HomeMy WebLinkAbout1992-215
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RESOLUTION OF
BONDS AND APPROVING
PRELIMINARY OFFICIAL
RESOLUTION NO.
92-215
THE CITY OF SAN BERNARDINO AUTHORIZING ISSUANCE OF
FORMS OF BOND INDENTURE, BOND PURCHASE AGREEMENT AND
STATEMENT FOR ASSESSMENT DISTRICT NO. 1003
4 WHEREAS, the COMMON COUNCIL of the CITY OF SAN BERNARDINO, CALIFORNIA
5 is conducting proceedings for the installation of certain public improve-
6 ments in a special assessment district pursuant to the terms and provi-
7 sions of the "Municipal Improvement Act of 1913", being Division 12 of the
8 Streets and Highways Code of the State of California, said special assess-
9 ment district known and designated as ASSESSMENT DISTRICT NO. 1003 (herein-
10 after referred to as the "Assessment District"); and,
11
WHEREAS, this legislative body has previously declared in its Resolu-
12 tion of Intention to issue bonds to finance said improvements, said bonds
13 to issue pursuant to the terms and provisions of the "Improvement Bond Act
14 of 1915", being Division 10 of said Code; and,
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WHEREAS, at this time this legislative body is desirous to set forth
16 all formal terms and conditions relating to the authorization, issuance
17 and administration of said bonds; and,
18 WHEREAS, there has been presented, considered and ready for approval
19 a bond indenture setting forth formal terms and conditions relating to the
20 issuance and sale of bonds; and,
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WHEREAS, there has also been presented for consideration by this
22 legislative body a form of Bond Purchase Agreement authorizing the sale of
23 bonds to Stone & Youngberg, the designated underwriter; and,
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WHEREAS, there has also been presented for consideration by this
25 legislative body a form of Preliminary Official Statement containing
26 information including but not limited to the Assessment District and the
27 type of bonds, including terms and conditions thereof; and,
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OS/26/92
OF BO~DS A~D APPROVIKG
AND PRELHlINARY OFFlC1AL
FOR"S OF
STATEMENT
BO\')
F09
RESOLUTION AUTHORIZING ISSUANCE
INDENTURE, BOND PURCEASE AGREEMENT
ASSESSMENT DISTRICT NO. l003
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WHEREAS, this legislative body hereby further determines that the
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unpaid assessments shall be specifically in the amount as shown and set
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forth in the Certificate of Paid and Unpaid Assessments as certified by
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and on file with the Treasurer, and for particulars as to the amount of
said unpaid assessments, said Certificate and list shall control and
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govern.
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BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
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BERNARDINO AS FOLLOWS:
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RECITALS
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SECTION 1. That the above recitals are true and correct.
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BOND AUTHORIZATION
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SECTION 2. That this legislative body does authorize the issuance of
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limited obligation improvement bonds in an aggregate principal amount not
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to exceed $1,123,745.63 pursuant to the terms and provisions of the
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II Improvement Bond Act of 1915", being Division 10 of the Streets and
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Highways Code of the State of California, and also pursuant to the
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specific terms and conditions as set forth in the BOND INDENTURE presented
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herein.
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BOND INDENTURE
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SECTION 3. That the BOND INDENTURE is approved substantially in the
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form presented herein, subject to modifications as necessary and as
approved by the Mayor or his designee.
Final approval of the BOND
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INDENTURE shall be conclusively evidenced by the signature of the Mayor or
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his designee upon final delivery of bonds and receipt of proceeds. A copy
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of said BOND INDENTURE shall be kept on file with the transcript of these
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proceedings and open for public inspection.
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OS/26/92
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RESOLUTIO!\ AUTHORIZING ISSUANCE OF BONDS AND AFPROVING
INDENTURE, BOND PURCHASE AGREEMENT AND PRELIMINARY OFFICIAL
ASSESSMENT DISTRICT NO. 1003
FORMS OF
STATEMENT
BO'iD
FOR
1
BOND PURCHASE AGREEMENT
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SECTION 4. That the BOND PURCHASE AGREEMENT as submitted by Stone &
Youngberg, the designated underwriter, is hereby approved substantially in
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the form presented herein, subject to modifications as necessary and
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approved by the Finance Director or his designee, subject to the review
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and approval of the City Attorney and Bond Counsel, and with the final
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pricing of bonds being delegated to the Finance Director or his designee
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(provided, however, that the net interest cost on the bonds shall not be
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in excess of 9% per annum and the underwriter's discount shall not exceed
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3% of the principal amount of the bonds issued). Final acceptance of the
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BOND PURCHASE CONTRACT shall be evidenced by the signature of the Mayor or
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his designee on behalf of the City.
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PRELIMINARY OFFICIAL STATEMENT
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SECTION 5.
That the PRELIMINARY OFFICIAL STATEMENT is approved
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substantially in the form presented, subject to modifications as necessary
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and as approved by the Mayor or his designee, and execution and distribu-
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tion of the Preliminary Official Statement and the corresponding final
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Official Statement is hereby authorized.
