,530
70,095
49,772
27,372
$10017,013
3l
The following are highlights of the Fiscal Year 2020-21 Five-Year Capital Improvement Plan
projects:
o Construction of Fire Station Headquarters.
o Rehabilitation of the Police Headquarters Atrium.
o Installation of shade sails over existing tot lot equipment at El Camino Park.
o Landscape renovation improvements at Santiago Hills
r Installation of LED lighting at El Camino Park tennis courts.
o Renovations to update El Modena Park.
. Handy Park renovation and video surveillance installation.
o Renovation of the Children's Homework Center at the Orange Public Library & History Center
o Rehabilitation of Children's Courtyard at the Orange Public Library & History Center.
o Commitment of $5.57 million to the Pavement Management Program and an additional $6.2
million for street maintenance and rehabilitation efforts at various locations in the City.
. Commitment of $5.6 million towards 17 projects intended to maintain or improve the City's
water production and distribution, including $1.1 million for pipeline replacement.
. Commitment of $750,000 toward various City infrastructure, facility and parking lot
improvements.
LRemainder of Page Intentionally Left Blankl
32
Statement of Direct and Overlapping Debt
Shown below is a statement of direct and overlapping debt for the City as of April 15,2020.
City of Orange
Statement of Direct and Overlapping Debt
20 I 9-20 Assessed Valuation: $22,844,350,7 39
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable
Metropolitan Water District 0.738o/o
Irvine Ranch Water District, Improvement Dishict No. 125 0.930
Irvine Ranch Water District, Improvement DistrictNo. 225 0.010
Irvine Ranch Water Dishict, Improvement District No. 153-253 0.073
North Orange County Joint Community College District 0.158
Rancho Santiago Community College District 27.682
Anaheim Union High School District 0.458
Anaheim School District 0.781
Tustin Unified School District School Facilities Improvement District No. 2002-1 0.056
Tustin Unified School District School Facilities Improvement District No. 2008-l 0.058
Tustin Unified School District School Facilities Improvement District No. 2012-1 0.040
Orange Unifred School District 59.302
Orange Unified School District Community Facilities District No. 2005-1 100.
Orange Unified School District Community Facilities District No. 2005-2 100.
City of Orange Community Facilities District No. 91-2 100.
City of Orange Community Facilities District No. 06-1 100.
City of Orange 1915 Act Bonds 100.
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations 3.6510/o
Orange County Pension Obligation Bonds 3.651
Orange County Board of Education Certificates of Participation 3.651
North Orange County Regional Occupation Program Certificates of Participation 0.162
Orange Unified School District Certificates of Participation and Benefit Obligations 59.302
Anaheim Union High School District Certificates of Participation 0.458
City of Orange f00.
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
OVERLAPPING TAX INCREMENT DEBT (Successor Aeencies):
City of Orange Tax Allocation Bonds 100. %
Orange County Neighborhood Redevelopment Project Area Tax Allocation Bonds 0.417
TOTAL OVERLAPPING TAX INCREMENT DEBT
COMBINED TOTAL DEBT
Ratios to 2019-20 Assessed Valuation:
Total Overlapping Tax and Assessment Debt .l.0lYo
Direct Debt ($0)............... ........0.00%
Combined Total Debt ................1.50%
Ratios to 20 I 9-20 Redevelopment Incremental Valuation ($4.75 1. 13 1.673):
Total Overlapping Tax Increment Debt.................................0.82o/o
Debt4/15/20
$ 275,274
1,647,342
25,435
14,228
449,935
60,945,809
1,298,311
2,153,853
23,754
48,242
15,958
106,971,913
5,895,000
5,405,000
22,295,000
22,230,000
r35.000
$229,830,054
$14,120,060
3,779,287
492,520
14,499
55,253,036
148,392
0 (r)
$73,807,794
$38,765,000
18.598
$38,783,598
$342,421,446Q)
(l)
(2)
Excludes issue to be sold.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease
oblisations.
JJ
Pension Plans
The City contributes to the Califomia Public Employees' Retirement System (CaIPERS), an agent
multiple-employer public employee defined benefit pension plan (the Plan). CaIPERS provides retirement
and disability benefits, annual cost-ofJiving adjustments, and death benefits to plan members and their
beneficiaries. CaIPERS acts as a common investment and administrative agent for participating public
entities within the State of Califomia. Benefit provisions and all other requirements are established by state
statute and memoranda of understanding with employee bargaining units.
Plan Description, Beneftts Provided and Employees Covered The Plan provides benefits for two
membership classifications, Miscellaneous and Safety, and those benefits are tiered based upon date of
CaIPERS membership. Safety membership is extended to those in active law enforcement and fire
suppression, while all others are classified as Miscellaneous members. Assembly Bill (AB) 340, also known
as the Public Employees' Pension Reform Act (PEPRA), became effective on January 1,2013. PEPRA
created new benefit formulas and a final compensation period as well as new contribution requirements for
new employees. Under PEPRA, "new employees" are those hired on or after January 1,2013, and had never
been a member of CaIPERS previously. All employees hired prior to January l, 2013, or whom, regardless
of their hire date had previously been a member of CaIPERS, will continue to be covered under the pre-
PEPRA plan. All "new employees", per PEPRA, will not be eligible for the pre-PEPRA plan, and instead
will be covered under the PEPRA tiered plan. PEPRA: (i) requires public retirement systems and their
participating employers to share equally with employees the normal cost rate for such retirement systems;
(ii) prohibits employers from paying employer-paid member contributions to such retirement systems for
employees hired after January 1,2013; (iii) establishes a compulsory maximum non-safety benefit formula
of 2.5Vo at age 67; (iv) defines final compensation as the highest average annual pensionable compensation
eamed during a 36-month period; and (v) caps pensionable income at $110,100 (5132,120 for employees not
enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of
the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases,
generally prohibiting contribution holidays, and prohibiting purchases of additional non-qualified service
credit.
A summary of the plan benefits in effect at June 30,2019 is shown on the following table:
Miscellaneous
Hire Date
Benefit Formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as aVo of eligible compensation
Required employee contribution rates
Required employer contribution rates:
Normal cost rate
Payment of unfunded liability
Prior to
January 1,2013
2.7o/o @ 55
5 years ofservice
monthly for life
50-67
2.0Yo - 2.7Yo
8.0%
10.495Yo
$5,098,284
On or After
January 1,2013
2% @62
5 years ofservice
monthly for life
52-67
1.0%-2s%
6.0Yo
10.459%
34
Safety
Prior to On or After
Hire Date January 1,2013 January 1,2013
Benefit Formula 3.0% @50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service
Benefit payments monthly for life monthly for life
Retirement age 50 -55 50 - 57
Monthlybenefits, asa%oofeligiblecompensation 3.00% 2.0%-2.7%
Required employee contribution rates 9yo llyo
Required employer contribution rates:
Normal cost rate 18.173% l8.l73Yo
Payment of unfunded liability 57,392,025
At the June 30, 2018 measurement date, the following employees were covered by the benefit terms
of the Plan:
Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 641 441
Inactive employees entitled to but not yet receiving benefits 483 ll2
Active Employees 360 258
Total 1,481 811
Actuarial Methods and Assumptions Used to Determine Total Pension LiabiliQ. The City's
net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary
net position. The net pension liability of each of the Plans is measured as of June 30,2018, using an annual
actuarial valuation as ofJune 30,2017 rolled forward to June 30,2018 using standard update procedures. A
summary of principal assumptions and methods used to determine the net pension liability is shown below:
Miscellaneous Safety
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions
Discount Rate
Inflation
Entry Age Normal Entry Age Normal
June 30,2017
June 30. 2018
Cost Method
7.lsYo
2.50Yo
June 30,2017
June 30, 2018
Cost Method
7.lsYo
2.50%
(l)
(2)
(3)
Projected Salary Increase (l)
Mortality Rate Table (2)
Post Retirement Benefits Income (3)
(l) Depending on age, service and type of employment
(2) The probabilities of mortality are derived using CaIPERS' membership data for all funds. The mortality
table used was development based on CaIPERS' specific data. The table includes 15 years of mortalify
improvements using Society of Actuaries Scale MP 2016. For more details on this table, please refer to
the December 17 experience study report.
(3) Contract COLA up to 2.0%o until Purchasing Power Protection Allowance Floor on Purchasing Power
appl ies, 2. 5 0o/o ther eafter.
35
Discount Rate. The discount rate used to measure the total pension liability was 7.15 percent. The
projection of cash flows used to determine the discount rate assumed that contributions from plan members
will be made at the current member contribution rates and that contributions from employers will be made at
statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net
position was projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of retum on plan investments was applied to all periods of projected
benefit payments to determine the total pension liability.
Changes in the Net Pension Liability-Miscellaneous Plan. The following table shows the changes
in net pension liability for the Miscellaneous Plan recognized over the measurement period.
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Assets)
(a) (b)(s)=(a)-(b)
Balance ilz 613012017 (Measurement Date)
Changes Recognized for the Measurement Period:
Service Cost
Interest on the Total Pension Liability
Difference between Expected and Actual Experience
Changes of Assumptions
Plan to Plan Resource Movement
Contribution from the Employer
Contributions from Employees
Net Investment Income
Benefit Payments including Refunds of
Contributions
Administrative Expense
Other Miscellaneous Income(Expenses)(r)
Net Changes During 2017-18
Balance atz 613012018 (Measurement Date)
$345,505,847
5,267,393
24,067,324
(1,306,394)
(1,376,690)
Employee (17,701,058)
$245,112,738
(see)
7,864,464
2,088,1I I
20,755,507
(17,701,058)
(381,953)
(725,336)
$100,393,109
5,267,383
24,067,324
(1,306,394)
(1,376,690)
599
(7,864,464)
(2,088,111)
(20,75_5,507)
381,953
725,336
$8,950,565
$354,456,412
$11,899,136
$257,011,874
$(2,948,571)
$97,444,538
Sensitivity of the Miscellaneous Plan Net Pension Liability to Changes in the Discount Rate. The
following presents the net pension liability of the Miscellaneous Plan as of the measurement date, calculated
using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated
using a discount rcte that is I percentage-point lower (6.15 percent) or I percentage-point higher (8.15
percent) than the current rate:
Discount Rate - 1%o
(6.rs%)
Current Discount Rate Discount Rate +lYo
(7.rs%)
Plan's Net Pension
Liability(Assets)$143,323,722 $97,444,538
(8.1s%)
$59,492,735
36
Changes in the Net Pension Liability-Safety Plan. The following table shows the changes in net
pension liability for the Safety Plan recognized over the measurement period.
Increase (Decrease)
Total Pension Plan Fiduciary
Liability Net Position
(a) (b)
$516,533,401 $351,926,047
Net Pension
Liability(Assets)
(c)=(a)-(b)
Balance at 613$12117 (Measurement Date)
Changes Recognized for the Measurement Period:
Service Cost
Interest on the Total Pension Liability
Difference between Expected and Actual
Changes of Assumptions
Plan to Plan Resource Movement
Contribution from the Employer
Contributions from Employees
Net Investment Income
8,684,357
36,374,391
Experience 2,812,674
(2,407,807)
$164,6070354
9,694,357
36,374,391
2,912,674
(2,407,807)
864
(72,902,982)
(2,863,563)
(29,531,053)
548,398
1,047,417
$1,756,696
Benefit payments including Refunds of Employee (25,095,404)
Contributions
Administrative Expense
Other Miscellaneous Income/(Expense)(t)
Net Changes During 2017-18
Balance atz 613012018 (Measurement Date)
(864)
12,902,982
2,963,563
29,531,053
(25,095,404)
(548,398)
(1,041,417)
$20i68,211 $18,611,515
$536,901,612 $370,537,562 $166,364,050
(l) During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75,
Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions, CaIPERS reported its
proportionate share of activity related to postemployment benefits for participation in the State of California's
agent OPEB plan. Accordingly, CaIPERS recorded a one-time expense as a result of the adoption of GASB 75.
Additionally, CaIPERS employees participate in various State of Califomia agent pension plans and during Fiscal
Year 2017-18, CaIPERS recorded a correction to previously reported financial statement to properly reflect its
proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and
Financial Reporting for Pensions.
Sensitivity of the Safety Plan Net Pension Liability to Changes in the Discount Rate. The
following presents the net pension liability of the Safety Plan as of the measurement date, calculated using
the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using
a discount rate that is I percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent)
than the current rate:
Discount Rate Current Discount Rate
(8.15%)(6.1s%)(7.rs%)
Plan's Net Pension Liability/(Assets) $240,211,745 S166,364,050 $105,898,652
'T
Pension Expense and Deferred Outtlows and Deferred Intlows of Resources Reluted to Pensions.
As of the start of the measurement period (July 1,2017), the net pension liability is $100,393,109 for the
Miscellaneous Plan and $164,607,354 for the Safety Plan.
For the measurement period ending June 30,2018 (the measurement date), the City of Orange
incurred a pension expense of $15,342,804 for the Miscellaneous Plan and $20,491,524 for the Safety Plan,
allocated as follows:
Govemmental Business-type Fiduciary
Activities Activities Funds Totals
$153,428 $15,342,804
20,491,524
s12,120,815
20,491,524
$3,068,561Miscellaneous Plan
Safety Plan
Total Pension Expense
Miscellaneous Plan
Safety Plan
Total Net Pension Liabilitv
$35,834,328
As of the end of the measurement period (June 30,2018) and as presented in the June 30,2019
Statement of Net Position, the net pension liability is $97,444,538 for the Miscellaneous Plan and
S166,364,050 for the Safety Plan, allocated as follows:
s32,672,339
Govemmental Business-type
Activities Activities
s3,068,561 $153,428
Fiduciary
Funds
$76,981,187
166,364,050
s19,48&907 $974,_444 s97,444,538
166,364,050
$243,345,237 $19,488,907
City of Orange has
$974,444 $263,808,588
deferred outflows and defenedAs of the fiscal year ended June 30, 2019, the
inflows of resources related to pensions as follows:
Miscellaneous Plan
Pension contributions subsequent to measurement date
Change of Assumptions
Differences between Expected and Actual Experiences
Net Difference between Projected and Actual
Earnings on Pension Plan Investments
Total
Safetv Plan
Pension contributions subsequent to measurement date
Change of Assumptions
Differences between Expected and Actual Experiences
Net Difference between Projected and Actual
Earnings on Pension Plan Investments
Deferred Outflows
ofResources
Defened Inflows
ofResources
$8,889,983
904,267-
383,858
$10,178,108 $(1,844,968)
Defened Outflows Defened Inflows
ofResources ofResources
$14,630,050
14,844,911
2,072,497
977,478
s(803,069)
(1,041,899)
$(1,774,174)
(2,359,043)
38
Total $32,524,936 $(4,133,217)
523,520,033 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended
Iune 30,2020.
Amounts reported as defened outflows and defened inflows of resowces related to pensions will be
recognized in future pension expense as shown on the following table:
Miscellaneous Plan Safetv Plan
Fiscal Year ended
June 30:
Deferred
Outflows(Inflows) of
Resources
Deferred
Outflows(Inflows) of
Resources
2020
2021
2022
2023
2024 andthereafter
$2,604,065
182,852
(2,628,546)
(715,214)
s10,902,362
7,396,039
(3,583,232)
(953,500)
At June 30,2019, the City had no outstanding amount of contributions to the pension plan required
for the year ended June 30, 2019.
The tables below show the historic required City contribution from fiscal years 2018-19 to 2020-21
and projected City contributions for fiscal years 2021-22 to 2023-24, as reported in the annual valuation
reports provided by CaIPERS. The projections are based on various assumptions, which actuarial
assumptions are subject to periodic review and revisions. Actual contributions will be subject to such
revisions. For the tables below, 'Normal Cost" means the annual cost of service accrual for the upcoming
fiscal year for active employees. "UAL" means Unfunded Accrued Liability. When a plan or pool's value
of assets is less than its Accrued Liability (i.e., the total dollars needed as of the valuation date to fimd all
benefits earned in the past for cunent members), the difference is the plan or pool's Unfunded Accrued
Liability (or unfunded liability). If the unfunded liability is positive, the plan or pool will have to pay
contributions exceeding the Normal Cost.
Miscellaneous Plan
Required Contribution Projected Future Employer Contribution(l)
2018-19
Normal Cost 7o 10.875%
UALPayment $6,271,908
2019-20 2020-21 2021-22 2022-23 2023-24
11543% 12310% 12.4o/o 12.4o/o 12.4o/o
$7,286,697 $7,933,826 $8,793,000 $9,479,000 $9,888,000
(l) Assumes 7.00 percent retum for fiscal year 2018-19, but see discussion above regarding certain assumptions used by CdPERS.
Safety Plan
Required Contribution Projected Future Employer Contribution(r)
20r8-r9 2019-20 2020-2r 2021-22 2022-23 2023-24
Normal Cost %o 18.572o/o
UAL Payment $9,157,459
19.3060/o 20.392o/o
$10,797,646 $11,971,214
20.4o/o 20.4Yo 20.4o/o
$13,424,000 $14,641,000 $15,397,000
(l) Assumes 7.00 percent retum for fiscal year 2018-19, but see discussion above regarding certain assumptions used by CaIPERS.
See "BONDOWNERS' RISKS - COVID-l9 Pandemic" for information regarding the potential
impact of the COVID-I9 outbreak on the City's unfunded pension liability. See also "INTRODUCTION -
COVID-I9 Impact." See Note 6 to the audited financial statements in "APPENDIX F - CITY OF ORANGE
39
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30. 2019" fOT
additional information regarding the City's pension plan.
Other Post-Employment Benefits Other Than Pensions
Plan Descriptions. The City administers an Agent Multiple-Employer defined benefit post-
employment healthcare plan for eligible City retirees and their dependents through the Califomia Public
Employees' Retirement System (CaIPERS). Retirees from the City enrolled in the Public Employees Medical
and Hospital Insurance Program (PEMHCA), who retire at age 50 or later and have at least 5 years of service
in the CaIPERS system are eligible for these benefits. These health insurance benefits are authorized through
City Resolutions/l4emorandas of Understanding defining health care benefits and contribution levels and
through the contractual agreement between the City and CaIPERS. The City cunently contributes $136 per
month for each retiree and the retiree is responsible for the balance of the premium amount.
Employees Covered As of the June 30, 2017 actuarial valuation, the following current and former
employees were covered by the benefit terms under the plan:
rotaI6-
Total OPEB Liability. The City's OPEB liability of $32,490,025 was measured as of June 30, 2018
and was determined by an actuarial valuation as of June 30,2017.
Actuarial Assamptions and Other Inpats. The total OPEB liability as of the June 30,2017
actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all
periods included in the measurement, unless otherwise specified:
Inactive employees or beneficiaries currently receiving benefits
Active employees
269
621
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Projected Salary Increase
Expected Long Term
Investrnent Rate of Return
Health Care Cost Trend Rates 6.5%o in first year, trending down to 3.84% over 58
years
Pre-retirement Turnover
Mortalitv Rate
The discount rate used to measure the
unfunded plan, therefore the discount rate was
bonds, as ofthe valuation date.
June 30,2017
June 30,2018
Entry-Age Normal , Level %o of Salary
3.62%
250%
2.75%o: Additional merit based increases based on
CaIPERS Merit Salary Increase Table
3.50%
Derived from CaIPERS OPEB Assumption Model,
revised December 20, 2017
Derived from CaIPERS OPEB Assumption Model,
revised December 20, 2017
total OPEB liability is 3.620/o. The City's OPEB Plan is an
set to the rate of tax exempt, high-quality 20-year municipal
40
Changes in Total OPEB Liability. The changes in the OPEB liability are as follows:
Total OPEB Liabiliw
Balance as of June 30,2017 (Measurement Date) $31,590,309
1,360,032
l,ll9,l20
(371,560)
(427,427)
(780,449)
899,716
$32,490,025
Sensilivity of the Total OPEB Liability to Changes in the Discount Rate The following presents
the total OPEB liability of the City, calculated using the discount rate for the Plan, as well as what the City's
total OPEB liability would be if it were calculated using a discount rate that is I percentage point lower or 1
percentage rate higher than the current rate:
Discount Rate Current Discount Rate
_ lyo Discount Rate + Iyo
(2.62%\ (3.62%\ (4.62%\
Total OPEB Liability $37,187,190 $32,490,025 528,608,144
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates. The
following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would
be ifit were calculated using healthcare cost trend rates that are I percentage point lower or I percentage rate
higher than the current healthcare cost trend rates:
Changes in the Year:
Service Cost
Interest on the total OPEB liability
Changes in assumptions
Contribution - employer
Implicit subsidy fulfi lled
Net Changes
Balance at June 30, 2018 (Measurement Date)
1olo Decrease
5.50%
Decreasing to
2.84%
Current Healthcare
Cost Trend Rates
650% decreasing
Io 3.84%;o
I o/o Increase
7,50Yo
Decreasing to
4.84Yo
Total OPEB Liability 827,917,149 $32,490,025
OPEB Eryense and Defened OutJlows of Resources Reloled to OPEB
$38,227,151
Contributions subsequent to measurement date
Implied subsidy
Total Defened Outflows $1,305,875
Defened
Outflows of
$466,929
838.946
Deferred Inflows
ofResources
Changes in assumptions (amortized over 7.9)
41
s324,527
The $1,305,875 reported as deferred outflows ofresources related to contributions subsequent to the
measurement date will be recognized as a reduction of the total OPEB liability in the year ended
June 30, 2020. Aher amounts reported as deferred outflows of resources and deferred inflows of resources
related to OPEB will be recognized as OPEB expense as follows:
Year Ending
June 30 Amount
2020
2021
2022
2023
2024
Thereafter
$(47,033)
(47,033)
(47,033)
(47,033)
(47,033)
(89,362)
For additional information regarding the City's OPEB plan, see Note 8 to the audited financial
statements in APPENDIX F - *CITY OF ORANGE COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR FISCAL YEAR ENDED JLTNE 30.2019.'
THE AUTHORITY
The Orange City Public Facilities Financing Authority is a joint powers authority established
pursuant to the Bond Law and a Joint Exercise of Powers Agreement, dated as of March 79,2020, by and
between the City and the California Statewide Communities Development Authority. The Authority is
qualified to assist in the financing or refinancing of certain public improvements and to issue the Bonds
under the Bond Law. The Authority has no taxing power. Under the Bond Law, the Authority may purchase
bonds issued by any local agency at public or negotiated sale and may sell bonds to public or private
purchasers at public or negotiated sale. The Authority is govemed by a five-member board of directors,
which consists of the Mayor and the other members of the City Council of the City of Orange. The Mayor
acts as the Chair of the Authority, the City Manager as its Executive Director, the City Clerk as its Secretary
and the Treasurer of the City as its Treasurer. The Authority and the City are each separate and distinct legal
entities, and the debts and obligations ofeach such entity are not debts or obligations ofthe other entity.
BONDOWNERS' RISKS
Investment in the Bonds involves elements of risk. The following section describes certain specific
riskfactors affecting the payment and security of the bonds. The following discwsion of risks is not meant to
be an exhaustive list of the risks associated with the purchase of the bonds and the order of discussion of
such risks 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 fficial statement in
evaluating the bonds. There can be no assurance that other risk factors not discwsed under this caption will
not become material in thefuture.
COVD-l9 Pandemic
The spread of COVID-l9 is having significant negative impacts throughout the world, including in
the City, County and State. See "INTRODUCTION - COVID-I9 Impact." The City, County and State
have all declared states of emergency on March 17, 2020, February 26, 2020 and March 4, 2020,
respectively. On March 11,2020, the World Health Organization declared the COVID-I9 outbreak to be a
pandemic and on March 13,2020,the President of the United States declared a national state of emergency.
42
The purpose behind these declarations is to coordinate and formalize emergency actions across
federal, state and local govemmental agencies, and to proactively prepare for a wider spread of the virus. To
date there have been a number of confirmed cases of COVID-l9 and the deaths caused by COVID-I9 in the
City and County. The outbreak has resulted in the imposition of restrictions on gatherings and temporary
closings of non-essential businesses, schools and universities. Such impacts may lead to business failures.
In addition, the United States is restricting certain non-US citizens and permanent residents from entering the
counfy. Further, stock markets in the United States and globally have been volatile, with significant
realizpd and unrealized losses in investment portfolios attributed to COVID-l9 concerns.
Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to,
disruption of the regional and local economy due to decreased commercial activity, with corresponding
decreases in the City's major revenues, including but not limited to, sales tax, transient occupancy tax and
property tax, and increased costs of City operations. In addition, CaIPERS has reportedly lost significant
value in its investments as a result of declines in the stock market, which could result in a significant increase
in the City's unfunded pension liability. See the captions "CITY FINANCIAL INFORMATION-BudgeI
Summary - Potential Impacts of COVID-19 Pandemic," "-$41s5 Taxes - Potential Impacts of COVID-I9
Pandemic," "-Property Taxes - Potential Impacts of COVID-19 Pandemic," sld ((-psnsion Plans".
The ultimate impact of COVID-l9 on the City's operations and finances is difficult to predict due to
the evolving nature of the COVID-I9 transmission, including uncertainties relating to the duration and
severity of the outbreak, and what actions will be taken by governmental authorities to contain or mitigate
the outbreak or to treat its impact. As of the date of this Official Statement the City does not believe that the
impacts of the spread of COVID-I9 will prevent the City from making Base Rental Payments when due.
Limited Obligations with Respect to the Bonds
The Bonds are limited obligations of the Authority payable from Revenues, which primarily consist
of Base Rental Payments payable by the City under the Sublease and amounts on deposit from time to time
in the funds and accounts held by the Trustee. If for any of the reasons described herein, or for any other
reason, the Base Rental Payments are not sufficient to pay debt service on the Bonds, the Authority will be
obligated to utilize money on deposit in the funds and accounts established under the Indenture. The
obligation of the City to pay Base Rental Payments and Additional Rental Payments under the Sublease also
constitute a current expense of the City payable from any legally available funds.
The Authority has no taxing power. The obligation of the City to pay Base Rental Payments and
Additional Rental Payments under the Sublease does not constitute an obligation of the City for which the
City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form
of taxation. The obligation of the City to make Base Rental Payments under the Sublease does not constitute
a debt or indebtedness of the City, the Authority, the State or any of its political subdivisions within the
meaning of any constitutional or statutory debt limitations.
Abatement
The obligation of the City under the Sublease to pay Base Rental Payments and Additional Rental
Payments is in consideration for the use and possession of the Leased Properties. Except to the extent
provided in the Sublease, the obligation of the City to pay Base Rental Payments and Additional Rental
Payments due under the Sublease will be abated in accordance with the Sublease during any period in which,
by reason of damage, destruction, condemnation or impairment of leasehold interest, there is substantial
interference with the use and occupancy by the City of all or such portion of the Leased Properties.
The Sublease provides that the amount of abatement will be in an amount agreed upon by the City
and Authority such that the resulting rental payments in any year during which such interference continues
does not exceed the fair rental value of the portions of the Leased Properties as to which such damage,
destruction, condemnation or impairment do not substantially interfere with the City's use and possession.
43
Such abatement will continue for the period commencing with the date of such interference and ending with
the restoration ofthe relevant Leased Properties to tenantable condition. Except as provided in the Sublease,
in the event of such damage, destruction or taking, the Sublease will continue in full force and effect and the
City waives any right to terminate the Sublease by virtue of any such damage, destruction or taking. See
"SECURITY FOR THE BONDS -Abatement."
The spread of COVID-l9 has resulted in the imposition of restrictions on mass gatherings,
temporary closings of non-essential businesses and schools (including within the City) and implementation
of stay at home orders for citizens to remain at home except for certain essential purposes. See
"INTRODUCTION - COVID-l9 Impact" and "BONDOWNERS' RISKS - COVID-l9 Pandemic." These
restrictions limit public access to certain City-owned facilities that include portions of the Leased Properties
but will not cause Base Rental payments to be abated under the Sublease.
Risk of Uninsured Loss
The Sublease obligates the City to procure and maintain throughout the term of the Subleaseo various
forms of insurance, to assure repair of the Leased Properties in the event of damage or destruction to the
Leased Properties. The City makes no representation as to the ability of any insurer to fulfill its obligations
under any insurance policy required to be procured and maintained by the Sublease. Certain risks, such as
damage from earthquakes, may not be covered by such property insurance. The City does not currently
maintain and is not required to maintain earthquake insurance.
In the event the Leased Properties are partially or completely damaged or destroyed due to any
uninsured or underinsured event, it is likely that Base Rental Payments will be partially or completely
abated. Apart from the Net Insurance Proceeds, the City will have no obligation to expend any funds to
repair or replace such damaged or destroyed property.
City General Fund
The Base Rental Payments and other payments due under the Sublease are payable from funds
lawfully available to the City. A variety of national, state or regional factors, which are beyond the control
of the City could reduce the City's General Fund revenues or increase the City's General Fund expenditures.
See for example, the discussion under *-COVID-I9 Pandemic" above. The City is permitted to enter into
other obligations which constitute additional charges against its revenues without the consent of Owners of
the Bonds. If the amounts which the City is obligated to pay in a fiscal year exceed the City's revenues for
such year, the City may choose to make some payments rather than making other payments, including Base
Rental Payments, based on the perceived needs of the City. The same result could occur if, because of
California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its
available revenues or is required to expend available revenues to preserve the public health, safety and
welfare. See "CITY FINANCIAL INFORMATION" for a more detailed discussion of revenues deposited
in and expenditures from the City's General Fund. Also see "LIMITATIONS ON REVENUES AND
APPROPRIATIONS - Appropriations Limitations: Article XIIIB."
Additional Obligations
The City may incur additional obligations payable from the City's General Fund. Such additional
obligations would increase debt service payable from the City's General Fund and could adversely affect
debt service coverage with respect to the Base Rental Payments. See "SECURITY FOR THE BONDS -
Additional Bonds."
State Finances
The State's financial condition and budget policies affect communities and local public agencies
throughout California. A number of the City's revenues are collected and dispersed by the State (such as
44
sales tax and motor-vehicle license fees) or allocated in accordance with State law (most importantly,
property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a
material economic downtum in the State, there can be no assurance that any resulting revenue shortfalls to
the State will not reduce revenues to local governments (including the City) or shift financial responsibility
for programs to local govemments as part of the State's efforts to address any such related State financial
diffrculties.
State budgets are affected by regional, national or even international economic conditions and a
multitude of other factors over which the City has no control. The City cannot give any assurances regarding
the financial conditions of the State during any period of time. Some of the State's budget solutions have
caused in the past, and may cause in the future, increased financial stress to cities, counties and other local
governments by: (i) decreasing local revenues (for example, the property tax, road improvement funding,
public safety or other categorical funded initiatives), or (ii) increasing directly or indirectly demand for local
programs (such as public safety or indigent health programs). In recent years, the State has faced significant
financial and budgetary stress. AB Xl26 enacted in2011, pursuant to which all redevelopment agencies in
the State were dissolved, was enacted during the Fiscal Yew 2011-12 budget process and was just one
example where cities and counties throughout the State were significantly impacted. Even though California
has experienced significantly improved fiscal condition during the past few fiscal years, the State is still
facing continuing financial challenges and unfunded long-term liabilities.
According to the State Constitution, the Governor is required to propose a budget to the State
Legislature by no later than January 10 ofeach year, and a final budget must be adopted by the vote ofeach
house ofthe Legislature no later than June 15, although this deadline has been frequently breached in the
past. The State budget becomes law upon the signature of the Governor, who may veto specific items of
expenditure. The Governor sigrred the Fiscal Year 2019-20 budget for the State on Jlur:re 27, 2019 and on
January 10, 2020, introduced a proposed 2020-21 State budget. The City does not anticipate any material
adverse effect on the City's finances based on the Fiscal Year 2019-20 State budget or the Fiscal Year 2020-
21 proposed State budget. However, the City can make no predictions regarding the changes, if any, that
will be made to the proposed budget before it is finally adopted, particularly in light of the effects of
COVID-I9 pandemic. The City also cannot predict what measures the State will adopt to respond to any
future financial difficulties. The City can provide no guarantees regarding the outcome of future State
budget negotiations, the actions that will be taken in the future by the State Legislature and Governor to deal
with changing State revenues and expenditures, or the impact that such budgets or actions will have on the
City's finances and operations.
Information about the State budget and State spending is available at various State-maintained
websites. Text of proposed and adopted budgets may be found at the website of the State Department of
Finance, www.dof.ca.gov. An analysis of the budget is posted by the Office of the Legislative Analyst at
www.lao.ca.gov. In addition, various official statements for State-issued bonds, many of which contain a
summary of the current and past State budgets may be found at the website of the State Treasurer,
www.treaswer.ca.gov. None of the websites referenced above is in any way incorporated into this Official
Statement. They are cited for informational purposes only. The City makes no representation concerning,
and does not take any responsibility for, the accuracy or timeliness of information posted on such websites or
the continued maintenance of such websites by the respective entities.
Natural or Manmade Disasters
The occurrence of any natural or manmade calamity, including but not limited to an earthquake,
uncontrolled fire or a major flood, may result in the substantial interference with the use and occupancy of
the Leased Properties, which could result in Base Rental Payments being subject to abatement. Under such
circumstances, although the City maintains property insurance and rental intemrption insurance and is
required to continue to maintain such insurance under the Sublease (see "SECURITY FOR THE BONDS -
Abatement; Insurance"), no assurance can be given that the insurance or other resources would be available
to make repairs to the Leased Properties or to make Base Rental Payments under the Sublease. Furthermore,
45
substantial damage to property located in the City could lead to successful appeals for reduction ofassessed
values of such property, impacting properly tax revenues, or also cause intemrption of commercial activities,
impacting sales tax and other revenues. For more information, see the Public Safety Element of the City's
General Plan on file with the City Clerk.
The City, like most regions in the State, are subject to a risk of damage from unpredictable seismic
activity. The City is located in a seismically active area. Several significant historical events (5.8 magnitude
or greater on the Richter scale) have affected Orange County in the last 100 years. According to the City's
Safety Element of the General Plan, the City is not located within a designated earthquake fault zone.
However, other regional faults could produce earthquakes which may impact the City. Overall, the
possibility of ground acceleration or shaking in the City is considered similar to the southem Califomia
region as a whole. Aside from structural damage, earthquake activity can produce other types of adverse
effects such as landslides, subsidence/settlement, and liquefaction.
Portions of the City are within 100-year flood plains, according to Federal Emergency Management
Agency maps. Parts of the City are considered to be susceptible to flood events from either a major storm or
a dam failure resulting from a significant earthquake. Dams are present along Santiago Creek at two
locations: Villa Park Dam and Santiago Dam (Irvine Lake). Both are located in the foothills of eastside of
the City. Peters Canyon Dam is located within Peters Canyon about two miles west of Irvine Lake. Unlike
Santiago Creek, which flows generally northwest, Peters Canyon drains to the south in this area. Prado Dam
is another nearby dam. Areas below (downstream from) these dams, including large areas within the City,
have high potential for inundation in the unlikely event of catastrophic dam failure. These dams and their
reservoirs prevent periodic flooding that would be expected to occur in a natural setting.
Fire and its destructive potential are safety concerns within both the urban areas of the City and the
undeveloped hillsides. Wildland fires are most problematic along the developed residential fringes of the
hillsides, known as the wildland-urban interface. On a seasonal basis, dry vegetation, little seasonal rain, and
Santa Ana wind conditions combine to increase wildfire potential. Newer developments, particularly in the
eastern portion of City, may be subject to fire hazard due to higher level of interface between residential
development and open grassland and vegetation along hillsides. The City has strived to keep neighborhoods
buffered from both urban and wildland fire hazards to reduce incidents requiring response, and minimize
damage to property when fires do occur. In addition, urban fire hazards are always a concern for industrial
areas.
Hazardous Substances
The City knows of no existing hazardous substances which require remedial action on or near the
Leased Properties. However, it is possible such substances do currently or may in the future exist and that the
City is not aware of them. Owners and operators of real property may be required by law to remedy
conditions of the property 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 whether or not the owner (or
operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities may
arise not simply from the existence of ahazardous substance but from the method of handling it. All of these
possibilities could significantly and adversely affect the operations and finances of the City, may result in the
reduction in the assessed value ofproperty, and therefor property tax revenue.
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technolory
environment to conduct its operations. As a recipient and provider of personal, private, or sensitive
information, the City is subject to multiple cyber threats including but not limited to, hacking, viruses,
malware and other attacks on computer and other sensitive digital networks and systems. Entities or
individuals may attempt to gain unauthorized access to the City's digital systems for the purposes of
misappropriating assets or information or causing operational disruption and damage. To date, the City has
not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity
systems that are in place. The City has implemented measures to protect against cybersecurity attacks, but no
assurances can be given that the City's efforts to manage cyber threats and attacks will be successful or that
any such attack will not materially impact the operations or finances of the City. Additionally, the City
carries cybersecurity insurance.
Limited Recourse on Sublease Default
Ifan event ofdefault occurs and is continuing under the Sublease, there is no remedy ofacceleration
of any Base Rental Payments which have not come due, and no right for the Authority to terminate the
Sublease. The remedy provided for in the Sublease is to exercise any action at law or in equity necessary or
desirable to collect the amounts due under the Sublease. In addition, if on November 1,20_, the City is in
default with respect to any Base Rental Payment, the Expiration Date of the Sublease will be automatically
extended to the date that is 10 years following the scheduled final lease payment.
Limitations on Remedies; Bankruptcy
Remedies available to the Owners may be limited by a variety of factors and may be inadequate to
assure the timely payment of principal of and interest and premium, if any, on the Bonds. Bond Counsel has
limited its opinion as to the enforceability of the Bonds and the Indenture to the extent that enforceability
may be limited by bankruptcy, insolvency,reotganization, fraudulent conveyance or transfer, moratorium, or
other similar laws affecting generally the enforcement of creditor's rights, by equitable principles and by the
exercise of judicial discretion. Additionally, the Bonds are not subject to acceleration in the event of the
breach of any covenant or duty under the Indenture. The lack of availability of certain remedies or the
limitation of remedies mav entail risks of delay in the exercise of. or limitations on or modifications to. the
rights ofthe Owners.
Enforceability of the rights and remedies of the Owners, and the obligations incurred by the
Authority or the City, may become subject to the United States Bankruptcy Code (the "Bankruptcy Code")
and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting
the enforcement of creditors' rights generally, now or hereafter in effect, equity principles which may limit
the specific enforcement under State law of certain remedies, the exercise by the United States of America of
the powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional
situations, of the police powers inherent in the soverei$ty of the State and its governmental bodies in the
interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of
related powers by the federal or State govemment, if initiated, could subject the Owners to judicial discretion
and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay,
limitation, or modification of their rights.
Bankruptcy of the City. Under Chapter 9 of the United State Bankruptcy Code (Title ll, United
States Code) (the "Bankruptcy Code"), which governs bankruptcy proceedings of public entities such as the
City, no involuntary bankruptcy petition may be filed against a public entity; however, upon satisfaction of
certain prerequisite conditions, a voluntary bankruptcy petition may be filed by the City.
If the City is in a Chapter 9 bankruptcy proceeding, parties may be prohibited from taking any action
to collect any amount from the City or to enforce any obligation of the City, unless the bankruptcy court
grants permission to take such action. This prohibition may also prevent the Trustee from making payments
to the Owners from funds in the Trustee's possession.
In the event of a City bankruptcy filing, the City may be able to borrow additional money that is
secured by a lien on any of its property, including the sources of funds for payment to the Trustee of the
47
assigned Base Rental Payments and Additional Rental payments under the Sublease (including, without
limitation, the General Fund of the City and funds deposited in the General Fund), which lien could have
priority over the pledges made under the Indenture, so long as the bankruptcy court determines that the rights
of the Owners will be adequately protected. The City may also be able to cause some of the Base Rental
Payments and Additional Rental payments to be released to it, free and clear of the lien of the Indenture, so
long as the bankruptcy court determines that the rights of the Owners will be adequately protected.
The City may be able, without the consent and over the objection of the Trustee and the Owners, to
alter the priority, interest rate, principal amount, payment terms, collateral, maturity dates, payment sources,
covenants (including tax-related covenants), and other terms or provisions of the Indenture and the Bonds, so
long as the bankruptcy court determines that the alterations are fair and equitable.
The City is informed that CaIPERS (the City's pension system) has significant unfunded liabilities,
and the City is unable to predict what the amount of unfunded liabilities will be in the future or the amount
of contributions that the City may be required to make. In a bankruptcy of the City, the amounts of current
and, if any, accrued (unpaid) contributions owed to CaIPERS or any other pension system (collectively the
'oPension Systems"), as well as future material increases in required contributions, reduce the City's ability to
pay Base Rental and Additional Rental payments. Given that municipal pension systems in Califomia are
usually administered pursuant to State constitutional provisions and, as applicable, other state and/or city
law, the Pension Systems may take the position, zrmong other possible arguments, that (1) their claims enjoy
a priority over all other claims, (2) Pension Systems are instrumentalities of the State and have the right to
enforce payment by injunction or other proceedings outside of a City bankruptcy case, and (3) their claims
cannot be the subject of adjustment or other impairment under the Bankruptcy Code because that would
purportedly constitute a violation of state statutory, constitutional and/or municipal law. It is uncertain how
a bankruptcy judge in a bankruptcy of the City would rule on these matters. In addition, this area of law is
unsettled because issues of pension underfunding claim priority, pension contribution enforcement and
related bankruptcy plan treatment of such claims (among other pension-related matters) are presently the
subject of litigation in the Chapter 9 cases of several California municipalities, but did not result in appellate
rulings giving definitive guidance on these matters.
Recharacterization of the Lease and the Sublease os a Financing Arrangemenl. In bankruptcy
proceedings, a bankruptcy court is not required to accept the characteization ofan agreement as a "lease,"
but will look to the economic realities of the transaction as a whole. In the event the City files for
bankruptcy, a bankruptcy court could determine that each of the Lease and the Sublease is either (1) an
unexpired lease or executory contract (defined below) under Section 365 ("Section 365") ofthe Bankruptcy
Code (a "True Lease") or (2) part ofa loan or other financing arrangement secured by a lien (a "Financing
Arrangement"). The Bankruptcy Code specifies different treatment for True Leases and Financing
Arrangements.
In bankruptcy proceedings, courts have been required to determine whether arangements with
features similar to the Lease and the Sublease were True Leases or Financing Arrangements. There are court
decisions arising out of bankruptcy proceedings that have found certain relationships to be disguised
Financing Arrangements, where a govemment agency granted an interest in property to an entity and then
leased that interest back and where the terms of the lease relate not to the market value of the property leased
but to bond financing, e.g., the lease-back is in exchange for payments equaling bond debt service and
related costs and/or the term ofthe lease is tied to the final payment on the relevant bonds.
There can be no guarantee that a bankruptcy court would not recharacterize the Lease and the
Sublease together as a Financing Arrangement. If a bankruptcy court did so, the payment obligations of the
City might be substantially reduced. A borrower in a bankruptcy proceeding that has given a security
interest in property in connection with a Financing Arrangement may retain such property, provided that it
make payments over time giving the lender the economic value of the security interest. If such economic
value is less than the balance due on the debt in the Financing Anangement, the difference is then treated as
an unsecured debt. In the case of the City, were the Lease and the Sublease to be determined to be part of a
48
Financing Arrangement, the City would very likely be permitted to remain in possession of the Leased
Properties if it made payments for that right, but the amount required to be paid is primarily dependent upon
the value of the Trustee's security interest under the Indenture, not the payment terms of the Sublease.
Therefore, there is a risk that payment will be delayed or reduced from the amounts specified in the
Sublease, even if the value of the Trustee's security interest is greater than the amount of the debt owed by
the City.
Treatment of the Leose and the Sublease as True Leases. Section 365 requires an entity in
bankruptcy to make considered decisions either to keep ("assume") or repudiate ("reject") its ooexecutory"
contracts (that are as yet incomplete as to both parties' performances), and its leases. Section 365 thus
requires that a lessee under a True Lease must either (l) assume the lease or the executory contract and fully
perform all of its obligations or (2) reject such lease or executory contract and surrender the Leased
Properties. In the event of a bankruptcy case with respect to the City in which a bankruptcy court
determined that the Lease and the Sublease were each a True Lease or executory contract. the Citv would
then have these two options.
Assuming the Sublease would require that the City cure all monetary defaults (including any unpaid
amounts due under the Sublease) and most non-monetary defaults, if any. The City would also have to
provide adequate assurance that defaults would not occur in the future.
If the Sublease is treated as a True Lease by a bankruptcy court and the City rejects the Sublease, the
rights of the Trustee (and thus the Owners) to receive Base Rental Payments and Additional Rental Payments
would be terminated. Under such circumstances, the Owners could suffer substantial losses, and any claim
for damages may be significantly limited. Rejection of the Sublease could result in a claim for damages
against the City in connection with the Bonds that would rank as a general unsecured debt of the City. In the
event of such rejection of the Sublease, the amount of any corresponding claim could also likely be limited
by the cap on landlord claims provided in the Bankruptcy Code, i.e., to the Base Rental Payments payable
under the Sublease (without acceleration) for the greater of one year or l5o/o of the remaining term of the
Sublease, but not to exceed three years, following the earlier of (a) the date the bankruptcy petition was filed,
and (b) the date on which the City surrendered (voluntarily or involuntarily) the Leased Properties, plus any
unpaid Base Rental Payments and Additional Rental Payments under the Sublease (without acceleration)
existing on the earlier of such dates. Thus, if the Sublease is treated as a True Lease under Section 365 and
rejected in a bankruptcy of the City, the damage claim could be severely limited resulting in reduced funds
available to pay the Bonds.
In addition, payments by a lessee within 90 days prior to a bankruptcy filing may be deemed to be
"avoidable preferences" under the Bankruptcy Code. Accordingly, payments made pursuant to the Sublease
could be subject to recapture in a bankruptcy ofthe City, subject to certain defenses that may be available to
the Authority or the Trustee.
There may be delays in payments with respect to the Bonds while the bankruptcy court considers
any of these issues. There may be other possible effects of a bankruptcy of the City that could result in
delays or reductions in payments with respect to the Bonds, or result in losses to the Owners. Actions could
be taken in a bankruptcy ofthe City that could adversely affect the exclusion of interest evidenced by the
Bonds from gross income for federal income tax purposes. Regardless of any specific adverse
determinations in a bankruptcy proceeding of the City, the mere commencement of such a bankruptcy
proceeding could have an adverse effect on the liquidity and market value of the Bonds.
Bankruptcy of the Authority. The Authority could potentially become a debtor in a bankruptcy
case. In a bankruptcy case of the Authority, the legal principles and risks discussed above, in connection
with a bankruptcy case filed by the City, would apply, with uncertain consequences to the Owners.
Because the Authority is not assigning all its rights under the Lease and the Sublease to the Trustee,
if the Authority became the subject of a bankruptcy proceeding, the Authority may be able to obtain
49
authorization from the bankruptcy court to sell to a third party all rights under the Lease and the Sublease,
including the Base Rental Payments and Additional Rental Payments, free and clear of rights of the Trustee
and the Owners. While the Trustee (and thus the Owners) would be entitled to receive the value of the Base
Rental Payments and Additional Rental Payments as determined by the bankruptcy court, the bankruptcy
court's valuation may be substantially different that the value placed on such payments by the Owners, and
the Owners may suffer a loss.
The Trustee and the Owners would be prohibited from taking any action to enforce any of their
respective rights or remedies against the Authority or its property, unless the permission of the bankruptcy
court was first obtained. This could prevent the Trustee from making payments to the Owners from funds in
the possession of the Trustee. In addition, the provisions of the transaction documents that require the City
to make payments directly to the Trustee, rather than to the Authority, may no longer be enforceable, and all
payments may be required to be made to the Authority.
There may be delays in payments on the Bonds while the bankruptcy court considers any of these
issues. There may be other possible effects of a bankruptcy of the Authority that could result in delays or
reductions in payments with respect to the Bonds, or result in losses to the Owners. Actions could be taken
in a bankruptcy of the Authority that could adversely affect the exclusion of interest evidenced by the Bonds
from gross income for federal income tax purposes. Regardless of any specific adverse determinations in a
bankruptcy proceeding of the Authority, the mere commencement of such a bankruptcy proceeding could
have an adverse effect on the liquidity and market value of the Bonds.
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS" below, interest on the Bonds could become
includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were
issued as a result of future acts or omissions of the Authority or the City in violation of their respective
covenants in the Sublease and the Indenture. Should such an event of taxability occur, the Bonds are not
subject to a special redemption and will remain outstanding until maturity or until prepaid under the
prepayment provisions contained in the Indenture.
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-
exempt bond issueso including both random and targeted audits. It is possible that the Bonds will be selected
for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of
such an audit of the Bonds (or by an audit of similar obligations).
Legislation affecting the tax exemption of interest on the Bonds may be considered by the United
States Congress and the State legislature. Federal and state court proceedings and the outcome of such
proceedings could also affect the tax exemption of interest on the Bonds. No assurance can be given that
legislation enacted or proposed, or actions by a court, after the date of issuance of the Bonds will not have an
adverse effect on the tax exemption of interest on the Bonds or the market value of the Bonds.
Early Redemption Risk
Early prepayment of the Base Rental Payments and redemption of the Bonds may occur in whole or
in part without premium, on any date if the Leased Properties or a portion thereof is damaged or destroyed
beyond repair or taken by eminent domain (see "THE BONDS - Redemption - Extraordinary Redemption"),
or if the City exercises its right to prepay Base Rental Payments in whole or in part pursuant to the
provisions ofthe Sublease and the Indenture.
Investment of Funds
All funds held under the Indenture are required to be invested in Permitted Investments as provided
under the Indenture. See "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE
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PRINCIPAL LEGAL DOCUMENTS." All investments, including Permitted Investments, authorized by
law from time to time for investments by the Authority contain a certain degree of risk. Such risks include,
but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed
receipt of principal. The occurrence of these events with respect to amounts held under the Indenture could
have a material adverse effect on the security for the Bonds.
Future Initiative and Legislation
As discussed under "LIMITATIONS ON REVENUES AND APPROPRIATIONS," Califomia's
Constitutional initiative process has resulted in the adoption of measures which pose certain limits on the
ability of cities and local agencies to generate revenues, through property taxes or otherwise. From time to
time, other initiative measures could be adopted, affecting the City's ability to generate revenues and to
increase appropriations. No assurances can be given as to the potential impact of any future initiative or
legislation on the finances and operations of the City.
Split Roll Initiative. An initiative measure (the "Split Roll Initiative") to amend Article XIIIA
(Proposition 13) has qualified for the State's November 2020 ballot. If adopted, the Split Roll Initiative
would base property taxes for commercial and industrial properties on market values beginning in tax year
2020-21. Such market values would be reassessed by the applicable county assessor's office at least once
every three years. The Split Roll Initiative includes exceptions for businesses with a total market value of
less than $2 million (adjusted for inflation), which would continue to be subject to property taxes based on
purchase price, and exempts from property tax assessments up to $500,000 ofthe value ofpersonal properfy,
or all personal property for businesses with fewer than 50 employees. There can be no assurance that the
Split Roll Initiative will be adopted. Moreover, if the Split Roll Initiative is adopted, the City is unable to
predict how it would affect the level of commercial building activity within the City and the relationship of
the assessed value between land use types (i.e. residential versus commercial) in the City, or what other
impacts the Split Roll Initiative might have on the local economy.
Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary
market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market
conditions or because of adverse history or economic prospects connected with a particular issue, secondary
marketing practices in connection with a particular issue are suspended or terminated. Additionally, pricing
of issues for which a market is being made will depend upon then prevailing circumstances. Such prices
could substantially differ from the original purchase price.
LIMITATIONS ON REVENUES AND APPROPRIATIONS
There are a number of provisions in the State of California Constitution that limit the ability of the
City to raise and expend revenues. Contained below is a description of some of these limitations. In
addition to the ones discussed in this section below, other initiative measures could be adopted from time to
time further affecting the City's revenues and finances.
Property Tax Limitations - Article XIIIA
California voters, on June 6,1978, approved an amendment (commonly refened to as "Proposition
13" or the "Jarvis-Gann Initiative") to the California Constitution. This amendment, which added
Article XIIIA to the California Constitution, among other things, affects the valuation of real property for the
purpose of taxation in that it defines the full cash value of property to mean "the county assessor's valuation
of real property as shown on the 1975-76 tax bill under full cash valueo or thereafter, the appraised value of
real property when purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two
5l
percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in
the event of declining property value caused by damage, destruction or other factors.
Article XIIIA further limits the amount of any ad valorem tax on real property to one percent of the
full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by
the voters prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in August 1986 by
initiative that exempts from the one percent limitation any bonded indebtedness approved by two-thirds of
the votes cast by voters for the acquisition or improvement of real property. On December22,1978, the
California Supreme Court upheld the amendment over challenges on several state and federal constitutional
grounds (Amador Valley Joint Union School District v. State Board of Equalization).
In the general election held on November 4,1986, voters of the State of Califomia approved two
measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended
Article XIIIA to provide that the terms "purchased" and oochange of ownership," for purposes of determining
full cash value of property under Article XIIIA, do not include the purchase or transfer of (l) real property
between spouses and (2) the principal residence and the first $1,000,000 of other property between parents
and children. Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over age 55
who sell their residence to buy or build another of equal or lesser value within two years in the same county,
to transfer the old residence's assessed value to the new residence. Pursuant to Proposition 60, the
Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the
event of declining property values caused by damage, destruction or other factors, to provide that there
would be no increase in the "full cash value" base in the event of reconstruction of property damaged or
destroyed in a disaster and in certain other minor or technical ways.
Article XIIIA Implementing Legislation
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to
pay voter-approved indebtedness). The one percent property tax is automatically levied by the county and
distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares oftaxes levied prior to 1978.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions
in the "taxing area" based on their respective o'situs." Any such allocation made to a local agency continues
as part of its allocation in future years.
Beginning in the l98l-82 fiscal year, assessors in California no longer record property values on tax
rolls at the assessed value of 25 percent of market value, which was expressed as $4 per $100 of assessed
value. All taxable propefty is now shown at full market value on the tax rolls. Consequently, the tax rate is
expressed as $1 per $100 of taxable value. Unless otherwise noted, all taxable properly value included in
this Offrcial Statement (unless noted differently) is shown at 100 percent of market value and all tax rates
reflect the $l per $100 oftaxable value.
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Challenges to Article XIIIA
Califomia trial and appellate courts have upheld the constitutionality of Article XIIIA's assessment
rules in three significant cases. The United States Supreme Court, in an appeal to one of these cases, upheld
the constitutionality of Article XIIIA's tax assessment system. The City cannot predict whether there will be
any future challenges to Califomia's present system of property tax assessment and cannot evaluate the
ultimate effect on the City's receipt of property tax revenues should a future decision hold unconstitutional
the method of assessing property.
Appropriations Limitations: Article XIIIB
On November 6,1979, California voters approved Proposition 4, the so-called Gann Initiative,
which added Article XIIIB to the Califomia Constitution. Article XIIIB limits the annual appropriations of
the State and any city, county, school district, authority or other political subdivision ofthe State to the level
of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population
and services rendered by the government entity. The "base year" for establishing such appropriations limit is
the 1978-79 fiscal year, and the limit is to be adjusted annually to reflect changes in population, consumer
prices and certain increases in the cost ofservices provided by these public agencies. Revenues received in
excess of the appropriations limit must be returned by a revision of tax rates or fee schedules within the next
two subsequent fiscal years.
Propositions 218 and 26: Article XIIIC and Article XIID
On November 5, 1996, California voters approved Proposition 218, "the Right to Vote on Taxes
Act." Proposition 218 added Articles XIIIC and XIIID to the California Constitution, providing certain vote
requirements and other limitations on the imposition of new or increased taxes, assessments, and property-
related fees and charges.
Provisions of Article XIIIC (D require taxes for general govemmental purposes to be submitted to
the electorate and approved by a majority vote, and taxes for specific purposes, even if deposited into the
General Fund, to be submitted to the electorate and approved by twothirds vote, (ii) require any general
purpose tax which the City imposed, extended or increased, without voter approval, after December 31,
1994, to be submitted to the electorate and approved by majority vote on November 5, 1998 and (iii) provide
that all taxes, assessments, fees and charges to reduction or repeal at any time through the initiative process,
subject to oveniding constitutional principles relating to the impairment of contracts. Provisions of Article
XIIID that affect the ability of the City to fund certain services or programs that it may be required or choose
to fund include (ii) adding notice, hearing, protest and, in some cases, voter approval requirements to
impose, increase or extend certain assessments, fees and charges and (ii) adding stricter requirements for
finding individualized benefits associated with such levies.
On November 2,2010, California voters approved Proposition 26, the "Supermajority Vote to Pass
New Taxes and Fees Act." Relevant to local govemments, Proposition 26 amended Article XIIIC of the
California Constitution by adding an expansive definition for the term "tax," which previously was not
defined under the California Constitution. As a result, Proposition 26 requires a local govemment to obtain
two-thirds voter approval for many fees, charges and levies that a local govemment was previously
authorized to adopt by a majority vote of its legislative body. Specifically, Proposition 26 defines a "tax" as
any levy, charge, or exaction of any kind imposed by a local govemment except those enumerated in seven
specified exceptions, as follows:
(1) A charge imposed for a specific benefit conferred or privilege granted directly to the payor
that is not provided to those not charged, and which does not exceed the reasonable costs to
the local government of conferring the benefit or granting the privilege.
)J
(2)
(3)
(6)
(7)
(4)
(s)
A charge imposed for a specific govemment service or product provided directly to the
payor that is not provided to those not charged, and which does not exceed the reasonable
costs to the local govemment of providing the service or product.
A charge imposed for the reasonable regulatory costs to a local government for issuing
licenses and permits, performing investigations, inspections, and audits, enforcing
agricultural marketing orders, and the administrative enforcement and adjudication thereof.
A charge imposed for entrance to or use of local govemment property, or the purchase,
rental, or lease of local govemment property.
A fine, penalty, or other monetary charge imposed by the judicial branch of govemment or a
local government, as a result of a violation of law.
A charge imposed as a condition of property development.
Assessments and property-related fees imposed in accordance with the provisions of Article
XIII D.
In the event that charges included in the definition of a "tax" in Article XIIIC cannot be
appropriately increased, the City may have to choose whether to reduce or eliminate the service financed by
such taxes or finance such service from its General Fund. Further, no assurance can be given that the City
mayor will be able to reduce or eliminate such services in the event the fees and charges that presently
finance them are reduced or repealed.
The foregoing discussion of Propositions 218 and 26 should not be considered an exhaustive or
authoritative treatment of the provisions of hopositions 218 and 26 orthe possible effects of Propositions
218 and 26. Interim rulings, final decisions, legislative proposals and legislative enactments affecting
Propositions 218 and 26 may impact the City's ability to make Rental Payments. The City does not expect to
be in a position to control the consideration or disposition of these issues and cannot predict the timing or
outcome of any judicial or legislative activity related to these issues. The City does not believe any of the
fees or charges constituting City General Fund revenues are imposed in violation of Propositions 218 or 26.
Proposition 62
On November 4, 1986, California voters adopted Proposition 62, which requires that (i) any local tax
for general govemmental purposes (a "general tax") must be approved by a majority vote of the electorate;
(ii) any local tax for specific purposes (a "special tax") must be approved by a two-thirds vote of the
electorate; (iii) any general tax must be proposed for a vote by two-thirds of the legislative body; and (iv)
proceeds of any tax imposed in violation of the vote requirements must be deducted from the local agency's
property tax allocation.
Most of the provisions of Proposition 62 were affirmed by the 1995 California Supreme Court
decision in Santa Clara County Local Transportation Authority v. Guardino, which invalidated a special
sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure had
approved the tax. The City does not believe any of the taxes constituting City revenues are levied in violation
of Proposition 62.
Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property
assessed by the State Board of Equalization ("Unitary Property"), commencing with the 1988-89 fiscal year,
will be allocated as follows: (i) each jurisdiction will receive up to 102 percent of its prior year State-
assessed revenue; and (ii) if county-wide revenues generated from Unitary Property are less than the
54
previous year's revenues or greater thanl02 percent of the previous year's revenues, each jurisdiction will
share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision
applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual
tax rate areas.
The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed
properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally,
AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.
Proposition 1A
On November 2, 2004, California voters approved Proposition lA, which amends the State
Constitution to significantly reduce the State's authority over major local government revenue sources.
Under Proposition 1A, the State may not (i) reduce local sales tax rates or alter the method of allocating the
revenue generated by such taxes, (ii) shift properly taxes from local governments to schools or community
colleges, (iii) change how property tax revenues are shared among local governments without two-third
approval of both houses of the State Legislature, or (iv) decrease Vehicle License Fees revenues without
providing local govemments with equal replacement funding. Beginning in Fiscal Year 2008-09, the State
may shift to schools and community colleges a limited amount of local government property tax revenue if
certain conditions are met, including (a) a proclamation by the Governor that the shift is needed due to a
severe financial hardship of the State, and (b) approval of the shift by the State Legislature with a two-thirds
vote of both houses. Under such a shift, the State must repay local governments for their property tax losses,
with interest, within three years. Proposition 1A does allow the State to approve voluntary exchanges of
local sales tax and properfy tax revenues among local govemments within a county. Proposition lA also
provides that if the State reduces the Vehicle License Fee rate currently in effect, which is l.l1Yo of vehicle
value effective July l, 2011, the State must provide local governments with equal replacement revenues.
Further, Proposition 1A required the State, beginning March 1,2006, to suspend State mandates affecting
cities, counties and special districts, schools or community colleges, except mandates relating to employee
rights, in any year that the State does not fully reimburse local governments for their costs of compliance
with such mandates. The 2020-21 proposed budget of the State did not include any Proposition 1A
diversion.
ABSENCE OF LITIGATION
To the Authority's and the City's knowledge, there is no litigation pending or threatened to restrain
or enjoin the issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Indenture,
the Lease, the Sublease or any proceedings of the City or the Authority with respect thereto.. In the opinion
of the Authority and its counsel, there is no lawsuit or claim pending against the Authority which will
materially impair the Authority's ability to enter into the Indenture or restrain or enjoin the collection of
Revenues as contemplated therein. In the opinion of the City and the City Attomey, there is no lawsuit or
claim pending against the City which will materially impair the City's ability to enter into the Sublease or
restrain or enjoin the payment of Base Rental Payments.
CONTINUING DISCLOSURE
The City has undertaken for the benefit of holders and beneficial owners of the Bonds to provide
certain financial information relating to the City and other data by not later than March 31 after the close of
each fiscal year, commencing March 31, 2021 with the report for Fiscal Year 2019-20 (the "Annual
Report"), and to provide notices of the occurrence of certain enumerated events. The Annual Report and
notices of significant events will be filed by Urban Futures, Inc., as the Dissemination Agent on behalf of the
City, with the Municipal Securities Rulemaking Board. The specific nature of the information to be
contained in the Annual Report or the notices of enumerated events is set forth in "APPENDIX E - FORM
OF CONTINUING DISCLOSURE AGREEMENT." This undertaking has 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 and Exchange Act of 7934, as amended. The City has previously entered
into continuing disclosure agreements in connection with its prior bond issuances.
Continuing Disclosure Historv. Prior to the printing of this Official Statement, an examination was
conducted of the continuing disclosure filings by the City during the past five years. The result of such
examination indicated a few instances of filing delays. The portion of the annual filings comprised of
updated information of certain tables and portions of the Official Statement for the: (l) $33,450,000 Orange
Redevelopment Agency Orange Merged and Amended Redevelopment Project Area 2008 Tax Allocation
Bonds, Series A and $6,180,000 Orange Redevelopment Agency Orange Merged and Amended
Redevelopment Project Area 2008 Taxable Tax Allocation Refunding Bonds, Series B, and (2) $28,850,000
Orange Redevelopment Agency Orange Merced and Amended Redevelopment Project Area 2014 Tax
Allocation Refunding Bonds, Series A, that were each due March 31,2016, were both filed one day late, on
April 1, 2016. Similarly, the updated information of certain tables and portions of the Official Statement for
the: (l) $28,810,000 City of Orange Community Facilities District No. 9l-2 (Senano Heights Public
Improvements) 2013 Special Tax Refunding Bonds, and (2) S23,920,000 Community Facilities District No.
06-l (Del Rio Public Improvements) 2015 Special Tax Refunding Bonds, that were each due March 1,2017,
were both filed on March 9,2017.
The City believes that their procedures with the Dissemination Agent are suffrcient in the normal due
course to assure substantial compliance with its continuing disclosure undertakings in the future. A failure
by the City to comply with the provisions of the Continuing Disclosure Agreement is not an event of default
under the Indenture (although the holders and beneficial owners of the 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 Bonds. Therefore, a failure by the City to comply
with the provisions of the Continuing Disclosure Agreement may adversely affect the marketability of the
Bonds on the secondary market.
CERTAIN LEGAL MATTERS
The legality of the issuance of the Bonds will be subject to the approval of Richards Watson &
Gershon, a Professional Corporation, Los Angeles, Califomia, as Bond Counsel. Bond Counsel's opinion
with respect to the Bonds will be substantially in the form set forth in APPENDIX B of this Offtcial
Statement. In addition, certain other legal matters will be passed on by Richards, Watson & Gershon, A
Professional Corporation, Los Angeles, California, as Disclosure Counsel.
TAX MATTERS
The Intemal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements
which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and
remain excluded from gross income for federal income tax purposes. Noncompliance with such
requirements could cause interest on the Bonds to be included in gross income for federal income tax
purposes retroactive to their date of issue. These requirements include, but are not limited to, provisions
which limit how the proceeds of the Bonds may be spent and invested, and generally require that certain
investment earnings be rebated on a periodic basis to the United States of America. The City and the
Authority have made certifications and representations and have covenanted to maintain the exclusion of the
interest on the Bonds from gross income for federal income tax purposes pursuant to Section 103 of the
Code.
In the opinion of Richards, Watson & Gershon, a Professional Corporation, Bond Counsel, under
existing law and assuming the accuracy of such certifications and representations by, and compliance with
such covenants ol the City and the Authority, (i) interest on the Bonds is excluded from gross income for
56
federal income tax purposes under Section 103 of the Code, and (ii) the Bonds are not "specified private
activity bonds" within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the Bonds is
not a preference item for purposes of computing the altemative minimum tax imposed by Section 55 of the
Code. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is exempt from
State of California personal income taxes. Bond counsel expresses no opinion as to any other tax
consequences regarding the Bonds.
Under the Code, interest on the Bonds may be subject to a federal branch profits tax imposed on
certain foreign corporations doing business in the United States and to a federal tax imposed on excess net
passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for
federal income tax purposes may have certain adverse federal income tax consequences on items of income,
deduction or credit for certain taxpayers, including financial institutions, certain insurance companies,
recipients of Social Security and Railroad Retirement benefits, those deemed to incur or continue
indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the eamed
income tax credit. The applicability and extent of these and other tax consequences will depend upon the
particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion
regarding these and other such consequences.
Bond Counsel has not undertaken to advise in the future whether any circumstances or events
occuning after the date of issue of the Bonds may affect the tax status of interest on the Bonds. Legislation
affecting tax-exempt obligations is regularly considered by the United States Congress and may also be
considered by the State legislature. Court proceedings may also be filed, the outcome of which could modiff
the tax treatment of obligations such as the Bonds. No assurance can be given that legislation enacted or
proposed, or actions by a court, after the date of issue of the Bonds, will not contain provisions which could
eliminate, or directly or indirectly reduce the benefit of the exclusion of interest on the Bonds from gross
income for federal income tax purposes, or have an adverse effect on the market value or marketability of the
Bonds.
For example, federal tax legislation enacted on December 22, 2017, reduced corporate tax rates,
modified individual tax rates, eliminated many deductions, repealed the corporate alternative minimum tax
for taxable years beginning after December 31,2017, and generally eliminated tax-exempt advance
refunding bonds, among other things. This legislation may increase, reduce, or otherwise change the
financial benefits currently provided to certain owners of state and local govemment bonds. In addition,
investors in the Bonds should be aware that future legislative actions may retroactively change the treatment
of all or a portion of the interest on the Bonds for federal income tax purposes for all or certain taxpayers. In
all such events, the market value of the Bonds may be adversely affected and the ability of holders to sell
their Bonds in the secondary market may be reduced. The Bonds are not subject to special mandatory
redemption, and the interest rates on the Bonds are not subject to adjustment, in the event of any such
change.
Investors should consult their own financial and tax advisors to analyze the importance of these
risks.
Certain requirements and procedures contained or referred to in relevant documents may be changed
and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in
such documents, upon the advice or with the approving opinion of nationally recognized bond counsel.
Bond Counsel expresses no opinion as to any Bond, or the interest thereon, if any such change occurs or
action is taken upon the advice or approval of bond counsel other than Richards, Watson & Gershon, A
Professional Corporation.
If the issue price of a Bond (the first price at which a substantial amount of the bonds of a maturity
are sold to the public) is less than the stated redemption price at maturity of such Bond, the difference
constitutes original issue discount, the accrual of which is excluded from gross income for federal income
57
tax purposes to the same extent as interest on the Bonds. Further, such original issue discount accrues
actuarially on a constant yield method over the term of each such Bond and the basis of each Bond acquired
at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued
original issue discount. The accrual of original issue discount may be taken into account as an increase in
the amount of tax-exempt income for purposes of determining various other tax consequences of owning
such Bonds. Purchasers who acquire Bonds with original issue discount are advised that they should consult
with their own independent tax advisors with respect to the state and local tax consequences of owning such
Bonds.
If the issue price of a Bond is greater than the stated redemption price at maturity of such Bond, the
difference constitutes original issue premium, the amortization of which is not deductible from gross income
for federal income tax purposes. Original issue premium is amortized over the period to maturity of such
Bond based on the yield to maturity of that Bond (or, in the case of a Bond callable prior to its stated
maturity, the amortization period and yield may be required to be determined on the basis of an earlier call
date that results in the lowest yield on that Bond), compounded semiannually. For purposes of determining
gain or loss on the sale or other disposition of such Bond, the purchaser is required to decrease such
purchaser's adjusted basis in such Bond by the amount of premium that has amortized to the date of such
sale or other disposition. As a result, a purchaser may realize taxable gain for federal income tax purposes
from the sale or other disposition of such Bond for an amount equal to or less than the amount paid by the
purchaser for that Bond. A purchaser of that Bond in the initial public offering at the issue price for that
Bond who holds it to maturity (or, in the case of a callable Bond, to its earlier call date that results in the
lowest yield on that Bond) will realize no gain or loss upon its retirement.
Payments of interest on tax-exempt obligations, including the Bonds, are generally subject to IRS
Form 1099-INT information reporting requirements. If an owner of a Bond is subject to backup withholding
under those requirements, then payments of interest will also be subject to backup withholding. Those
requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.
Prospective purchasers ofthe Bonds should consult their own independent tax advisers regarding
pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of
the Bonds at other than their original issuance at the respective prices indicated on the inside cover ofthis
Official Statement should also consult their own tax advisers regarding other tax considerations such as the
consequences of market discount, as to all of which Bond Counsel expresses no opinion.
Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and,
unless separately engaged, Bond Counsel is not obligated to defend the Authority or the owners of the Bonds
regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a
progftlm to audit tax-exempt obligations to determine whether the interest thereon is includible in gross
income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the
IRS will treat the Authority as the taxpayer and the beneficial owners of the Bonds will have only limited
rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but
not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of other
obligations presenting similar tax issues, may affect the market value of the Bonds.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix B.
UNDERWRITING
The Underwriter has agreed, subject to certain conditions, to purchase the Bonds at a purchase price
of $_ (equal to the principal amount of the Bonds, plus/less original issue premium/discount of $_
and less an underwriter's discount of $_). The Underwriter intends to offer the Bonds to the public
initially at the prices set forth on the inside cover page of this Official Statement, which prices may
subsequently change without any requirement of prior notice.
58
RATING
S&P Global Ratings (*S&P") has assigned a rating of ooAA-" (stable outlook) to the Bonds. S&P's
rating reflects only the views of such organization and any explanation of the significance of such rating may
be obtained from S&P. There is no assurance such ratings will continue for any given period of time or that
such ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of
such rating agency, circumstances so warrant. Any such downward revision or withdrawal of the ratings
may have an adverse effect on the market price of the Bonds.
FINAIICIAL STATEMENTS
The City's Comprehensive Annual Financial Report for fiscal year ended June 30, 2019, which
includes the City's 2018-19 financial statements and the Independent Auditor's Report issued by White
Nelson Diehl Evans LLP, Certified Public Accountants, Irvine, Califomi4 (the "Auditor") regarding such
financial statements, is set forth in APPENDIX F. The Auditor was not requested to consent to the inclusion
of its report in APPENDIX F and it has not undertaken to update financial statements included in
APPENDIX F. No opinion is expressed by the Auditor with respect to any event subsequent to its report.
MISCELLANEOUS
All of the preceding description and summaries of the Bonds, the Indenture and the Sublease, other
applicable agreements, legislation and other documents are made subject to the provisions of such
documents respectively and do not purport to be complete statements of any or all of such provisions.
Reference is hereby made to such documents on file with the City for further information in connection
therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds. Any
statements made in this Official Statement involving matters of opinion or of estimates, whether or not so
expressly stated, are set forth as such and not as representations of fact, and no representation is made that
any of the estimates will be realized.
The Authority and the City have duly authorized the execution and delivery of this Official
Statement bv their dulv authorized officers.
ORANGE CITY PUBLIC FACILITIES FINANCING
AUTHORITY
Executive Director
CITY OF ORANGE
By:
By:
59
City Manager
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX A
ADDITIONAL GENERAL INFORMATION REGARDING THE CITY OF ORANGE
The following information concerning the City of Orange ("City") and the surrounding area
included only for the purpose of supplying general information regarding the community.
Population
The following table shows the estimated population growth for the City, the County
Orange and the State of California (the "State") for the years shown:
City, County and State Population Growth
Calendar Years 1980, 1990,2000, 20100 2016-2020
of
Calendar
Year(l)
City of
Orange
o/o Change
from
Prior Period
-0.04
0.03
0.33
0.14
-0.25
0range
County
o/o Change
from State of
Prior Period California
%o Change
from
Prior Period
1980
1990
2000
2010
91,000 17.620/o@ 1,919,400
110,100 20.99 2,398,400
t28,253 16.49 2,831,799
t36,237 6.22 3,008,855
35.05yo@ 23,782,000
24.96 29,558,000
18.07 33,721,583
6.25 37,223,900
18.68yJ2)
24.29
14.09
10.39
20t6
2017
2018
20t9
2020
139,693
139,740
140,208
140,410
140,065
3,162,799
3,194,229
3,192,092
3,lg2,gg7
3,194,332
0.67
0.68
0.48
0.96
-0.46
0.56
0.68
0.25
0.03
0.04
39,131,307
39,398,702
39,586,646
39,965,376
39,782,870
Source: State of California Departrnent of Finance.
(l) As ofJanuary I ofeachyear.
(2) Percent change since 1970.
Major Employers
The following table sets forth the top ten major employers located in the City during 2019.
CITY OF ORANGE
MAJOR EMPLOYERS (2019)
Name
UCI Medical Center
CHOC Children's Hospital
St. Joseph Hospital of Orange
Chapman University
Santiago Canyon College
CalOptima Health Plans
American Advisors Group (AAG)
Westem Dental Services, Inc.
City of Orange
AECOM Technology Corp
Employees Type of business or entity
4,800 Medical Center
3,500 Medical Center
2,900 Medical Center
1,235 Education
950 Education
930 Healthcare
869 Reverse Mortgage Loans
730 Dental Services
729 Local Govemment541 Infrastructure Construction
Source: City of Orange, Comprehensive Annual Financial Report- For the Year Ending June 30, 2019.
A-t
Construction Activity
The following table presents construction permit valuations for the City for the calendar years
shown.
City of Orange
Construction Permits
Calenda r Yea rs 2015-2019 "
Residential CommerciaUlndustrial
Year Permits Issued Valuation Permits Issued Valuation Total Valuation
2015 1,928 $ 78,754,081 789 S 51,008,209 5129,762,2902016 1,713 44,737,565 805 102,844,861 147,582,4262017 4,598 40,657,431 786 61,285,782 101,943,214
2018 1,411 62,142,731 496 49,587,239 1t1,729,9712019 1,550 151,884,923 508 108,277,t26 260,162,050
Source: City of Orange.
Employment and Industry
According to the State of Califomia Employment Development Department, the May 2020
preliminary estimated unemployment rates for the City, the County and the State were 13.2 percent,14.5
percent and 15.9 percent, respectively. See "BONDOWNERS' RISKS - COVID-19 Pandemic".
The following table shows certain employment statistics for the City and the County for calendar
years shown.
City of Orange
City, Counfy and State Employment Statistics
Calendar Years 2015 through20lgo)
Orange City Orange Countv State
Labor Unemployment Unemployment Unemployment
Year Force nmp@_ Rate Rate Rate
2015 71,700 68,700 4.2% 45% 6.2%2016 72,100 69,300 4.0 4.0 5.52017 72"200 69.700 3.4 3.5 4.82018 72.300 70.100 3.0 3.0 4.22019 72,500 70,500 2.7 2.8 4.0
(l) Not seasonally adjusted. March 2019 benchmark.
Source: State of California, Employment Development Department.
A-2
The following table summarizes the historical numbers of workers by industry in the Anaheim-
Santa Ana Irvine Metropolitan Division (which covers Orange County) for the last five years:
Anaheim-Santa Ana-Irvine MD
(Orange County)
Industry Employment & Labor Force - by Annual Average
Categorv
Civilian Labor Force
Civilian Employment
Civilian Unemployment
Civilian Unemployment Rate
Total Farm
Total Nonfarm
Total Private
Goods hoducing
Mining, Logging and Construction
Mining and Logging
Construction
Manufacturing
Durable Goods
Nondurable Goods
Service Providing
Private Service Providing
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Educational & Health Services
Leisure & Hospitality
Other Services
Govemment
Total, All Industries
2016 2017 2018
1,597 300 t,'60?^800 1,6n,900
7,532,700 1,551,500 1,569,800
64,500 56,300 48,1004.0% 3.5% 3.0%
2,400 2,100 2,000
1,595,900 1,618,700 1,651,200
1,426,200 1,458,500 1,490,000
255,900 263,000 267,400
97,700 102,300 106,800
300 500 s00
97,400 101,800 106,300
158,200 160,700 160,700
116,200 117,500 118,500
42,000 43,200 42,200
1,329,900 1,355,700 1,383,800
1,170,300 1,195,500 1,222,600
258,500 260,500 261,600
26,000 26,800 26,700
I18,000 119,600 118,700
299,300 304,400 317,000
206"200 215,900 224,700
212,000 218,100 222,600
50,500 50,300 51,400
159,600 160,200 161,200
1,588,300 1,620,800 1,653,200
2015
1JS4J00
1,513,500
70,800
4.s%o
2,400
1,545,900
1,399,500
249,900
92,100
400
91,700
157,800
1 16,100
41,800
1,296,000
1,139,600
257,400
24,900
116,400
289,200
198,900
203,800
49,900
156,400
1,548,300
1,623,400
1,578,300
45,100
2.8%
1,900
1,672,500
1,509,600
266,700
106,800
s00
106,400
159,800
118,700
41,100
l,4o5,goo
1,242,900
259,400
26,100
177,400
328,200
231,800
229,000
52,000
162,900
2019
1,674,400
Note: The "Total, All Industries" data is not directly comparable to the employment data found herein. Data may
not add due to rounding.
Source: State of California, Employment Development Department, Labor Market Information Division, Anaheim-
Santa Ana-Irvine Mehopolitan Division (Orange County), Industry Employment & Labor Force - by
Annual Average, March 2019 Benchmark.
A-3
Median Household Income
The following table shows the estimated median household income for the City, County, the State
and the United States for the vears shown.
City of Orange, Orange County, California and the United States
Median Household Income(r)
Calendar Years 2014 through 2018
Year City County State United States
2014 $77,086 $75,998 $61,489 $53,4822015 78,513 76,500 61,818 53,8892016 79,192 78,145 63,783 55,3222017 83,500 81,851 67,769 57,6522018 96,027 85,398 71,228 60,293
(l) Estimated. Inflation adjusted based on conesponding year.
Source: U.S. Census Bureau, American Community Survey.
A-4
APPENDIX B
FORM OF OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Richards Watson & Gershon, a Professional Corporation,
Bond Counsel, proposes to render its final approving opinion in substantially the following form:
July _,2020
Orange City Public Facilities Financing Authority
300 E. Chapman
Orange, California 92866
Opinion of Bond Counsel
with reference to
$_
Orange City Public Facilities Financing Authority
Lease Revenue Bonds
Series 20204
Ladies and Gentlemen:
We have examined (i) a record of proceedings relating to the issuance of the above-
captioned bonds (the "Bonds") of the Orange City Public Facilities Financing Authority, a public
entity of the State of California (the "Authority"), (ii) the Indenture, dated as of July I,2020 (the
'olndentureo'), by and between the Authority and U.S. Bank National Association, as trustee (the
'oTrustee"), (iii) the Lease Agreement, dated as of July 1,2020 (the "Lease"), by and between the
City of Orange (the "City") and the Authority, (iv) the Sublease, dated as of July l,2020 (the
"Subleaseoo), by and between the Authority and the City, and (v) such other maffers of law as we
have deemed necessary to enable us to render the opinions expressed herein. As to questions of
fact material to this opinion, we have relied upon such certificates and documents without
undertaking to verify the same by independent investigation. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to them in the Indenture.
The Bonds are issued under and pursuant to the Indenture, the provisions relating to the
joint exercise of powers found in Chapter 5 of Division 7 of Title I of the Government Code of
the State of California, as amended (the 'oAct"), including the provisions of the Marks-Roos
Local Bond Pooling Act of 1985, constituting Article 4 of the Act. The Bonds are issued to
provide financing for certain public capital projects of the City.
B-l
We are of the opinion that:
l. The Indenture has been duly and lawfully authorized, executed and delivered by
the Authority. Assuming due authorization, execution and delivery by the Trustee, the Indenture
is in full force and effect in accordance with its terms and is valid and binding upon the
Authority and enforceable in accordance with its terms. The Indenture creates the valid pledge
which it purports to create of the Revenues and certain funds established by the Indenture
(including the investments, if any, thereof), subject to the provisions of the Indenture permitting
the application thereof for the purposes, and on the terms and conditions set forth in the
Indenture.