The Mayor or his designee is
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further authorized to execute and delivery any certificate regarding the
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finality of the Preliminary Official statement as may be necessary or
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appropriate for purposes of complying with Section 240.15C2-12 in Chapter
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II of Title 17 of the Code of Federal Rgulations ("Rule 15C2-12"). A copy
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of the Preliminary Official Statement and final Official Statement shall
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be kept on file with the transcript of these proceedings and remain open
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for public inspection.
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OS/26/92
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RESOLLTIO~ AUTHORIZING ISSCANCE OF BONDS AND APPROVING
INDENTURE, BOND PURCHASE AGREEMENT AND PRELIMINARY OFFICIAL
ASSESSMENT DISTRICT NO. 1003
FORMS OF
STATEMENT
BOND
FOR
1
FINAL ASSESSMENTS
2
SECTION 6.
That the Certificate of Paid and Unpaid Assessments, as
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certified by the Treasurer, shall remain on file in that office and be
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open for public inspection for all particulars as it relates to the amount
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of unpaid assessments to secure bonds for this Assessment District.
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SUPERIOR COURT FORECLOSURE
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SECTION 7.
This legislative body does further specifically covenant
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for the benefit of the bondholders to commence and prosecute to completion
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foreclosure actions regarding delinquent installments of the assessments
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in the manner, within the time limits and pursuant to the terms and
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conditions as set forth in the Bond Indenture as submitted and approved
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through the adoption of this Resoulution.
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OTHER ACTS
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SECTION 8.
All actions heretofore taken by the officers and agents
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of the City with respect to the sale and issuance of the bonds are hereby
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approved, confirmed and ratified, and the Mayor and any and all other
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officers of the City are hereby authorized and directed, for and in the
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name and on behalf of the City, to do any and all things and take any and
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all actions relating to the execution and delivery of any and all
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certificates, requisitions, agreements and other documents, which they may
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deem necessasry or advisable in order to consummate the lawful issuance
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and delivery of the bonds in accordance with this resolution.
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I HEREBY CERTIFY that the foregoing resolution was duly adopted by
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the Mayor and Common Council of the City of San Bernardino at a
reqular
25
meeting thereof, held on the
day of
June
, 1992, by the
15th
26
following vote, to wit:
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OS/26/92
4
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RESOLCTIO~ AUTHORIZI~G ISSCANCE OF BONDS AND APPROVI~G
INDENTlJIiE, BOND PURCHASE AGREEMENT AND PRELPlPJARY OFFICIAL
ASSESSMENT DISTRICT Nt}. 1003
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FORMS OF BOt\D
STATEMENT FOR
Council Members: AYES NAYS ABSTAIN ABSENT
ESTRADA X
REILLY X
HERNANDEZ X
MAUDSLEY X
MINOR X
POPE-LUDLAM X
MILLER X
.~
. / I .
iA (c c~ \-C.L-
, city Cler
June
The foregoing resolution is hereby approved this
, 1992.
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( / .-p.....
W: R.c HOr,cOMBI Mayor
city of ~an Bt~nardino
Approved as to form and legal content:
JAMES F. PENMAN
city Attorney
By: ~~ 1-. (t&rVh.4_
()
OS/26/92
5
18th day of
, '.
.
City of S Bdno Res No 92-215 adopted 6/15/92
July _,1992
The Common Council
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418
Re: Offer to Purchase Bonds in an Amount not to Exceed
$857,058.82*
Assessment District No. 1003
Limited Obligation Improvement Bonds
(Cajon Boulevard and Pepper Linden Drive)
Dear Common Council:
Pursuant to discussions with Bond Counsel, Brown, Diven & Hentschke, and our investigation
and analysis of the above captioned Bond issue of the City of San Bernardino (the "City"),
Stone & Youngberg (the "Underwriter"), hereby offers to purchase all of the above-referenced
Bonds subject to the following conditions:
1. The Bonds shall be issued pursuant to the Improvement Bond Act of 1915.
2. The par value of the Bonds shall be in an amount not to exceed $857,058.82*. The Bonds
shall mature in each year and in the amounts and at the rates of interest set forth on the
Maturity Schedule attached hereto as Exhibit "A".
3. The Bonds shall be issued in denominations of $5,000 or in integral multiples thereof and
one Bond in an odd amount due in 1993 as may be requested by the Underwriter.
4. All Bonds shall be issued in registered form in accordance with instructions to be
determined by the Underwriter prior to closing.
5. The Bonds shall be dated July I, 1992 and delivered on or before July _, 1992 or any
other date which is mutually agreed upon by the City and the Underwriter.
6. The Bonds will include serials and shall mature from September 2, 1993 through
September 2, 2012.
7. The City shall establish a reserve fund in an amount equal to ten percent (10%) of the
Bond proceeds and such reserve fund shall be established from Bond proceeds.
*Preliminary, subject to change.
1be Common Council
City of San BernardinQ
July _. 1992
Page 2
8. The City shall covenant to commence judicial foreclosure of delinquent assessments as
provided in the Bond Indenture.
9. The City shall furnish to the Underwriter a summary of property tax delinquencies which
shall include for such delinquencies (i) the assessor's parcel number, (ii) the property
owner's name, (ill) the amount of delinquent property taxes and (iv) the year or years of
each delinquency. Such list shall be furnished to the Underwriter within 60 days of the
City's receipt of the Fixed Charge Unpaid list from the County of San Bernardino.