2. The Authority is duly authorized and entitled to issue the Bonds. The Bonds have
been duly and validly authorized and issued by the Authority in accordance with the Constitution
and statutes of the State of California, including the Act, and in accordance with the Indenture.
The Bonds constitute the valid and binding obligations of the Authority as provided in the
Indenture, are enforceable in accordance with their terms and the terms of the Indenture and
entitled to the benefits of the Act and the Indenture. The Bonds are not an obligation of the State
of Califomia, any public agency thereof (other than the Authority), or any member of the
Authority and neither the faith and credit nor the taxing power of the State of California or any
public agency thereof or any member of the Authority is pledged for the payment of the Bonds.
The Authority has no taxing power.
3. The Authority and the City have duly authorized, executed and delivered the
Lease and the Sublease. The Lease and the Sublease constitute the valid and binding agreements
of the Authority and the City enforceable according to their respective terms. The obligation of
the City to make Base Rental Payments during the term of the Sublease constitutes a valid and
binding obligation of the City, payable from funds of the City lawfully available therefor, and
does not constitute a debt of the City or of the State of California or of any political subdivision
thereof within the meaning of any constitutional or statutory debt limit or restriction, and does
not constitute an obligation for which the City or the State of California is obligated to levy or
pledge any form of taxation or for which the City or the State of California has levied or pledged
any form of taxation.
4. Interest on the Bonds is exempt from personal income taxes of the State of
Califomia.
5. Assuming compliance with the covenants described below, interest on the Bonds
is excluded from gross income for federal income tax purposes. The Bonds are not "specified
private activity bonds" within the meaning of Section 57(a)(5) of the Intemal Revenue Code of
1986, as amended (the "Codeoo) and, therefore, interest on the Bonds will not be treated as a
preference item for purposes of computing the alternative minimum tax imposed by Section 55
of the Code.
The Code sets forth certain requirements which must be met subsequent to the issuance
and delivery of the Bonds for interest thereon to be and remain excluded from gross income for
federal income tax purposes. Noncompliance with such requirements could cause the interest on
the Bonds to be included in gross income retroactive to the date of issue of the Bonds. The City
has covenanted to satisff, or take such actions as may be necessary to cause to be satisfied, each
provision of the Code necessary to maintain the exclusion of the interest on the Bonds from gross
income for federal income tax purposes pursuant to Section 103(a) of the Code.
B-2
Certain requirements and procedures contained or referred to in the Indenture and other
relevant documents may be changed and certain actions may be taken or omitted, under the
circumstances and subject to the terms and conditions set forth in such documents, upon the
advice or with the approving opinion of nationally recognized bond counsel. We express no
opinion as to any Bond, or the interest thereon, if any change occurs or action is taken or omitted
upon the advice or approval ofany counsel other than ourselves.
Except as stated in the foregoing paragraphs numbered 3 and 4 and the paragraph
immediately following paragraph 4, we express no opinion as to any federal or state tax
consequences of the ownership or disposition of the Bonds.
The opinions expressed in the paragraphs numbered l, 2 and 3 hereof are qualified to the
extent that the enforceability of the Indenture, the Bonds, the Lease and the Sublease may be
limited by applicable bankruptcy, insolvency, debt adjustment, receivership, fraudulent
conveyance or transfer, moratorium, reorganization, anangements or other laws affecting
creditors' rights, to the application of equitable principles, to the exercise ofjudicial discretion in
appropriate cases and to the limitations on legal remedies against public entities in the State or
other laws or equitable principles affecting the enforcement of creditors' rights generally. We
express no opinion with respect to any indemnification, contribution, liquidated damages,
penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration,
judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies,
waiver or severability provisions contained in the foregoing documents. We do not express any
opinion with respect to the quality of title to, or interests in, any of the real or personal property
subject to the lien of the Lease or Sublease or with respect to the accuracy or sufficiency of the
description of any real property contained therein and in the Indenture. Without limiting the
foregoing, we have assumed compliance with all agreements and covenants contained in the
lndenture.
The opinions expressed herein are based on an analysis of existing law and cover certain
matters not directly addressed thereby. Such opinions may be affected by actions taken or
omitted or events occurring after the date hereof, and we have not undertaken to determine, or to
inform any person, whether any such actions or events are taken or do occur. We have assumed
the genuineness of all documents and signatures presented to us. We have not undertaken to
veri$ independently, and have assumed, the accuracy of the factual matters represented,
warranted or certified in such documents. No opinion is expressed in this letter regarding the
accuracy, completeness or fairness of the Official Statement or any other offering material
relating to the Bonds.
Respectfully submitted,
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF
THE PRINCIPAL LEGAL DOCUMENTS
The following is a brief summary of certain provisions of the legal documents related to the Bonds. This
summary is not intended to be definitive and is qualified in its entirety by reference to the Lease, the
Sublease, the Assignment Agreement and the Indenture for the complete terms thereof. Copies of these
docwnents are available upon requestfrom the Trustee.
DEFINITIONS
The following are summaries of deJinitions of certain terms used in this Summary of Principal Legal
Documents. Unless the context clearly requires otherwise, all capitalized terms not defined herein or
elsewhere in the fficial Statement have the meanings setforth in the Indenture, and if not in the Indenture,
then the Sublease.
"Act" means Articles I through 4 (commencing with Section 6500), Chapter 5, Division T,Title I
of the Government Code of the State. as in existence on the Closins Date or as thereafter amended from
time to time.
"Additional Bonds" means additional bonds payable from and secured by Revenues on parity with
all other Outstanding Bonds issued pursuant to and in accordance with the Indenture.
"Additional Rental Payments" means the additional rental payable by the City under and pursuant
to the provisions of the Sublease described below under "SUBLEASE - Rental - Additional Rental."
"1\n4g4!-Deb1!-Servigg" means, with respect to any Bond Year, the sum obtained by totaling the
following:
(a) The principal amount of all Outstanding Bonds maturing in such Bond Year; and
(b) The interest which would be due during such Bond Year on the aggregate principal
amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on the date of
such computation were to mature in accordance with the applicable maturity schedule. At the time and for
the purpose of making such computation, the amount of Bonds already retired in advance of the above-
mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon.
"Assignment ASeement" means the Assignment Agreement, dated as of July l, 2020, by and
between the Authority and the Trustee, as the same may be amended, supplemented or otherwise modified
from time to time.
"&Ibqli!y" means the Orange City Public Facilities Financing Authority, a joint powers authority
duly organized and existing under the JPA Agreement and the laws of the State.
"Authority Governing Board" means the Board of Directors of the Authority.
"Average Annual Debt Service" means the average Annual Debt Service over all Bond Years.
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"B4te&ntAl" or "B4ge_Rental_-Ba@" means the base rental payable by the City under and
pursuant to the provisions of the Sublease described below under "SUBLEASE - Rental - Base Rental."
"Bond_eElnge!" means any attorney or firm of attorneys appointed by or acceptable to the
Authority of nationally recognized expertise in the issuance of obligations the interest on which is
excludable from gross income for federal income tax purposes under the Code.
"Bont!.@" means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of the
Act, as in existence on the Closing Date or as thereafter amended from time to time.
"!!q1!-@" means each twelve-month period extending from November 2 in one calendar year
to November I of the succeeding calendar year, both dates inclusive, except that the first Bond Year shall
extend from the Closing Date to November 1,2020.
(Bonds" means the Orange City Public Facilities Financing Authority, Lease Revenue Bonds,
Series 20204, issued pursuant to the Indenture.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day on which commercial
banks in the city in which the Trustee maintains its Trust Office are authorized or required by law or
executive order to close or (iii) a day on which the New York Stock Exchange is closed.
"Certificate ofthe Authuity" means a certificate in writing signed by the Chair, Executive Director,
the Assistant Executive Director or the Treasurer of the Authority or by any other officer of the Authority
duly authorized for that purpose by a resolution adopted by the Authority Commission and filed with the
Trustee.
"Certificate of the Citv" means a certificate in writing signed by the Mayor, the City Manager, the
Assistant City Manager, the Administrative Services Manager, the Finance Director or by any other officer
of the City duly authorized for that purpose.
"eiry" means the City of Orange, California.
"Closing Date" means July ,2020.
(Code" means the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder.
"Continuing Disclosu " means the continuing disclosure undertaking of the City
relating to the Bonds in connection with Rule l5c2-12(bX5) promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as originally executed and as the same may be
amended and supplemented from time to time in accordance with the terms thereof.
"Costs of Issuance" means all expenses incurred in connection with the authorization, issuance,
sale and delivery of the Bonds, including but not limited to all compensation, fees and expenses (including
but not limited to fees and expenses for legal counsel) of the Authority, the City and the Trustee,
compensation to any financial consultants or underwriters, legal fees and expenses, filing and recording
costs, costs ofobtaining title insurance with respect to the Leased Properties, costs relating to conveyance
ofthe Leased Properties, rating agency fees, costs ofpreparation and reproduction ofdocuments, costs of
printing, bond insurance premiums and fees and costs for any guaranty, surety bond letter of credit or other
credit facility.
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"Costs of Issuance Fund" means the fund by that name established and held by the Trustee pursuant
to the Indenture.
"Depository" means The Depository Trust Company, New Yorlg New Yorlg and its successors and
assigns as securities depository for the Bonds, or any other securities depository acting as Depository under
the Indenture.
"Event of Default" means any of the events described under "INDENTURE - Events of Default
and Remedies of Bond Owners - Events of Default;'
"Expiration Date" means November | , 20 _; plqyiidgd, however, if on such date, the City is in
default with respect to any Base Rental payment or an abatement event has occurred such that all Base
Rental payments have not been made, then the Expiration Date shall be automatically extended to
November 1,20-.
"Federal Securities" means any direct, noncallable obligations of the United States of America
(including obligations issued or held in book-entry form on the books of the Department of the Treasury of
the United States of America), or other noncallable obligations for which the faith and credit of the United
States of America are pledged for the payment of principal and interest.
..E@'meansthepriceatwhichawillingbuyerwouldpurchasetheinvestmentfrom
a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase
or sell the investment becomes binding) if the investment is traded on an established securities market
(within the meaning of section 1273 of the Code) and otherwise, the term oofair market value" means the
acquisition price in a bona fide arm's length transaction (as referenced above) ifl (i) the investment is a
certificate of deposit the value of which is determined 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) the value of which is determined in accordance
with applicable regulations under the Code, (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, or (iv) the investment is the Local Agency Investment Fund of the State, but only
if at all times during which the investment is held its yield is reasonably expected to be equal to or greater
than the yield on a reasonably comparable direct obligation of the United States of America.
"EgglIQ Prqj_991" means the project to construct the City's new Fire Station No. I Headquarters,
at 105 South Water Street, City of Orange, California.
"Fire HO Property" means the real property located at 105 South Water Street, City of Orange,
California together with improvements thereon.
o'Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June
30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and
designated by the Authority as its offrcial fiscal year period.
"I@' means the Indenture, dated as of July 1, 2020, by and between the Authority and the
Trustee, as originally executed or as it may from time to time be amended or supplemented in accordance
herewith.
"Independent Certified " means any certified public accountant or firm of
certified public accountants appointed and paid by the Authority, and who, or each of whom: (i) is in fact
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independent and not under domination of the Authority or the City; (ii) does not have any substantial
interest, direct or indirect, in the Authority or the City; and (iii) is not connected with the Authority or the
City as an officer or employee of the Authority or the City but who may be regularly retained to make
annual or other audits of the books of or reports to the Authority or the City.
"Infolmalion_S-ervig.eg" means the Electronic Municipal Market Access System (referred to as*EMMA"), a facility of the Municipal Securities Rulemaking Board, at www.emma.msrb.org; provided,
however, in accordance with then current guidelines of the Securities and Exchange Commissiorl
Information Services shall mean such other organizations providing information with respect to called
bonds as the Authority may designate to the Trustee in writing.
..I@,meanstheaccountbythatnameestablishedandheldbytheTrusteepursuantto
Section 4.02(a).
"Interest Payment Date" means May I and November I of each year, commencing November l,
2020.
"j$4greement" means the Joint Exercise of Powers Agreement, dated as of March 19,2020,by
and between the City and the California Statewide Communities Development Authority, together with any
amendments thereof and supplements thereto.
('Lease" means the Lease Agreement, dated as of even date herewith, by and between the City, as
the lessor, and the Authority, as the lessee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Lease Revenue Fund" means the fund by that name established and held by the Trustee pursuant
to Section 4.02.
"Leased_-Pro@." means the real property being leased by the Authority under the Lease and
subleased by the City under the Sublease, as described therein, including improvements thereon, including
the following:
(i) the property identified in an exhibit of the Sublease as Parcel No. l, including the
addresses currently known as 105 South Water Street (the Fire HQ Property) and 189 S. Water Street
(City Water Division operation center),
(ii) the property identified in an exhibitof the Sublease as Parcel No. 2, including the
address currently known as 300 East Chapman Avenue (City Civic Center), and
(iiD the property identified in an exhibit of the Sublease as Parcel Nos. 3 and 4,
including the address currently known as 368 North hospect Street (Grijalva Park).
"Maximum Annual Debt Service" means, with respect to the Bonds, the largest Annual Debt
Service during the period from the date of calculation through the final maturity date of any Outstanding
Bonds.
"Mqedy.'s." means Moody's Investors Service, Inc., and its successors and assigns, or if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, any other nationally recognized securities rating agency designated by the Authority.
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..@,'meansanyinsuranceorcondemnationproceeds,paidwithrespecttotheLeased
Properties remaining after payment therefrom of all expenses in the collection thereof.
"Nominee" means the nominee ofthe Depository, which initially will be Cede & Co., as determined
from time to time pursuant to the Indenture.
"Odeinal_Purchaser" means Raymond James & Associates, Inc.
"Outstanding" when used as of any particular time with reference to Bonds, means (subject to the
provisions of the Indenture described below under "INDENTURE - Miscellaneous - Disquali/ied Bonds")
all Bonds theretofore executed, issued and delivered by the Authority under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of the provisions of
the Indenture described below under "INDENTURE - Miscellaneous - Discharge of Indenture"; and
(c) Bonds in lieu of which or in substitution for which other Bonds shall have been
executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
((Owner" or ooB.snd_Qwler" when used with respect to any Bond means the person in whose name
the ownership of such Bond shall be registered on the Registration Books.
"Participants" means those broker-dealers, banks and other financial institutions from time to time
for which the Depository holds Bonds as securities depository.
"Payment Date" means, with respect to a Base Rental payment, the date listed as its related
"Payment Date" in the Sublease
"Permitted Encumbrances" means (a) liens for general ad valorem taxes, special taxes and
assessments, if any, not then delinquent, or which the City may, pursuant to the Sublease, permit to remain
unpaid; (b) liens created pursuant to or permitted under the Lease or the Sublease; (c) easements, right of
way, mineral rights, drilling rights and other riglrts, reservations, covenants, conditions or restrictions which
exist of record as of the Commencement Date; (d) utility, access and other easements and rights of way,
restrictions and exceptions that do not interfere with or impair the use intended to be made of the relevant
Leased Property; (e) the City's right to access and exclusive right to use and maintain facilities essential to
the City's utilities systems; (0 any right or claim of any mechanic, laborer, materialman, supplier or vendor
filed or perfected in the manner prescribed by law after the Commencement Date; (g) such minor defects,
inegularities, encumbrances and clouds on title as normally exist with respect to property similar in
character to the relevant Leased Property and as do not materially impair the use intended to be made of
property affected thereby; and (h) easements, right of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions established following the Commencement Date which do
not materially impair the City's use of the Leased Properties and to which the Authority and the City consent
in writing.
"Permitted Investments" mean any of the following obligations if and to the extent that they are
permissible investments of funds of the Authority and/or the City, as applicable (provided, that the Trustee
shall be entitled to rely upon a Certificate of the Authority as conclusive certification to the Trustee that the
investments described therein are permissible investment of funds of the Authority):
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(a) Direct obligations of the United States (including obligations issued or held in
book-entry form on the books of the Department of the Treasury) or obligations the principal of and interest
on which are unconditionally guaranteed by the United States of America.
(b) Bondso debentures, notes or other evidence of indebtedness issued or guaranteed
by any ofthe following federal agencies and provided such obligations are backed by the full faith and
credit of the United States (stripped securities are only permitted if they have been stripped by the agency
itself;:
(1) U.S. Export-Import Bank (Eximbank) - Direct obligations or fully
guaranteed certifi cates of benefi cial ownership;
(2) Federal Financing Bank;
(3) Federal Housing Administration Debentures (FHA);
(4) General Services Administration - Participation certificates;
(5) Government Mortgage Association - (A) GNMA-guaranteed mortgage
backed bonds, and (B) GNMA-guaranteed pass-tlrough obligations;
(6) U.S. Department of Housing and Urban Development (HUD) -
(A) Project Notes, (B) Local Authority Bonds, (C) New Communities Debentures - U.S. government
guaranteed debentures, and (D) U.S. Public Housing Notes and Bonds - U.S. government guaranteed public
housing notes and bonds.
(c) Bonds, debentures, notes or other evidence ofindebtedness issued or guaranteed
by any of the following non-full faith and credit United States government agencies (stripped securities are
only permitted if they have been stripped by the agency itselfl:
(l) Federal Home Loan Bank System - Senior debt obligations;
(2) Resolution Funding Corp. (REFCOPRP) obligations; and
(3) Farm Credit System - Consolidated system wide bonds and notes.
(d) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following non-full faith and credit United States government agencies (stripped securities are
only permitted if they have been stripped by the agency itself):
(l) Federal Home Loan Bank System - Senior debt obligations;
(2) Resolution Funding Corp. (REFCOPRP) obligations; and
(3) Farm Credit System - Consolidated system wide bonds and notes.
(e) U.S. Dollar-denominated certificates of deposit, bankers' acceptances or interest-
bearing time deposits that are made with the Trustee or with any member of the Federal Deposit Insurance
Corporation, provided that such investments are: (l) fully insured by the Federal Deposit Insurance
Corporation; (2) made with any bank (including the Trustee or any Affiliate thereof) having undivided
capital and surplus of at least S100,000,000, the debt obligations (or inthe case of the principal bankholding
company, debt obligations of the bank holding company) of which are rated in the top 2 tier categories by
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at least one ofthe recognized rating agencies at the time ofpurchase; or (3) continuously secured as to
principal , to the extent not insured by the Federal Deposit Insurance Corporation, by items listed in (a) or
(b) above, or other marketable securities eligible as security for the deposit of trust funds under applicable
regulations of the Comptroller of the Cunency of the United States of America, having a market value
(exclusive of accrued interest) not less than the amount of such deposit.
(0 Investments in money market mutual funds rated in the highest short-term rating
category for money market funds (without regard to qualifier) of at least one nationally recogrrized rating
agency including funds for whichthe Trustee and its affiliates provide investment advisory or other services
but excluding funds with a floating net asset value.
(g) Federal funds or bankers acceptances with a maximum term of one year of any
bank which has an unsecured, uninsured and unguaranteed obligation rating of Prime-l or A,3 or better by
Moody's and A-1 or A or better by S&P.
(h) Repurchase Agreements for 30 days or less, subject to the following criteria:
(l) Repos must be betweenthe municipal entity and a dealer bank or securities
firm;
(2) Primary dealers on the Federal
rated A or better by S&P and Moody's; and
Reserve reporting dealer list which are
(3) Bank rated ooA" or above by S&P and Moody's.
(i) "State Obligations," which means:
(1) Bonds or notes issued by any state or municipality whose underlying rating
from Moody's or S&P is in the highest rating category assigned by such agency;
(2) Direct general obligations of any state of the United States of America or
any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured
general obligation debt of which is rated "A3" by Moody's and "A" by S&P, or better, or any obligation
fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general
obligation debt is so rated;
(3) Direct general short-term obligations ofany state agency or subdivision or
agency thereof described in (a) above and rated "A-1+" by S&P and "MIG-l" by Moody's; and
(4) Special Revenue Bonds (as defined inthe United States Bankruptcy Code)
of any state, state agency or subdivision described in (A) above and rated'oAA" or better by S&P and "Aa"
or better by Moody's.
C) Pre-refunded municipal obligations rated "AAA" by S&P and"Aaa'o by Moody's
meeting the following requirements:
(l) the municipal obligations are (A) not subject to redemption prior to
maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions concerning
their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such
municipal obligations other than as set forth in such instructions;
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(2) the municipal obligations are secured by cash or direct obligations (other
than an obligation subject to variation in principal repayment) of the United States of America ("United
States Treasury Obligations") which may be applied only to payment of the principal of, interest and
premium on such municipal obligations;
(3) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent certified public accountants to
be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the
municipal obligations ("Verification");
(4) the cash or United States Treasury Obligations serving as security for the
municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations;
(5) no substitution of a United States Treasury Obligation shall be permitted
except with another United States Treasury Obligation and upon delivery of a new Verification; and
(6) the cash or United States Treasury Obligations are not available to satisfy
any other claims, including those by or against the trustee or escrow agent.
(k) Any state administered pool investment fund in which the Successor Agency is
statutorily permitted or required to invest will be deemed a permitted investment, including but not limited
to the Local Agency Investment Fund in the treasury of the State.
"PringipalAcgount" means the account by that name established and held by the Trustee pursuant
to the Indenture.
"Prqi_gg1_Qgslg'means, with respect to a Project, the costs, expenses and liabilities paid or incurred
or to be paid or incurred by the City or the Authority, all calculated in accordance with generally accepted
accounting principles, in connection with acquisition(s), financing, planning engineering, desigrl
construction and installation(s) relating to such Project or any portion thereof, and the obtaining of all
governmental approvals, certificates, permits and licenses with respect thereto, including but not limited to
(a) the costs ofacquisition, renovation or construction ofreal or personal property or any interest therein,
(b) any good faith or other similar payment or deposits, (c) the costs of any demolitions or relocation
necessary in connection therewith, (d) costs of physical construction and costs incidental to such
constructiorl renovation or acquisitiorL (e) all costs relating to injury and damage claims, (f) the costs of
any indemnity or surety bonds and premiums on insurance, including obligations to a stoclg mutual or
reciprocal insurance company or exchange, (g) preliminary investigation and development costs, (h)
engineering fees, contractors' fees, legal fees and expenses, and any other fees and expenses ofprofessional
consultants and (i) the costs of labor, materials, equipment and utility services and supplies,
O administrative and general overhead expenses and costs ofkeeping accounts and making reports required
by the Indenture or the Sublease prior to or in connection with the completion of such Project, (k) all federal,
state and local taxes and payments in lieu of taxes legally required to be paid in connection with such Project
prior to or in connection with the completion of such Project. It is intended that this definition of Project
Costs be broadly construed to encompass all costs, expenses and liabilities of the City and the Authority
which are chargeable to the capital accounts of related Project in accordance with generally accepted
accounting principles.
"Project Fund" means the fund by that name established and held by the Trustee pursuant to the
Indenture.
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"*ojects" means the following City projects (all of which constitute "public capital improvements"
as defined in the Act): (i) the construction of a new Fire Station No. 1 Headquarters, (ii) roof and related
improvements at the City's police station headquarters, (iii) roof and other improvements at the City's other
fne stations, (iv) installation of security improvements at City facilities, and (v) such other public
infrastructure improvements to be determined by the City.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day of the
month immediately preceding such Interest Payment Date, whether or not such day is a Business Day.
"Redemplion_Fund" means the fund by that name established and held by the Trustee pursuant to
the Indenture.
"Registration Books" means the records maintained by the Trustee pursuant to the Indenture for
the registration and transfer of ownership of the Bonds.
"RentAl&@" means, together, the Base Rental Payments and the Additional Rental
Payments.
"Request of the Authority" means a request in writing signed by the Chair, the Executive Director,
the Assistant Executive Director or the Controller of the Authority, or by any other officer of the Authority
duly authorized for that purpose by a resolution adopted by the Authority Commission and filed with the
Trustee.
"Request of the City" means a request in writing signed by the Mayor, the City Manager, Assistant
City Manager, the Administrative Services Director or by any other officer of the City duly authorizedfor
that purpose.
"Revenues" means: (a) all Base Rental Payments payable by the City pursuant to the Sublease
(including prepayments); (b) any proceeds of Bonds originally deposited with the Trustee and held by the
Trustee in the Lease Revenue Fund and the accounts thereof; (c) investment income with respect to any
moneys held by the Trustee in the Lease Revenue Fund and the accounts thereof (other than amounts
payable to the United States of America for arbitrage rebate purposes pursuant to the Code); and (d) any
insurance proceeds or condemnation awards received by or payable to the Trustee with respect to the Leased
Properties, including rental interruption insurance.
"S&P" means S&P Global Ratings, its successors and assigns, or if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other
nationally recognized securities rating agency designated by the Authority.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, New Yorlg New
York 10041, Attn: Call Notification Department, Fax(212) 855-7232 and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities
depositories as the Authorrty may designale in a Certificate of the Authority delivered to the Trustee.
"State" means the State of California.
"Sublease" means the Sublease, dated as of July 1,2020, with respect to the Leased Properties, by
and between the Authority as sublessor and the City as sublessee, as the same may be amended,
supplemented or otherwise modified from time to time.
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"Supplemental Indenturc" means any agreement supplemental to or amendatory of te Indenture
entered into in accordance with the provisions of the Indenture described below under "INDENTURE -
Modification and Amendment of the Indenture."
"Tgxeertifigate" means the Certificate Regarding Compliance with Certain Tax Matters (or similar
instrument) dated the date of the original delivery date of the Bonds relating to the requirements of certain
provisions of the Code, as such certificate may from time to time be modified or supplemented in
accordance with the terms thereof.
"Tgx-Exg!qp1" meanso with respect to interest on any obligations of a state or local government,
that such interest is excluded from gross income for federal income tax purposes whether or not such interest
is an item of tax preference for purposes of the alternative minimum tax under the Code or otherwise taken
into account in calculating tax liabilities under the Code.
"I$SL Qffige" means the corporate trust office of the Trustee at the address set forth in the
Indenture, or such other office desigrrated by the Trustee from time to time; provided, however, for transfer,
registration, exchangeo payment and surrender ofBonds, such term means the corporate trust operations
office of U.S. Bank National Association in St. Paul, Minnesota, or such other office designated by the
Trustee from time to time.
'(Trustee" means U.S. Bank National Associatiorl and its successors and assigns, and any other
corporation or association that may at any time be substituted in its place as provided in the Indenture.
SUBLEASE
Term
The Authority subleases to the City and the City leases from the Authority, the Leased Properties
on the terms and conditions set forth in the Sublease.
The term of the Sublease shall commence on the Commencement Date, and shall end on the earliest
of: (i) the Expiration Date; (ii) the date on which the Base Rental payments are paid (or prepaid) in full
under the provisions the Sublease; or (iii) the date ofdischarge ofthe Indenture.
Throughout the term of the Sublease, fee title to the Leased Properties shall remain in the City.
While any Bonds remain Outstanding under the Indenture, there shall be no merger of the subleasehold
estate in the Leased Properties created by the Sublease, the leasehold estate in the Leased Properties created
by the Lease, and the fee estate in the Leased Properties merely because such estates, or any of them, have
been acquired or become vested in the same person or entity.
Rental
Subject to the provisions of the Sublease, the City agrees to pay to the Authority, its successors or
assigns, as rental for the use and possession of the Leased Properties, the following amounts at the following
times:
Base RentaL The City shall pay as "Base Rental" to the Authority or to the Trustee, as provided
in the Sublease, semiannually, the rental payments in accordance with the Base Rental payment Schedule
attached as an exhibit to the Sublease, less any amount credited against Base Rental pursuant to the
provisions of the Indenture described under *INDENTURE - Revenues; Flows of Funds - Lease Revenue
Fund - Surplus." Each Base Rental payment shall be payable in arrears five days before its Payment Date,
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and shall be made in consideration for the City's use and possession of the Leased Properties for the six
month period preceding the Payment Date of such payment.
Additional Rental. The City shall also pay, as "Additional Rental," in addition to the Base
Rental, to the Authority or to the Trustee, as provided in the Sublease, such amounts in each year as shall
be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the
proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution,
performance or enforcement of the Sublease or the related assignment to the Trustee, the Indenture, or the
Authority's or the Trustee's respective interests in the Leased Properties, including, but not limited to, all
fees, costs and expenses, all administrative costs of the Authority relating to the Leased Properties
(including without limiting the generality of the foregoing salaries and wages of employees, overhead,
insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the
Trustee payable by the Authority under the Indenture), fees ofauditors, accountants, attorneys or engineers,
and all other reasonable and necessary administrative costs of the Authority or charges required to be paid
by it to comply with the terms ofthe Bonds or of the Indenture. The Authority or the Trustee shall bill such
Additional Rental to the City from time to time. The City shall pay amounts so billed within 30 days after
receipt of the bill by the City.
Ag,eementofFairRentalValue:AnnualAnpropriation Such payments of Base Rental and
Additional Rental for each rental payment period shall constitute the total rental for said rental payment
period, and shall be paid by the City in each rental payment period for and in consideration of the right of
the use and possession of, and the continued quiet use and enjoyment of, the Leased Properties during each
such period for which said rental is to be paid. The parties have agreed and determined that such total rental
does not exceed the fair rental value of the Leased Properties for each such period. In making such
determination, consideration has been given to other obligations ofthe parties under the Sublease, the uses
and purposes which may be served by the Leased Properties and the benefits therefrom which will accrue
to the City and the general public. The determination of fair rental value of the Leased Properties pursuant
to this paragraph shall not be deemed to be controlling in connection with a determination of fair value of
the Leased Properties by the parties for any other purpose.
Each installment of Base Rental payable under the Sublease shall be paid in lawful money of the
United States of America to the order of the Trustee.
Notwithstanding any dispute between the City and the Authority, the City shall make all Rental
Payments when due, without deduction or offset of any kind, and shall not withhold any Rental Payments
pending the final resolution of any such dispute. In the event of a determination that the City was not liable
for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be,
at the option of the City, shall be credited against subsequent Rental Payments due under the Sublease or
be refunded at the time of such determination.
The City covenants to take such action as may be necessary to include all such Rental Payments
due under the Sublease in its annual budget and to make the necessary annual appropriations for all such
Rental Payments. If the City's adopted annual budget for any fiscal year fails to include sufficient
appropriation for the scheduled Rental Payments for the such fiscal year, the City shall give written notice
to the Authority and the Trustee of such failure as soon as practical, but in any event within ten Business
Days of the adoption of such annual budget. The covenants on the part of the City contained in the Sublease
shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each
and every public official of the City to take such action and do such things as are required by law in the
performance of the official duty of such officials to enable the City to carry out and perform the covenants
and agreements in the Sublease agreed to be carried out and performed by the City; provided, the obligation
of the City to make Base Rental or Additional Rental payments does not constitute an obligation ofthe City
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for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or
pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental or
Additional Rental payments constitutes an indebtedness of the City, the State or any of its political
subdivisions in contravention of any constitutional or statutory debt limitation or restriction.
Use of Proceeds
The Authority and the City agree that the proceeds of the Bonds will be used to: (i) finance the
Projects, and (ii) pay the costs ofissuing the Bonds and incidental and related expenses, as more fully set
forth in the Indenture.
Maintenance. Utilities. Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the Leased
Properties, all maintenance and repair, ordinary or extraordinary, of the Leased Properties shall be the
responsibility of the City, and the City shall pay for or otherwise arrange for the payment of: (i) all utility
services supplied to the Leased Properties, (ii) the cost of operation of the Leased Properties, and (iii) the
costs of maintenance of and repair to the Leased Properties resulting from ordinary wear and tear or want
of care on the part of the City. The City shall, at the City's sole cost and expense, keep and maintain the
Leased Properties clean and in a safe and good condition and repair. The Authority shall have no obligation
to alter, remodel, improve, repair, decorate, or paint the Leased Properties or any part thereof, and the
parties hereto affirm that the Authority has made no representations or warranties to the City respecting the
condition of the Leased Properties.
The City shall comply with all statutes, ordinances, regulations, and other requirements of all
governmental entities that pertain to the occupancy or use of the Leased Properties. The Authority has no
responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the
Leased Properties.
The parties contemplate that the City will use the Leased Properties for public purposes and,
therefore, that the Leased Properties will be exempt from all taxes presently assessed and levied with respect
to real and personal property, respectively. In the event that the use, possession or acquisition by the
Authority or the City of any of the Leased Properties is found to be subject to taxation in any form, the City
will pay during the term of the Sublease, as the same respectively become due, all taxes and governmental
charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect
to such Leased Property and any other property acquired by the City in substitution for, as a renewal or
replacement of, or a modification, improvement or addition to such Leased Property; provided, that with
respect to any governmental charges or taxes that may lawfully be paid in installments over a period of
years, the City shall be obligated to pay only such installments as are accrued during such time as the
Sublease is in effect.
Chanses to the Leased Properties
The City shall have the right during the term of the Sublease to acquire and construct improvements
or to attach fixtures, structures or signs to any of the Leased Properties if the improvements, fixtures,
structures or signs are necessary or beneficial for the use of such Leased Properties by the City; provided,
however, that no such acquisition or construction shall result in a material reduction in the aggregate value
ofthe Leased Properties or reduce the aggregate fair rental value thereofor result in an abatement ofthe
Rental Payments.
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Upon termination of the Sublease, the City may remove any fixture, structure or sign added by the
City, but such removal shall be accomplished so as to leave the Leased Properties, except for ordinary wear
and tear and damage by casualty, in substantially the same condition as they were in before the fixture,
structure or sign was attached.
Title Insurance
The City shall obtain one or more California Land Title Association insurance policies (or, at the
City's sole discretion, American Land Title Association insurance policies) at the time of and dated as of
the Commencement Date in an aggregate amount not less than the agg[egate principal amount of the Bonds,
payable to the Trustee, insuring the respective interests of the City and the Authority in the Leased
Properties, and insuring the validity of the Sublease, subject only to Permitted Encumbrances, naming the
Trustee as an insured thereunder, issued by a title insurance company qualified to do business in the State
of California and acceptable to the Trustee. To the extent permitted under the Indenture, the costs of
obtaining such title insurance policy or policies may be paid out of the sale proceeds of the Bonds.
Other Insurance
Fire and Extended Coverage Insurance. The City shall maintain or cause to be maintained fire,
lightning and extended coverage insurance on the Leased Properties in an amount equal to (D 100 percent
of the then current replacement cost of the Leased Properties, excluding the then fair market value of the
land as unimproved or (ii) the principal amount of all outstanding Bonds, whichever is less (except that
such insurance may be subject to a deductible clause not to exceed l0 percent ofthe amount ofsuch policy).
Earthquake insurance shall be maintained on the Leased Properties only if available on the open market
from reputable insurance companies at a reasonable cost. The extended coverage endorsement shall, as
nearly as practicable, cover loss or damage by explosioq windstorm, riot, aircraft, vehicle damage, smoke,
vandalism, malicious mischief, dumping or other deposit of any pollutant or other debris and such other
hazards as are normally covered by such endorsement. Each such policy of insurance shall be in form
reasonably satisfactory to the Authority, and shall contain a clause naming the Trustee as an additional
insured and making all losses payable to the Trustee, and all proceeds thereofshall be paid over to the party
contractually responsible for making repairs of casualty damage.
In the event ofany damage to or destruction ofthe Leased Properties caused by the perils covered
by such insurance, the proceeds of such insurance shall be utilized to repair, reconstruct or replace the
Leased Properties to the end that the project shall be restored to at least the same condition that it was in
prior to such damage or destruction. Any balance of such proceeds not required for such repair,
reconstruction or replacement shall be transferred to the Authority and treated as Revenues and applied in
the manner provided in the Indenture.
Liabilitv Insurance. The City shall maintain or cause to be maintained public liability insurance
with limits of not less than $3,000,000 for one person and $5,000,000 for more than one person involved
in one accident to protect the Authority and the Trustee from all direct or contingent loss or liability for
damages for bodily injury or death occasioned by reason ofthe construction, condition or operation ofthe
Leased Properties. The City will also maintain or cause to be maintained insurance against liability for
property damage resulting from any casualty attributable to the operation of the project in an amount not
less than S1,000,000 for each accident. The public liability insurance and property damage insurance may
be subject to a deductible clause for anyone accident ofnot to exceed $250,000. The insurance coverage
required by this subsection may be effected by blanket policies covering the Leased Properties issued to the
party contractually responsible for the maintenance and operation ofthe project and such insurance policy
or policies shall name the Trustee as an additional insured.
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Rental Interruption Insurance. The City will maintain or cause to be maintained rental interruption
or use and occupancy insurance to cover loss, total or partial, of the use of the Leased hoperties as a result
of any of the hazards covered by the insurance required by the paragraph under the caption "Fire and
Extended Coverage Insltrence" above in an amount not less than the greatest of the aggregate Base Rental
payable by the City under this Sublease for a period of any futtre 24 months. Any such insurance policy
shall be in form satisfactory to the Authority and shall contain a clause naming the Trustee as an additional
insured and making any loss thereunder payable to the Trustee as its interests may appear. Any proceeds
of such insurance shall be used by the Trustee to pay Annual Debt Service on the Outstanding Bonds for
the period during which the payment of rental under the Sublease is abated, and any proceeds of such
insurance not so used shall be applied as provided in the Indenture to the extent required to pay
administrative costs of the Authority in connection with the Leased Properties.
Self-Insurance: Alternative Plan of Protection As an alternative to providing the insurance
required by paragraph under the caption "Liability Insurance" above, the City may provide or cause to be
provided a self-insurance method or plan of protection if and to the extent such self-insurance method or
plan of protection shall afford reasonable protection to the City and the Authority, and their directors,
officers, agents and employees and the Trustee, its directors, offrcers, agents and employees in light of all
circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted
by public entities in the State of California other than the City; provided that the obligation of the Authority
or Crty to make payments under such self-insurance shall be limited to money in a designated fund balance
established by the Authority or City and that the Authority or City shall not be obligated to replenish such
designated fund balance from the General Fund or be otherwise obligated to make payments except from
such designated fund balance. After the Commencement Date, before any substitute method or plan may
be provided by the City, there shall be filed with the Trustee a certificate of an actuary, independent
insurance consultant or other qualified person, stating that, in the opinion of the signer, the substitute
method or plan of protection is in accordance with the requirements of this Section and, when effective,
would afford adequate protection to the City and the Authority, and their directors, officers, agents and
employees and the Trustee and its directors, officers, agents and employees against loss and damage from
the hazards and risks covered thereby; provided, however, that in the event the City provides a self-
insurance method or plan ofprotection for the rental interruption insurance required abovq the desigrrated
fund balance established by the City shall be funded in an amount at least equal to the greatest of the
aggregate Base Rental payable by the City under this Sublease for a period of any future24 months.
Moreover, as an alternative to providing the insurance required by paragraph above under the
caption "Liability Insltrance," the City may provide a self-insurance method or plan of protection tlrough
the California Insurance Pool Authority (or another insurance risk sharing pool joint powers authority
formed in the State) or any successor entity as the City may reasonably determine.
Evidence of Insurance. The City shall deliver to the Trustee each year a Certificate of the City
stating that all requirements of the Sublease related to insurance have been complied with. Each such
insurance policy shall require that the Trustee be given 30 days' notice of any intended cancellation thereof
or reduction ofthe coverage provided thereby. The Trustee shall have no responsibility as to the sufficiency
of coverage or amounts of such policies. If so requested in writing by the Trustee, the City shall also deliver
to the Trustee duplicate originals or certified copies of each insurance policy described in such schedule.
Advances. If the City shall fail to perform any of its obligations under this Sectiorl then the
Authority may, but shall not be obligated to, take such action as may be necessary to cure such failure,
including the advancement of money on behalf of the City, and the City shall be obligated to repay all such
advances as soon as possible, as Additional Rental under the Sublease.
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Waivers of Subrogation Each of the parties hereby waives any and all rights to recovery against
the other or against any other tenant or occupant ofthe Leased Properties, or against the officers, employees,
agents, representatives, customers, and business visitors of such other party or of such other tenant or
occupant of the Leased Properties, for loss or damage to such waiving party or its property or the property
of others under its control, arising from any cause insured against under the standard form of property
damage insurance policy with all permissible extensions and endorsements covering extended perils or
under any other policy ofinsurance carried by such waiving party in lieu thereof, to the extent such policies
then in force permit such waiver.