10. Not later than the date of Closing or the seventh (7th) business day after the date hereof,
whichever occurs first, the City will deliver to the Underwriter an Official statement dated
the date of July _, 1992, in such quantities as the Underwriter may reasonably request to
permit compliance with Rule 15c2-12 of the Securities and Exchange Commission (17
C.F.R. 240.15c2-12), including any appendices, maps, exhibits, reports and statements.
11. The purchase price shall be _% of par (a discount of _%).
12. The Bonds may be called for redemption prior to maturity on any March 2 or September 2
according to Section 9 of the Bond Indenture.
13. The purchase price of the Bonds shall be paid in full in clearinghouse funds to the order of
the City, upon delivery to the Underwriter of the Bonds accompanied by:
(a) The approving legal opinion of Brown, Diven & Hentschke, Bond Counsel. The
legal opinion shall be printed on the Bonds at no charge to us.
(b) A no-litigation certificate of the City.
(c) The opinion of Brown, Diven & Hentschke, Bond Counsel, dated the date of Closing,
to the effect that (1) the Bonds are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Bond Indenture is exempt from
qualification pursuant to the Trust Indenture Act of 1939, as amended; (2) the
Purchase Contract has been duly authorized, executed and delivered by the City and
(assuming due authorization, execution and delivery by, and enforceability against,
the Underwriter) constitutes a valid and binding agreement of the City; and (3) the
statements contained in the Official Statement, dated July _, 1992, with respect to
the Bonds, under the captions "THE BONDS", "SECURITY FOR THE BONDS,"
"TAX EXEMPTION" and "APPENDIX D - Form of Legal Opinion," insofar as such
statements purport to summarize certain provisions of the Bond Indenture, the Bonds
and our opinion concerning certain federal tax matters relating to the Bonds, are
accurate in all material respects.
14. (a) The City shall pay the following expenses incidental to the performance of the City's
obligations hereunder: (i) the cost of the printing of the bonds, the Preliminary
Official Statement and the Official Statement; (ii) the fees, expenses and
disbursements of engineers, accountants, Bond Counsel, appraisers, advisers and of
any other experts or consultants and the Paying Agent retained by the City; and
(ill) any other expenses and costs of the City incident to the performance of its
obligations in connection with the authorization, issuance and sale of the Bonds,
including out-of-pocket expenses of the City.
(b) The Underwriter shall pay all expenses incurred by them.
The Common Council
City of San Bernardino
July _.1992
Page 3
15. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the
closing date shall be subject, at the option of the Underwriter, to the following additional
conditions:
(a) At the Closing Date, the resolution authorizing issuance of the Bonds and any other
applicable agreement shall be in full force and effect, and shall not have been
amended, modified or supplemented except as may have been agreed in writing by
the Underwriter, and there shall have been taken in connection therewith, with the
issuance of the Bonds and with the transactions contemplated thereby and by this
Purchase Contract, all such actions as, in the opinion of Brown, Diven & Hentschke,
Bond Counsel for the City, shall be necessary and appropriate;
(b) Between the date hereof and the Closing Date, the market price or marketability of
the Bonds at the initial official prices set forth herein shall not have been materially
adversely affected, in the judgment of the Underwriter (evidenced by a written notice
to the City terminating the obligation of the Underwriter to accept delivery of and pay
for the Bonds) by reason of any of the following:
(1) Legislation enacted or pending by the Congress of the United States of America
or a decision rendered by a court established under Article ill of the Constitution
of the United Sates of America or by the Tax Court of the United States of
America or an order, ruling, regulation (fmal, temporary or proposed), press
release or other form of notice issued or made by or on behalf of the Treasury
Department, the Joint Tax Committee, or the Internal Revenue Service of the
United States of America, with the purpose or effect, directly or indirectly, of
imposing federal income taxation upon the interest as would be received by the
owners of the Bonds;
(2) Legislation enacted or pending by the Congress of the United States of America,
or an order, decree or injunction issued by any court of competent jurisdiction or
an order, ruling, regulation (fmal, temporary or proposed), press release or other
form of notice issued or made by or on behalf of the Securities and Exchange
Commission, or any other governmental agency having jurisdiction of the
subject matter, to the effect that obligations of the general character of the
Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of
1933, as amended, or that the Resolution is not exempt from qualification under
or other requirements of the Trust Indenture Act of 1939, as amended, or that the
issuance, offering or sale of obligations of the general character of the Bonds, or
of the Bonds including any or all underwriting arrangements, as contemplated
hereby or by the Official Statement or otherwise is or would be in violation of
the federal securities laws as amended and then in effect;
(3) Any amendments to the Federal or California Constitution or action by any
Federal or California court, legislative body, regulatory body or other authority
materially adversely affecting the tax status of the City, its property, income,
securities (or interest thereon), validity or enforceability of the assessments or
the ability of the City to acquire the improvements or undertake the financing as
contemplated by the Resolution and the Official Statement; or
The Common Council
City of San Bemantino
July _,1992
Page 4
(4) Any event occurring, or information becoming known which, in the judgment of
the Underwriter, makes untrue or misleading in any material respect any
statement or information contained in the Official Statement concerning the
City, the Improvement Project, the Developer, or the property assessed.
16. This contract is conditioned upon the successful consummation of the Assessment District
proceedings and should said proceedings for any reason fail to be successfully
consummated, there shall be no obligation on the part of the City.
Respectfully submitted,
STONE & YOUNGBERG
By:
Partner
I
Approved as to form and legal content:
James F. Penman, City Attorney
Accepted this _ day of
/7 1
/
'W. . Holcomb, M yor /
City of San Bernardino
.~
Maturity
9/02/93
9/02/94
9/02/95
9/02/96
9/02/97
9/02/98
9/02/99
9/02/00
9/02/01
9/02/02
9/02/03
9/02/04
9/02/05
9/02/06
9/02/07
9/02/08
9/02/09
9/02/10
9/02/11
9/02/12
Total
EXIllBIT A
$857,058.82*
City of San Bernardino
Assessment District No. 1003
Limited Obligation Improvement Bonds
(Cajon Boulevard and Pepper Linden Drive)
Principal
Date Amount
$
$857,058.82*
Interest R HIP.
The net interest cost, which includes a discount of _%, is _%.
The average coupon rate is _%.
All Bonds are re-offered at par.
*Preliminary, subject to change.
%
,----
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BOND INDBNTURE
This Bond Indenture (the "Indenture") dated as of June 1, 1992, is created, entered
into and approved by the City of San Bernardino (the "Issuer") to establish the terms
and conditions pertaining to the issuance of bonds in a special assessment district
known and designated as ASSESSMENT DISTRICT NO. 1003 (the "Assessment District").
SECTION 1.
SECTION 2.
SECTION 3.
SECTION 4.
SECTION 5.
SECTION 6.
Issuance, Designation and Amount. Pursuant to the provisions of the
"Improvement Bond Act of 1915", being Division 10 of the Streets and
Highways Code of the State of California, as amended (the "Act"), the
Issuer does hereby authorize and direct the issuance and sale of bonds
to represent unpaid assessments on private property within the Assess-
ment District in principal amount not to exceed $1,123,745.63 and desig-
nated as the City of San Bernardino, Assessment District No. 1003
Limited Obligation Improvement Bonds" (the "Bonds").
Unpaid Assessments. The Issuer shall determine the assessments which
are unpaid and theag~regate amount thereof as authorized by Section
8621 of the Streets and Highways Code of the State of California and
shall issue Bonds in an aggregate principal amount equal to the deter-
mined amount of unpaid assessments.
Term of Bonds. The Bonds shall bear interest at a rate not to exceed
the current legal maximum rate of 12\ per annum, and shall be issued in
the manner provided in the Act. The last installment of the Bonds
shall mature a maximum of and not to exceed nineteen (19) years from
the second day of September next succeeding twelve (12) months from
their date. The provisions of Part 11.1 of the Act, providing an
alternative procedure for the advance payment of assessments and the
calling of Bonds shall apply. ,The Bonds shall be subject to refunding
pursuant to Division 11.5 of the Streets and Highways Code of the State
of California.
Registered Bonds. The Bonds shall be issuable only as fully registered
Bonds in the denomination of $5,000, or any integral multiple thereof,
except for one bond maturing in the first year of maturity, which shall
include the amount by which the total issue exceeds the maximum
integral multiple of $5,000 contained therein.
Date of Bonds. All of said Bonds shall be dated as of June 15, 1992,
and interest shall accrue from that date.
Maturity and Denomination. The Bonds shall be issued in serial form
with annual maturities on September 2nd of every year succeeding twelve
(12) months after their date, until the whole is paid. The principal
amount payable each year, which amounts result in approximately equal
annual debt service during the term of the issue considering the
interest rate and principal amount payable in the respective years, is
as shown in Exhibit "A" attached hereto.
1
"
SECTION 7,
SECTION 8.
SECTION 9.
Interest. Interest is payable each March 2 and September 2 (each being
an interest payment date), commencing March 2, 1993. Each Bond shall
be of a single maturity and shall bear interest at the rate as set
forth in the accepted bid proposal for said Bonds from the interest
payment date next preceding the date on which it is authenticated and
registered, (i) unless said Bond is authenticated and registered as of
an interest payment date, in which case it shall bear interest from
said interest payment date, (ii) unless said Bond is authenticated and
registered prior to the first interest payment date, in which case it
shall bear interest from its date, or (iii) unless interest is in
default on said Bond on such date, in which case it shall bear interest
from the last date on which interest was paid in full or from its dated
date if no interest has been paid, until payment of its principal sum
has been discharged. Interest shall be calculated on the basis of a
360 day year composed of twelve 30-day months.
Interest on said Bonds shall be paid by check mailed (or, in the case
of any owner of not less than $1,000,000 principal amount of the Bonds
who so requests in writing prior to the close of business on the
fifteenth day preceding each interest payment date, by wire transfer)
to the registered owner thereof on each interest payment date at his or
her address as it appears on the books of registration, or at such
address as may have been filed with the Paying Agent for that purpose,
as of the 15th day immediately preceding said interest payment date,
whether or not such day is a business day.