Damage. Destruction and Condemnation: Anplication of Net Proceeds
Ifl (i) the whole, or any portion, of the Leased Properties is destroyed (in whole or in part) or is
damaged by fire of other casualty or taken by eminent domain proceedings (or sold to a government
threatening to exercise the power of eminent domain), or (ii) the leasehold title in all or a portion of the
Leased Properties is materially impaired by reason of a defect in title, then:
(a) the City, but only to the extent permitted by law, shall substitute other property for
the portion ofthe Leased Properties that has been destroyed, or taken, or affected by the defective title in
accordance with the provisions of the Sublease described under "SUBLEASE - Substitution or Release of
Property"; or
(b) the City shall require the Net Proceeds of any insurance payment (other than the
Net Proceeds of rental interruption insurance which shall be applied pursuant to Section 8(c)) or any
condemnation award to be held by the Trustee in a special trust fund to be applied and disbursed by the
Trustee as follows:
(D If less than all ofthe Leased Properties shall have been so destroyed or
taken or affected by defective title and the remainder is usable, then the Sublease shall continue in full force
and effect as to such remainder and (A) if the portion taken or destroyed is replaced by one or more
properties of equal or greater fair market value (as demonstrated by an MAI fair market appraisal), the
Trustee upon written direction of the City shall disburse such proceeds to the party thar incured the expense
of making such replacement and there shall not be any abatement of the Base Rental under the Sublease;
or (B) failing the making of such replacement, there shall be a partial abatement of the Base Rental under
the Sublease (in accordance with the provisions of the Sublease described under "SUBLEASE - Abatement
of Rental") and the Trustee shall apply such Net Proceeds, together with any other money then available to
it for such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds
in accordance with the Sublease and the Indenture.
(ID If less than all ofthe Leased Properties shall have been so destroyed or
taken or affected by defective title and the remainder is not usable, or if all of the Leased Properties shall
have been so destroyed or taken or affected by the defective title, then the term ofthe Sublease shall cease
as of the day that possession shall be so taken; and the Trustee shall apply such Net Proceeds, together with
any other money then available to it for such purpose, to the Redemption Fund under the Indenture for the
redemption of outstanding Bonds in accordance with the Sublease and the Indenture.
Default
(a) If default shall be made by the City in the observance or performance of any agreement,
condition" covenant or term contained in the Sublease required to be observed or performed by it (including,
without limitation, the payment of any Base Rental or Additional Rental), subject to the provisions of
subsection (c) below, the Authority may at any time thereafter (with or without notice and demand and
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without limiting any other rights or remedies the Authority may have) recover rent and other monetary
charges as they become due hereunder without terminating the City's right to possession of the Leased
Properties (regardless of whether or not the City has abandoned the Leased Properties). Furthermore, upon
the occurrence of such a default, the Authority shall have the right, and the City hereby irrevocably appoints
the Authority as its agent and attorney-in-fact for such purpose, to attempt to relet the Leased Properties at
such rent, upon such conditions and for such term (subject to then existing Permitted Encumbrances,
including but not limited to the City's right to access and exclusive right to maintain and use facilities
essential to the City's utilities systems), and to do all other acts to maintain or preserve the Leased
Properties, including the removal of persons or property therefrom or taking possession thereof, as the
Authority deems desirable or necessary. The City hereby waives any and all claims for any damages that
may result to the Leased Properties upon any action taken by the Authority under this Section. No action
taken by the Authority under this Section shall be deemed to terminate the Lease or the Sublease and the
City shall continue to remain liable for any deficiency that may arise out of such reletting, taking into
account expenses incurred by the Authority due to such reletting, payable at the same time and manner as
provided for Base Rental in the provisions of the Sublease described above under "SUBLEASE - Rental."
The Authority expressly waives the right to receive any amount from the City pursuant to Section
1951.2(a)(3) of the California Civil Code.
Each and all of the remedies given to the Authority hereunder or by any law now existing or
hereafter enacted are cumulative and the exercise of any one remedy shall not impair the right of the
Authority to any or all other remedies.
(b) In addition to any default resulting from breach by the City of any agreement, conditiorU
covenant or term ofthe Sublease, if-
(D the City's interest in the Sublease or any part thereof is assigned or transferred,
either voluntarily or by operation of law, except as provided in the provisions of the Sublease described
under "SUBLEASE - Assignment to Trustee; Subletting by City"; or
(iD the City shall file any petition or institute any proceedings under any act or acts,
state or federal, dealing with or relating to the subject of bankruptcy or insolvency or under any amendment
of such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity, wherein
or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or
all of its debts or obligations, or offers to its creditors to effect a composition or extension of time to pay its
debtso or asks, seeks or prays for a reorganization or to effect a plan ofreorganrzation or for a readjustment
of its debts or for any other similar relief, or if the City shall make a general or any assignment for the
benefit ofits creditors in connection with any proceedings related to bankruptcy, insolvency, liquidatiort
winding up or similar evenU or
(iiD the City shall abandon the Leased Properties or any portion thereof, then in each
and every such case the City shall be deemed to be in default under the Sublease.
(c) Neither the Authority nor the City shall be in default in the performance of any of its
obligations under the Sublease (except for the obligation of the City to pay Base Rental when due) unless
and until it shall have failed to perform such obligation within 30 days after notice by the Authority or the
City, as the case may be, to the other party properly specifying wherein it has failed to perform such
obligation.
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Prenavment and Credits
(a) In the event that, pursuant to the provisions of the Sublease described under "SUBLEASE
- Damage, Destruction and Condemnatiory Application of Net hoceeds," the City determines that Base
Rental shall be abated and Net Proceeds from insurance or any condemnation award shall be used to redeem
Bonds, the City shall provide the Authority and the Trustee an amended Exhibit B reflecting the new
schedule of Base Rental payments.
(b) The City may, at its option, prepay from any source of available moneys, Base Rental then
unpaid, in whole or in part, for the redemption of Bonds, which redemption date(s) shall be on or after
November 1,20-. In such event, the Bonds shall be redeemed pursuant to the optional redemption
provisions of the Indenture. A prepayment under this Section shall be deemed made upon the occurrence
of either of the following:
(D The City shall have deposited with the Trustee an amount equal to the sum of (A)
the principal components of Base Rental being so prepaid, plus (B) the interest components with respect
thereto accrued to the related redemption date(s) of the Bonds, plus (C) a premium, if any, in an amount
equal to the redemption premium applicable to the Bonds being so redeemed; or
(iD There shall have been deposited, on behalf of the Authority, with the Trustee or
another fiduciary, Federal Securities in a sufficient amount to satisff the requirements of the Indenture
described under "INDENTURE - Miscellaneous - Discharge of Indenture" to discharge the Bonds to be
redeemed in connection with such prepayment.
Except in the case of a prepayment of Base Rental to redeem all of the then Outstanding
Bonds,aprepaymentofprincipalcomponentsofBaseRentalpursuanttothisSection shall: (l)applyonly
to Base Rental previously unpaid and not yet due, and (2) be applied to reduce Base Rental so that, after
such prepayment (and the related redemption of Bonds), (A) each annual installment of principal
components of Base Rental due hereunder shall be an integral multiple of $5,000 and (B) the principal
components of Base Rental due in any year shall correspond with the principal amount of Bonds due and
payable in such year.
(c) The City shall have the right to rescind an optional prepayment (exercised under paragraph
(b) above) by written notice to the Authority and the Trustee prior to the corresponding redemption date of
the Bonds, and the Trustee, upon receipt of such notice, shall promptly send notices ofrescission ofsuch
optional redemption of the Bonds pursuant to the Indenture.
(d) In the event of a partial prepayment of Base Rental under this Section" the City shall
provide the Trustee with an amended exhibit to the Sublease reflecting the new schedule of Base Rental
payments. A prepayment made pursuant to this Section shall not cause a defeasance of Bonds unless the
requirements of requirements of the Indenture described under "INDENTURE - Miscellaneous -
Discharge of Indenture" are satisfied.
(e) In the event of a prepayment in full of the principal component of Base Rental under this
Section, such that the Sublease shall be terminated by its terms as provided the provisions of the Sublease
described under "SUBLEASE - Term," all amounts then on deposit under the Indenture which are to be
credited to the City's obligations to make Base Rental payments shall be credited towards the amounts
then required to be so prepaid.
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Risht of Entrv
The Authority and its assignees shall have the right to enter any of the Leased Properties during
reasonable business hours (and in emergencies at all times), subject to the City's reasonable security
measures, (a) to inspect the same, (b) for any purpose connected with the City's or the Authority's rights
or obligations under the Sublease, and (c) for all other lawful purposes.
Mechanics'Lien
In the event the City shall at any time before or during the term of the Sublease cause any
improvements or other work to be done or performed or materials to be supplied, in or upon the Leased
Properties, the City shall pay, when due, all sums of money that may become due for, or purporting to be
for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or
for the Crty in, upon or about the Leased Properties and which may be secured by any mechanics',
materialmen's or other liens against the Leased Properties or the Authority's interest therein, and will cause
any such lien to be fully discharged and released at the time the performance of any obligation secured by
any such lien matures or becomes due, except that, if the City desires to contest any such lien it may do so.
If any such lien shall be reduced to final judgment and such judgment or such process iN may be issued for
the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City
shall promptly pay and discharge said judgment.
Ouiet Eniovment
The parties mutually covenant that the City, so long as it keeps and performs the covenants and
agreements contained in the Sublease, shall at all times during the term of the Sublease peaceably and
quietly have, hold and enjoy the Leased Properties without suit, trouble or hindrance from the Authority.
Assienment to Trustee: Sublettine bv Citv
(a) The Sublease and the rights of the Authority under the Sublease (except for the Authority's
rights with respect to approvals or consents under the Sublease and indemnification and payment or
reimbursement for any costs or expenses of the Authority under the Sublease) will be assigned to the Trustee
pursuant to the Assignment Agreement and the Indenture, and accordingly, the City agrees to make all
Rental Payments due to the Authority directly to the Trustee, notwithstanding any clainr, defense, setoff or
counterclaim whatsoever (whether arising from a breach of the Sublease or otherwise) that the City may
have from time to time against the Authority, except as provided in the provisions of the Sublease described
under "SUBLEASE - Abatement of Rental".
(b) Neither the Sublease nor any interest of the City under the Sublease shall be mortgaged,
pledged, assigned or transferred by the City by voluntary act or by operation oflaw or otherwise; provided,
subject to the provisions of the Sublease described under "SUEILEASE - Additional Covenants Regarding
Tax-Exempt Bonds," that the City may sublease all or any portion of the Leased Properties, and may grant
concessions to others involving the use ofany portion ofthe Leased Properties, whether such concessions
purport to convey a leasehold interest or a license to use a portion ofthe Leased Properties. The City shall
at all times remain liable for the performance of the covenants and conditions on its part to be performed
under the Sublease, notwithstanding any subletting or granting of concessions which may be made.
Nothing contained in the Sublease shall be construed to relieve the City from its obligation to pay Base
Rental and Additional Rental as provided in the Sublease or to relieve the City from any other obligations
contained in the Sublease.
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(c) Without limiting the foregoing, to the extent that the Sublease or the Assignment
Agreement confer upon or grants the Trustee any right, remedy or claim under or by reason of the Sublease,
the Trustee is hereby further recognized as being a third party beneficiary under the Sublease and may
enforce such right, remedy or claim conferred, given or granted under the Sublease.
Abatement of Rental
(a) The obligation of the City to pay Base Rental and Additional Rental shall be abated during
any period in whictr, by reason of any damage, destructiorq condemnation or impairment of leasehold
interest, there is substantial interference with the use and occupancy ofthe Leased Properties or any portion
thereof by the City. Such abatement shall be in an amount agreed upon by the City and the Authority such
that the resulting Base Rental in any year during which such interference continues does not exceed the fair
rental value of the portions of the Leased Properties as to which such damage, destruction, taking or
impairment do not substantially interfere with the City's use and right of possession. Such abatement shall
continue for the period commencing with the date of such interference and ending with the restoration of
the relevant Leased Properties to tenantable condition. For clarification purposes, to the extent that any
Base Rental is to be paid or prepaid from insurance or condemnation proceeds deposited with the Trustee
pursnant to the provisions of the Sublease described under "SUBLEASE - Other Insurance - Rental
Interruption Insurance," such Base Rental shall not be reduced or abated pursuant to this Section.
(b) Upon the cessation ofthe occurrence of any abatement event during the term of
the Sublease, the City and the Authority shall, in good faittr, determine the current fair rental value of the
Leased Properties. If such fair rental value is greater than the fair rental value of the Leased Properties
determined under the Sublease as of the Commencement Date, the Base Rental shall be increased by the
lesser of (i) such incremental value or (ii) the amount needed to recoup all amounts abated during the
remaining term of the Sublease.
(c) Except as set forth in the Sublease, in the event of any damage, destruction of
condemnation, the Sublease shall continue in full force and effect and the City waives any right to terminate
the Sublease by virtue of such damage, destruction or condemnation. The City further waives the benefit
of Sections 1932(l),1932(2),1933(4),1941 and 1942 of the California Civil Code.
Additional Covenants Regardins Tax-Exempt Bonds
The City covenants that during the term of the Sublease it shall not use or permit the use of the
Leased Properties or any proceeds of the Bonds, directly or indirectly, in any manner, and shall not take or
omit to take any action, that would cause any of the Bonds to be treated as an obligation not described in
Section 103(a) of the Code. The City shall comply with the provisions of the Tax Certificate, which is
incorporated in the Sublease.
Substitution or Release of Pronertv
(a) Notwithstanding anything in the Sublease to the contrary, the Leased hoperties may be
substituted, in whole or in part, by other properties, or a portion of the Leased Properties may be released
from the Sublease, at the option of the City; provided, that the following conditions shall have been
satisfied:
(i) such substitution or release does not, in the opinion of Bond Counsel, adversely
affect the Tax-Exempt status of the Bonds;
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(ii) the City shall have provided a certification to the Authority and the Trustee that
the fair market value ofthe Leased Properties, after the proposed substitution or release, shall be equal to
or greater than the aggregate amount of the principal component of the Base Rental (i.e., the principal
amount of the Outstanding Bonds);
(iii) the City certifies to the Authority and the Trustee that, based on the Ctty's
determination, the annual fair rental value ofthe Leased Properties, after such substitution or release, is at
least equal to the maximum annual Base Rental remaining unpaid under the terms of the Sublease, and the
expected useful life of the Leased Properties, after such substitution or release, extends at least to the
Expiration Date;
(iv) Except as provided in paragraph (b) below, the City shall notiff the rating agency
(or agencies) then rating the Bonds regarding such substitution or release;
(v) in the event that the substituted property consists in whole or in part of real
property, a California Land Title Association insurance policy (or, at the City's sole discretion, an American
Land Title Association insurance policy) on the substituted real property has been obtained" along with
evidence that, other than Permitted Encumbrances, no prior liens exist as to the substituted property;
(vi) the City shall provide to the Authority and the Trustee evidence that any existing
title insurance with respect to the portion of the Leased Properties remaining after such substitution or
release is not affected; and
(vii) the parties shall amend the Sublease to properly reflect such substitution or release.
(b) It is recognizedthat after the completion of the Fire HQ Project, the City may choose to
release a portion ofthe Leased Properties under the Lease and the Sublease; and in that connection, so long
as the Fire Station HQ Property will remain as among the Leased Properties after such release, then the
City, with respect to the conditions to be satisfied under paragraph (a), will not be required to provide notice
to any rating agency pursuant to clause (iv).
Waiver
Failure of the Authority to take advantage of any default on the part of the City shall not beo or be
construed as, a waiver thereof, nor shall any custom or practice which may be established between the
parties in the course of administering the Sublease be construed to waive or to lessen the right of the
Authority to insist upon performance by the City of any term, covenant or condition of the Sublease, or to
exercise any rights given the Authority on account of such default. A waiver of a particular default shall
not be deemed to be a waiver ofthe same or any subsequent default. The acceptance ofrent hereunder
shall not be, nor be construed to be, a waiver ofany term, covenant or condition ofthe Sublease.
Net Lease
Subject to the provisions described under "SUEILEASE - Abatement of Rental," the Sublease shall
be deemed and construed to be a "Triple Net Lease" and the City agrees that rental provided for in the
Sublease shall be an absolute net return to the Authority, free and clear ofany expenses, charges or setoffs
whatsoever.
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ASSIGNMENT AGREEMENT
The Authority transfers in trust and assigns to the Trustee, for the benefit of the Owners from time
to time of the Bonds, all of the right, title and interest of the Authority in (but not of its obligations under)
the Lease and the Sublease (except the Authorrty's rights to give approvals and consents under the Lease
and the Sublease and to indemnification and payment or reimbursement for any costs or expenses
thereunder), including the Authority's rights to receive the Base Rental Payments scheduled to be paid by
the City under and pursuant to the Sublease, and any and all of the other rights of the Authority under the
Lease and the Sublease as may be necessary to enforce payment of such Base Rental Payments when due
or otherwise to protect the interest of the Owners of the Bonds. The Trustee accepts the foregoing
assignment for the benefit of the Bond Owners, subject to the conditions and terms of the Indenture, and
all such Base Rental Payments shall be applied and all such rights so assigned shall be exercised by the
Trustee under and pursuant to the Indenture. Excepting only the assignment and transfer ofrights to the
Trustee as described above, the Assignment Agreement shall confer no rights and shall impose no
obligations upon the Trustee beyond those expressly provided in the Indenture.
INDENTURE
Validitv of Bonds
The validity of the authorization and issuance of the Bonds shall not be affected in any way by any
proceedings taken with respect to the application of the proceeds of the Bonds, and the recital contained in
the Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity
and ofthe regularity oftheir issuance.
Resistration Books: Transfer and Exchanee of Bonds
The Trustee will keep or cause to be kept at its Trust Office suffrcient records for the registration
and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by
the Authority with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under
such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred,
on said records, Bonds as provided in the Indenture.
Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the
person in whose name it is registered in person or by his duly authorized attorney, upon presentation and
surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a
form approved by the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the
Authority shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new
Bond or Bonds of like tenor, maturrty and aggregate principal amount. The cost of printing any Bonds and
any services rendered or expenses incurred by the Trustee in connection with any such transfer shall be
paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such
transfer of any tax or other governmental charge required to be paid with respect to such transfer. The
Trustee shall not be required to transfer, pursuant to this Section, (a) any Bond during the period established
by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption by the
Trustee pursuant to the Indenture.
Bonds may be exchanged at the Trust Office ofthe Trustee for the same aggregate principal amount
of Bonds of the same tenor and maturity and of other authorized denominations. The cost of printing any
Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange
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shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting
such exchange ofany tax or other governmental charge required to be paid with respect to such exchange.
The Trustee shall not be required to exchange, pursuant to this Section" (a) any Bond during the period
established by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption
by the Trustee pursuant to the Indenture.
Additional Bonds
(a) Subject to this SectiorL the Authority may from time to time issue one or more series of
Additional Bonds payable from and secured by Revenues on parity with all other Outstanding Bonds.
Bonds issued pursuant to this Section shall be issued under and pursuant to a Supplemental Indenture which
shall specify:
(l) The maturity date or dates of such Additional Bonds, which shall be November I
in any given year;
(2) The interest payment dates, which shall be May I and November 1;
(3)The terms, if any, for call and redemption of such Additional Bonds prior to
maturity; and
(4) The interest rate or rates on such Additional Bonds and any other matters deemed
appropriate or necessary and not inconsistent with the provisions ofthe Indenture.
(b) All of the Additional Bonds shall be executed by the Authority for issuance under the
Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee upon the Request
of the Authority but only upon receipt by the Trustee of the following documents or money or securities:
(l) A certified copy of the Supplemental Indenture authorizing the issuance of such
Additional Bonds:
(2) A Request of the Authority as to the delivery of such Additional Bonds;
(3) An opinion of Bond Counsel substantially to the effect that: (i) the Authority has
the right and power under the Act to execute and deliver such Supplemental Indenture, and such
Supplemental Indenture has been duly executed and delivered by the Authority, and the Indenture and such
Supplemental Indentures are in full force and effect and are valid and binding upon the Authority and
enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights and similar
qualifications); (ii) such Additional Bonds are valid and binding special obligations of the Authority,
enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and are
subject to the terms of the Indenture and all Supplemental Indentures and entitled to the benefits of the
Indenture and all such Supplemental Indentures and the Act, and such Additional Bonds have been duly
and validly issued in accordance with the Act and the Indenture and all such Supplemental Indentures; and
(iii) the obligation ofthe City to make the Base Rental Payments during the term ofthe Sublease as amended
pursuant to this Section is a valid and binding obligation of the City.
(4) A Certificate of the Authority: (i) certifying that the Authority is in compliance in
all material respects with all agreement and covenants contained in the Indenture and that no Event of
Default has occurred or is continuing; (ii) stating that the Authority and the City have entered into an
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amendment to the Sublease pursuant to which the City is obligated to make Base Rental Payments at times
and in amounts sufficient to provide for payment of the principal of and interest on the Bonds (including
such Additional Bonds) which will be Outstanding following the sale and delivery of such Additional
Bonds; and (iii) containing such additional statements as may be reasonably necessary to show compliance
with the requirements of the Indenture;
(5) An executed copy of the amendment to the Sublease; and
Such further documents, money and securities as are required by the provisions of the Indenture
and the Supplemental Indenture providing for the issuance of such Additional Bonds.
Revenues: Flow ofFunds
Pledge of Revenues: Assignment of Rights. Subject to the provisions of the Indenture relating to
Trustee fees, the Bonds shall be secured by a first lien on and pledge (which shall be effected in the manner
and to the extent hereinafter provided) of all of the Revenues and a pledge of all the moneys in the Lease
Revenue Fund, including all amounts derived from the investments of such moneys. The Bonds shall be
equally secured by a pledge, charge and lien upon the Revenues and such moneys without priority for
number, date of the Bonds, date of execution or date of delivery; and the payment of the interest on and
principal of the Bonds and any premiums upon the redemption of any portion thereof shall be and are
secured by an exclusive pledge, charge and lien upon the Revenues and such moneys. So long as any of
the Bonds are Outstanding the Revenues shall not be used for any other purpose; except that out ofthe
Revenues and such moneys there may be apportioned such sums, for such purposes, as are expressly
permitted by the Indenture.
Pursuant to the Assignment Agreement, the Authority has transferred in trust and assigns to the
Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the
right, title and interest of the Authority in (but not of its obligations under) the Lease and the Sublease (other
than its rights to indemnification and payment or reimbursement for any costs or expenses), including its
rights to receive the Base Rental scheduled to be paid by the City under and pursuant to the Sublease and
any and all of the other rights of the Authority under the Lease and the Sublease as may be necessary to
enforce payment of such Base Rental when due or otherwise to protect the interest of the Owners of the
Bonds, including its leasehold title to the Leased Properties leased to the City pursuant to the Sublease. The
Trustee accepts such assignments. The Trustee shall be entitled to and shall receive all of the Revenues,
and any Revenues collected or received by the Authority shall be deemed to be held, and to have been
collected or received, by the Authority as the agent of the Trustee and shall promptly be paid by the
Authority to the Trustee.
Lease Revenue Fund. All Base Rental Payments shall be deposited by the Trustee in a special fund
designated as the'ol.ease Revenue Fund," which the Trustee shall establish, maintain and hold in trust .
On or before each Interest Payment Date, the Trustee shall transfer from the Lease Revenue Fund
and deposit into the following respective accounts (each of which the Trustee shall establish and maintain
within the Lease Revenue Fund), the following amounts in the following order of priority, the requirements
of each such account (including the making up of any deficiencies in any such account resulting from lack
of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any
transfer is made to any account subsequent in priority:
(a) Interest Account. On or before each Interest Payment Date, the Trustee shall
deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest
Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all
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Outstanding Bonds. No deposit need be made into the Interest Account if the amount contained therein is
at least equal to the interest becoming due and payable upon all Outstanding Bonds on each succeeding
Interest Payment Date within the then current Bond Year. All moneys in the Interest Account shall be used
and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become
due and payable (including accrued interest on any Bonds redeemed prior to maturity).
(b) Principal Account. On or before each Interest Payment Date, the Trustee shall
deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the
Principal Account to equal the principal amount of the Bonds maturing or required to be redeemed tluough
mandatory sinking account redemption on such Interest Payment Date. All moneys in the Principal
Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the
Bonds.
Redemotion Fund. To the extent the Authority has provided the Trustee with written notice of its
intention to redeem Bonds in connection with an extraordinary redemption or an optional redemption (or
the Trustee has received written notice from the City regarding a related repayment pursuant to Section pf
the Sublease), the Trustee shall establish a fund known as "Redemption Fund." At any time the Trustee
receives money from the City pursuant to the provisions of the Sublease described under "SUBLEASE -
Damage, Destruction and Condemnation; Application ofNet Proceeds" or "SUBLEASE - Prepayment and
Credits," the Trustee shall immediately deposit such money as follows: (i) an amount equal to the interest
on the Bonds to be redeemed pursuant to the provisions of the Indenture relating to extraordinary
redemption or optional redemptiorl accrued to the redemption date shall be deposited in the Interest
Account; and (ii) the balance of such moneys shall be deposited in the Redemption Fund. Amounts on
deposit in the Redemption Fund shall be applied solely for the purpose of paying the principal of the Bonds
to be so redeemed; provided" however, that at any time prior to giving notice of redemption of any such
Bonds, the Trustee may apply such amounts to the purchase of Bonds at public or private sale, as and when
and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable
from the Interest Account) as shall be directed in writing by the Authority, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds.
Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to
the Indenture shall be invested by the Trustee solely in Permiued Investments pursuant to the written
direction of the Authority given to the Trustee at least two Business Days in advance of the making of such
investments; which Permitted Investments shall, as nearly as practicable, mature (or be subject to
redemption or disposition by the Trustee) on or before the dates on which such money is anticipated to be
needed for disbursement under the Indenture. In the absence of any such direction from the Authority, the
Trustee shall invest any such moneys in money market funds described in clause (f; of the definition of
Permitted Investments, so long as such money market funds contain only United States Treasury or United
States local government obligations; provided, however, that any such investment shall be made by the
Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a
written request of the Authority specifying a specific money market fund and, if no such request of the
Authority is so received, the Trustee shall hold such moneys uninvested. Obligations purchased as an
investment of moneys in any fund or account shall be deemed to be part of such fund or account.
The Trustee shall transfer at least semiannually all investment earnings on amounts in the Principal
Account, and the Interest Account to the Lease Revenue Fund. Unless otherwise specified in the Indenture,
investment earnings on amounts in all other funds and accounts established and maintained pursuant to the
Indenture shall be retained in such respective funds and accounts. For purposes of acquiring any
investments under the Indenture, the Trustee may commingle funds held by it under the Indenture. The
Trustee or an affiliate of the Trustee may act as principal or agent in the acquisition or disposition of any
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investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses
arising from any investments made pursuant to this Section.
Valuation and Disposition of Investments. For the purpose of determining the amount in any fund
or account, Permitted Investments credited to such fund or account shall be valued semiannually at the Fair
Market Value thereof; provided that as to certificates of deposits and banker acceptances, the value thereof
shall equal the face amount, plus accrued interest thereon. The Trustee shall have no duty in connection
with the determination of Fair Market Value other than to follow its normal practice in determining the
value of Permitted Investments, which may include utilizing computerized securities pricing services that
may be available to it including those available tluough its regular accounting system.
Covenants of the Authoritv
Punctual Pqvment The Authority shall punctually pay or cause to be paid the principal and interest
to.become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of the
Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets
pledged for such payment as provided in the Indenture.
Extension qf Pqvment of Bonds. The Authority shall not directly or indirectly extend or assent to
the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the
purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the
time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case ofany default under the Indenture, to the benefits ofthe Indenture, except subject to
the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest
thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance
shall not be deemed to constitute an extension of maturity of the Bonds.
Against Encumbrances. The Authority shall not create, or permit the creation of any pledge, lien,
charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture
while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture. Subject
to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for
any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue
other obligations for such purposes.
Power to Issue Bonds and Make Pledee and Assignment The Authority is duly authorized pursuant
to law to issue the Bonds and to enter into the Indenture and to pledge and assign the Revenues, the Lease,
the Sublease and other assets purported to be pledged and assigned, respectively, under the Indenture in the
manner and to the extent provided in the Indenture. The Bonds and the provisions of the Indenture are and
will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and
the Authority and the Trustee (subject to the provisions ofthe Indenture relating to Trustee fees) shall at all
times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues
and other assets and all the rights of the Bond Owners under the Indenture against all claims and demands
of all persons whomsoever.
Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be
kept, proper books ofrecord and account, prepared in accordance with corporate trust industry standards,
in which complete and accurate entries shall be made of all transactions by the Trustee relating to the
proceeds of Bonds, the Revenues, the Sublease and all funds and accounts established pursuant to the
Indenture. Such books of record and account shall be available for inspection by the Authority and the City
during regular business hours with reasonable prior notice.
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Additional Obligations. The Authority covenants that no additional bonds, notes or indebtedness
shall be issued or incurred that are payable out of the Revenues in whole or in part, except as permitted
under the provisions of the Indenture described under "INDENTURE - Additional Bonds."
Sublease. The Trustee, as assignee ofthe Authority's rights under the Sublease pursuant to the
Indenture and under the Assignment Agreement, shall receive all amounts due from the City pursuant to
the Sublease (excepting any amounts due to the Authority relating to the indemnification of the Authority).
The Authority will faithfully comply wit[ keep, observe and perform all the agreements,
conditions, covenants and terms contained in the Sublease required to be complied wittL kept, observed and
performed by it and, together with the Trustee, will enforce the Sublease against the City in accordance
with its terms.
The Authority will not alter, amend or modify the Sublease without the prior written consent of the
Trustee, which consent shall be given only: (i) if the Trustee receives an opinion of Bond Counsel that
such alteration, amendment or modification will not result in any material impairment of the security given
or intended to be given for the payment of the Base Rental Payments, or (ii) if the Trustee first obtains the
written consents of the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding to such alteration, amendment or modification. Prior to any amendment or modification of the
Sublease pursuant to this Section, the Trustee may require the Authority to deliver to the Trustee an opinion
of Bond Counsel to the effect that such amendment or modification has been adopted in accordance with
the requirements of the Indenture.
Tu Covenants.
(a) The City shall not take any action, or fail to take any actior; if any such action or failure to
take action would adversely affect the Tax-Exempt status of interest on the Bonds under Section 103(a) of
the Code or cause interest on the Bonds to be an item of tax preference for purposes of the altemative
minimum tax imposed on individuals and corporations under the Code.
(b) In furtherance of the foregoing tax covenant, the Authority shall comply with the
provisions of the Tax Certificate, which is incorporated in the Indenture as if fully set forth in the Indenture.
These covenants shall survive payment in full or defeasance ofthe Bonds.
Continuine Disclosure. In connection with the issuance of the Bonds, the Authority shall cause the
City to enter into a Continuing Disclosure Agreement. It is recogrized that a failure of the City to comply
with a Continuing Disclosure Agreement shall not constitute a default under the Indenture or the Sublease;
provided, however, the Original Purchaser or the Owner or beneficial owner of the Bonds relating to such
Continuing Disclosure Agreement may take such actions as may be necessary and appropriate to compel
performance, including seeking mandate or specific performance by court order.
Further Assurances. The Authority shall adopt, make, execute and deliver any and all such further
resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention
or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners
ofthe Bonds the rights and benefits provided in the Indenture.
Trustee
Appointment o.f Trustee. U.S. Bank National Association, a national banking association duly
organized and existing under and by virtue ofthe laws ofthe United States of America, is appointed Trustee
by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee under
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the Indenture and to allocate, use and apply the same as provided in the Indenture. The Authority agrees
that, so long as any Bonds are Outstanding, it will maintain a Trustee which is a banl! national banking
association, banking institution (state or federal) or trust company with a corporate trust office in California,
having a combined capital, exclusive of borrowed capital, and surplus (or whose parent holding company
has a combined capital, exclusive of borrowed capital, and surplus) of at least $75,000,000, and subject to
supervision or examination by federal or state authority. If such bank, banking institution or trust company
publishes a report ofcondition at least annually, pursuant to law or to the requirements ofany supervising
or examining authority above referred to, then for the purposes of this Section the combined capital and
surplus of such banh national banking association, banking institution 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 Trustee is authorized to pay the principal of and interest and redemption premium (if any) on
the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel
all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts
administered by it and of all Bonds paid and discharged.
Acceptance of Trusts. The Trustee accepts the trusts imposed upon it by the Indenture, and agrees
to perform said trusts, but upon and subject to the following express terms and conditions:
(a) The Trustee shall not be liable for any error ofjudgment made in good faith by a
responsible officer of the Trustee, unless the Trustee was negligent in ascertaining the pertinent facts.
(b) Whenever in the administration of the Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting any action under the Indenture,
the Trustee (unless other evidence is specifically prescribed in the Indenture) may, in the absence of bad
faith on its part, rely upon a Certificate of the Authority.
(c) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by the Indenture at the request or direction ofany ofthe Owners pursuant to the Indenture,
unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinioq report, notice, request, directiorU
consent, facsimile transmission, electronic mail, order bond or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(e) The Trustee, prior to the occurrence ofan Event ofDefault and after the curing or
waiving of all Events of Default that may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in the Indenture and no covenants of or against the Trustee shall be
implied in the Indenture. In case an Event of Default under the Indenture or under the Sublease has occurred
(which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it
by the Indenture and by the Sublease, and shall use the same degree of care and skill in the exercise of such
rights and powers as a prudent person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(D The Trustee may execute any of the trusts or powers under the Indenture and
perform the duties required ofit under the Indenture either directly or by or through attorneys or agents,
and shall be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture.
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(g) The Trustee shall not be responsible for any recital in the Indenture, in the
Sublease, or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for
the sufficiency of the security for the Bonds issued under the Indenture or intended to be secured by the
Indenture and makes no representation as to the validity or sufficiency of the Bonds, the Indenture or the
Sublease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of
any covenants, conditions or agreements on the part ofthe Authority under the Indenture or on the part of
the Authority or the City under the Sublease. The Trustee shall not be responsible for the application by
the Authority or the City of the proceeds of the Bonds.
(h) The Trustee may become the Owner or pledgee of Bonds secured by the Indenture
with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences
of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act
as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity
with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such
committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then
Outstanding.
(D The Trustee may rely and shall be protected in acting or refraining from acting, in
good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, consent,
certificate, order, affrdavit, letter, telegram, facsimile transmission, electronic mail or other paper or
document believed by it to be genuine and to have been signed or presented by the proper person or persons.
Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to the
Indenture or the Sublease upon the request or authority or consent of any person who at the time of making
such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding
upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof.
The Trustee shall not be bound to recognize any person as an Owner ofany Bond or to take any action at
such person's request unless the ownership of such Bond by such person shall be reflected on the
Registration Books.
() The permissive right of the Trustee to do things enumerated in the Indenture or in
the Sublease shall not be construed as a duty and it shall not be answerable for other than its negligence or
willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers,
directors, employees and agents.
(k) The Trustee shall not be requiredto take notice or be deemedto have notice ofany
Event of Default under the Indenture or under the Sublease except failure by the Authority or the City to
make any of the payments to the Trustee required to be made by the Authority or the City pursuant thereto
or failure by the Authority or the City to file with the Trustee any document required by the Indenture or
the Sublease to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be specifically
notified in writing of such default by the Authority or by the Owners of at least 25 percent in aggregate
principal amount of the Bonds then Outstanding and all notices or other instruments required by the
Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Offrce of
the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no
Event ofDefault under the Indenture except as aforesaid.
0) At any and all reasonable times the Trustee and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers
and records of the Authority pertaining to the Bonds, and to make copies of any of such books, papers and
records which are not privileged by statute or by law.
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(m) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises of the Indenture.
(n) Notwithstanding anything elsewhere in the Indenture with respect to the execution
of any Bonds, the withdrawal of any casb the release of any property, or any action whatsoever within the
purview of the Indenture, the Trustee shall have the right, but shall not be required, to demand any showings,
certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be
deemed desirable for the purpose of establishing the right of the Authority to the execution of any Bonds,
the withdrawal of any cash or the taking of any other action by the Trustee.
(o) All moneys received by the Trustee shall, until used or applied or invested as
provided in the Indenture, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(p) Whether or not expressly provided therei4 every provision of the Indenture and
the Sublease relating to the conduct or affecting the liability ofthe Trustee shall be subject to the provisions
of this Section.
(q) The Trustee shall not be considered in breach of or in default with respect to any
obligations created under the Indenture, in the event of an enforced 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, acts of a government, acts of the other party to the
Indenture, 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, litigation or arbitration involving a
party or others relating to governmental action or inaction pertaining to the Leased Properties, 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 ofthe Trustee; provided, that in the event
of any such enforced delay, the Trustee shall notify the Authority in writing within five business days after:
(i) the occurrence ofthe event giving rise to such delay, (ii) the Trustee's actual knowledge ofthe impending
enforced delay, or (iii) the Trustee's knowledge of sufficient facts under which a reasonable person would
conclude the enforced delay will occur.
(r) The Trustee shall have no responsibility or liability with respect to any
information, statements or recital in any offering memorandum or other disclosure material prepared or
distributed with respect to the issuance of the Bonds.
(s) The Trustee shall not be liable in connection with the performance of its duties
under the Indenture, except for its own negligence or willful misconduct.
(t) With respect to moneys have been released or withdrawn in accordance with the
provisions of the Indenture, the Trustee shall not be responsible for or accountable to anyone for the
subsequent use or application of such moneys.
(u) To the extent that the Authority or the City has caused to be fumished to the Trustee
an opinion from Bond Counsel or other counsel of the Authority or the City, with regard to legal questions,
the opinion ofsuch counsel shall be full and complete authorization and protection to the Trustee in respect
ofany action taken or suffered by it under the Indenture in good faith and in accordance therewith.
Fees, Charges and Expenses qf Trustee. The Trustee shall be entitled to payment and
reimbursement for reasonable fees for its services rendered under the Indenture and all advances (with
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interest on such advances at the maximum rate allowed by law), counsel fees (including expenses) and other
expenses reasonably and necessarily made or incurred by the Trustee in connection with such services.
Upon the occurrence of an Event of Default under the Indenture, but only upon an Event of Default, the
Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held
under the Indenture for the foregoing fees, charges and expenses incurred by it.
Notice to Bond Owners of Default If an Event of Default under the Indenture or the Sublease
occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as
provided in the Indenture, then the Trustee shall, within 30 days of the receipt of such notice, give written
notice thereof by first class mail to the Owner of each such Bond unless such Event of Default shall have
been cured before the giving ofsuch notice; provided, however, that unless such Event ofDefault consists
of the failure by the Authority to make any payment when due, the Trustee may elect not to give such notice
if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not
to give such notice.
Intervention bv Trustee. In any judicial proceeding to which the Authorrty or the City is a party
that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of
any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to paragraph (c)
above under "Acceptance of Trust," shall do so if requested in writing by the Owners of at least 25 percent
in aggregate principal amount of such Bonds then Outstanding.
Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent
instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal
amount of the Outstanding Bonds. The Authority may also remove the Trustee at arry time upon 30 days'
notice, except during the existence of an Event of Default. The Trustee may be removed at arry time for
any breach ofthe Trustee's duties set forth in the Indenture.
Resignation btt Trustee. The Trustee and any successor Trustee may at any time give written notice
of its intention to resign as Trustee. Upon receiving such notice of resignation, the Authority shall promptly
appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such
acceptance, the Authority shall cause notice thereof to be given by first class mail, postage prepaid, to the
Bond Owners at their respective addresses set forth on the Registration Books.
Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee as
described above under "Removal of Trustee" or "Resignation by Tru"stee," respectively, the Authority shall
promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to
appoint a successor Trustee within 60 days following the delivery to the Trustee of the instrument as
described above under "Removal of Trustee" or within 60 days following the receipt of notice by the
Authority as described above under "Resignation by Trustee," the Trustee may, at the expense of the
Authority, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting
the requirements descrive above under "Appointment of Trustee." Any such successor Trustee appointed
by such court shall become the successor Trustee under the Indenture notwithstanding any action by the
Authority purporting to appoint a successor Trustee following the expiration of such 60-day period.
Merger or Consolidation Any company into which the Trustee may be merged or converted or
with which it may be consolidated or any company resulting from any merger, conversion or consolidation
to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all
of its corporate trust business, provided that such company shall meet the requirements set forth above
under "Appointment of Trust@," shall be the successor to the Trustee and vested with all of the title to the
trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its
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predecessor, without the execution or filing of any paper or further act, anything in the Indenture to the
contrary notwithstanding.
Concerning anJt Successor Trustee. Every successor Trustee appointed shall execute, acknowledge
and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment
under the Indenture and thereupon such successor, without any further act, deed or conveyance, shall
become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its
predecessors; but such predecessor shall, nevertheless, on the Request ofthe Authority, or ofthe Trustee's
successor, execute and deliver an instrument transferringto such successor all the estates, properties, rights,
powers and trusts ofsuch predecessor under the Indenture; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee under the Indenture to its successor. Should any instrument
in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in
such successor the estate, rights, powers and duties vested or intended to be vested in the predecessor
Trustee, any and all such instruments in writing shall, on request, be executed acknowledged and delivered
by the Authority.
Apnointment ofCo-Trustee. It is the purpose of the Indenture that there shall be no violation of any
law of any jurisdiction (including particularly the law ofthe State) denying or restricting the right of banking
corporations or associations to transact business as Trustee in suchjurisdiction. It is recognized that in the
case of litigation under the Indenture, and in particular in case of the enforcement of the rights of the Trustee
on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction
in may not exercise any of the powers, rights or remedies granted in the Indenture to the Trustee or hold
title to the properties, in trust, as granted in the Indenture, or take any other action that may be desirable or
necessary in connection therewith, it may be necessary that the Trustee or the Authority appoint an
additional individual or institution as a separate trustee or co-trustee. The following provisions of this
Section are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution as a
separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by the Indenture to be exercised by or vested
in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee
or co-trustee but only to the extent necessary to enable such separate trustee or co-trustee to exercise such
powers, rights and remedies, and every covenant and obligation necessary to the exercise thereofby such
separate trustee or co-trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee or co-
trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such
properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Authority. In case any separate trustee or co-
trustee, or a successor to either, shall become incapable of acting shall resign or shall be removed, all the
estates, properties, rights, powers, trusts, duties and obligations ofsuch separate trustee or co-trustee, so fztr
as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or
successor to such separate trustee or co-trustee.