Place of Payment. The principal on the Bonds shall be payable in
lawful money of the United States of America upon surrender of the Bond
at the office of Bank of America National Trust and savings Association
in San Francisco, California, the designated registrar, transfer agent
and paying agent of the Issuer ("Paying Agent"), or such other regis-
trar, transfer agent or paying agent as may be designated by subsequent
Resolution of the Issuer.
Redemption. The Bonds shall be subject to optional redemption and
payment in advance of maturity, in whole or in part, on the 2nd day of
March or September in any year, from any source of funds, at the
following redemption prices, expressed as a percentage of the principal
amount redeemed, together with accrued interest to the date of
redemption:
103\ if redeemed on or before September 2, 2002
102\ if redeemed on or before March 2 or September 2, 2001
101\ if redeemed on or before March 2 or September 2, 2002
100\ if redeemed on or before March 2, 2003 and thereafter.
If less than all outstanding Bonds are called for optional redemption,
the Issuer not less than 45 days prior to the redemption date shall
select Bonds for redemption in such a way that the ratio of outstanding
Bonds to issued Bonds shall be approximately the same in each annual
maturity insofar as possible. Within each annual maturity Bonds shall
be selected for redemption by lot.
2
If less than all of the outstanding Bonds are to be redeemed, the
portion of any Bond of a denomination of more than $5,000 to be
redeemed shall be in the principal amount of $5,000 or an integral
multiple thereof, and, in selecting portions of such Bonds for redemp-
tion, the Paying Agent shall treat each such Bond as representing that
number of Bonds of $5,000 denominations which is obtained by dividing
the principal amount of such Bond to be redeemed in part by $5,000.
Notice of redemption of Bonds shall be provided at least 30 days in
advance of the redemption date by registered or certified mail or by
personal service to the respective registered owners thereof at their
addresses as they appear on the registration books of the Registrar.
Neither the failure of any registered owner to receive redemption
notice nor any defend in such notice so given shall affect the suffi-
ciency of the proceedings for the redemption of such Bonds.
Upon surrender of any Bond to be redeemed in part only, the Paying
Agent shall authenticate and deliver to the owner, as the expense of
the Issuer, a new Bond or Bonds of authorized denominations equal in
aggregate principal amount to the unredeemed portion of the Bond
surrendered, with the same interest rate and the same maturity date.
Such partial redemption shall be valid upon payment of the amount
required to be paid to such owner, and the Issuer and the Paying Agent
shall be released and discharged thereupon from all liability to the
extent of such payment.
SECTION 10. [Reserved].
SECTION 11. Exchange of Registered Bonds. Fully registered Bonds may be exchanged
at the office of the Paying Agent in San Francisco, California, for a
like aggregate principal amount of Bonds of the same interest rate and
maturity, subject to the payment of taxes and governmental charges, if
any, upon surrender and cancellation of this Bond. Upon such transfer
and exchange, a new registered Bond or Bonds of any authorized denomina-
tion or denominations of the same maturity for the same aggregate
principal amount will be issued to the transferee in exchange therefor.
SECTION 12. Books of Registration. There shall be kept by the Paying Agent suffi-
cient books for the registration and transfer of the Bonds and, upon
presentation for such purpose, the Paying Agent shall, under such
reasonable regulations as it may prescribe, register or transfer or
cause to be registered or transferred, on said register, Bonds as
hereinbefore provided.
SECTION 13. Execution of Bonds. The Bonds shall be executed manually or in facsi-
mile by the Treasurer and by the City Clerk, and the corporate seal may
be imprinted manually or in facsimile on the Bonds. The Bonds shall
then be delivered to the Paying Agent for authentication and registra-
tion. In case an officer who shall have signed or attested to any of
the Bonds by facsimile or otherwise shall cease to be such officer
before the authentication, delivery and issuance of the Bonds, such
3
Bonds nevertheless may be authenticated, delivered and issued, and upon
such authentication, delivery and issue, shall be as binding as though
those who signed and attested the same had remained in office.
SECTION 14. Authentication. Only such of the Bonds as shall bear thereon a certifi-
cate of authentication substantially in the form below, manually
executed by the Paying Agent, shall be valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certifi-
cate of the transfer agent and registrar shall be conclusive evidence
that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder, and are entitled to the benefits of this
Indenture.
FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This bond has been authenticated and registered.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Transfer Agent, Registrar and
Paying Agent
Date:
By:
SECTION 15. Negotiability, Registration and Transfer of Bonds. The transfer of any
Bond may be registered only upon such books of registration upon
surrender thereof to the Paying Agent, together with an assignment duly
executed by the owner or his attorney or legal representative, in satis-
factory form. Upon any such registration of transfer, a new Bond or
Bonds shall be authenticated and delivered in exchange for such Bond,
in the name of the transferee, of any denomination or denominations
authorized by this Indenture, and in an aggregate principal amount
equal to the principal amount of such Bond so surrendered. In all
cases in which Bonds shall be exchanged or transferred, the Paying
Agent shall authenticate at the earliest practical time, Bonds in accor-
dance with the provisions of this Indenture. All Bonds surrendered in
such exchange or registration of transfer shall forthwith be cancelled.