Limited Liabiliry of Trustee. No provision in the Indenture shall require the Trustee to risk or
expend its own funds or otherwise incur any financial liability under the Indenture if it shall have reasonable
grounds for believing repayment of such funds or adequate indemnity against such liability or risk is not
assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance
with the direction of the Owners of at least 25 percent in aggregate principal amount of Bonds Outstanding
relating to the time, method and place of conducting any proceeding or remedy available to the Trustee
under the Indenture or exercising any power conferred upon the Trustee under the Indenture.
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Modification and Amendment of Indenture
Amendment of Indenture. The Indenture and the rights and obligations of the Authority and of the
Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture which shall
become binding upon adoption, without consent of any Bond Owner, to the extent permitted by law but
only for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Authority contained in the Indenture,
other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers
reserved to or conferred upon the Authority in the Indenture so long as such limitation or sunender of such
rights or powers shall not materially adversely affect the Owners of the Bonds;
(b) to cure any ambiguity, to supply any omission or to cure, correct or supplement
any defect or inconsistent provisions contained in the Indenture or in any Supplemental Indenture;
(c)
powers or authority;
to grant to the Trustee for the benefit of the Owners additional riglrts, remedies,
(d) to subject to the Indenture additional collateral or to add other agreements ofthe
Authority;
(e) to provide for the issuance of Additional Bonds pursuant to the Indenture;
(0 to modify the Indenture or the Bonds to permit qualification under the Trust
Indenture Act of 1939, as amended" or any similar statute at the time in effect, or to permit the qualification
of the Bonds for sale under the securities laws of any state of the United States of America;
(g) to maintain the exclusion of interest on the Bonds from gross income for federal
income tax purposes;
(h) to evidence the succession of a new Trustee; or
(D for any other purpose that does not materially adversely affect the rights or interests
of the Owners.
Except as set forth in the preceding paragraph of this Section, the Indenture and the rights and
obligations of the Authority and of the Owners of the Bonds may only be modified or amended at any time
by a Supplemental Indenture which shall become binding when the written consent of the Owners of a
majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such
modification or amendment shall: (I) extend the maturity of or reduce the interest rate on any Bond or
otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption
premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the Owner of such Bond, (II) reduce the percentage of Bonds required
for the written consent to any such amendment or modification, or (IIf modify any of the rights or
obligations of the Trustee without its written consent thereto.
E{fect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes
effective, the Indenture shall be deemed to be modified and amended in accordance therewith, the respective
rights, duties and obligations of the parties to the Indenture or thereto and all Owners of Outstanding Bonds,
as the case may be, shall thereafter be determined, exercised and enforced under the Indenture subject in
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all respects to such modification and amendment, and all the terms and conditions of any Supplemental
Indenture shall be deemed to be part ofthe terms and conditions ofthe Indenture for any and all purposes.
Endorsement or Replacement of Bonds After Amendment After the effective date of any action
taken as hereinabove provided, the Authority may determine that the Bonds shall bear a notation, by
endorsement in form approved by the Authority, as to such actior; and in that case upon demand of the
Owner of any Bond Outstanding at such effective date and presentation of such Owner's Bond for that
purpose at the Trust Office of the Trustee, a suitable notation as to such action shall be made on such Bond.
If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be
necessary to conform to such Bond Owners' action, then new Bond certificates shall be prepared and
executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such
new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Bond Owner, for
Bonds then Outstanding, upon surrender of such Outstanding Bonds.
Events of Default and Remedies of Bond Owners
Events of Default The following events shall be Events of Default under the Indenture:
(a) Default in the due and punctual payment of the principal of or premium on any
Bond when and as the same shall become due and payable, whether at maturity as therein expressed" or by
proceedings for redemption.
(b) Default inthe due and punctual payment of any installment of interest on any Bond
when and as such interest installment shall become due and payable.
(c) Failure by the Authority to observe and perform any of the covenants, agreements
or conditions on its part in the Indenture or in the Bonds contained, other than as referred to in the preceding
clauses (a) and (b), for a period of30 days after written notice, specifying such failure and requesting that
it be remedied has been given to the Authority by the Trustee, or to the Authority and the Trustee by the
Owners of not less than 25 percent in aggregate principal amount of the Outstanding Bonds; provided,
however, that if in the reasonable opinion of the Authority, the failure stated in such notice can be corrected,
but not within such 30-day period, the Trustee and such Owners shall not unreasonably withhold their
consent to an extension of such time if corrective action is instituted by the Authority within such 30-day
period and diligently pursued until such failure is corrected.
(d) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law of the United States of America,
or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the
Authority, seeking reorganization under the Federal bankruptcy laws or any other applicable law of the
United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any
court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any
substantial part ofthe Leased Properties.
Remedies: No Acceleration Upon the occurrence of an Event of Default, the Trustee shall have
the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the Authority or any member, officer or employee thereof, in order to compel the Authority
or any such member, officer or employee to perform and carry out its or his or her duties under law and the
agreements and covenants required to be performed by it or him or her contained in the Indenture;
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(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights
of the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the Authority
and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners
of at least 25 percent in aggregate principal amount of Outstanding Bonds and indemnified as described in
clause (c) undeT "INDENTURE -Trustee -Acceptance of Trtnt," the Trustee shall be obligatedto exercise
such one or more ofthe rights and powers conferred by the Indenture, as the Trustee, being advised by
counsel, shall deem most expedient in the interests of the Bond Owners.
No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bond
Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to any other remedy given to the Trustee or the Bond Owners under the
Indenture or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver or any such Event of Default or
acquiescence therein; such right or power may be exercised from time to time as often as may be deemed
expedient.
The Trustee shall have no right to declare the principal ofor interest on the Bonds to be due and
payable immediately.
Application of Revenues and Other Funds after Default. Following the declaration of an Event of
Default, all amounts then held or received by the Trustee pursuant to any right given or action taken by the
Trustee under the provisions ofthe Indenture shall be applied by the Trustee, in the following order upon
presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially
paid or upon the surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee, including reasonable
compensation to its agents, attorneys and counsel; and
Second, to the payment of the whole amount of interest on and principal of the Bonds then due and
unpaid; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount
of such interest and principal, then such amounts shall be applied to the payment of such principal and
interest without preference or priority of principal over interest, or interest over principal, or of any
installment of interest over any other installment of interest, ratably to the aggregate of such principal and
interest.
Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an
Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties
under the Indenture, whether upon its own discretion or upon the request of the Owners of at least a majority
in aggregate principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its
discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance,
withdrawal, compromise, settlement or other disposal of such action; provided however, that the Trustee
shall not, unless there no longer continues anEvent ofDefault, discontinue, withdraw, compromise or settle,
or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it
a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding
Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other
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disposal of such litigation and if the Trustee is indemnified as described in clause (c) undeT "INDENTURE
- Trustee - Acceptance of Trust." Any suit, action or proceeding which any Owner of Bonds shall have
the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the
equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is appointed (and the
successive respective Owners of the Bonds issued under the Indenture by taking and holding the same, shall
be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective
Owners of the Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform
any and all acts and things for and on behalf of the respective Owners of the Bonds as a class or classes, as
may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.
Appointment of Receivers. Upon the occurrence of an Event of Default under the Indenture, and
upon the filing of a suit or other commencement ofjudicial proceedings to enforce the rights of the Trustee
and of the Bond Owners under the Indenture, the Trustee shall be entitled, as a matter of right, to the
appointment of a receiver or receivers ofthe Revenues and other amounts pledged under the Indenture,
pending such proceedings, with such powers as the court making such appointment shall confer.
Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or any Bond
Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or
remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of
any of the Bonds to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver ofany such default or an acquiescence therein; and every power
and remedy conferred upon the Trustee or Bond Owners by the Bond Law or by the provisions of the
Indenture described under "INDENTURE - Events of Default and Remedies of Bond Owners" may be
enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the
Bond Owners, as the case may be.
Rights of Bond Owners. No Owner of any Bond issued under the Indenture shall have the right to
institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture,
unless: (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted
or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the
Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with
such request for a period of60 days after such written request shall have been received by, and said tender
of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are declared, in every case,
to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture; it
being understood and intended that no one or more Owners of Bonds shall have any right in any manner
whatever by such Owner's or Owners' action to enforce any right under the Indenture, except in the manner
provided in the Indenture, and that all proceedings at law or in equity to enforce any provision of the
Indenture shall be instituted, had and maintained in the manner provided in the Indenture and for the equal
benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment ofthe principal of and interest and premium
(if any) on such Bond as provided in the Indenture or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the
foregoing provisions ofthis Section or any other provision ofthe Indenture.
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Termination qf Proceedings. In case the Trustee shall have proceeded to enforce any right under
the Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such
case, the Authority, the Trustee and the Bond Owners shall be restored to their former positions and rights
under the Indenture, respectively, with regard to the Leased Properties subject to the Indenture, and all
rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.
Miscellaneous
Limited Liabililv of Authoritv. Notwithstanding anything contained in the Indenture, the Authority
shall not be required to advance any moneys derived from any source of income other than the Revenues
for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof,
or for the performance ofany covenants contained in the Indenture (except to the extent any such covenants
are expressly payable under the Indenture from the Revenues or otherwise from amounts payable under the
Sublease). The Authority may, however advance funds for any such purpose, provided that such funds are
derived from a source legally available for such purpose and may be used by the Authority for such purpose
without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as
provided in the Indenture. The general fund of the Authority is not liable, and the credit of the Authority
is not pledged, for the payment of the interest and premiums (if any) on or principal of the Bonds. The
Owners of the Bonds shall never have the right to compel the forfeiture of any property of the Authority
except the Revenues and other funds pledged to the payment of the Bonds as provided in the Indenture.
The principal of and interest on the Bonds, and any premiums upon the redemption of any thereof, shall not
be a legal or equitable pledge, charge, lien or encumbrance upon any property ofthe Authority or upon any
of its income, receipts or revenues except the Revenues and other funds pledged to the payment thereof as
provided in the Indenture.
Bene.fits o.f Indenture Limited. Nothing in the Indenture, expressed or implied, is intended to give
to any person other than the Authority, the Trustee, the City and the Owners of the Bonds, any right, remedy
or claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements in the
Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the
Trustee, the City and the Owners of the Bonds.
Discharge of Indentwe. If the Authority shall pay and discharge any or all of the Outstanding
Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and
premiums (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money
which, together with the available amounts then on deposit in the funds and accounts established with the
Trustee pursuant to the Indenture, is fully sufficient to pay such Bonds, including all principal, interest and
redemption premiums (if any); or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, Federal
Securities in such amount as an Independent Certified Public Accountant (defined below) shall determine
in a written report filed with the Trustee (upon which report the Trustee may conclusively rely) will,
together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts
established with the Trustee pursuant to the Indenture, be fully sufftcient to pay and discharge the
indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their
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respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such
redemption shall have been sent pursuant to the Indenture or provision satisfactory to the Trustee shall have
been made for the sending of such notice, therl at the Request of the Authority, and notwithstanding that
any ofsuch Bonds shall not have been surrendered for payment, the pledge ofthe Revenues and other funds
provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the
Authority under the Indenture with respect to all such Bonds, shall cease and terminate, except only the
obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and
paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all amounts due the
Trustee. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds
pursuant to this Section, which are not required for said purposes, shall after payment of amounts due the
Trustee under the Indenture be paid over to the Authority.
Successor Deemed Included in All References to Predecessor. Whenever in the Indenture or any
Supplemental Indenture the Authority is named or referred to, such reference shall be deemed to include
the successor to the powers, duties and functions, with respect to the management, administration and
control of the affairs of the Authority, that are presently vested in the Authority, and all the covenants,
agreements and provisions contained in the Indenture by or on behalf of the Authority shall bind and inure
to the benefit ofits successors whether so expressed or not.
Execution of Documents bv Bond Owners. Any request, consent or other instrument required by
the Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of
substantially similar tenor and may be signed or executed by such Bond Owners in person or by their agent
or agents duly appointed in writing. Proof ofthe execution of any such request, consent or other instrument
or ofa writing appointing any such agent, shall be sufficient for any purpose ofthe Indenture and shall be
conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section.
The fact and date ofthe execution by any person ofany such request, consent or other instrument
or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary
public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds,
certifying that the person signing such request, consent or other instrument or writing acknowledged to him
the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request, consent or vote
of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of any Bond
issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the
Trustee or the Authority in pursuance ofsuch request, consent or vote. In lieu ofobtaining any demand,
request, direction, consent or waiver in writing, the Trustee may call and hold a meeting ofthe Bond Owners
upon such notice and in accordance with such rules and obligations as the Trustee considers fair and
reasonable for the purpose of obtaining any such action.
Disaualified Bonds. In determining whether the Owners of the requisite aggregate principal
amount ofBonds have concurred in any demand, request, direction, consent or waiver under the Indenture,
Bonds which are owned or held by or for the account of the City or the Authority (but excluding Bonds
held in any employees' retirement fund) shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, provided, however, that for the purpose of determining whether the
Trustee shall be protected in relying on any such demand, request, direction" consent or waiver, only Bonds
which the Trustee knows to be so owned or held shall be disregarded. Upon the request of the Trustee, the
Authority and the City shall speciff in a certificate to the Trustee those Bonds that are disqualified pursrant
to this Section and the Trustee may conclusively relv on such certificate.
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Waiver qf Personal Liabilitv. No officer, agent or employee of the Authority shall be individually
or personally liable for the payment of the interest on or principal of the Bonds; but nothing contained in
the Indenture shall relieve any such officer, agent or employee from the performance ofany official duty
provided by law.
Partial Invalidilv. If any one or more of the covenants or agreements, or portions thereof, provided
in the Indenture on the part of the Authority (or of the Trustee) to be performed should be contrary to law,
then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and
void and shall be deemed separable from the remaining covenants and agreements or portions thereof and
shall in no way affect the validity of the Indenture or of the Bonds; but the Bond Owners shall retain all
rights and benefits accorded to them under the Bond Law or any other applicable provisions of law.
Payment on Business Days. Whenever in the Indenture any amount is required to be paid on a day
that is not a Business Day, such payment shall be required to be made, without accruing additional interest
thereby, on the Business Day immediately following such day
Unclaimed Moneys. Anything in the Indenture to the contrary notwithstanding any moneys held
by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two
years after the date when such Bonds have become due and payable, either at their stated maturity dates or
by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after
the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become
due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and free from trust,
and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall
look only to the Authority for the payment of such Bonds; provided, however, that before being required
to make any such payment to the Authority, the Trustee shall, at the expense of the Authority, cause to be
mailed to the Owners of all such Bonds, at their respective addresses appearing on the Registration Books,
a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not
be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed
will be returned to the Authority.
Governing Lan The Indenture shall be construed and governed in accordance with the laws of the
State of Califomia.
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APPENDIX D
DTC'S BOOK-ENTRY ONLY SYSTEM
The information in this APPENDIX Concerning The Depository Trust Company ("DTC"), New
York, New York, and DTC's book-entry system has been obtainedfrom DTC and neither the Authority
nor the City takes responsibility for the completeness or accuracy thereof. The Authority and the City
cannot and do not give any asslrances that DTC, DTC Participants or Indirect Participc*tts will
distribute to the Bene/icial Owners (a) payments of interest, principal or premium, if any, with respect to
the Bonds, (b) certi/icates representing ownership interest in or other confirmation or ownership interest
in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the
registered owner of the 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 Jile with DTC.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the
Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate
principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company
for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard &
Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com. The information
set forth in such website is not incorporated herein by reference.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive wriuen confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Ovmers. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds, such
as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to
credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information
from the City or the Trustee, on payable date in accordance with their respective holdings shown on
DTC's records. Payments by Participants to Beneficial Owners will be govemed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trusteeo
or the City, subject to any statutory or regulatory requirements as may be in effect from time to time.
Principal, premium (if any), and interest payments with respect to the Bonds to Cede & Co. (or such other
nominee.N may be requested by an authorized representative of DTC) is the responsibility of the City or
the Trustee, disbunement 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.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a
successor depository is not obtained, certificates representing the Bonds are required to be printed and
delivered.
The City may decide to discontinue use of the system of book-entry-only transfers through DTC
(or a successor securities depository). In that event, representing the Bonds will be printed and delivered
to DTC in accordance with the provisions of the Indenture.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the City and the Authority believe to be reliable, but the City and the Authority take no
responsibility for the accuracy thereof.
D-2
APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as ofJuly 1,2020,
is executed and delivered by the City of Orange (the "Ci$"),and Urban Futures, Inc., as dissemination
agent (the "Dissemination Agent") in connection with the issuance by the Orange City Public Facilities
Financing Authority (the "Authority") of its $[principal amount] aggregate initial principal amount of
Lease Revenue Bonds, Series 2020A (the "Bonds"). The Bonds are being issued pursuant to an
Indenture, dated as of July 1,2020 (the "Indenture"), by and between the City and U.S. Bank National
Association. The City and the Dissemination Agent covenant and agree as follows:
Section l. Purpose of the Disclosure Asreement. This Disclosure Agreement is being
executed and delivered by the City and the Dissemination Agent for the benefit of the holders and
beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with
the Rule (as defined below).
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined in this
Section, the followingcapitalizedterms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and4 of this Disclosure Agreement.
"Dissemination Agent" shall mean Urban Futures, Inc. or any successor Dissemination Agent
designated in writing by the City and which has filed with the City a written acceptance of such
designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
*MSRB" shall mean the Municipal Securities Rulemaking Board.
"Obligated Person" shall mean the City.
"Official Statement" shall mean the final Official Statement, dated June _,2020, relating to
the Bonds.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required
to comply with the Rule in connection with offering of the Bonds.
"Rule" shall mean Rule l5c2-12(bx5) 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 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than March
3l after the end of the City's fiscal year of each year, commencing March 31,202I with the report for
the 2019-2020 fiscal year, provide to the MSRB, in an electronic format accompanied by identifing
information as prescribed by the MSRB, an Annual Report which is consistent with the requirements
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of Section 4 ofthis Disclosure Agreement. The Annual Report may be submitted as a single document
or as separate documents comprising a package, and may include by reference other information as
provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of
the City 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 not available by that date. 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(b).
(b) Not later than fifteen (15) business days prior to the date specified in subsection
(a) above for providing the Annual Report to the MSRB, the City shall provide the Annual Report to
the Dissemination Agent (if other than the City). If by the date specified in subsection (a) above, the
Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall
contact the City to determine if the City is in compliance with the first sentence of this subsection (b).
The City shall provide a wriffen certification with each Annual Report furnished to the Dissemination
Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by
it hereunder.
(c) If the Dissemination Agent is unable to verify that an Annual Report has been
provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a
notice, in a timely manner, to the MSRB in substantially the form attached as Exhibit A, or in such
other form as prescribed or acceptable to MSRB.
(d) The Dissemination Agent (if other than the City) shall, if and to the extent the
City has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a
report with the City (which may be provided electronically on the Dissemination Agent's website)
certiffing that the Annual Report has been provided to the MSRB pursuant to this Disclosure
Agreement, and stating the date it was provided.
Section 4. Content of Annual Reports. The City's Annual Report shall contain or
incorporate by reference the following:
(a) Audited financial statements of the City 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 Annual
Report shall contain unaudited financial statements in a format similar to the financial statements
contained in the Official Statement, and the audited financial statements shall be filed in the same
manner as the Annual Report when they become available.
(b) A statement of any investment losses incurred by the City's General Fund in
excess of $1,000,000 in any Fiscal Year.
(c) If not included in the audited financial statements, an update of Tables I , 3 , 4,
5,7 - 11 contained in the Official Statement.
(d) With the Annual Report due March 31,2021, an update to Table 2 for fiscal
year 2020-21, along with the City's adopted budget for fiscal year 2020-21.
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 have been
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available to the public on the MSRB's internet web site or filed with the Securities and Exchange
Commission. The City shall clearly identiff each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be
given, notice of the occurrence of any of the following Listed Events with respect to the Bonds, which
notice shall be given in a timely manner, not in excess of ten (10) business days after the occurrence
of such Listed Event:
(l) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reseryes reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Intemal 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 Bonds, or other material events affecting the tax status of
(14)
the Bonds;
Modifications to rights of security holders, if material;
Bond calls, if material, and tender offers;
Defeasances;
Release, substitution, or sale of properly securing repayment of the
securities, if material
Rating changes;
Bankruptcy, insolvency, receivership or similar event ofthe Obligated Person;
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, if material; and
Appointment of a successor or additional trustee or the change of name of a
trustee. if material.
(b) The Dissemination Agent shall, within one (1) business day after obtaining
knowledge ofthe occurrence ofany ofthe events listed in Section 5(a) (1), (3), (4), (5), (6), (9), (11) or
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(7)
(8)
(e)
(10)
(11)
(r2)
(13)
(12), inform the City of the occurrence of such event. As soon as reasonably practicable after obtaining
knowledge of the occurrence of such event (regardless of whether the source of the information is the
Dissemination Agent pursuant to the foregoing sentence or another source), the City shall, or shall cause
the Dissemination Agent to, file in a timely manner, not in excess of ten (10) business days after the
occurrence of any such event, a notice of such occurrence with the MSRB, in an electronic format
accompanied by identiffing information as prescribed by the MSRB.
(c) The Dissemination Agent shall, within one (1) business day after obtaining
knowledge of the occurrence of any of any of the events listed in Section 5(a)(2), (7), (8), (10), (13) or
(14), inform the City of the occrurence of such event and request that the City promptly notify the
Dissemination Agent in writing whether or not to report the event pursuant to subsection (d).
(d) Whenever the City obtains knowledge of the occurrence of any event specified in
Section 5(a) (2), (7), (8), (10), (13) or (14), the City shall as soon as possible, in order to meet the ten (10)
business day deadline to file notices required under the Rule and pursuant to the following sentence,
determine if such event would be material under applicable Federal securities law. If the City determines
that knowledge of the occurrence of such event would be material under applicable Federal securities law,
the City shall, or shall cause the Dissemination Agent to, file in a timely manner, not in excess of ten (10)
business days after the occurrence of any such event, a notice of such occurrence with the MSRB, in an
electronic format accompanied by identi$ing information as prescribed by the MSRB.
Section 6. Termination of Reporting Obligation. The City's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full
of all 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(b).
Section 7. Dissemination Agent.
(a) The City hereby appoints and engages the Dissemination Agent to assist it in
carrying out its obligations under this Disclosure Agreement. 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. The City may replace the Dissemination Agent with or without cause. If at
the time there is no designated Dissemination Agent appointed by the City, the City shall be the
Dissemination Agent and undertake or assume its obligations hereunder.
Any company succeeding to all or substantially all of the Dissemination Agent's
corporate trust business shall be the successor to the Dissemination Agent hereunder without the
execution or filing of any paper or any further act. The Dissemination Agent may resign its duties
hereunder by giving 30-days written notice to the City.
(b) The Dissemination Agent shall be paid compensation by the City for its
services provided hereunder in accordance with its schedule of fees agreed to between the
Dissemination Agent and the City from time to time and for all expenses, legal fees and advances made
or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination
Agent shall have no duty or obligation to review or veriff any information provided to it by the City
hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, holders or
beneficial owners of the Bonds or any other party. The Dissemination Agent's obligation to deliver
the information at the times and with the content described herein shall be limited to the extent the City
has provided such information to the Dissemination Agent as required by this Disclosure Agreement.
The Dissemination Agent shall have no responsibility for the City's failure to report to the
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Dissemination Agent a Listed Event or a duty to determine the materiality thereof. The Dissemination
Agent shall have no duty to determine or liability for failing to determine whether the City has complied
with this Disclosure Agreement. The Dissemination Agent may rely and shall be protected in acting
or refraining from acting upon any direction from the City or an opinion of nationally recognized bond
counsel.
Section 8. Amendment Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the City and the Dissemination Agent may amend this Disclosure Agreement and any
provision of this Disclosure Agreement may be waived, provided that the following conditions are
satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a),
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 identit5r, nature, or status of an Obligated Person with
respect to the Bonds, or type ofbusiness conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements ofthe Rule at the
time of the primary offering of the Bonds, after taking into account any amendments or interpretations
of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the
Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of
holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the
interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof the first annual financial information filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form, the
reasons for the amendment and the impact of the change in the type of operating data or financial
information being provided. For purposes of this paragraph, "impact" has the meaning as that word is
used in the letter from the staff of the Securities and Exchanse Commission to the National Association
ofBond Lawyers dated June 23,1995.
If an amendment is made to the undertaking speciffing the accounting principles to be followed
in preparing financial statements, the annual financial information for the year in which the change is
made shall present a comparison between the financial statements or information prepared on the basis
of the new accounting principles and those prepared on the basis of the former accounting principles.
The comparison shall include a qualitative discussion of the differences in the accounting principles
and the impact of the change in the accounting principles on the presentation of the financial
information, in order to provide information to investors to enable them to evaluate the ability of the
City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of the change in the accounting principles shall be sent to the MSRB in the same manner as
for a Listed Event under Section 5(b).
No amendment to this Agreement which modifies the duties or rights of the Dissemination
Agent shall be made without the prior written consent ofthe Dissemination Agent. The Dissemination
Agent may rely conclusively on any opinion of nationally recognized bond counsel delivered pursuant
to the provisions of this Section 8, and shall have no duty to determine or liability for failing to
determine whether any amendment made pursuant to this Section 8 is consistent with guidance
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provided by the Securities and Exchange Commission with regard to permitted amendments, or the
manner of effecting such amendments, under the Rule.
Section 9. 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 notice
of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the City or the Dissemination Agent to
comply with any provision of this Disclosure Agreement, any Participating Underwriter or any holder
or beneficial owner ofthe Bonds may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the City or the Dissemination Agent,
as the case may be, to comply with its obligations under this Disclosure Agreement. A default under
this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole
remedy under this Disclosure Agreement in the event of any failure of the City or the Dissemination
Agent to comply with this Disclosure Agreement shall be an action to compel performance.
Section I l. Duties. Immunities and Liabilities of Dissemination Aeent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and
agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the
exercise or performance of its powers and duties hereunder, including the costs and expenses (including
attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent's negligence or willful misconduct. The Dissemination Agent may rely and shall
be protected in acting or refraining from acting upon any direction from the City or an opinion of
nationally recognized bond counsel. The obligations of the City under this Section shall survive
resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
To the City:City of Orange
300 E. Chapman Avenue
Orange, CA 92866
Attention: Assistant City Manager
Phone: (714')744-2235
Urban Futures, Inc.
17821East lTth Street, Suite 245
Tustin, California 927 80
Attention: Continuins Disclosure
Fax: (714\283-9334
To Dissemination Agent:
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Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners
from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Countemarts. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of
the date first written above.
CITY OF ORANGE
Mayor
URBAN FUTURES, INC.,
as Dissemination Agent
Authorized Officer
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING
BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Orange City Public Facilities Financing Authority
Name of Bond Issue: $[principal amount]
Orange City Public Facilities Financing Authority
Lease Revenue Bonds. Series 2020A
Date of Issuance: JuJy _,2020
NOTICE IS HEREBY GIVEN that the City of Orange (the "City") has not provided an Annual
Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement,
dated as of July 1,2020, by and between the City and Urban Futures,Inc., as dissemination agent. The
City anticipates that the Annual Report will be filed by
Title:
cc: Assistant City Manager, City of Orange
By:
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APPENDIX F
CITY OF ORANGE COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR FISCAL YEAR ENDED JUNE 30. 2019
F-l
[THIS PAGE INTENTIONALLY LEFT BLANK]
Oranae Citu CouncifUJ
MAYOR
MARK A. MURPHY
MAYOR PRO TEM
MICHAEL ALVAREZ
COUNCILMEMBER
KIMBERLEE NICHOLS
COUNCILMEMBER
CHIP MONACO
Cover designedby lamey Taulbee
City of Orange
California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30r 2019
Prepared by:
FINANCE DEPARTMENT
Will Kolbow
Assistant City Manager /Dfueffior of Administrative Services
Elected Officials
CITY TREASURER
zuCHARD A. ROHM
CITY CLERK
PAMELA COLEMAN
lrfiroduetory Seetion
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Reeoneiliati*m of ttre Balsnoc Shset $f6ovrrrrme,&tal Fundeto &e
Sieterugfit *fNEt Fo*itigg ey-"..o4a"a,,,4.,,....4,4,...!,,',.,.t...,.,r,r ...,,,,..4,r,,.,3,.,"*,,V3
Slstemsn* ofRwenues" Sxgr,ordilum nnd ehanges in Flud Bnlsaeep,,. ,.."",24
Reconciliatioar ofths Statement of Rsvenuss, Expendinnea and Chenges in
Fur.d Fnlances of Oovemmantnl f'unds to the Swememt of Astlrvi,aw,,,",.26
frop{etary fundt:
$talgmex af Xet Poeltiar ..-,.\.,,,,,..,....,,...,,,r,..,..... ,"",,",,.,"""".,""",,."27
$ atsrynt o f
.fi
.evenugs, @;rrlw*a and Changes fu f wl N &. Y asttiry,. :.,, y. " :28
$tetemsnt qf fash Plows ",,.,.,.,"".*,,--".."'29
Fidrxr;*ry FVrMs;
Stskntenlsf9Ldw{ieryW#-Ys*i&gN ,,,,.,,,,,,,\,..,.,.,1.,,..,*,.,,44,*.,,"3$
Swt"vxwrrf ehangesinFiduciaryN&Verrthwt-yfurstry-f,WwTr\&
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TABLE OF CONTTNTS
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0.C.P"T. Euilding Maintsnnnpe .,r,.,.r,.,.r...... ...........105
Landscnpe Mainrenrrre A"s$essmfrtt Di*ricts ......106
X%reeWW@*,44.,,,,.1.,,.,,.u,'.4,**,..r,,,.,t,.'.4....rt&,,,.,,.y1.,1.)",,",.',':.rr,r*ru"urrrrr\{&V.
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Budgr*afrr Comparisoar Scbpdules I
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'eawhAwtggWerWt*fM*,Vaxtegn,r,.u.t.,,,,,..,,,4t.i,,,,.-,,.r..t...,,.,*4.b,,,.,..r,r1u*122
kffi rnvgfl'Wt6f &"wwt*x,&rywMeqwffi tt\W&Va'l,,t*w,3&4
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enmbtning &rMe of, Changoc in Axwtx M :t e&ilLw*e-AFmrsy F r;ra$*,,, 13*
TSTATIsflCALtfffffXo.Nr,
HetPositisn by e*mpnwt -Lnst Tbn fisf.tl 7f&w,",.""*.r,...i.ri,,,..:..!, ..".,..."",.."*134
Chmgcs lnNelPosition - Gowrnmental Arrivities - tnst TeuFiscal Ysws,,,,,,,1&6
Changer ln Nsfcslti{t{:- Businare-rype A$vttw- LwtT*npist}al Y*tts",".,,"13*
Fund Bnlanwx rf ffiwwrnmwtul Fgndr - T.wtT*xfftrgqal Year*,., ,.,.,.,..,,,..,.,**,,"14*
Changsr in hrd Balances of Govemmerral Funde - Lasr Tcn Fisnsl. Yews".,..,.L 2
Assessd Ydrw.aad-.Fntimatsd A,ch&l Valw stTwffie Property - Larr Ten
Fiwgf Yecr9,."...,,. ..,..,,,...,.1..,..rr.,,.r.....,..r,,i ,....,,,,,,",.,,.,".,144
Direct gtrdWwTwfugproperty Tsx Rat6s -Lu,stTsnFiscel y&aru,..,...., .".,"..,..1N
Prineipnl Fra1rmf' ryTwpryers-Cument Year and Nine Years Ago,,....,,,.,,..,.,",,",148
Proper{y Taxl,wiw and Colles.{iong - LsstTcn Fiar;el Yesr$..........-.."."."".."",."",,,1.49
Rarios nf OutxtsndingDebt by 1}pe - larTwtFixsd Yems ,".,"....".25fi
Ratips of Gsnerel **ndwJFisht&nt6{orrding- Legd,Tw pisc$l Yrars ...,,,*,o""*,,,."752
Direst *nd Ov e*ryl$wgDs.b1, "", "..,.,,,,.., *,.. 1..,...,,
I*lplDebtW[at$nlxfr*rntahw -tr *tTsn Fiscsl Ywra.,,..,.,,.,....q,"*,",u.n,",,",.",356
Pl@ged-Revanuef,nvuage -I,sst Twfiasa|Vawe"..",.,".,.......,...,.,,...",.,.".,,,...-."L5&
Danograph$r surJ8r,rywrxtir,Statr tfia*f",exrTenPlwplYwrs"..."-". .,"....".........."359
Pdrlcleql Sryl*ywx - f,ttrrw*YearandXiwYwra &5,,,,,,,...,,.,*.,.,.,.,se.",,"","36?po11"$nrYquzvdWbyFutxfi*n-t"ectYmrz€leed,Ywrc ."."".","",".",t61
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iv
CITY OF *EEW#K
'WffiW;,,,,K$W*.,. .'-,**vW -- ry:*X\%,M.:,
b@rg;xtw'
Ts the Honorable Mayor" C.ity Comcit and City Manager of the Lriry of Orange, California:
The Cornpreheusive Annual Financial Report (CAFR) of the City of Otange (City), as pneparod
W, .M'Wx?iorrmce Dcparunenl ia hore.b,y ili.a.m@re6,W fo$r informsioa. Staia law @&s,.Mwary r&nrtrda,aryose loeal governmefi fustt1,rilhb, r6&,wr(fu fif'ff& & w *X'@t'&waL
y&r* eomple6 mt of audited financial statvrilrrfr., 'It*xrEon futfilt$ ttnr roquilv&imi fure&
W X, Wr Effi& Ittxs W, g0L:9,
Responsibility for prcparation of thc CAFR rests with rhc City's msusgcmenl" In addirioo,
Wiw es$innes S*1. rcspsrtibility fsr the accuine.f, pomplcteness, and ."liubdttry xf &e
tfursfrarroonhined ir this @"laaeed upon a comprelrenrive frameu'ork of iqtarusl cq,@k
{h*lkwpMasrabli$hsd &r'&i*prnpose, Pes$rs; ths W ryf 1,dr,?fryaelconfol* rhould net sM@6$ bmefib, fue a$lwrwt*ro pruviite ne*sonebl erryff{lqqwEb'cslute, $s$ilxgsqs &wW
&nstfr*jral statiaerent3 sre lbes ff.,W rn6ifri4l rnisgtatsrrnntr k,fu best sf our }rr w,lW W&
W&,the enclosed dara is ac{,uryte in all rnaledal respect* a*d io rnported in ! manmr @6W
to presnt fairly the finsncifll positio'n and results of operalioor of the City of Omng€. All
*kel<r€sncwssaly to ensbltthem*dcr tq gain su.under.siar$xtg.af&eeiry'F finnnshl gr{dyi{dm..
bEYialso bwn inaludd.
thE indWndent accountiitg fim nf lVbite Nelson Diehl Waw ttP (Audihrs) petf@d the
*nrunl financial nudit, u/ftieh w*r dssig06d to ms6t the rq*iremcas of Crovsrnrnent Audtins
$taidqrds. The Arditors hare issrrd an unmodifiod f'cle{rf'} opinion on fts Crtyls eneqeir/-
statements for the yenr ended June 30, ?019. The tndependent Audibns' Report on the CAFR is
itrlu{gd at &e fnont of the fingneial r*e*tion of thie teport.
The Managcment Discussion and gnalysir (MD&A) immcdiatcly follows the Independmt
Audit0rs' Report and pvides a naitative intrndustioni's-ffiview, and analysir of the basic
fidrueial sbtenprrtx. Thc MD&A eornplcnente thls tensr sf wmltlal and &sulf W gs$tn
conjunction with it.
PROFILE OT'T}M CITY OF ORANGE
The City of Orange. with a presmt popnrlation csti$nted at l4169l is situsted in eentml OrarryB
Counry, appmximmely 32 miles southeast of Los dngr,les. Ihe Cityts land arca is ?4 sqrrare miles,
y6p/&rtiaew**stx4lhw* of ;,x&t@' is 62 square miles.
&w&*teq:*r{r& &"wvx*i*@eW*.ee.@'We ry''&l1&8&*W, NgXWw O8AUCE. Ct SCS0C,'!tO8
''tk* *W wery tnwte&tn 1&*e
wMtwWw fww *E Ww*rt6g,* e wy&, 'ix ,*?qM ' ^tery
two ysars and fiour rnrincil
wwW ws &wtr& *e fu *i -y xw tww dwrw6ng w w wry$w W*{x" W* QW Wwguq - v@ k
fu&wilwe&x *ffixWwf &*W,t*rypwrAWby& ttty &w&.,
W C&W W&e* u t&l wee *f xwviwc.f&r ee etuw Ww swMwfxbeWe Mw fury-
praxx*&*, wwwnay **axprt"N3*&t r&bw, tw'r*a**s wA WrW, reerw r;w&wu pemrirrzu @
&w Mmwi, W,sct rsWrx'r axxe* s&e &&M M ffiwf .et &rx*ws*w' W W &w (t@ee.ee'
s wster utitity ewl cewwe tw rsfiwv swilw&rew *&wn, Ix &elfrgn* &* W niravides aid to iu
ei tjrens in ths form ef e*Meie w& wwiNl rMlM**nlww and wrz*wle Md.spwW"
Tbe fornrer Orangr Redevelopmenr Agenry wa.s o r'omlgrnsot unit of the City mtiJ tto
WwmxwZnn Qf: W, W. X&, wWe &i,wwk&& feifaryeeWwebwWt e.e@w qffegswx
IwW &3, zrytz @.xur&*{*tr AW:u e 8M&. ewd*ee w & M &wry wwp wwxws&w W
erA.*qeWr eW* Wffixwexfuq*. W,Cw,pre,w@ti,w*.?4w;t&ffi-6nra l,xs*u*&*x**xwt &,gawy
tn M &&welapmom Agcncy, 'ryb* *s*w,*W Wx WW gw@% Wv& w
N&k*x w &$w M *uaWwq*,ww ev $vxw gW &wr& {effi wx& *wa brya*txW *{ FWe
WiW " Wf kMwx &trrc tr*w &a *tr*xry*;XAaw dww w$ $t w@ W %&e"' M$l pwt*er
W W Wswe&,M tbe .Ww*wr:&Lww &et {et&'
'fue ew*&b*e@k @@ey 1W te W &Z M wf.M @ *w x&a,xr*, eoquistem witb
gwtwffiy w,WW wsxW W'WwWkwerzt*rye&@ wwv* wwpStazw,S.t**'
2,6 ryvwwinx,e' ffi . $theri ln the xppqr t@,bt&@ sx aWw & ur WsN& W M.rW e*xre&\
eca\eM*{keyxw;C&tyWwrrywnab.Tefqzww:&x:rWW'@eMg*fux*'&w$*e;
W W*W &x WW@ W ee& eW @.s. 6!iw), ur&, 4&i$ €w"w WqW., TwawWx.&
xWgwn&*xab&rra fas&,bwwx*x dc;mrtrnents *ithin a Ww&".ss&bww @\xA'exdtluv w
*W WrA** W& wxW'&s& Www.slas*ifioarion within e" &qWWW", W@ Oty Codncil
erywd. M sW,&&wWs dtryp*'@w&wwxwx{b* ;*@e*t$ mw&sWr.appuvd.
LOCAT ECONOMY
&* W@ ryrzgxxg x fu* W W ew,wgp hw *exftfuM xw \wtq1vw since r$ Crr&l Recessioa
*wM WS MWWr & Wvxwe* &Wr W,etxg W NV tnx, snnsie*rt ewwryt W'
eVqrysw@Wx, ard fes{t hr scrvrw)*M&,eeyW Mr?Wg,w,. TW.Wury:a.lwry&
r,dtwwt* weee'&s rax. increased fi f7w&2ry&tw 1$ffi.i*&x& ,Yxx&fiwW,p.&w'YivwtYw WW Wesey M@e*Yuels incresse in x;rvlr:rMM&W@q**ec*@Wee
wholr:sale fuel di sriburors.
{x eryM:WWswww"7rw,t*,@&t"effirwrryerthcpnory6sr. lxsq*xdv6&wx
continue to climb foliowing ths dccfirag€s duti:og tbe Reoe$ioa, and a nrbu$ rcal eamre markr-r
bas rcsglted in the rcvaluErionofpropcrtics as they nre trmsfbrod to nsx,rt o$tnrr$, In additiun, fta
earrw* X e|.Mt e*,trw* W W" W Xxwgqsd in rc gtdusl wt uWw,w w w,*!& wt W &We&*rc *
We &Ww &ws@w{WWvwwAgensy'\tiad{nwdi.
lnteresr rat€s increnssd sliglrtty b FY J9 wirh irn'estnrsrts wning Bn average yield of 1.839t.