The Paying Agent may make a charge for every such exchange or registra-
tion of transfer of Bonds sufficient to reimburse it for any tax or
other governmental charge required to be paid with respect to such
exchange or registration of transfer. No transfer of fully registered
Bonds shall be required to be made between the fifteenth (15th) day of
the month next preceding each interest payment date, nor during the
fifteen (15) days preceding the selection of any Bonds for redemption
prior to the maturity thereof, nor with respect to any Bond which has
been selected for redemption prior to the maturity thereof.
SECTION 16. Ownership of Bonds. The person in whose name any Bond shall be
registered shall be deemed and regarded as the absolute owner thereof
for all purposes, and payment of or on account of the principal and
redemption premium, if any, of any such Bond, and the interest on any
such Bond, shall be made only to or upon the order of the registered
owner thereof or his legal representative. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such
Bond, including the redemption premium, if any, and interest thereon,
to the extent of the sum or sums so paid.
SECTION 17. Mutilated, Destroyed, stolen or Lost Bonds. In case any Bond secured
hereby shall become mutilated or be destroyed, stolen or lost, the
Issuer shall cause to be executed and authenticated a new Bond of like
date and tenor in exchange and substitution for and upon the cancella-
tion of such mutilated Bond or in lieu of and in substitution for such
Bond mutilated, destroyed, stolen or lost, upon the owner's paying the
reasonable expenses and charges in connection therewith, and, in the
case of a Bond destroyed, stolen or lost, his filing with the Paying
Agent and Issuer of evidence satisfactory to them that such Bond was
destroyed, stolen or lost, and of his ownership thereof, and furnishing
the Paying Agent and Issuer with indemnity satisfactory to them.
SECTION lB. Cancellation of Bonds. All Bonds paid or redeemed, either at or before
maturity, shall be cancelled upon the payment or redemption of such
Bonds, and delivered to the Issuer. Upon written direction from the
Issuer, Bonds may be destroyed by the Paying Agent, as allowed by law.
A certificate of destruction shall be provided to the Issuer. The
Issuer agrees to reimburse the Paying Agent's costs incurred with the
microfilming or other required permanent recording, if any, related
thereto.
SECTION 19. Creation of Funds. The Treasurer of the Issuer is hereby authorized
and directed to establish and maintain the following funds for purposes
of making payment for the costs and expenses for the works of improve-
ment and payment of principal and interest on the Bonds. The funds to
be created are designated, and the terms and conditions of the funds
are, as follows:
IMPROVEMENT FUND. The proceeds from the sale of the Bonds, after
deposit of required amounts in the Reserve Fund and Redemption Fund,
shall be placed in the Fund hereby created, pursuant to Sections 10602
and 10424 of the California Streets and Highways Code, as amended,
which shall be called the "Improvement Fund", and the monies in said
Fund shall be used only for the purposes authorized in said assessment
proceedings, and specifically to pay for the costs and expenses of the
acquisition of the authorized public capital improvements, together
with all incidental expenses. Any surplus in the Improvement Fund
after completion of the improvements shall remain in the Improvement
Fund for a per iod of not less than two (2) years from the receipt of
Bond proceeds as provided in Section 10427.1 of the California Streets
and Highways Code, and thereafter shall be utilized or distributed as
determined by the Issuer and authorized by the Act.
REDEMPTION FUND: The Treasurer is hereby authorized and directed to
keep a Redemption Fund designated by the name of the proceedings, into
which he shall place accrued interest, if any, on the Bonds from the
date of the Bonds to the date of delivery to the initial purchaser
thereof, all sums received for the collection of the assessments and
the interest thereon, together with all penalties, if applicable.
Principal of and interest on said Bonds shall be paid to the registered
owner out of the Redemption Fund so created (pursuant to Section B67l
of the California Streets and Highways Code). In all respects not
recited herein, the collection of assessment installments and the
Redemption Fund shall be governed by the provisions of the Act. Under
no circumstances shall the Bonds or interest thereon be paid out of any
other fund except as provided by law.
5
RESERVE FUND: Pursuant to Part 16 of the Act, there shall be created a
special reserve fund for the Bonds to be designated by the name of the
Assessment District and specified as the special "Reserve Fund". An
amount equal to the Reserve Requirement shall be deposited in the
.Reserve Fund out of the Bond proceeds.
Monies in the Reserve Fund shall be applied as follows:
A. Amounts in said Reserve Fund shall be transferred to the Redemption
Fund for the Bonds if, as result of delinquencies in the payment of
assessments, there are insufficient monies in said Redemption Fund
to pay principal of and interest on the Bonds when due. Amounts so
transferred shall be repaid to the Reserve Fund from proceeds from
the redemption or foreclosure of property with respect to which an
assessment is unpaid and from payments of the delinquent
assessments.
B. The "Reserve Requirement" shall be an amount equal to the lesser of
(i) the Maximum Annual Debt Service on the Bonds, (ii) 125\ of the
average annual debt service on the Bonds, or (iii) 10\ of the
following. initial principal amount of Bonds Issued, less any
or ig inal issue discount, and less the principal amount of Bonds
redeemed by prepayments of assessments. Annual Debt Service on the
Bonds for each year ending September 2nd shall equal the sum of (a)
the interest falling due on the outstanding Bonds in such 12 month
period, assuming that the outstanding Bonds are retired as
scheduled, and (b) the principal amount of outstanding Bonds
falling due during such 12 month period. "Average Annual Debt
Service" shall mean the average Annual Debt Service during the term
of the Bonds. "Maximum Annual Debt Service" shall mean, as
computed from time to time, the largest Annual Debt Service during
the per iod from the date. of such computation through the final
maturity of any outstanding Bonds.