Ratee gre cxpected to renrnin neutral in F}' X0'
VI
we\w.Mr, Yx,e w & x,*{.tctE}
IiietnricaUy, tbe City's Fegerye Policy providfd for as m$eh as g25% sct-aside of budgercd
*Wre gW ryt4wfus rytm*:W a!;- B designadoo sf tud b,alance (V&WW* furq wblx W@WeefulSwxslWad S.rnd balnn -c*, WewltW vv* sct&rl&&w
provjdg a contingenoy bn W xt x Wpphio., or otber sevete' *teMlq xv*M". W {ex@ wg-
asidt i3 173%of FY20 budgeted Geasral Fund opcrding cxpondituroa.
LONO-1]3RM TINANCIAL PTJ}.INIT{C AND MAJOR h{ffIATIVES
V M t* &o &liltcnnt* Public Ernployen*l Xew{r*x WM &e" & W3 ryew@ M, *v\w&
e@yeww,thsetyzmplwwqWwWa4w&r&ttefftWwswx*wW&eedWeW?t&te
W$*xue&rr1rrewsnt W*twr {effi.Wff*r'E}ltx ayxtwr prw,$&as &*ry * wawne 6w xt r&uw&
@riWW bamfit& effsctive for errrploye*r lrrEd *fur lan*ary' t,.Wg n&o ars qlw sW 'W
XeW, X inplurlss aretfuamwtbwfit af 2% at 62 for nrisocllaa?ous employe*e and?,VV.g&
SV"Wxxtmy enploywg" w&@trs*Wt*ywenstrib{d{rn Mwt:rf $.VSY&M&l2Wa,ryr,*tk*&y,
&vw.tb*'Iqrggtarl& ihis rrrluned bwe,ffiV&w ic A6aig0pd trrdecmaxe x&remtafrcwts for tlw&rg"
&vwt?,aw30,2fil9"tfuresraV3& nttheCity'r 6tf cmpl*pes (36.8%) ar thir lsvy,F Awxt
@rytWssfits.
W* TaX f;hnring Pnogrnn: XttWw 2fi13, the Cify Caurwll ee*e& Ordinnnc,a No. &13
w UAebega Seles T$r Shring Yx*Kryt&s s neweconomic dsve2m.Werlt lncenlivr to prom&e
W\wxs'Wwh and jcli smtltiot!, w&te nr:rhnnce the ecsnomi*baxetbwugh inweased sales Xax
Ww6,A"mtW City of Orange. l.ir&wfu* Salas Tzur $baring Ywrymn &e City aroy sntsr v&n w
YwrhaW&**.4'psemcm ffih ths $wn ts nf eoci*tiagar uerr lgqa),,Wsq&Fcs ih61 Benerste tdst
tExravw*ain provide f,w cconomi* develnprnent incsntiver, Q:Ar y,ihr City han Ponicipntimr
Agrewlel0rur-with onc eutjty,
Yrrtvtdfng for Internrl $crviee l'undlng flS4: fire eity w(Wtfms *sv€ral lrtcnBl Servlce
fr:nds U,$n, The Ciry eandnneg t* Mrw r€servsn in the Wo*cm' Compensstinn md GEneraf
lJebtltry fiurds as it ctrives ta clocc pui a nuurber oi'nldEr c,lximx, AlLnsrilinn* tn othrr ISSa
i MlMe the Enrp loyee &*sr*e& I;rx}r'll$ &nd {*ee belo w|, Equlryeat &{nioien w;,*eo Eqvlprwxt
&Wlxwww Tnfrlwtatian 9ysk*rax" wfi Cclmpu/.rr Rnplace.mmt ft&s, rusurr adequalr futurp
hmdwralbr pseh pfthosc reqpcctive functisn&
Ksti;rem*ut{rxtfner*ssrx;t.&*gsrt*f&vkplwrrxf*3Jy fundafreitkwwtrplansvrixhia SQyvxw,
QetW a&lisbr& s Nw ts &rw.6&&lW fusrsew weldbffi*re rcl*x r:v*t u fivv.yw Nwd,
Wwftnetnw t6. laaEldition, chnngrxinaeuxen&L.wwmp{iranxMx*&*xli&*x,ryrtawyb**
txM.,eirerwt *sM far &l wgparc,iw, f8 VY \3"'W{ CMuA ,x&Mzdxr& w Wrexxgwy
r*Ww b M, WNW w Wwxwl t*&ttblS YwA &3e Wa*$s Mw tx h* tw& ra atr*$. &Mrx
r&wxtw w&K. WW $ww K*& Mv * ue ye, Wn M, 86.2 wWsqn bw bsw wz &&v w 6
trw*3.*,Wrg-
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Tb*. Wepwut*w eg M ee*VW. w&& x** hssrc Ww, wplishod without the, efficient and
&&i**t& xwls* &f the Finance Deparlrnrs@* M&, Ww*'s**dt&xt* Wws urx xgryr&xffixnt*
w$. wew. st &q WWwW & .xxaLsW @6 *WfM@ w fu Wb&e of this rcpsil.
Wv6ey &xx lx*nwfug d&&Nrax' a fuw&*t wWffi &W *w" Yl a M 6gte*ix* &* w*swxwe. Mrry&v&*xrn*&Iwtuwn* d&vzg WAt*e'w&eW @twWtupt@M@&WrQe&* S@ald ryrd$L*w wf tW Ctry drewYtWe*M Xw, ew"Ti w&xWrys*M ryry$Naws for thair rtcadfaet qWffi W wW*gfrW'W. b&Wxt sandsrds of
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Assigant City Managa
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CITY OF ORANGE
Organzation Chart at June 30,2019
CITIZENS OF ORANGE
City Clerk Mark A. Murphy, Mayor
Michael Alvarez, Mayor pro tem
Kimberlee Nichols, Councilmember
Chip Monaco, Councilmember
Commissions &
Committees
Assistant C ity Manager/
Community Services Director
Assistant City Manager/
Administrative Services Director
Community Development
Director
Police Chief
Library Services
Director
Public Works
Director
Human Resources/Employee Relations
Director
ix
ELECTED POSITIONS
Mark A. Murphy Mayor
Michael Alvarez.. .....Mayor Pro Tem
Kimberlee Nichols... ........Council Member
Chip Monaco..... .....Council Member
Richard A. Rohm.... .. City Treasurer
Pamela Coleman... Citv Clerk
ADMINISTRATIVE PERSONNEL
Rick Otto. ..City Manager
Will Ko1bow......... .......Assistant City Managerl
Administrative Services Director
Bonnie Hagan....... .... Assistant City Manager/
Communitv Services Director
Gary Sheatz .. City Attorney
Tom Kisela .... Police Chief
Christopher Cash.. Public Works Director
Christopher Boyd. ... Fire Chief
William Crouch.... .........Community Development Director
Monica Espinoza. . .. ....Human Resources Director
Dave F. Curtis...... ...........Library Services Director
Finaneial tection
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t**n*,tewr&t1 *W,eum*r)
of tlre Ciiy oCOrange
&wg*a,&tri&mitra
Report os the Financtal Strttments
Wry Wq wM M. aWryryyyqe en&eel ,WW of the $pvrmmental activities, the
WMq"WW@i&s,&4&eWwetrte"@MW fuetryWwthw,&€e&,W &f
ewg, Wew&a.tthn Crty), ac of and frrt fu yw M $ttw W, Wr*, M ew M.M x@d w'&x
Wi.c' ffiM*'W -wnt8, lvh i ch callwtitt*l{y @. es. &W' x M&c'{trxwraL &Me. w. W t*
thc aablc of conteuis.
lltanrgcmcnt'* Rrspon*ibility for tbe Flnrncial Strtementl
:rc. @ W *** W*ry @fut @ry, st W;ta'ftstencrli ct&t€mena in
@W wte sww@ eqt$W Wrtry&y W Yb rbs W{t@' q cf America; this
i&dl1dry.W @gr k iiw tm& wtcW* 8f W@@*gttwe*x,re M @
wr6 W Wwwfun *{ {M W,xx*ww Mr. we ke* &w' Mt wxWtw*t, whethor due to
*w&*rww'
k&l**WweW
&zy, @&f ix ra ryw "pfu66.M
oq these f^swr'e* MeW w &rw wM' Wv
see&rM bw ws6c tyt @ rytW MW e&ewe. MW w@ wt rbs Usk& Xww 6f&M'ee M @& wri'*aet* * .tW?at @*? w@M. rs &ttww@ Aret&W Xreed&,t -W tW,@&Ll.ur WM q{ tbe.Vaix@ qry,Tw xtw&x&,*@r& W,*w {lw @.
we@ fu w& t* ett*tx wwe eM* &^* w w fuw,e. ew w w wMe&W,9"
$81 W*t twer@ peryW'We.W W,W cf'Ielt A@gc abn d the amoun8 ard disc l osure3 in
W W@r, wwrte" W @rw. MeM Ww&,'w, M @* 3u@wq WreW ery
W, af 'W M & wted&L wWntw'*f,t&s WN MIW&r.Mhrr due to ftaud or
errar. h nshinx thpec risk ss$essments r,'&* wxdW. 'bt@'Me, MWt.tsfWC.@"*
pteparilion ffd frfu preseaation of ttrc financial stillcmctrb in ordtr to design rudit procedures thst src
appmpriare h tre circumgames, bnrt not for &c prupooc of exprrssing an opinion on the effoetivcnc$s
of thc Crty'c intcralrl W, @ry$y, *ia @w& &e,, rysK;b, $@ M.&e M *&e&p
eeww.&*,w@ww *$)a&,vMM&@'ew w e{ t&g*wmt
@:MW &&,W r*WsW*'x'weJ& ee.w6;&&W wMt6@ 6gt&
finaacial stateilrenu.
W*.&l&w* &W W ar*t w idgrrw wp bavr obtainrd is suffi ci&& M WWit fu Wt$a. w &&x fur,
our ardit opinicms.
faW& We'& &rk*":'.%s*W 1 &&,{3*&ee.We t WWWYK:Y&,wtw t T r r t i''4.t,il,t!
{*Sr$unx,
TA ttttr. w&tWt'*9 &wi:zw& *2&Wwtx,reterrgd to aborp prw*. &t:slVx e e mmcrint respocb, lie
wryry&.v* W@eL posiuon of the govcnunental activiuw , fu Wee,WW .&e*u{t*w Wb wWwfr& ewe W xWWwrx' twMe We te$r,e&e, wf W W u w at {ws 9;(1, XXry, wA W @u,tw c
fuaww re frewM W&w wtx&u wbwre @i,ffiwr ry& @wx &qwt W.&e'Xw &w, W&& t*
accordance with acuouniing prrncrph gcncralty aceeptecl in tbe Uuited $tates of A,luerica
ffieherW&r*wx
fupaxt *x Steqtxtr&.&ury1*wrwr*g $rrfurnWftux:
'erwvaxr*x* pfur@tw g ly ws*W,J rn the Urired $txtxx .*( $@*a rtquiru *rar tlre
MW*Wsm*o{e Wr.ix*exew w& M*yxLq Wx&gry &rywtrxuW Xe&etw , &WW& w* MaS*z
&pe,civl' V,ww. ffunds, the lcherldex r*f eMgre fu M Wfusss l1ffiW xn& rMe& raavx, &*
xrfrl&dsx aX pTw Mtxw fsr &e pew*e Nwu.w* M **@rg&*s sf *bws&* zx ** tatal u&ry;
go*W$rBlayntettt beeW'WY.ry $xbilby tnd relard rnrioq t&mb&& ax ka@red Su;:plemenrzuy
Infunn&tan W*f} & M wampxnyipry tffiry t*€ MMe, M prw*r&wJ b.x Wlwnt rhe b*si*
finwctal st&iemanlg, *wb xrtnrwati*W 6tbqu& W, ry ?Wl nf iW bsxxr fLxMi& xta|lwnun]r"r zx
rrryirvd try rh* err.v*rr*wwrxl egxxwtfugWderdx eryry&. wha *ffieLfierx k tx W &e wxwt:$al W &t
fuaeridrepnrdng fur placing the baric furancial statttnents in an nppr@r;x**,upxx*A*w\w,*aawle w
hlxinrieal su*ext, W*ba\q, *ry4lned c&dx;lebrwt&.p@,wer b {ks nSI i& wxrxr&wrx** :llvidn a&ttiry
alanelsrdc genemlty *Wte& is ihp V**@ Sl*f*x *t'&*aenvu, *&i& utlwiy,tr"d. x€ mqlfirir:x *t
nnauxgement *fuur &x, wr*we af pr€,Meg &s k&w&inn and, ewzwry M rnt$xtanw trsr
esnslstsnel With mWxggw*&uo rr;apongryg tu sur swqvwsu4 thr ba*rie ftaxnstd, WWw**, wd ar&*x
lnxrwledge we abtqincd dunng the uudig *f &e bdp frxwqigl staterarnts" We &u wi:t sx?rwr an
apinion or pmvide eW ew:&refre,e oo tlie RSI becausc the timircd prorcdurrr &'*.grst ryfnvirls us wittr
sufiipi&il evrdxnr;* W ffi,WEeeA npinion *r prcvidse e&y q**,ttt''&nae.
0ther l4fonvarittn
$ur $udit vvas uonduete& tsr the purpnxe wf tarMg'cpialur m be ffia*weral rtatements thlt
collectivsly conrprise the City's basic financial sraterncnfs. 'fhl irtroduchnry xecfuxn, e*mbining oad
indivirlual nfil.-maJor ftmd ftrancial e{aismsnt* anil rrhedul*s (oupplwneuhry iwtwrwrion)" aad
statistical sccrifil. axlicw*, k* ffu tablr af conteuts" sre We6€n1nd fur pr:rpar*s of a&&iLwaal ;uulyrrix
rnd ure nor n rcqurcd part of the basic fu*me iri st&tnt'r:ixx,
The supplemrnta:y irrf,srrxaeiw,, *s lxtx* in &e wble ryf *a*ents, ir &* rwpqrzqbilry &f w*gsnunl
nnd qras dsrivfd k*m xnd rdater &r&y lil t w w6*rWin&' ar*uantuzg ax& u&er m*nt* ard 1r
preps.rrg thc bnxic frinevvtel Wx-'e;tn6r.l:s. SU& mtbrxaxtir.lr" ba* betrr zubjet:tcd ro ttre wrx,ittrryrrwsd;we
ryplint tu &* wrJtr nf *t* baxie frnswctsi &tatffi*ete $M a6rW Mfrox*l pt*e&urwx, ixt:\wding
*omparing an$ rx*un*zlwt6 x'wlt tnfurrrxlfian &vw:$y tw &c rtn@yttry w.*ryl;ttttvtg md other records
used to prepw **bxwt'fk't6ertef et&rywwlx w t* &sbaxte &nwx*i& sMwmt* fu*w&v*x, xnd'n&et
sddirrt.md pwr:x*xrwx'fu "aw@**.wrrh, w$sfue& xtqn*&&x Wtty Wt*d w WWntM Wtw *1
Anredrs, lk Mt *piniorl dre supplcrnemt@ *t*ux*atSan b'Wy s@red is cU rwexw&, r*xpxatx in
relation to the basio finetcinl fiatemcntr tnkcn as a wbole.
"fhv bw*&wry M **euxzt& &wM Wvw ww be*u xahja**g te &e wa&&W wwe&tqw wip&& rn
lhe ett& & MebW,&besi*2 Wfwwr and, ucuorclingly, we €xpre{s no opini,w *r Wu'tzdx wy
e"xew&.ww'eeffi"
Ww We@Kpry&r*6by 6*v*rx*xnt &xffing &w*{x&a
te W&&e** *ib Gavernment Audltixg .&sndt dx, w*. ,bwp *x* iwW ,e{tr wpw\ M
Xlw@w X"Z*lgt w ow W$be *f thb e?,V?& tetwx€,&
"ry,:lvrrl
,*vw ffiwaxuxr,*A rrying:.xa& xn
tfier t&*e rx{ ltx rxwpW*e w2*. w:s&p Wvwawx *f laWxu wgp&s6M" ,wrtWwre w& grwt egrwwe
w& &lMx rstW* W p*rywx r,{. &et Wert t* tp &*&e. &x saw, qf wv @tee wt lwew*& *@r43
wxr t*ntlsueJ rxp&x6 *a& wpbw** and.&*, wsAtx *f &wtx&g, *M we w prgw** atr sg\ryzw *s
e& tx& el' ery*W*l over financial reporting w.w *ryw*ltwnsp, Wf zry*rt zx m mtegr& pW rK w
wue$ $ryrfwwe*, m auwx&w*e udzb. ffs\te&t t W &w&iing &*e&ar& tx wxxlMry&w &tV'x inwrnaS
*WW&wq*fuM*We'@wwMee,
e&e"rue,* $&sea,W@) ef
kvtrt*,C&&fsrxxla
WM*r'e,2*t*
Ws Wee intentinnq[y lsft b1]*&
Managemertt'l Dbewai;on
andAnalyai,t
waw&wwr.?*&NWWW,,ffi,,W&;*XW
Ybq WtWw wf el* Nutaylnlen t' s Di scils&im e64 WWw w'% *XrypW.. we wM'ee
lnryqial lhare$ in M W. *r maxW Ww&e6rlt $twwite t*r Vtee&U *,st 2&t:&r?W' Mx
au alyr b wil | ft cus on &rx xxg&fiwV t*wEw lx,wt ffil' fu x@A;* fu*.*&$ u w w*Xewe*
Wt&6**" 'W* ryqettrwreeewtu M&w ev*MafitwryMe@ if @iunction't& Wty ae&uwr ts-Mb&t*e MM i n o ur la{t€r of Tr avttpMt&, 6pW te rW 3' i n n n ci ol
WWa&W\tatt'*&&Mqx
OVARVIrW OT'THD T'INAI{CIAL STATA,ME]{TE
Ttw etsetwsn end srt ide.v *M&"@ to $crre ns sn intnoduction to the- City's g&
eW6* Sbkyrrrg|,tsr r&i*k sxp wWM *f *trw wntwmtel {1} &ovwwnMbwtds.
FWxeisJ *xmwrtx; 14 rwlt Bb,xad& €ratmmnts. an& (33 N*&. ta fhs Firmri.el
*MrW&,YAxddxtanto&tx&axk:Fiaww&&'rstawgrts:wdrquMfr$u:anrintiqn"fu icrryrrJ
&n* waww o*m xrypl rmralWy ttt/fgxxwxrex
"
6'ffqwm*et{ltitilf Aryncl4i Stc.tem€ngr -'ffie Oovsmmemt-witle Finqncial Starernent* ars
'ewW& w ]anw& rwfiwc wW wW & wwuzew ofthe Ciry'x firzancl &- p*xnury in s mens
&trxfus**&xaf apnvu\*'.x*Wbw,taxsxg, Ybwe qtglm-ents wryrryaM an thr fufi gccru&l
b&sstaw*twtarry. Thur, rwwaesw&wprwus$llrerrpt"rrtext (wr*twvflemgthfltwili n$t
&* ee& fiox's until fulave &craI pwp&s.
Ybe &wwxment.widc Virlweral'*tMW *sparate Govcrnmentd Actlvides lhflt srs
pnncipd.ly itlrppfftu.l by t$rer xnd rsvwttw Forn orhrr agmtrl,xx, &nm Bnclnerc-qrpe
Ae*|v1*wMfsse ntendd Wtw/w &n*x axignifioemt portion, uf,f}ierlr nosts thmuglt usnr
feeg md &*W, TlLe fi*verrwmr*al &*tivilt* of the Cily inrludr &s&rr.al OovcilxmstL
haW* XeW, Fublic Y$atkn, esmwww$ Detclopmmrt Pmb and Librwy, Eeonomic
nw;6op.wwt^ ffril Intsrerl *n LungTwtx Oebt, whsn applicnble. Yh* C,try's two Businesx-
tg* A:ffiriher are Water w&Swnttxtiun,
Tbegtwwrtl of NetFasta*spreren&'w{rrnwtian rn ell rf ths *}.ryt**r,6el;x afiddelbstl
cwrfirwsot:rwtw(es, and tt&r1lifu*rrll-&eWdinfl*weofvmorxqee;ew&tffwwnelietwesrl
fin fnr^rr ix ryv*d *x w\ gnniti*n. Tr*M uryas inelude & r:@4 ttmt inctuding
ink&sVvew, Vvdrzg;ttwrnf;r@ew ar *wrww in nEr pe*itirn xvw *w,x will um;e es a
xtxeftA tsfussrqr *t wlrlrl&sr es &nwd&t pmbw *tifie Ciry ir inryrnutmg *r &wliwng.
'fbV 8W x rf Activities pre*ents in{swxie*am w '&e v& m& nt *adl
fuX*u \M;NvW dwxn&*t$%:wxLytwt, This xh*lwaw&dw rAWffiw &a'wnnu*r a{'Ewct?l
rcverruEr needed to fi.rlly fund ench goverrunontnl functrorl
XWe Xgew*d $tturyane A. W& i* e, Wpxryw& 6 rdw&, aeanvCIds tkat rs ae& @ nr n rf8i rr
Wxd ww wwlesw &xt. Wr,b:w, eW*&W& W Wwr&a wxdx&sx w't&$9fu276ry" Yht*
*iW;,Vk* {&K stste, xx&*x& grxtswst&&retw {we srwv*ttpYt* diw*rtwM&* 6w$i ew
wze &x@aW WN\ Wri.gwwtx, & &f *e X;;Ma,*{ fuw *& qwbw ervtW rtu M
@8W*, &wrw@ .$w&x u Vweq'wy Fun ds, and ri du cr*rf YW&.
&gwermmsntx$ .trui&s t@wxt Furul" Special Rovenu*, wM *wvtm a1xl
eW.iWWseteY'wn&xxzxx&*o accaunt for the effne lirnctionsruportd ss
&wwns**s& M,vrtlsg ts &4 ffi*ttwwt&&* Finrrcisl Statcrnmtg"
9*wwe6 MW& && fir*vw*rzt&&* Kine$xl fiWwnw&r VvwA YWrielgWrw&&*wx w &bWwete*qwx @ $Mqw&ry{ xEMffi*rwrwe"'ttese firndr nre reported ruing tlw rnadifitxi aocrual basis oi'rcsrunting which
ww&*rw eeb aru& r*fi s&xr &awzd&. w*.&:*';w.rxx6t{ybc wnM te
*&*. Tbt*.i*tfir rm ati nn is uscful ia *r w\'a&xg &w &ry' a r&WWw XxrMxg
W;ryqrx&:.
'Xkw fux*xx 8. thg Fund Pinaneitf* Wrwwx* *x nwruwor thao tbat of tbe
&sww*tetL&'K.twuuNa& W&ffiw&". ffie WwnwWq& &w& e&w**
W wr& &* &twlwnw* m{'k'wmuw. lLxpenditures, w& &wu*W.zttVl&&&
W*lwzw rWi;x* *,ww,Az&iis* ts W13,we &e wwrivsrbctween the Fund
&W"wka ,*vi& tW e*vq*w,w"w@ *Wr&.Wso W twi**&&m ix
rw&ve hqqry &e &rwwww*.&ee Wwww we WW M &e W
erw**et bwele qt.wwwitas dk&x &* Vrw& WeeWx W @ rw &q
w*eiec& ww&*b@x *f wwwxAng. Thdsc reiconcrlr&wx'w%e fuw&ee
&* Kvxr& VMe& Mwte* & Wgw 23 efi 26,
Pnrpriewry Funds ue Enterpriae and Intemal $crsioe Funds. Thc City ilsc'@dFaMa 6* xwwa*, fur tts Water Udlit)' *n& &W*e*ryrtl*srvM'
te**x& &wvx.rx Yw&,e we wM W {rcrrundnte atrd allo&. x*eW.MW W
v&qw W&*an* The City wa lM *ryvzwYs*e t& allsp&e wu@wS,
eWW ryatWxtwLr@ iz&&,rng,jor buildiqg'wrpwr&Ws**WWwr'gW;Wq *, ryWt@W, @ryW,q*qt@.K&i&& @ wv*W
wwWt@an ; XMW w& *M sel l-insuraocs gosts.
%t &f 6x* n&qre& *wvk* Vva&x we wM wx x"w*Nxt ewe44
WwlMqx im MT@@X viaq{Eiwwx&* &rwet*e, 'W6&M*"WW
&s*" * r tbe t$Wt ee eq,6e f.w* i* XWvSeW- 1x We brm of combiniug
ewt& {szawA qrz pww 3X%tX7.
Strt*r6*ry..ffun{s tAgency wJ V&{*\WWW Txe Y@* W* w& w
wxra6 &t rwww'W*'fur tbe WW&X. & yM weWe& ef *te,CzW' xrs& w
t w Me*ewe *f MW w& ee t** ,eW W4 eeWqw, W*
Yn&&Ki Xfree@**& w t wee%ewwiwlfWwwwq. Vi&eei@*W 'sw W&, ,b..$tee@y V\ree %@M *f lbe busie Pinasris',
WW EM,w M sxe fu*,repqM. W ee Supetcmentary scbodulsg
ssction.
l{oter to the l'lnrncirl Stntomeutr, Tbe trotrs provide adtlitiosill infrrmation &dt is es*etttiat
trx ttrw w&&w W w r&L w@xW& *t &p &e*e wqW M &*' @v@@evan4 Funt1
finamial Statcmsnts,
Wxr'fu .€ wxtM, W MM.*xx a*. 8x' W&g .7@s;$* etewWe w&,. tsxwwty .wfurxr !s,
thi* rryort alro pre*enw csrain Supplarr@T*Wte4w&wWg*ts&i few&*
Schedu,l* for thr tfeneral Fund and all lv{41or Spccial Raysriue F'unds, Schodulea of Cb*ngea
fu &q@tVm&€tti%xW9tyxx&wetztt&Xe&ew&&&&&w&Yla{t@t&ew@W1*1M&W. tW lMorl. in additiorq XveN*wy &Wpwxryw Wi**l&*.fwx. & nX &*
Wrrw.Wwlw{*Wwt*eWew,q@W.WS,@xYw6e,W&.f $Meeg,W*a-M&'*r'ffitat?@4erew pMM f,eryplWwy e@*.*" 7e* &XWi,*sal section provides 'aswx wi,&.
@*e, trfuM:xst Wv wry'fu * *@mcs, r n cMing fir,anxxe We&& rWW Wec&ry,
Wt W@, *swr*w@e @ w@n1* ix{-wrx*&wu w*& rywxtw${eWee%e&"
' WVWW'YY l?f m& refW &eI Ar. etr&LrcrlTs antD $,N A L Y$ I S
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fith{r*c..ry.dlffisvtv*t
weww
L*ng"vxw4l.,o;btli!j'ax
fdstsrl*i!&
Netpenxion linbilily
TsuiAYtr& hbiliry
O&er lisl,ilities
Total liabililies
Dcfcrred inflnnx 0f
nlsoErcss
l.Ict |rrvr*&ment in
eapital ar*drs
Rcrtislea
Unresric1rd
Toulmtffxithn
* 194;749
..,,9w's',
824,&M
"" Stjt'?7
17"ii?5
143J45
25,667
I I 1,0?3
tw,7tl
*.fi ,&7:l -
a!.wJ _
l?,1 3,
?43,918
24,956
" "*"".?3,?E:6309-995
3Z,W&
t3&,4e4*ww
."gr6
&6e
t{t&&g
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3As
33,1q3
434
25,W
.llz.eap
451
:0$?s
6318
-".-qJle
3J"16?
618
tq-ry'
I&5;W7
- W*ffi:.*sw&'
t3"&93
,&r6X9
2W.,&34
32,1&5
73*33,.
i44u&&
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t?s '2e"rat,&l
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3sw
1'7
'5f,&zfirt,W7
31,w4_ 30,3qt*
143,t62 .
EJ*7
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_^s,841
s6ff,8$$ &fi*,,7lli 118,&440,51s J8,lt44
***fgell_ il47*$6:, &33j
s 349.14' Jro34 t?v.xyl
lt2,9x5 79w,362 Vgl,63t- .$rj,st{} 1il"844
ll,1?,2) {r60go0} tlst,.e2Elu9,203 €78"9:f2 6',19,5{r
fus€ts exsdsd li&zTensa al lhs *7u*w. w{ tlw fixud y*x * SStq milllun. frie w$ery *f thtx
&xs6 ts &tte ts lhs e@WlMllnw g€ &w eig'e rs{r*w*xtx*turv p*r &&&& *tAsrwq*f Wa.34,
hcluding r*&, sidewalks, rights-of-w{& *lxw lid@, hgrffic *gt &&, t*sww q&mg srcrrm
&rvls xy&W trrellx Mbxdi,gw,
"t*Miv*yqse.ittmx'r,g ftCIm $SlJ milliorr rr,r $E:q rnillioq is dnqilraxtrt&NLrrwe*ixu@lxd
&&e'
T M Wrxw'rExrz:xts& l*rd W W \ | &r*fqx wtpase, rn W & Q'tw\X*xrt tr* &tx @*x y w,
ffi* r&.&& Wrhw, sf &e e,$ a w* purlbxn ffi .5 ffili*n} Wwle, rwwsw &s* we
etrb&W z* gegal elestM @*r**x by. &uw, constifi;rricn" or wWn& lxW&&s*, wA &Mx
xewW&@ &$ frnncil for rpcuitic Wpww"
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19
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i&* xlqx.* W* @*t w* We*A w'ex@,
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{$@w4 aaxwe t&. ewry @es't&ew"es* *wtw* ttu W{rwrr
bcnease (decroslc) h rccottnu pay*bb
h$*arc (docr&o) tn compcn*ntd sbconres
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Taxes rscoiveble
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f'rfwc- paa*ien rsre*ed it6ms
Defurod OPLB rslsled rt€rus
Deftrrr&,locs nn bwrl rcfunding
Total deferrod outfi*wr of rcsourner
T"TABILITTf$:
Accounts pn1'able
fnterest paynble
Oeposfts pnyable
Due ta bCIndhnldrrn
Non cunent linbilitira Ww l$6r:
Ne.t pension lirbility
Total OPEB linbtlity
Dun ir oneye6r
Due in morethsn frlrr:-yaer
Tolal tisbillries
Defbnsd peinion r&t*d *wa
Deftned OPEB rclated iterns
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31
(Thi$ pag:e isleMionally Iefi blauk)
32
Noteo to the
Finaneial Etatementt
YWk
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4.
6,
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9,
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12,
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ffie&&e&wwxa&W&*Xtretw
Cashond lrnegtment+
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ryws
WWXevww
SeswseWw
Itrumrre Programs
WsrYqV{;KMw*EntWe?leXte
tx&g-Yw,T,&&frlww
esmM,y'Y s*ilttdipa ead e'awwt bta@ qnd Other Ksvseue
H0n6Ww
IsimA\fsM
Ln*g{K,n*glr{I&le
&Avwrm ts*twm 00mr Ysnds
TrsM
WnltYWW Eslenees
Contilgcncies
&xpendttures in Exaess nf Appmprininns
nr*&dawn. pf *t s$trictsd* &oyenrnsrtgt Ytmd Bslruees
frtw**a:xur &.gancy Trrut fbrAcsets of fnrnrer Redevclopn er* AgvrNay
tubsequcatWer.rts
W
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33
&" &W&sM,W:uu*xg'8rlrjrees
TSMgrAsewf **eWw&W.W
&u W *f Wp WWt ww Wpordd in April | 588 \Mst M WMI lffi:x af.M. W,
X*tzpmxx"ryb,**W*Xwmrw*wfu rxL1*rwA&.Wwrwryt*w&gwerwwr*,w&w&&ex
fu. fd:l\wtArtg ee&wt pt*,ll*" asW* WeSu w*a, wxstwtry d*velopnrert and
Ww&qwtrp&s MWwx; &et$w" **& gwffiZ aerx&w*Waurya wrviuw
t*{#*#ffuduninzserndardq,
*qrrw*,'Vxsv*Wd@
* &&,$!W &3' ffert*trr &ree &ettrement Obl igaiow, &wv*fryr M*eeWrteSxeM
Trsus 15,' W3&, W* WW@ eq*& wew M rary.
* eeW 8&'-'*srts,tn &tkrtaxwrex &atw*& *e Ssstttt kwtr*$&wg {3$reeg $*ree*wf,xp M
{&}r*s f{*c*rwzrkn Wry rw M&*WMeesr {w* tSaW& w&,&&snx*sffi_wtyWMW,
Pending Araounring Stan dr rdc
6 &W W exwx& &e Wiewryg xwxw*xe" @wb W fup act rhe C ity' r fvgrnlr& r ryxr&ag
@ewe*M&*ft&w:,
r &&,W 84 ^, ?i&xsisry &sttvfft*&, ffi**t{vs' br Me Wryrxw. ey'WwWt.$,2*t&"
* 1&WW - .f,eases, effective far pcriods beginning dWAweMt t%,Wg,
* e&W &9.: Atwxw;Wpr XNtxrext C{t&* twwe& bcfore the Ed al a Cannruuion
8 xr**&, *fws*t w t*r MaA& b@rtwg &w WW@ r&* W39;
* &&,W,W ry.lxx&ra** -xr*ew*w&*,xfe*X *g WwW .:91', *1 arul
3{*tt- 63} ;Mvc fur pwxSdw.@wtryafer Decenrber 15 "W&&
* &&W $1 **qr&$t &erc&xtryteterw,,W&W @Me w&qee &*W@*
k:6"2&2&;
Bo*is of Accounr-g ard M:asirgrqc4t !]ocu$
W eaNis bwtw&&' ale&W$x. qf ea &ty, &rtg WWpr*M *f d$ fo l towiqs :
, Ws':wileFinansidgtatemffi&
'q VMV@x,w e,&wtw"x
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34
l, Wffi,w&'e*wme**,e&bwMW
W W6W&ne W MwM" wweee, wutu& w Wm4xe Wy M &Mtsffie
Wswr*w&t fircus gld bosis of eccouuring. Mwvretriae tw Mt&tW"fu,ry''lW& *fe*W Wee w*xxti& M w WW ffi@ tryewse. ry WW& @tW, W
basls e{ @{Mwee Wne &Www*sae sr'w&a M rwW&ybwbthe
fitrnnctsl statsmef,ir.
{&wvvmwqt"ry{r&e' Ftnwtsl #tg$eryer*trN
.Www*&de Firmncial Statemcmt& *irylw wfuwr*&*x Mw, tke W&Wxovrrnnent
as a nfiolc, sr(c€pl t'sr its liduciar.v activities. AU fittucinry octivitiee are reported only in tbc
frffid,&n&wd W&.W&" Wr.&vvw@wtdw *t*a*w** include wparatc wli,rmrw t*r
the governmeotal afid bruincss-type sctivities of the prir[ary govfiment, Eliminations have
Ww w&*. bdtc $mtsnffi t of Activiti es so thtrt cartd! all*aM *xpwrgx err. w*@; *Ny
6rw4 (by &e fiM*nlw &iob,&cy w*t* &Iowa,j. b&*wuver,ggrrtral 8wwbgr8je*,fgry,wxes,
W*wlbeawllcl@anirldrbwl*TpmwwlntlzavM&asf Xsns-of &sCiW;&wr,*sr&n
*limiuadsns hsve bwr* Mg'Jl* ful rewde la tafr:rfr&& tfsnxfsrs, penbls6, MMqekt*
Intcmsl cervics fund artivity has h**u eliminated ar& ngt belgdtm* *fa iwledp& b *re
gowrnnrcntal nqrf,rtfi&*ufuwrfund xwicrr Wuvrd& M wxsd,, if nny, ffi nof eliminated in
thc cnnsofidationptwwx,
Oover*mant*wide Iinnncial $tatcmenls se presentat uring &s esonnrs{u re€or*rc&g
messwement &$r;* wA&elull uecrusl beslt pj'sc*$**nffng. Undm the econornic rt$our,ces
measuf€ntenl fueus, all ftath curenl aw|Iang"tnnnJ cc*nomiu rcs{nrrlcs and obligations of
rlre r''oporting gwwr *ffi rue repoflFd br the Govemmeat-l.iids financid Swrwmlrx, &uxts
of $cuvnting wfsrx tr vr{rcn revcnue* and exporxee g,rs recogni.aed in lhg e*6ory!* and
rcportcd ln the Xw&tt*|el ptatemenlx, tlndar rbe, wqw,l basir uf nccuuniing, fgyenuss,
€4pclrr&$, garRs, lngwn q$set$r sid liqbilitias rw$rkt& &om ocehnnge and ex*b6ege-like
ususaolions ar a f,x,agW whee the oxchangc wkvx pl;re,
Pmgram rcyenurc inrhtdr*. chargee lbr xrrvicea nperxfing grunb rud eontributignx, capitu.l
gnants and contr.ibry4iuxxtryial ess€smrnts,w&ryrg@s modr bypwfiasqrf&i&e ryf the
reponring gov€mmerrt'.s eitlzeuryo if fhlt rnoncy is restrioed to n palticul*t WWAtx,YWWwn
rcv€nue* we M t ;i& Wo$an €rprnrep in &tc Xwstrww of Ar.tiviti*r Ia pt&ffi *w nef
cost ofss{rh prryr:ffi, Wargea &r geryices include revfi}uco fmm eugtomers waryliwrts
who purchaseuwr.,w&trverJy&rwfrtfs*m gpn&"wrvx*e6rarBdwh*gnxpwvidn&.@ *61vrx
funeli,an, er.exu, wl *tlrrfp'l,battnns ir*ltudatsvewtae* werxtdrd b meeiing *w ryxt&swl w
cnpitd uryrterv&*, af a pwttutJar fvrtc:tisn,"'Tw*x wd a*lw itsnrr nat properly inc.luded
ftrletrr"g w grw r wwlLtw are rrynrtu& i**x$ w gwrwut rertwrl*& "
AmrywxW gw6 t*'wryd'ste mfM as, w c,e@w&w wxw zrt&* ffisve?wM&e
fbt&v\uM WWxwrlx, reew 'bxx" t*fW&& &x w w{W&, Vr*w&x ,r*f l&ryg"/,r;rron debl ar€
ew&x & *x x.lwblliy i n thc G wc rn&Wy$fu YtlaxW.W f * *" @w tW *s an *o*rcr
findncirg !iource'', Arnounts mid to rtduce lorrg-term indebtndness of the roponing
Ws t*tMw* we @& w * *&ap*ag *{ &v rM LIMTW,, ra&w \Ws, w w Www
35
! , Significant Accounting Prrliciee icontinus{}
Fwtd trtnanc t a I S:grt e me w s
me uew$W e*eawlrre& xXem sf &s Ctry te wgwwnd and operate d on &s, Wx ot
WW M&u M e.t v&t*b ix wxm&sree refu e wryse swrxt&w *xtfu, 'W
operetionr of eaot fund anc sccountod filr with a $rrpsrsl,e sst of self-balancurg accounts lhil
W@tse ila w&, Xe*W Wrd inflowg of oesourets, fund equity, wW wJ
W@:wrw {x r&ppnse s, w W@, &wury*ffi** rwrawwx w* sttacx'qd m ard
xqwwW& fu ijr iadividual funds bac&d We'W pwww fu f"&&zbqy w tu bx rywt W
Mwbgek*,spwd&x6,Mr*ttiwwwst&ww,
trx{ne'WM& Statenrcms for the pery Xq,rwM's govemmcrsol , g@xwy, wx&
W W M WW*M &ce *te *rev,*wm*wrido Finaucial Sffismsnls, Tbege
sl &&re*W t&rm*qzsa***ut'xzafu &n&xia&&u*n$y and non'm4jor funds in thc
Wweeq t*x *Xfv&mfuw:& M @&s.W&s" &tMW *WW&* Wttde linatlciBl
'ewW*ew W eWW M&&&, WtMwv &&;* wt $ry CAry yttwW W* wW twt&
W M Qt*y lxxqqMt*'sws&W W.M te*eti&e** w *rgrttzbw&*wr,
Covenn*ntat Fwds
ln the Fund Sin*ncial Statmsrts, governnrcntal fuuds are present€d ruiug Src modtfed-
aeerw& &wk **{r*rwxtr*tw"'W&r rwwee& wevewgeWe&&e&xxyb.ww* w*w*at&r{e&{*
w& wrx*{.*&l*, Wwx'ttf*\g'wryw* e& e".'w*t*x*s w bt" eater rys ffWwiliw
eW,mlst&, -4vsi/&**.ww. M, W mry*W wffi **3W:td durinx rho repor{i.q@ p&& W
sotrn enough theletd,er to be availahle to finarce tbc expendiurrer gccruod fot the rcporting
p&.e&, W,ft*y nW W wsMX.SW petwe &}W *xyu :fur W M w wt* xrzlli W 8W * {*r &l
wkw wvw*, Wqr wusst** w')M W w W&r* ww& w & *., pr@
W wM v Ms. fu && M*, &wehi ge fc es, li cenre a't* W*tz* W *w'*&x. {wr x,@&r*w.
,w&t*,M"rwnrxgs',
@.ewgs tr.Ecw'rx#rtw?tx WrwMd.fis reyqr,re.E in trq pfftod in wbiclr W www&
{X"w", .&* WA*M W&x rsr gwVl*ry, w W\e&6, {;u*at$ trNp'gad &k$-w& .tw rstst{ue,f sr€
WM w yw@t 6 ffi* @e W &W ew &*ew&X@ @w&W Mxw wpm
wVnt:b,&W w T6exe, &w plkau*,, &ryase& tag W.w&wle sr*/eeWr*@ s&'
w*w fu fu pertod for wlich thry- ..ess6Y Wwt*'K tW pe{W a{'*ae* i* nn'r spci {ied,
W w wgprzd as rwcnues wltw w &w*etv *ry*e &&fu Sw fu W*xwv e4W ryt
&&w W,qw xw$&u&*,wh@srvc aww W. ryw,W,g&swt-wwrs6{ttq& w, uu*w*ctqqp; sp7a*
wqpw; wwww gry rwrry@ee x* rqvwur wheu all aFFltoalrls ewww
WyW:W*Www*"
keimfurwwent Ka$s are those gronts fur *hioh l.ha rteipient goy€rrube$t nrust fit$r imur
*\gw*WxwixYin order lo qualify MM"ggMwe$*for thcecgranr6,frirdlx,trw&t€&kt:
&*rw,et@txxsefUe sloqebte so!tr- et recqrdod y txwxr*rM &rwur *ttW,er Fw&
FtrtrysSq$t'&tetryrynt,c ad the Goveresi@.eh&e Xtxsx*;at $t$tewert*ao .e@M* @&
@ y*xw& Xp .rwee fu w*x trewe,ewerytb*. yww &s&r *eW wwMMhw9t
36
t. fiisnilican /lccrxnminc Polioics {conrinuedl
'xey*lWryetved. fn tba trtund Finmcis! 56$$aw ** gwvw*mtxl *M&Wwww;
wwvwtta&fe. rw& w& Wb&r t&w Www& &* rWe& * &* MXM*& ggt Mx www sbtw
WWa W &,&"MM a*w{t*WW*&wln, received during M r&flwfx
availabiliry psrioo,
&$tuwtewu w'r&W wwse&We x *xx @e& kw, wM g*xwww M&
&:W'rt&Wf*rmq{ss*w.Ww&gaw"w"Ww&flMryf &*w1,;ptwtwvswtfor*,* ffi*tW"wm*&skw{t; &,zryovW@,Ww:ryWw.WMMtweq'8{&g',*Wffilw, W *wreltrd;e sra ww&w& aa rwweie wM &* wwptw* &svwew&'Wrywwa ggdjltdrc to tbc allocmion. &*w*6 rwwe*.** Wrwsrdry& m eWr cbs,8{M
Vit"eereL WeqW ry *w M &uwmunWfu YineM *tMre,W W @" wt
qJfwwMn*prinr to the rccordirrg of *Ja&d *tw&ffi," *rL W&e wew M wqlwW ffi
WWrt tv&fuie u spqifrsl- ' rMbw *t yqw (tha xperdtng,pwt*& s1t*\ W r?tlmed W *&
W:\^elee agwcy. The requirerrent W rffiwn :.J,0,strKni &Ms w*Ms {se qpending pm l& ix wt
M&srgdto bs n rytrbaner&Wttaningto tbe eligfbilityaf Wgsod dow nxlt sffesttke
gwwgrttauof,revenue for this fundfng- This is b*sswr&we tee& wrqlilrurle$,ts apcfd&*
dls@$ reoureff in xpwrffio wxtegk or proportirne {w rye af @ fi scal year* aovwod by
fuwqs@period" ffiEe4ldse*Iw*wnrnay be spe&{ M,ewy *f.kfucalycars coverod @
tha ryrrrdlng period- Ary mvaxta rsturned at the wd s{ &e ryrdtne poriod are ryuired
st'* gwxa[y ac*eptsd *wufug@wlplwtsba@ed A l}rat tirne as an qrcndtturc,
ln M' Fund Financial Statcments) governmen|nt &nd* 6r& Wrwefitrd ueirg the utrrent
finatz*lal reaources nsasw*metxl :ft*cut. Thi.s meanr e&X W curlenl usretq curenl
lisbiLid;w md deferrrd infl&ws pf rcorucos arc g*neral-?y iw?n&& *m lheir balause ahwb.
Therepurted fund bslanco is considered to be a mea$ure rltu'gv&l&Le rpcndable r6soutrcc8.'u
Oovwlrnsrfal ftrnd opornting $xl*nwntr prosent incmsss* {revuurco nnd ottrer financing
;gouw$) sfid dereas€s {6,.llryrrdrltr;lm snd othcr &undxg 'aws) in tirnd bslfi,&E&
Aoeordingly, tlrcy at" snid to prescntasumnrary ofsources sndu$es of "avails.ble spendoble
trssoutrg€f" during a period,
Non qunent portions of lCImg-tean rsceivablos duc to gnv*rwtffial fi$rds *re reported ou
theirbsl*nse shee;s in rpito rlf&*is xpending mo,asurmsnt foeus md are offsd byffshiclsd
ftrnd &alonce. In additinn* xlrtsln loans havc a hrg.tvnncs,s e6:rlpon6nt and/*r hsse a
rcW y rlrwt temr g$etsr &wtW st snavsfttional.loans, I:or thasc loans. an sllowunce hns
k*nrp.*,arded to nm& w*cwat*ly gwwnt the set ptrcwrtluslw"ui€&w* ree*ivablns,
Wne W tle naturs pf &w xpuMg -measursmsnt Wwn r*ry*xldnuw rncognition flor
gsyelrnvtwl,a\ fun&Wpc,$ w&w&vry w*$wtr ry1rlrewnle&by nux-vw6t ltabLltti*s . Xtrlce eey
,6r:wx*fuxfim&ba\wrry.xvt*b2rsag-**m&wt tnt&wv,wtxwwgx*&esWtw$r&esLwJXtne
fyW Ww6,w &* &:t& ttMtt*w
Mwwt;s W@* xx,xryaAw @W e*xw we rwxW w.*xpen*i.8wr*a xrb'M yer M*
e*et@ Wwxv,ewpan**4. x@ ewt e* W& www" Tbs Ww'*4* sf 1*x*Wn dch arc
37
t, W:,W W:'mbv M,waXpqeW.S
rocordod w x otlrerfinwtcing eowce ruther dran as a fimd tiability, Amotnu paid to redu$e
lnn&qw, irldr@&nwe w repljr,& ax $uae @iww ;
?raprierry *M Wdustwy W
W &r{x WstWe YMx ryew wdt &wl:tstuAq wd ldcrnql Seryice Yxru&x *e*
ryryiewy fuMr, Ww@wry We Vtmwte Mtwsews inqluile n Swlemenl of Ner
bn&w e &t&qwv ** xwM, Wwwwx, W &wsex in rund }ia Psaitis& :w& w
&rWweng af && WW, e WVw{w r.x,WW&ze rMwM, w&e &Me ix x*es W8' ts
&Wxrxt&wx,f gwswr**e,*w*'wrvi*Mwww{*w&w&wbavabws{eeMv*W
&n wwM w&;*,ew tu M ettv err'w&ts&& SWel Kw@
W M$uW X*w*A Wry, pxryery$ {Ntw*,x w&.6 drr: tw y fund s xs W**@'gwx&
ee&ig 6s6wxt &w$x *f *v.xerwin6" Www'w* rpwepW @ ewX.sw'wri& x&
wxfuw*ww tewpwvewW'&w e@& W& ss @w exe Wt@ tn the Fuild
WXwee Wwa, W*pMwy ilrrgJs an d privat e -pryass wlgz W&s W WWW{ wW
&ry,e*gr*t*ttt** rsxE;wfs**rxaAwqewdfocns. Ttris meenf W&. *n&&wr$outfiowe of
l?sous96r liebiliries, and dell'rred inflowp of rexorncs (wlntbet culr!trt or nnn-cureil)
wweM&e{t&r wAryW &*rz&t&c& wWbwlwx* &ww,Vv@*wy &M-rypw
',&W&&W Sa@e&e ry*wx t*&W @ aW& &r*trwx*,{@$ ln total net
W**wn, eWlU f\Me. e e&, 7*w*:* * w msxp^xx4M*.'W,
yr:oWxAW 9M, *W*r&A w6r&& er@ $'e &wr6 &ar xw&w, xw& &on excfiNngr
*@***x w@e@ wa$ {#e WWe. w.*&ry &M,tb*&" W&&ffiW www&M W.
&wxlr* &e'e w*b W wxvxx w& Wv*x W'e"MMdd3g @ v&',w"Wmq@W6i
W&w*&, wA&r w.&te&W'Ww, und irwEsmrenl wfu&4 @ r4 W.&WWWW ws w.&r*c. 'as,M&i&" ew&g W&& Xn6tt4e &x *w".*f,Mu
eWW:**, e.6**e*Ww* we''e*WsWeeffit. wxW* xww* "e,&8e we:*!sx&$'w t e,
pgryqy We@ wg M, &Me; &&.&x ry*W M Wortal ar non-operndng expsns!6 "
Arnoulrte pard to acquire capitnl adsflg are capitalizod as asseB in brrr! tho Encerprisc and
vW YWw Yw& Y@ wWW" &WM, rA&W Ww WW,sx an expcmc. Also
g gEsry @ Ww&6 ef bwpm.W, wa w*&& w w l*ei@ &w &w as un *oths
iinancing sourcct md anrounts paid b re&rc{: lung-lerrn lndebtodneas sre teport€d &s.8
rnduction of the ralstnd lisbility, raths Sran q$ en expenditure. fusrey firnds are cudotlial
MWtwMx&Wwett&W3,we'ewwWevdWWryM*f ww$eedc,cperise6,
wxwwww
Ths funds designared us mqior fundr are detenniuert by o mm,homrxical ualculadon cunsist$gt
W &&XW WW:*r*t W*, 34, W* bscwwwxu ww w &,N{fus W 6\Q crit*ia for
beroming a majc fund, it will continu, to be mported as a mejor fun! fy qf,nn$mffL
wWx"&W& wf t& &**N&e- r&t Mnt W W.SsMs *Me*W @ rywrWwcdW,ey between th a
yrfux, W ry vrymrtx &* MtwW @w gwwrwtNl tundr l
38
1 " &twffiX*w.*wxq*xwfi,WY:*EAw&M*.
Gewrsl Fund. Tai* is dro paimary oprtating tun.l of Sr City. li is ussd !o rccaunt for 8ll
rwwW'M w,&*e& &xx'&x&Wz@txe, w,wwg.e tu wMw W&.
&a,WWNie,wxxWFtm&x
Wepwi&ers f 72 &w*- Tb& i*usrld 1,0 npcount f<v si*wtwxw@4,W VWW&@
W p&We @y We ewry, Yhz* p*rywy wulxr* at iweNw **'&** hxt& w aaLxx
1w
FWigr ql, 8l * t* t wnd La *al Greruts tur&, 71N x ffitu& w aM b ee\W W W *s{ pr*Wtgs c/,Wb
:N &w@ Dw&apwwx &lwik tueU WvriW M.UNbw W&ryryt &rs$r,
CellfuMn v M{t.e Q&n\ ffi.&ws Qp$*n {sr P&Ltc, X fW Ww Xr egwrr- -
T raffia, &**y
*wt* llcudrw elxJg;ww &rrlgx wa& a&wx, Yhp rywr nsvrrp nt wewe W &&w frurgE" k
psmee&a W vsrlsw fudard, x1dry and local granls.
Ilbwing Sias€&.;isar M, W eM &s.ucd W owlvrrk fsr Lnw xn& m*&srrd'* houair.rg
apti.vitissas of fobquory t,A\t7,#brn thsC:r'rybwamnlhs suceencwbxuxl*&ageucy to the
{brrnpr Rduvelop'rraert Agrrr*yn up.sn ils dlgrolution, Fdor w tWq eW andvltic* wEre
accountd fsr.irr-dra Redsvslssr.rent Agcucy Houaing Fund", Tae'Wsqry *&srwof rsvmue
fsr thssr fi&ds i* princi@ hmxdWSaen nr$xry?nnsmx,
Mer*gure l,{ Puw 'Ihjs furrJ is used tCI aceaunt for rcoeipts anrf. We.r&fuffi rrlatiug to
tranryortatlo* improvc.menlryw:wt&iandprogr&ms, fimded by luc*'tr V*wtlsdsll&t.
Caoital Prroiectr Funds
Cqpit&t lryf@,emew Fwd, Ihis fund is uced @ a,scount tbr genorul-prrrponq'trepdsl
improverneff , *txd conperati v*W fuMd proj&ss.
ParkAcquitthrsn .Dtwlopmext & &6$,lntsnaws guwd, {his ftnd i* t;s&tre acqswlf" for tbe
acipisitirq doveiopment wd@nrrcrrw ofpcrlra thst ale finenes, W {wedWer foss.
't hr City ryperc dre ftl luwin g x$w,wtrlrpnae ftnds.
W*tcr ,funtl, Thl* fuad ic used t$ **wl,M. fsr *e W;svt$un * wxfw awwwe& fu $stdcntial;
csmrwawil*1 w& in&wrrt*l r t&tww&,
&ssttar$trrt We \W frene ix wwA w www fsr tbn W &eW *f *asxWa*a asrl ff$er
s,crvicles tu residential. comrneroiat and indusrrid customers.
Thc City's fund s-nrctult nl*o irrludes the tbllowing lirnd types:
39
l. Sisnifcmrt Accounthq Policics (codi[u€d)
Sp*iu{ Wvenxta tunds. Tb€sc funds wewdWwwr&t f &*W&sf We*rw*gw
v&e* &at aw re&te& by lww *r adminishgive actisg M x x.pwl&*& gtryee&".W*w
fueeiw&t&e
Cgp*al W*Se*t Fwds. These ff:ndc are qx&** xry,qMfsr WMerwwwwgw&&
tw &e *x*qu@rfury qa& wW*nuw ut ryryw @e, Weew @&w Ws&ew &xWs&W
lbr pnoprietary funds).
tzet e$tet Wyiw P Wds" Yew Mee w* tw& W awwxx &r be fi nancin g sf @. &eve%
W Wee *er@ &*e"tie rfu W- W @r,&iw,t*&rxdi*,.Wery@t ryEe&Wu
W@rrw{. w$aww6. *{$*r b&tetry , bWw&*w Wewt,*6wu?wye@rt@ @*,gw ,wte& KeW:ffiWy* M ewel w& q&&w* w@r&aa xe&X-
imuance costs.
w*cxw"&wr&.*se Ww XW&, WW *M Mwee $W Ue ascetq d,cfurred *Wv'qr
'rw*xryryr&M.rwew&tkfueW,*vqxwf rwwxs*w&1&fuxwzwV"e**exWw&&Mx,
Yw\nwMxwwe" uM ww tr*@y a&p**,MW WWwW r* M Mw@.@yr b.'&uw. e&eM w M'ww;ww ,&wwxy 7ni,ya@&Wrysx'tr,xx* Yw& w ffan&.
wryrxtwe qf w%**@x sbN&w*.qwx we M *t,M Mqr &&**bwq& eWW
rye p*& *rv'ffi* w& *x* bwvw'bew fu ui daed.
.&gexqy fr*m&x. &wx. &w.6x w &*& fu wew'tur m*a*y qx& W8@ b&e @ e* **W ax
&wMxwvM*&zw-,YWs*1Mt*E*&*wp{*yq.z*ffiqwb$y*W.&WtWW$xesslt@,wrxW' af W'{eW *:s@n W M*\ w;e $&:wv @ @&tu u*$g&, W w&L
pt*rywW. &Wmry fube w* 8s* \e& e WWW,*w&W etwqwe? &,tf:iee trw vete
e& XW *ete ee e sWX&r &bt wviq* aslkiry '
Gmh anrt Caih Enuivalenrs
Kw WW *f&x,Wwt &SwbXWee e&W **n*lderdpaclr and ca&,w*rv @We wt& rwW*x qg &M, wtsa&w ry T&ffi & &e. gw,w e M& :M wM"
bt*& MW kvvwrxw *t&.'wts W @y'*w M* rx Wx www e.g we M w.
eet&Wde wt&tueryWewwws*Wr&Wtrt*. *{ ee*,W61*kve&W@.w w M gw
rb ,t@e'c.6,w, 'W mW XW&ww* &*.g@** & *WXxW M x&. 'M iwaWWs er"et
&MaTwWWWWg
tryt WvM& by @, x,ryM, &a w sww w ssM* w &x'w frsrt&'&rL Aw& &W' M
.M tww&.e& weri**M e be r;ash and caah oqui v&l Wx:X*r &WXwwgM WKtw*
Wg'$W&t
{%@v* & & v6ew W gewt WW e W W. w vq,ngri. rs rwerrues fum uce uf
ssnty reported for th6t fixal year. Uie cf monry und prqrerty iacludps inblwt oarnings,
cbunges h fair vahre (rcalizc#unrealiznd), gainr or lnsses realiped upon tbe liquidation,
marurity, or snle of inyestmes!& and reiltal income.
40
I
W,XW,@ryeh@&vWM&ZW'WW wwu held by fix,&ry;wtx'
W'&@x W',W ih"c, p@, &g eW\W & r$t &x xryWg@'&{tw*& M@,s as cash
MWxffiwaw.,WqxWW*sw'*wxeWW@essvs@xxM&rnonthly'WMK@fuw&Ms.
ws" w&&'x&'x Wr wreaWsit{. eeb wee'trrqew$eb&M"
W
\nv*u&*x *t wffie** b*x, WW,A&ax M'tttt wrg Mwzx*-d by th€ General nnd lnramal
&w&w vw&s. W W*stwy tuxtuxM W M o*{w &dW WW*e xr:e& conoietu
*@$ry af s$abe wwsx&,r*M WEs*3ryax*a&'f*ngx Traplerwy Fund lnventories are
8@ *, &* tiwr st w& as ffiaM Srwrytee.on a fu*"rnu Kret*atbMx, ffixi'ngrhn
*msgrn$ian Mq&. af aecountiqg W ltryg0,rnfira " W & enst & Y w& *x& WWM Senrier
grtrr&t&vwwnw are vahnd nt cost, dercrmined on a weig*rrcd *vwwbw * g&Uzrrng&e
conxrirrytia n m*thxd of accounting fu invwtories-
AMtfr,g r*tls ts vrn&w &tt w*b e@c*l&e fn &tttnn x;counting pwiods aed me
rcwrdr& as prcpei{ s$ls'ng&e uaawpaan nrahod"
l.osgp$qW{vsttd
l{on'.rnnnnt Fsdions 9f long-temi rmsiysbtree &rr q:e rcpottril un W tSwwwenral,
Gsvern:natt-wide snd Flduciary Kxancia: statemetrl$, For lorru *wt bwx w {wgvwwsx
componeni qgd/or 6 repayment twr greater thon that sf€onventi nw& laxaxn x*dl&vanw is
rew&*& io more seeuutely prewr*i M wt prcsmt value ofthnw rwwgtrsla&" me City'o
Juns 3tl effeqtivs rarc ofreturn st |.93% on inve*lrnents is ssed to dlreoug{ &age rsccivebles
l,o thek ret prcscnt whre.
Cqpltsl As**rs
Capilal es$ets tlrt*hte&W ineasffiu)16q qre reeo*led at eost wlrerr fuM,el Mnds ae
avaitabls erid al srl sstlrn&tsd origi*61 sost whsrs na historical rrxrrrds w**L C&&*rbr,fted
cspitnJ ffisetx arr valued $ their se{uwrtion yalts.at tlrc date of wawb&sn Garerally,
cqfital n*wryxvabxw* h exeess nf $5;000 arv capitalized if {hey b*rnp art ry&d us€ful
lifuaf wayearewwrrsv"
*spltnl areatr isehldx affii$nns m p&l** fuwwn fmfrackucpt'4; eenuw Wprnvwene
in*l*&is& Watnw, 6&* ee gt fu .c,, &&w &w \xvffie, r.onrsl dw ww,. 6xwtt@"" s&nrcts,
sww&kwjxlrdgax Mri$t*-*txrwy \rfletar*r-f'firyJfhe f;i$ ba*v,ttyuw&w&tW.*Ne&afi
'tafu wbr@arxa*wx,&x*xwssut&-$&,W*,tx@r*&rw$wnf lrttx3f)t2&t9"
e8$a7 waffi :gEgtr b WW6'*r.tx W 6W@e$ *v xr rkgw r#igr1r,sx& rffie W w, i*&xg W
*w@ .ee&ee&th*,ew*WW*j&*Y{saee*el,WeWeg e&bfu We gi&*n*ret
&tweng,,sf &&ryrw@ac,Ymrd&,Wry6:lationischnrgedaswg&Wwww*wst?perations
4l
t, WWrr&Xwt&uWiw,*&r4 (ry*,t$iqirr&,
x&awwrM*e.@&*trwttxrytdoutfnrenpccdvebxlgnwrl.rl*ets,Wellvw,rts&fu r
eww$ febep{rposs fur each oapita .wxw\*xwwx,
WtxW*VMWffi{wzM
,tWWeww
W&\xrwservgtwp&twk"s
8t;*Wdtxx w$,twka
Water liuer/pipelince
Pumps & boo$tcr pumps
V*tt*twMw*rxry@wiv
W-5* Y@ee
3&,&5 yxasx
wxwx
&8 yws
Wywx,
ffi yewq
%.*5 y&s,
Ww
Y'** gryryy $ w@ fu w" Wnxt* lisbiliry, defbned out{low*/infl ows of rww
wZM W g@wW.M ryaM ry,ryw" in fom at ios ab orr r th* W a* #w&*w & &*
Wry C&&&eYaal|,c Emptoyees' AW,*yW WeSeW;; prea We* ee
&eryaw wf W -t*ru frqm the P I an's $LMW M. p@&.ryw We &@ @ wt {Wwh&* se &ryX ew wWe W eAW, K w *&x p@w M Ww 6e@ee
vuMx' *X Wt&,* *Msee@ &ae twgew&. We@ we Ww,b3e fu a*w6ew v&&
W bwwW'wws" WvM w* r sWM & fe* vM',
e*& *e We@tbnt tle reportod results must pertah Lu h@lg M *Wt*Wrxwiwrz.
wsx&rx *r*t&w Wee &wee;stryu Y qr|W W M Mtqw&ra* timefrara es anr ussd.,
Valuatioa U$e ffD)g{wWw*V
W&MW twrtS*,Pl;a
It{easurumenr Period (MP) July l, 2gl7 toJuns 30, Z0l8
W
tx xMna $& &&we' &* w*r xf .fixww& m&&W t& .sr,rrrfitrr,* rrysrt a WMeW,w fu* dM ourf,owr of resousp*x. *Ktx @ ffiMg&** MMavw W*e"e@e erffiWx ri,f resourc€r, reprcscn& e w.s&tlryW af sfi.ro*irion thx apfuw X*,
Wwp:ffi&.&**.rry will not be rccognizs &xry wMxw &Swwstses {e*penreJorpgt W,
until tlen. Ths Ciry has four typoa of itcmc is lbiu cutegory, oodl r€latod l,o Penrion nsiloa
OPEB lis&i tid€r- 1 ) N ot ditrrcnce bd${W,WW.& we *W& We qs.Y ee@WW
fuv@W'*& M w& wWiM, *n a *rqrlht-litr bds,n, Mx. ,&, ywry* W W*WM,
wwflW W eW& e M,M W*aa finbt{iry/trrial aPF#- WMXW wa &e re&ttts of
&beWryqwry&e @ M rwstwtt period, which arc @ .@nerhe r&**&.
e$M &e.W$ b"&e W gary; fi'{@rys $ e"eWbrysxry x*.xw.,xevtnv& &a&'ia,e;&@weweWWwW*,w&kW ,&M*6lr6s6*eW
M.e Ww bW xryW* @, **Uxe@w *w wiM. wvx * €{@
42
t, Ww&*N*x,t 'WM
@b&W{Wthesvsrage of the rxryeew&WeW&**lzv*x.wf uX|@ryecs trar arEg*vM & pwitons thro"gh rhw plryt, 'WMe eW W W*tM, *&x teW. *txsf.W*&*wxr we@trx&ar &ef&' webxxfu ut a*ryemr,lng,
Xs WAww:labiDtie* rhe Btalr$€nt of finsnEili pasifarx &t wMxs W & @xweefw&fuffi w*qYiewa@."rkte*ryxryWf *@&ewit*1.w?;&teM
fu&aN* xf xww sw ryrws& wt WM.r&ryx 6tt WWMee M @iw t* a Wr* @ee
.xn& a* @ rwt;'be xwwg6M. we {ekw .*f t*wrw UwWxx* xir&, Wr&rye" W W
@rWWWew*f tW*etqWXWfar@6agtx&uWy,WWire,zawv*t&&lx
fwqg.rWg *wvarious sources; tnxes and granr rnonie*, is tryn&& u,&y tx e* gsvernrrmll&*f,
Wfre b*:ww fuM" w6 *nwx W@ *, xrqd;zfr& 6eMb&& wf wr,wiiry ms*e erttrr'trye
'aw &6wpd. aft&wwg*c*d w waX&Wv *f rewvrwixr&e.penqd ths the am s,&Wfutq&rrr*
.avaih&b, The o&tr W iWeMryfuflav* hryw r&aw**{rhwgwj*mhr&7tfy m&.
l.,otal OPEB liability, and ue rcportod ouly in tle statemsrr trf ner posifloa arising rnOsr fte
fitll rqwt *l'bssis of accormting. Thsxw irydi,wtx rels*pd wwe$& w& OF&W MMW*,a xrp
rkz rwtltaf:
r &iffersnces betx&e$ WA and Agu,al Bxlrlueirr;w W &**We nud rynortized
uqirganEARSL,
* fhqges in eszurnrytions is w.effiflvnt r}sr is ddW@ q:zd amodryd rrs.{4g $e
S,xpettra Averoge Remainiug bwtice Lifctine pAftS,f,} fu pnxinwd7.V y*arx
br 0PEB
Compwp$sl.Abrencer
The eepl$yee benefrts rnry,et*e llslehllty ls rccorded fer M rmr,atioo and similar
compar*elory leave bElances,Ttw wt$CIycetr' entitlemgrt ta &ew bnlances is atfihutabls
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?1r,9"r3,t6$ 6J98.r60 -,...!.281;96". ltN,058.{n1
05t 06016 l?,556,9;7 6,3.2,fi0 !{e,lllJll
(TbSesp*vLv:,derst*ssJly't&,btwk3
,W"gW 8{b46t.748- 37.635,603
51
Capital Aseets fcmtinucd)
ewfuwwe-Wp*'&W*at
eapyasqxae"nts.
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t e646,932 * &,ww
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3"tw"w &,&w,wt &;tww,&arl' x,427,621
2,823,M8 {88,333
t*t&Q&,erVlJ.?50,?36 t60,7y2
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w:r&&,59& 6v7,WW
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a t*,6w&rv; 1e,*t7& &
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tA"4tA,rW 4rW7, t ...,.Wt&,&M,
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1.46e.u0 216.129 - a6t5.e6e
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125,179,82t !,45$,560 -- l??,o36Jt?
I t31.924.641 2.63tr.787 S.to0,r?O t30,464.008
- &.&3w
- 3;&tz&M_ *&y7,rwte,w .&4.ww3_ 4*&&w- t*ew*4
52
3. Cariml Asses fpo"tinued)
Ar cf Jrnrr 10, 2019. i&o Clty had rlro &lloring nutsandtng Wrdrass comrnlmenur
t'$@* ptt@*x v' qE@ q*@** r..
Fun<llrrrn Snurt:*
%&,w&t ,ew@
WW,agwyx &&**trzz* tk:eazta2&as&w :fu***1*6rP&d,:'
Prvcrpn t M snngcn*rr fta g.sm
Vebicb Plmh*rra'l\{e**wkYMe*yx*r,.aw
TWetet$&
Strrnr Lino Roglnoanon U M&jir t.
Werryt*n&*X*ex@.y.,
T(rret
,z*4"M
eWrWe
boyw&
Ws3&?
s&{{x,
9rr,wy
_ LWetW.\**9177 etz,w&* 1x44ry
?tt,6t:t,"€rew' X;W:7W
D vplwlg*rw,Wwrre6r w w &hery*d t& &e fo Uowing f iurc.rions In &e Swtsmest st &M&*xr
Eoyemrrsngl 8wfa*au$Sg*Asrili$w MvLW
&rycw|gwqrnwwt
Sthllb xa&tygwilxwar&
V,eWsndltbmry
&Stwnie dnvelnpoem
ln@l$crryicc fusds
Wt*.wr
fiwlrwiwt
Ywl $8,9t 0,?69 5,403.99t
& 42og3e
t32819?3
3&v4,asa
1;48&6?6
108,334
t,579,8+1
2,51&,til*
2,e&9.315
A 'Isxqs
Pruperty tax€fi me *ttsohed as ur enfsredbtrta lim on p$per!'ae of january l. 'fores flre
levled ou Jttly I md me paynble in two iln*&dt:rralr;Eon Decembet l8 e& Wi| 10,
Any icpa.iel xw&.. erls st thri snd of tlw &uN y€st alE fficotd€d w 1&w&.rpc€ivablo in
n&wdrwt's.witb &eeiry'g aocrued trlletut*eg*ttr,y ss stabd is Hok l"Wt&wry of0range
bills end *sllx* *e pmnerty b*eg ard xubryguently rcmits the wWfut* &e City rf
Orruerr i*.lWwf/mlrlmr drringthe year. Hirmrieally, the Cityhax rwatrvr,&xi&xa*idly all
of the iaffis tffitiriJ within t$tc yesrs &om the dde they Ere levisd,
ThewvwrtxMweW. Wre taw fnicle xlII A of rbe caltfomia Consfrutionlwl*vy
Wegw$ txxexat qwWwVAt'ClVq af fiill ma:{rd vnlus** *me ntw*twwqq&,W increase
&* gxp*@x '&1xe wJ nwrr &art rwu. pxr*er* pY*! W yw, We W Weuvw e.*twe *f
\&k bwil* Wy WWe&ee 1* &w lt rrx€ive* ts &e t.*v & xs tW e WM -
53
%ws*:MM
W W ww& W w @ww&Ex W@ w sbw &'W @:th w Qur&"&miurss unds
&*taWa{*WeWrxxt7e\fu &*@ux.*3"5*aXwTs#"WxtngProgran,undcrfiecode,
&"W^wyKM&&te*w.&wwkstfu*wy"*f salwWwk*WWwWe
&e Wfr'fat &w g*xw x{ WaWg w re,tx&nfugW:iilww &Te&6r }Mx&x&nw,Ww
&* y *cx s&s& t rw ffi , 2*t9
" W ffiW eM Mv* tww Wl*,ryW $&',7 & L ;W1 3 .
{StWWwxw
{Mer vww.w W.&etw{re Ywt& wr*s.&x* rcMY wf MMMw* W M e'ewz l Street
Fair and reimbusera€nb ftom other agencieo for fiafrrgency setvic€s prolridsd.
W*W
Xwms.xWwsw-&wsfjrtx\toVtMaadWKWM_
ryW 8W w@seo the f*liforniq PrSlic Fxnployeel kemwmwtWww{CaMWwr
WwveeW p&,*w&.&:grd€fined berrefft pmqion pkn (tbe Plan). CeVW"e
W@ yq&M M WttW b@tx,, w& wWWu@ w*,a@.w*xr wx&'W
Www'p\w.w&rs&'Ww'bw*{tx&w*41:ex.X&*K&&a*txs*wwMW.e*werrtud
qeryt*tw&a wq&'f*r Wq&@r$tevW*,ewWpv'@x & Starc ot Califrrmiq. Ww&
pr*vi&xm azz& e* ether recluiremcng ary webni&x& @ x&x* ,W wwxMs" ryt
wxWxmfW &k ,,lrrplo.yrx bargpinivg w&ix. e e** Mwrpw & ee p*rsion p10n
r*W&tTw&wx *t erafioyees urverc{ b & *6&wwrwrwzWrwxwewebekt{
not acccr.nrtingpurpwwSu weMee{W wWWw w tteMMM MYW& &w38;
2017 Yaluatiorr Repm'{; Wq&**{&*WWWIM@W@vs &@{txB o{
M vMriueryr*Th&xwwwee&YWt' w&&&WWeeS,Mtw wa
pMely weWbte ryeW M ex*x hw' *Wbe e ry&#WeY wxb&&,@*r W$wyw;
Tbe Plan gnrvides hril:lit$ fr-rr tn'o msrrbership cla*ifications, Miscellaneow nrul $ofrry,
& ewa Mx w &MWwe tW 4w & *esW w@wetw" W we@
ts Me.w &zriw 1n M*a W wtrqv*wug M M Nwrw*w*,@.s,}!' ry!.herr srs.
ewWee wt*$3se&lznuous membme. hw**,&, W &W34&,M Wwt*wWV&W
Ernployees' Pen$on Reform Act (PEPM), c,csted mrr benefit formulss sotl a final
urmpenx*ion frsiod as wrll as new contribrnion rqui!ffrnerits fur nerv employeee. For tlrs
$npqsr of,Ff,f'RA, 'Yws s66Xrw* wrykbw. 6e6x *tcr Jm'uary l, 2013, @W
neyerb*n 0 ogrrrbsrof CaIPERS previoudy. All employoeshired prior to January l,2013,
qz @u ryw&*w *{ W t*ry W nN prwio,udy boen a rnenabq of (etPWt wgT
&x x'& *w'w* rd@ &w pi.saWltA p luo. Ali "mw wptr&e*{, wwr, *WW&" wlT
M'W&&L*Wdrin plm, and insad w&%wry*u@,vew"W.WWW&we6W e.x X *W &waw zx&x'xX*ry6ry,:&&t$ ixWveWqq'turry..-t.\wWeW.
54
o@
?wsw
w&ewqe
we,wtevex*bi*&&*'wtett&y@*
ww*wwWW b@x r w * % *r, wWW* *awexw&tr
WWaIWEWWw.wevxfusrww,
g,Wt@ Wbvy w x**tslbwti*s rew i
Wsxr&WWmg6
vwwe*a{vw.Md&yMw
aew.
ks&tuwM
W\q&vW{*s&*:Bhgd'nlr"
&n&ryxY@nts
\wwetwe
t/I**;t& b*yw{ltr, ax & Vo of, rligiblo .*n Wmvefu a
&eqt W a@w ooutibutlou rate
Rr:ryt\M @ cl conribuiirr n wtw t
W$r'wlwtnla
V wy w*m* at wtun Jcd llebility
M3*Wrtn@ux
'&lwrw &xsv&,W.
SrvWrytrwu&
Wful{'ktrw,. ,&2r&
9,Wa-*ffiqw
t8"4v:%
'w-w
2,l}{4,-\M
?lli
t8,t?39*
At tlre Jt*n* 30"20l8mo6durem nt.datr*ttzc tblluwing w:ptoyeoa wrre r&vered by {re bonefit
terms of lhrTlan:
_.Wu gdf*x
Innnivsmrployees or bensfisiedsc rywe&fly roceivingti*nefits 64t 44t
lnsstiVaWployeesentitled tobtfi,h&y*.eoeivingbguefi& 483 ll?Autiv*wployrs.s 3W 75s.Totqi W W&
qo,n*lloubumUagf.l.i8&lw,
&e&efi W& t 4(*tl of tbs e&ftntx Y tWw &mplry neuo &atuffip& L*w (YWKQ 7 6Ws ry Wt
*r*, w$*y,l.w w**,nrr.mts* W'eW Wfullls' w@wx wa d.&xrlwnw& ww xa aw@Wa.za
W e&eWW an& &afi& ef(&vw vttW t*3y \ {aW&xxn&w utw@geiwtb* w,
W We VLM w*tbew we &et WtM W* &WWX' exwr* w.Mal ?aluation
W*we W ee&*k e@wrqx6.Mte. &* &* *WwW'wuer n€{.:Essry ra finanev We
w& wg W&s q@W @sXry Wng 6p year, wltb an M*w& wtotxffi" w trwwa
W tee&@wws,&@'&* @cry ar is rcquired w *oa&s& M Wwwx btWwt
Jaauarv l.Al3 January 1,2013
2.Th@s5 2%@62
$,yw*a*ret&MWr$r&" $fi*&
zM-2W
WLq
t8eqw
5ffi&W
5A.ffigW
w
lE'173i'3&g lw,qw
W-fliorio &sr&&.at
January l.?013 Jmtry 1,3013
3,WW5W LYlr@gl
5 yc6xs etrgwit*e *y*vtx Ef c€rvks
r*,'rh& &/r.W wnthlr &rl!&
55
6, WWx$WWMw:tXwffi
&e 6s&ww' e.efuer*tndl re, .M, &*. wMbztuw rwe 8f wfrlrywe. Employer
*aabbxfuw yq\gx W c,bxmgs W ril:w *r&wW"sre rmeodrd. Paymeirs M'W ee
@wyry Ys x&lsfy conkibution
,W&Mxtembe @_U*rmxe$&{tllno;fq are classiffod wx$aery@ eendbutiont. It
1x*z*xWs**&tr1@ *f rbr&wr$*yvr w'M*Wxry xnwW&w6'e&yeMeres !o re0ost ths'WW ew & Wi:WWWysrY*eWSwWr **atei&iifw w stt&e,w&ww meiubers nre
puilng a portion cf rhe omplopr connibr,nion.
M&,Wa-&*,q*x&&wreww&mVrrdtnDseffiiffi Tolmlp:en$ion,rsbiriY:
&e Ci*' x ll€f penrion liability fw &, YW i* wwwq& se &e tu?el ry*w liffiiry; lws
xttxWNlwx$Nixe*w*w.y w$p,x*&w" 1rkee&*Xwd'srx@fry ef @*f &nV,Wx *
WW@ xx *t [tW 7*, 2ry9&, t*fu* w .w&xea] Mrx .e @W&*n aa e{ SwLw 3*, 2* t7 N}x&
fonurd to Juuc 30, 20lS urirry stnnOarO updaic procdures, A zummery of principul
s siwtw'sx.e &w6x @ w &&r*ww &x w pwxtw tew b eWwe'be\ew"
v*W&eWw.WW,eawMWuee"W&.,
**WWrt*errextt@
Dkcount Rrrts
T:&,*,wyws,*& wxbw rwr*ewe
WrteWfuegT&bk
Port &c.dranrsrt Br*Jllp &*onr
W@ , ,&qW$te3&"W7' .3xeaw9{}a.2ttt"{
Jugle 30. 2Ol IJuna 30, 2Oi $
Wx &ee'W*rm&A*.ee W &eYetzrt@rQ.*&WWr6 ,Me&**&..
v,t.&%
&,9*W
t:ttw
tw3
v"\9Va
'x,7&%,.
4t3w
433
(ll Dcpcrdiru trn agc, a<rrvies ard typo of orryhryrrsrd
W "$ry, W&We $tw@ *xx &W* wW qqwwx' wrq@&& @w W *,&"4$,
'W ry*W @W M \*de ttw@M b@e cq*,&W.W eW @ W k
MWq 7 $ W arc of rrnnrd*I trysvwex uee e&@ *t @&* &teb W g'A | 6.
"&w W 8@ q$ e& t &b& $ww e W. ee *:rywerw 3 o I 7 oxpcdurr a eurlv @.
&9:ry:*r*w*8.wX;& xx*, w, x:W w&.W@w&Xe* MpwM &)bx*xxw Wb*r wtx
Vw&e$ekgWr:vor applb*. 2,3014 awxW"
l-tincount Rnte
We *WW @to n$asure rhe wtal pW{s.WW W 7,l 5 pencent 1' hE prqjwW .w
8 w&:&ryw *W t* WMn*'rtue'dwese ry *x*wW& &w x*uWr*ewp &sW pM
wwW& b* wy&w N &,4y M Mwr ryMxWtua* r,M. we && w@&$tw Ww
$&e eVba waae* srsnmrily req&& W&e&ey *WxAw,$" &s..q A** *'e
mxurap{anp, lfre Phn's fiduoiarJ nEt W*&'*& v$ee g@ *e'W MW e. @ d1
pr'ojected tuiure beu6t?t peynsts at ew9@, glfw w@ WW&t tbe W"W
ryM r& *t 6xm on plan inv *qne& ry{W Wrte{l e. & *&,e&' qt M}We We
*.ry6e.WW Wwe*qwL Mxxv.WeW.'
56
*,,&&Mw*YAw.Xw&,W**t&
Lons-tsrm Expectad Rrfe of Return
W@<qnsxpwW&W qf.Ww a& pension plan inveruucnts rmns detrnnined..Mxgx
buiI diug-bl oc&, m$$&, .& eW.We ftwe wdL xwx *$ sew Wy@ Waffie M &
pondon plnn hrve*tnnent e4peue auJ inn&@ ww&w*wLry&fu:s&.rg&*g WWMgt
xw M,ery W @4eryw W@ W.qt W&wz ryxW# abff took into ascount both
fuWr,* @'fwg"ry* ry@ @w swW,&we e,& @l w &e W@ @> r,**e
.wpb &wax,KaiW Wste6& v,Wr& &f ffi ?h* fuui&xt wx*, alassns, expectad ooryWw&
Geonrcric) rs&rns werc calculeu.d over the $ort-tsrm (fust t0 ymrs) aod the long-tenn
{l * +,fxwS wrra&. a br&l&lWhls*, Ww& " W {twX'M @ wt&iM rr.&&as €qr bt&
&*ElW, End trong-term" the present vat:ue sf bes&s ww *tl*W&eM fut Mx m&6, W
e4pected rate of rstum was s€t by calculating the mundcrt ringle equivalent expecled rerurn
Mt*&ve at Sre wewwwtv&x* sf bene&x fut w&"frw*..axthr ona adnralat&'a&gW eW.rt4eflg and lwiglrerm r&w&, The expectcd rate o f retlrtg wus t&ax @, Wrxl- W &w
&WqawdrntretE MstW &ctv* and adlixrtvt tn ryaqt fur assumod admifrsb&ry
*qr8,|lff,s.