C. Interest earned on the permitted investment of monies on deposit in
the Reserve Fund shall remain in the Reserve Fund to the extent
required to maintain the Reserve Fund in an amount at least equal
to the Reserve Requirement. On July 15 of each fiscal year the
amount on deposit in the Reserve Fund in excess of the Reserve
Requirement may, in the sole discretion of the Issuer, be transfer-
red from the Reserve Fund to the Redemption Fund and used in the
manner provided in Section 8887 of the Act. If applicable, the
Audi tor' s record shall reflect the credits against each of the
unpaid assessments in the manner provided in Streets and Highways
Code Section 10427.1 in amounts equal to each parcel's proportion-
ate share of such transfer.
Notwithstanding the above, interest earnings on monies on deposit
in the Reserve Fund in excess of the "yield" on the Bonds, as that
term is defined in the Internal Revenue Code of 1986 (the "Code"),
shall be subject to transfer and rebate to the United States of
America pursuant to the terms and provisions contained in Exhibit
"B" attached hereto and incorporated herein by reference.
6
D. Whenever monies in the Reserve Fund, together with other available
monies in the Redemption Rund and the Improvement Fund, are suffi-
cient to retire all of the Bonds outstanding, plus accrued interest
thereon and any premium, such money shall be transferred to the
Redemption Fund for the retirement of the Bonds and collection of
the remaining unpaid assessments shall cease.
E. In the event assessments are paid in cash in advance of their final
maturity date, the Issuer shall credit the prepaid assessment with
a proportionate share of the Reserve Fund and transfer an amount
equal to such credit to the Redemption Fund to be utilized for the
advance retirement of Bonds.
SECTION 20. No Issuer Liability. It is hereby further determined and declared that
the Issuer will not obligate itself to advance any available funds from
its Treasury to cure any deficiency or delinquency which may occur in
the Bond Redemption Fund by failure of property owners to pay annual
special assessments. This determination shall be clearly set forth and
stated in the title of the Bonds to be issued pursuant to these proceed-
ings as authorized and required by Section B769 of the Streets and
Highways Code of the State of California.
SECTION 21. Covenant for Superior Court Foreclosure. In the event of delinquency
in the payment of any installments of unpaid assessments, the Issuer
does covenant for the benefit of the owners of the Bonds that it will
review assessment records of the County not later than February 15 and
June 15 of each year to determine the amount of the assessments
collected in the current fiscal year. The Issuer shall commence
foreclosure action(s) on all parcels for which the payment of
assessment installments are delinquent in the Superior Court of the
State of California (Part 14, Division 10, "Improvement Bond Act of
1915", Streets and Highways Code) no later than April 1 (with respect
to the February 15 determination) or August 1 (with respect to the June
15 determination) and diligently prosecute and pursue such foreclosure
proceedings to judgment and sale. Initiation of such foreclosure
actions may be deferred in any fiscal year (i) the total assessments
delinquent in the Assessment District for such fiscal year is less than
five percent (5%) of the total assessments levied in such fiscal year,
and (ii) the Reserve Fund remains at the reserve requirement. Notwith-
standing the foregoing, the Issuer determines that any single property
owner in the Assessment District is delinquent in excess of ten
thousand dollars ($10,000) in the payment of assessments, then it will
diligently institute, prosecute and pursue foreclosure proceedings
against such property owner. The Finance Director shall notify the
Mayor and Common Council and the City Attorney of any delinquency
requiring the commencement of a foreclosure action pursuant hereto and
the City Attorney shall commence, or cause to be commenced, such
proceedings.
SECTION 22. Covenant to Maintain Tax-Exempt status. The Issuer covenants that it
will not make any use of the proceeds of the Bonds issued hereunder
which would cause the Bonds to become "arbitrage bonds" subject to
Federal income taxation pursuant to the provisions of Section l4B(a) of
the Code, or to become "Federally-guaranteed obligations" pursuant to
7
the provisions of section 149(b) of the Code, or to become "private
activity bonds" pursuant to the provisions of section 141(a) of the
Code. To that end, the Issuer will comply with all applicable require-
ments of the Code and all regulations of the United states Department
of Treasury issued thereunder to the extent such requirements are, at
the time, applicable and in effect. Additionally, the Issuer agrees to
implement and follow each and every recommendation provided by bond
counsel and deemed to be necessary to be undertaken by the Issuer to
ensure compliance with all applicable provisions of the Code in order
to preserve the exemption of interest on the Bonds from Federal income
taxation.
SECTION 23. Covenants Regarding Arbitrage. The Issuer shall not take nor permit or
suffer to be taken any action with respect to the gross proceeds of the
Bonds as such term is defined under the Code which, if such action had
been reasonably expected to have been taken, or had been deliberately
and intentionally taken, on the date of issuance of the Bonds, would
have caused the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code and the regulations promulgated thereunder.