T&e*parf ,dresl rates afr*xnhyassstulsss are as folows:
As*et CIlr*(l)
Asrumsd
Acnet
"Allocrtian fl1
&n*11&.p*ulr
Vas,&L-ln.;n
R'id Retunr
Yernr tt+t&t
Gbbel Eouitv 5O.O09/t &."ew 5,98q&
YWx,d trtcomr:2.A,gQ L"QU 2.62
tnflation Asrets Q.-V7 r,s t
Prh,ee Egu6r 8.O0 6"gff 7"21
Real Arscls l3,oO 3.Vs 4.91
Lrqddilv t.oo {r}"921
Tqrhl t oo.00%;
ll.l tn&e CaIPER* CAF& Fixedlnssme is inrJud*d iw&\&& nsbt$oeurilic*; Liquidlf
i!* kreludsd in Shn*.term.lrys*&nenb; InflctisnAs$€e afC included in bo$ Globql
Wry $eeurilis* and Olobal Debt Securitlec,
p) &n qxpectxl infiMan at&.&W& awf f*r lhiix Wriud
$1 fu *xprx7r& inllarion ot 2.92Vo u sed fpr thir period
W,m*,mtWv'emi*,
'Th:ess,v{er* an s&gwwwffitgs *re wwl&mxweJty'rMt lh,* rw&**,ntmx &ixd**rxs"
Pension Plqq Fidrcirunv Net Positi,on
W *w K&wAaxy xwr p*ibw, *xdsw&. in thc GASB 68 w,wt&g z&k{st;rw ryryrt wy
etW &w &s, &w aWe Wu*a& \e M'f@*ee M x*t&ax qrywxt W tw r:W@
Wtn&,Vtvew&wwwA*gvqlw6wsa,qeWrtreW*,Ww.s&w&*Wwy
57
6.R*imurrent Plm (conr inuod)
w*wex M ffieu@y veWtiww{te w&M ae w*a&',Xbw w&.ttltrg we Mx&& f *r Ww&g WWwe b *xs **n4wY Me' v&@w, lf N. &9Afu6 di fferenccs wee tea&t Msw
wry *wmVx*bMv ry &errvsl X twugjsl, wqx6. dxex6 aM M wM& wxx -
MWieWWe.Y WY:WwwXW
Ylw fw&rt&*tSx xbawa the cb{4ges in net pmsion tiabllr.f' tr(rr &e Wlks&Mw&w
wwg&M. ww W.rttW(Mw& gS*&,
WWwse@WWM.wwtxwx
&W&rw*x,&:
kecrp* *wrf wi W V M*IW'V@
W*weU-tw"WwX@eMJ
Bxpgrieocc
Y@xqxfewwMw,
lfurtt&YbNTtxwwWWvW
*ryw&.u&sr@M&w@@er
T effi&tt&ew,W&@7w
Itie! Irn prdrgn lrr:orrtWYWWM**W**&st
E{rpbypc Combr^dion*WWWw
5"3*3
24u*&&Xe
tt,Yrf&rewry
*:?rr7e.x&sry
&rwe*r&tt
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*Y&*t,*w
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Tnpe&s&:W
{2,OS&lr tl
tp'{t;7xpe
s,wigw
24,W7W
tt&www$
qt,37er6w3
sw
ry,ewr&&
Net Chanps Drriu 201?-18
WewxS&e.W&{wweWMeWMwWtqWWcwtEip$wDqr#qnpqr.
&,* Xwh@ WKw,&* m& pwefw WW ef M fexwl&ww *tan w eY &*,
@.&.W;@Wt&c*weM,\t*ryeeed&w'a$u,W*€'r,t&g@r,ew6L*MWq6
Wktn'X&W rr&ttK bo if it were calg$latsd u*iag a dllr;ow& W ee'* $ WsxqWWW-
ryM,**Wt"6,X,5 rywtg or I pilcentago'point highcr (5.15 pqryxS$fu.,We*gwm@;
Ww@"tW
&,16W''
&ww
{f,l$w$
www4t%
wew.
58
e,ewwWxWz:*W&
Qbangos js th€ lkl tsplion Liabilily-Saf€ty Plan
me'{e%w&,.M"xbnws tbc chmgrs ArwxWMw.AM WWe@m wwz&
,wYw'&e.wwwwwb&,
$rnsiM of fu *q&ry f[*lt $,*t,r*Ms.'- Lisbiliiv to &h#,ngs*,tll r:s qi$cCIu$t Rate
Tbr-'&/.trwing pre,reata &a wxt pcnrion liabillly af e* 8a@ Ytaxr" w uf &e nreaswwsffi
date, patm$*rsd nslng! tfu fu**uW rate sf 7.15 prwnq s& wsi* ax whnt tl* nat pension
ILabAW wnuld kif i\w*,re wlm*xtcd*xtwgaddr;vslrrrllr&*&at is I perueutage-poltttkww
(6"19 fwraenrl w L parwr&ag*'Wi:t/"rlj4/nst &.15 pet*6aq fuw ltre qrntnt rate:
WaWw.'av, 6l38WV {3/SMW
et$e&,e57
w&,r4&w
2,&1?."€74
ry4&tJ7Wv3
w4
w*#*,xw33
*&N,X*&,
eWx Msgfu& er M'tdeesw,$ M
e$wCa*
Idercst onth Toral Pensimliability
WMrn b€tuewkewedNa&M
W:vcmrr.
@EanofAswqrytb{s
YWw PbnResotusc l"iowrrffi
Cffishafrryn\twXWW
Ca&tutbnc fum&fh&.rs
Xstlnss@atlmon:s
Wffi Faynens irplud*rg nemdc *{WwlpW
*&*4&57
96374,391,
2,&L2067{.
p5,8W3"4W4
"t2,9Wp82
e8ff,563
29,531,053
t35,095,4M
1.041.41
et Ctrarues &rias 20 I 7- l E
Babogs at 6R0n0 lS &{qcuremw neb g536,gtjt,&\x
wwwxw-t%
't6.Lsw
CweWweSW.
ry'"Y5'q&
Wrxs"8,W+l%
ry,1ffi
YW*?&a"w$6
Zkbwt4,wbtt * g&"Ttt"v*.s &, t66.364,"{t3&'& 1&9"W"&:52,
59
&.. XM{*wM&.
'6i:tX&WYi,s&*UWZrl't7-&&,xxNr,wdii*f *wv,wrwmal,&wuW&'&rx&ardafuw&Ww*t
{6W Wx, 3 5' u &wuwlx{ snd VittewM eryr$ng kw Yr*wpitew,M 9w t &w, Ww
&asx$46.6fg X*YX&* wwed W WtaqfuuW ewye v{ &vity &t@, W VW.wx&nyrwWr*we' W gM*tpwtew tu *hc Wb atr WltuwuWx xgrlr*v W&&'plw,, &**w&bAW" C*WX
r,wee& w wswxLmc e"@ry w a twt&'dt &a*$*fuw *f $ &W 75,
&*&Mly,&WWwtpWywWri$&e*vqrAwsW*X*al&xfu.xgW*ww**Nx,pfua
wetui*981*MVerz*w-1.&,WWSrw*x4ry&ws,ryWW,r&'W&eba&yWe&,ww\*
.&Wx&. t&,Wwve, 1y wee &x W@*wg*: &qw sf w&'ti ty rehted co pen rion x in w.ew&wa
wx&eeW w*"tiw"6&; XwzzneW&VtfwM,Xx{oorfng fc Poosions
Recognigsn qf O '.atrs Erd Losssg
Veew eeee &8. gwm and Inases rd@"e @g;rylr1*tal penrion liabil"try M'WMW
rw Wq&13*g. wrwe$Wm w&*ry ww ry*wluwfu:r*vw @, :
W&xetM* amount$ are mcognizrd tn pension vry@WWywee W6tewWx*.
ww\^x&, @ xweblxg qwwwp w We wStx& ee W *e*&W.* M &@MWx uf
twwee et&& V W6wwx aM w W W rex*:gxk& b fuewq WeiW WWW.
Xka wxrriw imn siod diffrrs d@fugw M W g *w Wfu *V trxxw
tuWwqebwwwsswte&*re 9x*Mw.&t&eatuww*rgit&r6;wa
sctud carnings
N1&rw.wtxza6 Srnight-lrtw nrnortizatioaovq&e,
w *Wp@ yerxairfuW; wwrx*
livEs of dl rrmbcrs tb* sre
Ww.eee@W,@Y1ry6
|ns&avx;weMM3w.*t'W
@t@Wlftbe mm$remlwlp#rrdl
ery'.WrW.ww&* rs&,ti&ryX ryviw WWw* &W*t;t, ex @MMby Weq&c torql
fe,we Mry yww W M we @W w{ &:xxt MW Xe@st Wy*, arni retired}.
Nnw&x&trws**s
wte Mr 4 t& frWw wrsxqrytw,bwx& qb W wMl prybobil ny o f demner*i n& &w w' w
,ww 6W: &w rw*ifu,e w xx*t Mnd^
W rWL fu ,@ WwWwwgFlan hr thc 20 r ?-1 t w&WW g@ ls. x.4.yw,
&WWWMWW,6W&w |evwiaeyuunof 3,5II (thosumof Miry W*z€e
e&tMtw&ewWww&sy,g W 1,4s4(!hg ryd uurafuqr of pnddpaats; a@vqrfW&Epr
s$d rstirsd).
"yy'A'ffiWW&*:WWMfuf &2*LV.L*,WaxWFil perbt ie 3"8 yesra urlrictr wus
ebqtwe W W&6eee &** W&. M Xwe &f &,Wl Ste sum of rnnai niry Mw ltWstw,
60
6, Retircmsafi Plan fcarlinuad]
vf .tW &, w werywS W eU {thr !rt"l nurnber of p&x&@ai.&&w% t@e,:wdt
rctied).
Pensisnfxnenee.&hd Dcfemed:Ou!;Fowq snd Dc,ferrsd Inllorrs qf-ftesqlqpcERel&d tq
Psnsioru
Ar of the san of the mra$urcnisn puiod (July l, 2017), the ner pension liabiliry ir
.&l W &93,\ Q9 br' *b* &$.{Ml.W*ae mw axx& * L &&,&W u&54 fut && &f*ty WW,
Xar tbv meaxr*rsrrrent periotl qnrlirrg, Jrw* 38, W'& W wWsxw** &eW, M W &
*wage itquryd a pennion erpcns€ ut *\5&qew W, &e lt&4welhvasa,ax Y&w* e&
W{3,491 "524 tar M XxW Ylry xthmvd ax fu|Lr,wx
Wrrellm;wl
&ctiviths
Wrtrlimq*-W
tu:Mx FXrrinvFladr 'r&w
It{lmslhrcorc F&nr
Sn&tvThn
&. lz,l7o,8l5
WAlt,s?4
s 3"&6815&7 s 153,428 s 13,w"&&&
2&Wi-sw
'lb*slPsrubtr&meme f :z.orz.llp $ 3,068,561 &. 153,42*$ 35"&34"32&
As nf the qmd of tho &cssuremsrt period (Jun* 30, 7VLX3 Xnd as presentecl in the VpWS*u
?019 Sffiemeff sf $et Po*itiorq ths rii{ pcnrirx &ability is $97,4i14,538 {w W
Miscellaueous Flm snd S166Jfi4,050 for ths Ssfbry U& Nlseldied ar {bllows:
(Yhrx W*t* *wwurxwS,W MX W*nk\
61
Golwre#al
A{:tivhhc
Busirsg*iryte
Ase,ilke
FHriary
Funds '1bt&k
Miscdhnow Pho
Saftlv Ph
'& 76,9S1,1S7
| 6S.364,0i0
fi t9,4W,987 $ 974,444 $ 97.l,44,53X
166.3&.85fr
Tslal Net Pensbn Lin&i&v & 243,345,237 $ 19,488.907 $ 974,-+44 8263,808,5N8
h. Rerirement Plun {contin.usdl
&*sf &* ffiMW w&e fi'*mw 3*,.2{*r*"&& *,ry &*w*grbwa.&wfw*E sMlw* M
>w@iffiswx taXx"xwrrewt*Mw pwdsw w fu&lwx:
WIlMwwx,Yl*rx
wwxw
W rW.e W3 W ae &WM @*ws wf rywxssw.&lst& x* @ww w.t\SW*
tu tbx wwx iw &ws wt&b* rrysN@ w e Me&tse ef && xy&pwewWWW tn *W
year ended June 30.3020,
e"WWW@X*A&cMatMWxWd defcrrsd hftl\As rrf msourges rcIct€d topw&'*x
@L6*y:enuW&@tseeee@:hw'wW{nwg?*@;azr@WW'
M&wWWarS;sM*VWb\@:
'trl,.*&r&
erW&wee wwxe.w
*f,&wrw,
YM$&tt*eWr&rbneg& WNwaaw@'eW
C herrgs of A.s,s r.mrptkrrc
WrWa b@eeww& w& ewww&rweq.w
Mst'WiW. bwFrcjecred $d Aeet
Eandng3 (}n Pcnsion Phn lrneetnmm
W &neW&W'*Y
g&&-x3&
*
w*s,g&w
m&qr,&gw
Totat t 10,178,r08 I fl,Sd*4,968j
wete
€J&Mw* qY
Wa,arw
W,TEW
pf.Wwsclvt{e*:*
Y w@ixrw *&Wrxww s&WryW, ws Wwrx@w&Sxtn
Wp.wte*wWW
betweerrwet& M &Ml Earmiencr*.*
T.qs*WMProjecrd ata l@
Farnirw on Pernlcn Phn lrrvcsgrrrns
&. t*r&Yw,r&5&
t4,84,&-WX*
&wx&w
w7.4,2X
't*.?7&-t74)
ryexs*&qz\
YW&J s 32-524"936 & .&,T33..&'133
62
6. KerirementPtae$ontinugd]
MisccIanporx Phn Sa&)tyPlsn
Yk*&Yewtr--,:,
'&6,gtee&W
rwM
*M*&fu*v&'wt
Yewww
*€,-*cM$ MQT
Wwww
erywwt
w?,ry
%ryW
wtu4.
T b,w*W
s 2.604"065 x, t&&w3&7,.
$ 182,852 &;, v3&&&3qe t3",&&,54ffi s rcsffi332\
$ fl15,2t4 $ (953,5001
k 7w 3*, 2fr I 9, ee 8. W eq. elrrrlad:urle am*uui. CIf s UMW** to the ry&vn Nw
WWd fsr the yoar emdad lvno 30.&&19 "
7 , lnsurana€ Prcgmrrts
XI*'&?y isexposod t* vwlswx**g,6tlaxs ffhrad ta ta&qn&e. &waW and dectrusii:aeuX.
ew&;&areandcmiwiwrrp&,wS,wnlkrwydasirylr,hmee,q&*lewwidcn&s&'na*a&
&isewre fwryhia,h ths C rty cgiatxfuxvmious insuranse pe, WWe We Cig ha* cnterc*l i*ls
ass/ml*swlth outside vendors to supcwisc aud adorinisrer thrse progrEms. lnaddw{fi'fkt*
ei$-ccmplotes atr snnusl wttswi mnlynis tbr thp WEfurs'eorypensation qdd ljrsKld&
Funde to detsrmhre appropriatc fi.rnding levels.
Gensrsl tiabilitY
Ths City b sElf-inrured for S$rlsml snd Aulo Liabllity ulxins up f0 $350,000 per occurrenee.
For a$rounts in excees of $350,000 smd up to $3,000,{Kfi &e Ct:ry prrticipuet in a public
€nrity risk pool maintained ttr1cugh liie California Insuenss Sppl Authotity (CIPA). eWe
is e oousortium of Californis citiEs uder one joint polve{s xw&ariry agreemrnt, s'tticft we*
e*rablished to pool l€srillrees, shnls drks, purchase &yo{gc irwrww*s, and CI slure rgsw f€r
pro{'ersional risk rnr.nngemcnt and. clsimg adnrinisnath& ffm &mouatg in sxEess $f
$3,00CI,000, the pnol purcbese$ commsoial insursnce od tw wvsc$rgc up to g13,\Wtqtttf'
Sqr&sry' gp{nfnratinn
T1t*, Qiry har a nelf-inxuronoe Wwexn tar wy liability rw &$ srefiny,e* wsiry xt&s M
Wur*nr:r' f;sr"nWrwiriisnlew.$ *t&* Slare of falifwnii1 "W Li\ Wc ltplt ffiUUuV*g *
wwtw,t*g Yu* ayns\t6 rn w"t*w qf $!ffi,$fi$ &;rtt ry w &2#ee,&i@ M City panicipctm
te Qry,l\, Vst wtcrlxrtrx ip ww a{&2,0{J0,Wfru fux pr**l ptwr,bwwxxt*rye* .bew;itw
snd hr! eowrage up to $52,000,000 per occtrrrsace.
M*w we M&eti'*Wwttkq&&s, &&wtswhw rycee@sx&M amounl of fhe
3,*sx w W ffiwbW esM@' Li&ttee& e6:8& rw awt& W. e&W W, W o Ww
63
7.Insurance Programs (continued)
incurred but not reported (IBI.IR). The liability for claims and judgments is reported in the
appropriate Internal Service Fund. An amount for current claims payable is calculated based
on the current year expenses and the remainder is shown as noncurrent claims payable.
Changes in claims payable for the year ended June 30, 2018 and June 30, 2019 are as follows:
General Workers'
Liabili8 Compensation Totals
Unpaid claims, Iuly 1,2017
Incurred claims
Less claim payments
Unpaid claims, June 30, 2018
Less current portion of
unpaid claims
Noncurrent unpaid claims, June 30, 201 8
Unpaid claims, July l, 2018
Incurred claims
Less claims payments
Unpaid claims, June 30, 2019
Less current portion of
unpaid claim
Noncurrent unpaid claims, June 30, 2019
$ 2,243,126 13,368,633 15,611,759
1,039,399 3,542,762 4,582,161
(681,441) (2,462,r4s) (3,143,586)
2,601,084 14,449,250 17,050,334
(728.272\ (3.195.911) 8.924.183\
$ 1,613,849 10,616,914 12,230,763
2,601,094 14,449,250 17,050,334
881,960 3,963,426 4,845,386
o.197.186) Q.769.86q (3.967.050)
2,285,858
1.040.871
15,642,812 17,928,670
4.375.480 5.416.35.
8.
s 1,244,987 tl,267,332 12,512,319
Other Post Emoloyment Benefits (.OPEB)
Plan Description
The City administers an Agent Multiple-Employer defined benefit post-employment
healthcare plan for eligible City retirees and their dependents through the California Public
Employees'Retirement System (CaIPERS). Retirees from the City enrolled in the Public
Employees Medical and Hospital Insurance Program (PEMHCA), who retire at age 50 or
later and have at least 5 years of service in the CaIPERS system are eligible for these benefits.
These health insurance benefits are authorized through City Resolutions/IV1emorandas of
Understanding defining health care benefits and contribution levels and through the
contractual agreement between the City and CaIPERS. The City currently contributes $136
per month for each retiree and the retiree is responsible for the balance of the premium
amount. There are no assets accumulated in a trust that meet the criteria in paragraph 4 of
GASB Statement 75.
(This space intentionally left blank)
64
&, WY,W*WWwy'W:WM
Emplryee* Covcrgl
Xx e @ @ 3 0, 2A r? scrusrlsl valunrioq tre follawi!* ry&W M W *wnWWW
w& wiv*re&W WWtw uaW&* pLw:.
lnanivs ernployner ot bondrinries curmritllr rcceiving benefits 269&&q.wW,g WL
TM *s&
Yeei&WWueffiW
&a Wx QYw itebif.S sr &3?a;,49e,U25 wae wewLx*A w qf Jw* 3*,2*l& wA qolee,
Wby wsenrsrlql r*&wt&w w $f lws 30, 2u17 .
&tWM& * u*uMsns eM mMrWlM
ryWetet OP$B liability w ryf ,&* {@30,301? mtnsdel vNtrvwxxn *Es det*rminrd nxing
&a Mr&eotttryiel wsrt@nrw'M othsr iqrtnx, arglll& w &l pxiadq inslt dsd lnW
megsu:sment, unless otherwige ryeciff ed:
Vahstion Dats Juue 30.:CIl?
MwxwrwtwrlDaw Juue 30.2018
A.ffiwid Cost Mglhod Enty.Ase Xsrdrel .trmel % of$alary
A otuarisl Assumptions :
trXssount Ratn 3.62Ve
b*a&an 2.50%
Ydl*xarl $nlry Ineroseg 2.75Frr:, lrMWbaS meril bqsed inu,ea.ssx
bosd w C.ffiWS &d.€rit &tlary lnurea'se
Tablc
&xparfrtri Long Tenn lwrrfmretLr
Rate of Rehm 3.5CI?6
ItFdth Care Cost Trend Rares 6.5% ivtwslyaw, uvnilng donm tn 3,&Wq
ovsrSE.Ysrr*
Wr*.rg,tircn,ent lbmover Dcrivcd frar* C&Wfi OPEB Ase&$aptio,r
Mpdd. tevix&Wwrmber 20, 2Ql7
{rqws;f,/rrWFud*Dnived fr&w CwWX&$ CIPE& A.wu@m
Mottel. rwisod Docernber 2A,20L7
@ r&zw$twtwttee&wmw*re&*xat6l WW ltMwx k?.&"Va, Tbr *|ry?x 8W 91ax
iawMx&a&eta&eweee&e&tsr"&wt"t&e.w*xsst"&r&wsWstraxwxnzp\YutfuWlfw
2&*,w ww1twWd Wadrs, as of the val:ugltisfr/ &wtw"
65
s, ot*,arLsg-EwsWwwww&e WW fu*tke6&
WWaq*,U,wX*YvNvXUXXW
'$k* c&wgab&s &?W'\iW *yx wfull*wx:,
ry&ww w *f |vw 3*, 2W2 &,,qwxw*mar*Ti*rx3
AhsrywtxthryYw:
*crc&'{k*
' J*,wwx& w W Wef &YW rteb&:tW
eryW&bwxwrypci*yr*
CpMttrx&.*rx,*ryArywt
t@sre@WMr&Ue'Me;t.Mg*e
W&Wv e 5 {xW: 3* ;,,Wr.& Wwxr@w M3
-YMW"tAqWx,
wx'wu&os
1&&{t,W3
tr*11{*.t38
{3W;$&*3
wv&ev3
.-'''-'*-
ww#3s-
_ $32,490,025
eW W *k%XM.ffi-&3&&&W w QWw $rt *he.xte:e&mx ew:
The foilowing pres€nb t}e totnl OPEB liabtlity of the Cily, ctlcularca wing Oe dtscuunt rol.e'fu &t*Mw, w w&, w. &x *w eAry'x wM WYW \W&W w*&& b* tf x w*** twbr*eM
&W a &s@ reW'&6' rx 3" WWW p;r*kx lw*r: {w t pW;r,W x&e* kr&w ew ee
WMY&*:
Dissrunt Rgle Cuffcot Dircount Rare*{Vw fAwwwXX& t,|Yw
{z.gzyot *. - _ t3 6zh) g$z%L*vwwwr;ww Wrcffi* srffi,i;5--*ffiWW*
.
WtA:W*gWwWW'WWi &Ys&rArabrltty of the Cdy, w,zvsA| & M'M@xWfW t*eW weee W'W i, wwrx &*u*M. *reWW@ cost lr"od ratre M w,
wqwww&&ttxbw,etww4eew&esxeww@txwerwwe'*w&'wilws:
Cuntat Hgd*asrr
lWWw q,$'fttrd Rrtei |v&lrwrwwe.\e'& &'5W&9w'4ws 7"5*YitWryw@Ww &&&,W' Wbrgfu____M._$21.e1?.r4e **Tm625- -T#n--XM*ryWr,WM
66
Otber Fort Emplqpenrlcnefils (OPEB) (,continucd)
OPEF Fr.nsrqe and Deferfsd Outl]ovrs of R€sourc$ Relat€d CI OPEB
esW wtuwx*ts@* t*'zw*xwM dale
hrplied subsldy
Totd Defemed oudlows
WWwaax
sf Rer$qrcet@
,ffi&,w"wsww
WWrw&'.1a9.w*
gf Beeou$es -xw*&xlWwwee b a'm'sifry/.ff,fri* &w&a& xvw 7 "9 y wej
TW &t:&&$r*75 rapi&d sr deferr&.sutffowr sf twr;:w& WM fs ws&ibutioo.r
*vbWwW ** &6 rnrxisstwntrylfl eW W*t be rscsgoid we a &Mb:a of tbe tutsl OflH"F
IL*M&*X *rr $a y€nr Ended ftne 3Q 2{n0" Oftry flarqwtts rupertrd ap deforcd otrflsilr af
rexuvrex,*mll defmed infiouffi of rer.ouc&ss.rdated ts OPEBsr*tll W.vwgtad as OPEB
ex&rwW fbllowisl
Yw F.nditng
.- inne 30"
?020
2021
2027.
!023
2V24
Thereafts
.4m01i81
s (47,033)
\47,43, 3
(47,mq
(47,Q?3i
(4?,033)
(.8e3ffi3
ffia w*iw {*xr1fiweL|y td' Wrtk,
67
*. Laq,N:f*mTa&*&w,
Y*.Ll*uzts*i* & t*onciliatiou of long*rm bMW&wWs &* yaw M,s& &uw 30, 2019:
Nwtwte ,&wa'a*x
&ww, utrdin3 ewwwb? 8www8W&sa. tA*lte* Daki*r Bdrapc *MV'&&t *3&*Ye
&WMx\M*l*xtbitwW;Mqe
3eryre?*ts
Mct'1t&3bw:*W,xaW6W
WwW%W
tMSwq@ttrys
e\t{ttVstwwWwcw*s&w
TM
* we,w 91v&t*rywv a&r1&ti, 2?i7,w 1ww
&&&,w e&r&6s 3w&* v&t&w t378,w 4&2wt*J:l;W&- 4'845*-i8& W7.We t?W&W 'Ar63tr
r25tz&rg
tJtI{ 1ra9?0 ra,??6 r!3.63{ t4r6s 464,{?0.
t2d,20?.066 g.s6rJi$4 ?.924,s05 2?fia2s5 9.161 ]60 l&Oss.it t
Se W eeU U *{W 2*f g, &w @ : vWT $r*!.* a s&w w bw Wwre w& &rytrWe
Wsta,:M*xw f&x f W r@&t *{ &W cwtte& aw&lM, W t@e r*W t &ryZ rW& e{teW e w p*tw M" W. W r*:es@xfugMw* * X'ee* .x&
" W*' w &t,et:, &13 r-fWwtweMewew,tbllwat
wrp-&* &233,772tr20-21 237,Ttg?v2t-22 237,7782w4&. twwW&3-2& 3$;&.95Wqe e;vwbWW _W,Tf,&
YeW&. WW&
X.ww* ryry@le wry w& W W&e.ew$Frsd Cornp eneaxl, @ww w* pq&&,Mw: &
WW$ee e-e&re* X-WW YM @ &wrwx peyM& wix pw& tuw M WMU
Cwxp@Y@tf;urd the Liabiliry rwd.
$w@'MMw M,ewwu'ba*xM w& *e*s" w,w,w*&,mw{ xeeww
In July 1996i SBccial A*sessmeril tistrict 95-l boud.q in theamount of $1J00,000 wcre
issuqlto {insnw rhe acquisition ofpublic inpmvements to Sycanrore Croasirg, 'l'he irtcrwt
r&. rxt ee eW W,yaritrbla, ranghg haxz &,7% w 6,W'W,,'W''h@ we *adrule,8 w
sltsW.b&y@wZffi,L"
I$ fcbrusfy 20S4, CoTnnrunity Facilifias Distht No. 9l-2 iscued refirnding bonils in the
www &, Wyrs**,M* try- Ww.w" * *,q*l*X*A sffiet , *t @t**.Wfqrywwre", te &63 2{313 ; W*e t*- ne arnount of t2&8 tr 0, W8 wrw {xw*x& t* @e
Mw,Ww**, W Wfw€@ Ms {'s W W * vwab\,q uwW Ww eW' w M, @b*w&'w*xMlW,tuwwre&WeW"
68
\W, @ &wwwW$xtm&w'xw& &&rs W wte Bg,lra l:rrllg4*:k&M2
In lvltrcb.2015, Cmnmuuity Facilitier Dislrncr 06-l issusd 2015 Special l'sx Refimding
'W@& &'M mount of $ 23,92 0, 00CI, PwM& & &w b@e *ww *M **, & weM a& *$ the{*@ry *ewtwW wMe nt&& w 6 "'W4 ee& e &eeT ry w Wri@x, M& ww
efrW@y @ e &*w M W-W:X"w vX x.W,e *w*wM*wt&w,w{ rytuKu
@wvw*@ W Mw e e@& xnt&, &* &ew* W @We @ e.*' We eWew@* rr& q W ryW *f *ry*, W tM@ @..v& &w ebg t& @We, y@
&*m 2% rw 3%, ryk&bue& W &t&&& &' wezs t& &@'2*34,
X &&lrx e*'&dtFrrns anal dol€tiong ra &exryWgda,iE *n fulhnv.rr:
."... . ".W*a** *W?,,*". WW.* .. **.*,*-*-""-W ..
&y*wwweMxW&
.&,b,*5-l
krrmsllxl$6
&r.p-sza,
fuNki*{'Ye"%-x,20ri
*p&rLfW%ke ttxu
v zffJ,gw
2,4;r**&tfi(t
2r,lli'0,{r1&
l,tMW *,sW&$(t
sWtM X,6&Ns
s*8.060.0fit r.6t0.0{lo 46.450,t100
'fW C@ttw n* rbligatioa ar &ug kt pey W' dalixq$nncy out of any crnailsble firndr *f &e
C13y, Tbr,gh$tewily acring ssllaegsrrt for &sWspery ouneru in colleating theasssxsrnents
and thw.re*iag&attfu deh seryvicc Wyffipn:l*,cry-rxedrc,s$d neithsr fuMee&*redit, nor
tle taxing p*wet nf the Citg in pledged to W pvymarr of the bondc. "fuMfutr*, ths bond
indebtdsEsr ig nprshoiln intbg fity's finan*i*j $atsmsnk
tl Jsif*Vc$fiffis
Tkr City .is a Fsnicipant in the Annheim&wdrys Grove-Orenge firu'r&.{wng Faciliry
Arrtborif, *3xit* powers autbortly ereatsd ir finance nrc treinhg. Thesc cit{ee hf,vs orc
rcplrrsentn*ive mch on tho Aurhorir/slhre*-meinbry Board af DireEtors,kCl$* shms of
thr Ar:tlmri@ng crrts ir included in the accompanying finqncial q&rt€msnts as gpenditure$
$f gw 6anw& YtM und ix im:mwwial to the opsrBtioos atttw f,'iS" WW*x finsncist
&Wmwlxwyb*cbtqin€d fw*taftueTwilmryffasility Authority ftom tbe City of Omden
&rwe"
In nddition &r thc Firc lraining Faciliry Authorir.v, thc Cities of Orange, Amheim, Fountain
Vallcy, Fullutan, Garden Gmve, Brea lluntington Bcach and Newport Beach have formed
a r**$M. dkW& rywr*tmn & WMee &sp& aMw tsr thr:r. r"irr*x,
W f zry *{Atrygr' x *sr* vf w&* {lxf' &*t p &W& x*q* tx'*x &x {wrwWxl b ew arytuvw
wf W W, Wy ffiw&e1 wqrwpwrynL M MbeWeieyt & A6* W*t*e &,ifu
recponrftrility ot'tle City of Anphoim, $qarate finqnglai sta.temena may be oblainod ftn tlre
r\We XW'*ke eWW tuwee W re{ M"
69
13. LwMWte
With ttre dissolurisn of tho Redevetopnrrnt Agpff)y dfocrive January 31. 20i2, the City
fu w6l &qwx& e,&wX\\b .&t Wh&btg &* *iW xx Wwane tlr Sucoer sor Horuing A gen cy
MwWangfu ef@wwere,Wp&ggsg:wexMeMinsof theRederclopruwz3t&wX"
TW Sswwr llov*ag @ry prr,vhdw W&ser& txwrw tw M r*bahlJl&ee rye WWXW
&f WeW fur Law and moderare -\\r*w* W,1&8 fu &* W " WgwWe Mtf&* l*xxx
wa tw &,e prxww &f. &t&XWne W& tWm&W 4w@xe baur.@ W, W ppwM
dry&*W,&ex" WW\ne l*wnx &x txt &e wlrte&MbrL &t w rnt&bew*y WMW
Wqtww&n@W&nW*feee twtu,
N&K*eeg**W X&s@Wesixa@,ssyaalpromirsory rMx,ryxwt,
t* ,wd & W\Wivtt :*tr g **&M&3& Wag Ressle Rrstdsrions Optinn to
ww&Ww WLW?r:M.aNw eez Wtr* *p&-$mta'3ryr&w w& @an $ Puchas!
LSWW{, These notes do n*a wxJ?y wwexw qp* w&& $ry tbw.twt9p't*w , br&&
&ww*,ee m@iey wnMMvey we@@,W ee &omower as a result of bCIrrowers"
puawibww ffi ' tX* 1ryry * w giw b&w iw fuk wwW v s&w, ?Au W&qq* *t W xw
f* &t* W.&rx WWww cw$ ee' eff .MWte'VW & &e Zw W t"&' Wwa ,xrrw*esry
t'rum tbc Lmn daro), or upon sale of th,e Froptrry or default" rs drscdbed in thc note, At June
3&.s,'W\Wr&s'wuxwalng erormt for thffe loans rr'?s SW,&W Wwtcttberryffiwf &*
etML we W vsqx&xWV wf W,YwM &eW rwe W wMsbs&@wk qWW
w aMwwwfux. ee WL wryw *r &* rw@"
T* W W 2*t& r W W w*Ke& iww x&&wwtry &Wwa .*xzW Wv*.vt&w f* *w TSav@er
& r**i W rww W w& i*tW&ea tXw&W? &*. W wiwwWa eg Ws*x Wrxws tur
M &*ra*s W'w&* W tM wWn musradrl'ng com$\w& @& affi@&re bxrr&ag
ztryks@"X&awi*wa&eeeeW,pt*,4exeWnCityloan-ft omtl_reln-liauHousing
fu &&Aeesm*,x&&&&,$**&**,*twbxlwwx*st&s\qw&&ue&e8,P829"t&*f &Wry.
f
',
e&rwwt u&t*, ix VZi:l %,72ffi ,
Le@fuWWm emeW* pgx$r@,x,fu qW Me*eMWt*W& &stble City of
ffi rwg*,rwieee'e\t&|o.**rrr'arxe*W&eeewWl
A&W&$W Nrw b*"wry w. & &ww. tux M prex*xv w6w*; tar &**x Wry'.tw
*& &re 3&,?-519 se conrprircd of M Wfuv&*X:
ffit**WsgaaryeryXry@tuwWWtwx
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x3W;zW
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70
n3- .&eWWW,.e&p*We*
fu Ww et fu &@,tw, *ry@kwiwt'tute WeWw k W WrxW e*tary ffm MHz
f @@6* *, vs&nsx& g3*wwwn*xafua WW W*W, &e W,@ wrys@, W @w s.
ry*&@W 6f W@ewab,We&& r&z* ivv**r{@,Wtwwry x@wW*xt*W
kryWwW?ryYV?ffi 4@,Ww"at&@w*w&xffi@@wwwWtxte&w&Wt39,
erstdWw' WL&&3 , xs W"fury& lwri wxs m*& {r*w W e:,aw&t TwWvW VW& w
&x, 8 &p LV & ew6 b fu w*t& e{ 62,? 7 0J I 9. Repaymssl wf ,tbc\W* @ wwe.W&et
e&&ew.*f rM,WMxX*w*&wtsvWxYrM*st&"v&tte@ewWweVffip
172revenuesov€r &perioduf 6ysr*, begtrfiinginfiscalycar20t?-lE, Th€balame ofr}is
sdveywwryf {$*e%*n*ffi g,wstz&ssgqwu&t*wet*&1,8&,3V3"
\4u lxwxexx
hwfu Ww &e&e {& tb* yw wdd &tm* 3* u W19 srq.es futrlqw&;
Twwx&,mIn
Trgnsfsm Ont
lnt*MWw,
Canitdlrm. Fund Fund ?ot*lc
Crneml Fund (f)
Capi6llmp"rund (3J
Intcnsl$Erv. furd (3)
?atrb
e00o,ofi]&*%,wn
ry;w$
ffit,*2
495CI,otlo
20s,CI{0
631,48?
xCIm.mo 3,781,42 t,781,4{2
Inledhnd transfors wrrc us€d to (l) fund gaarnel filrdcd capiral v*qJ&e" vshiclE
nplncemrnls, infbrua$on cystem*, oomputcr r*pXacnments, and liahiiity deiwn; {2} l'und
improvernenu to City &sitiries ad (3) lo provide frmding for linbillity claims Weree"
15. Deficit Isuitv Barances
The Pmposid nn 177 Furd eualed rhe &stxl year ir a fuee balance deficit of $ 2 ,5** ,*:r)*,Iltis
dcfislt is * rwulr sf * esmmritmeut ln ryilw* Wi* publir Betb'ry rwdna *qulpett witk
Pwpaaitrunl??fu6e,w,btchll{ll xarb*wfil&1*w*r,*!*zwteyears, A,luqtlkrlrt*he&pi$al
lmgxWs Vtwd wa* m&e t* the Pmposition 172 VlucrrJ Ia prewda Eqsh {o Pa} this
saNtwirmmt, Y\*x&&i*wtttb*EliruinaJr;&*vwfux*xt 3 years, as geles lalsffTsnueg sre
rwvtwd. wd we uw& ta puy r*ff tb* lwfu ,
TM Wsr*t lMr&wwse W*w& &pr&*e, Y&qt&b&'g &sfi€,tt W pa,&a a{ $ 4.2 uri lli on,
et/*btbwew@tta8r.l6etr&P&W&e"W*.Mwww.ee@ers{Mffinnlff ssr*tdt&
x&'pw\.*w \bWW ryf W,& @ibn & &,&&W v 5 ;' xMrh wry&x Ar* &wf && &f &a'%xxd.r s
Mat Qfuw V uy^-WW.ywwv &p&Ls linb i I i ry o f $ I . I rnllllsw YM 6f *M'*uwpurw&,*x
7l
t:5. Wx&x&t,WM&s,&wW {SWrewX&
Vry'ry@ W*s 4 Fund and ths Lisb ilW W wl ew"q: w We he Met W . ri*ena *t W &
&&i*x w& &l 2 mil li,on" respecrlvely, &w M y*wr& t@ldlhag af see*& &@be
&sw, q&6m* Weble.. k ix &* W, x Wrttry rW W W &*as'6&Mu,w &t**w WN dq wr,
rT *M:twglbl*erywswg"
W.Wt&Ms*
:fW et$ 3s Malved in pe rding laws*w * eww wrymextW mEw* at&|W $'t&dt{agw
elry WWxWw eWseses MeW WWM Mzne Wqtssr fu CW" est wv*r& Wfu*t&Ws'@ W ba$ w x wratw *, a& w* wWX *xs qbw&ws&a& p*&&*w *f &,* *,&X,
t7, MW&,WAuAKWW x,f hwW&Wr:na
W w Wa p vxr. @:*. Y{ew 3* ? &ELg*,'uw&16xw& WW&& Wrygi*tu w. tue followingd'ryarto,crds,
o*ul
Final Budset kmndlqryg YSgar',cg.**
eweeW@
r:iry tulanaEry lt$ ee;WS&&6 e,6e&;fsx tn0,44?l
Clry clcrk W' ' e&X&W Wu,tS* &.t&Www&,*wwswt& t&xx&W , WW.M& W,xW
Prop 172 Fund
Ciry Managff (3) 10U,E32 | 15,468 tl4,63$
Hor"rsing Succespor FundCornmunlty,&vx@ry.ffi 5*,2&4 g*4&44 ryW
Economic err,:w*WSW L{}*,W ffi&;VW WS,&W
e.xw&eemtxsxYM.W***W&*x&wpqry.S 7 'ss$ te6&e&
We Mss,, vw*ww* w &* r* &* t&W@:
(l) Paymonn undor rev$oue *lraring agrocrneflt bigher thnn anticip*ed,
W WWMqWee ry"XwtttywrY, eee* r4w 4@l sr Ww. wwss'"w.
ffi WW ryWuv @& w tWW& tw ww WW@ .
W e wMX a&wmxrzt r* tua&rs \we'@ry&be. W W WWe xx.&xw w
prcucnt vduc
72