The Issuer shall create a Rebate Fund, shall calculate Excess Earnings
in accordance with the Rebate Instructions attached hereto as Exhibit
"B" and incorporated herein by this reference, and shall pay Excess
Earnings to the United States of America, all in accordance with the
Rebate Instructions.
Notwithstanding the foregoing, the Rebate Instructions may be modified,
in whole or in part, without the consent of the owners of the Bonds,
upon receipt by the Issuer of an opinion of Bond Counsel to the effect
that such modification shall not adversely affect the exclusion from
gross income of interest on the Bonds then Outstanding.
SECTION 24. Order to Print and Authenticate Bonds. The Treasurer is hereby
instructed to cause Bonds, as set forth above, to be typed or printed,
and to proceed to cause said Bonds to be authenticated and delivered to
an authorized representative of the purchaser, upon payment of the
purchase price as set forth in the accepted proposal for the sale of
Bonds.
SECTION 25. Arbitrage Certificate. On the basis of the facts, estimates and circum-
stances now in existence and in existence on the date of issue of the
Bonds, as determined by the Treasurer, said Treasurer is hereby autho-
rized to certify that it is not expected that the proceeds of the issue
will be used in a manner that would cause such obligations to be arbi-
trage Bonds. Such certification shall be delivered to the purchaser
together with the Bonds.
SECTION 26. Amendments or Supplements. The Issuer may, by adoption of a resolution
from time to time, and at any time, without notiCe to or consent of any
of the Bondowners, approve an amendment or supplemental indenture
hereto for any of the following purposes:
8
I
(a) to cure any ambiguity, to correct or supplement any provision here-
in which may be inconsistent with any other provision herein, or
to make any other provision with respect to matters or questions
arising under this Indenture or in any supplemental indenture,
provided that such action shall not materially adversely effect
the interests of the Bondholders;
(b) to add to the covenants and agreements of and the limitations and
the restrictions upon the Issuer contained in this Indenture,
other covenants, agreements, limitations and restrictions to be
observed by the Issuer which are not contrary to or inconsistent
with this Indenture as theretofore in effect;
(c) to modify, alter, amend or supplement this Indenture in any other
respect which is not materially adverse to the interests of the
Bondownersj or
(d) to maintain the tax exempt status of the interest payable on the
Bonds.
Exclusive of the supplemental indentures hereto provided for in the
first paragraph of this Section 26, the OWners of not less than 60\ in
aggregate principal amount of the Bonds then outstanding shall have the
right to consent to and approve the adoption by the Issuer of such
supplemental indentures as shall be deemed necessary or desirable by
the Issuer for the purpose of waiving, modifying, altering, amending,
adding to or rescinding, in any particular, any of the terms or provi-
sions contained in this Indenture; provided, however, that nothing
herein shall permit, or be construed as permitting, (a) an extension of
the maturity date of the principal of, or the payment date of interest
on, any Bond, (b) a reduction in the principal amount of, or redemption
premium on, any Bond or the rate of interest thereon, (c) a preference
or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a
reduction in the aggregate principal amount of the Bonds the OWners of
which are required to consent to such resolution or order, without the
consent of the OWners of all Bonds then outstanding.
IN WITNESS WHEREOF, the Issuer has executed this Bond Indenture effective the date
first written hereinabove.
TREASURER
CITY OF SAN BERNARDINO
STATE OF CALIFORNIA
9
CITY OF SAN BERNARDINO
ASSESSMENT DISTRICT NO. 1003
EXHIBIT "A"
MATURITY SCHEDULE
YEAR
PRINCIPAL MATURING
INTEREST RATE
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$
10
CITY OF SAN BERNARDINO
ASSESSMENT DISTRICT NO. 1003
EXHIBIT "8"
ARBITRAGE REBATE INSTRUCTIONS
This document sets forth instructions regarding the investment and disposition of
monies deposited in various funds and accounts established in connection with the
issuance by the City of San Bernardino ("Issuer") of its Assessment District No.
1003 Limited Obligation Improvement Bonds in aggregate principal amount of
$1,123,745.63 ("Bonds").
The purpose of these instructions is to provide the Issuer with information
necessary to ensure that the investment of the monies in the funds and accounts
described herein will comply with the arbitrage requirements imposed by the Internal
Revenue Code of 1986 and the regulations issued thereunder.
DEFINITIONS
For purposes of these instructions, the following terms shall have the meanings set
forth below:
Bond Year. The term "Bond Year" means each 12 month period (or shorter period from
the date of issuance) that ends at the close of business on a date selected by the
Issuer.
Code. The term "Code" means the Internal Revenue Code of 1986, as amended.
Delivery Date. The term "Delivery Date" meanS
, 1992.
Excess Investment Earnings.
equal to the sum of:
The term "Excess Investment Earnings" means an amount
(1) The excess of
(a) The aggregate amount earned from the Delivery Date of the Bonds on all
Nonpurpose Investments in which Gross Proceeds of the Bonds are invested,
over
(b) The amount that would have been earned if the Yield on such Nonpurpose
Investments had been equal to the Yield on the Bonds,
plus
(2) Any income attributable to the excess described in paragraph (1).
In determining Excess Investment Earnings, (i) any gain or loss on the disposition
of a Nonpurpose Investment shall be taken into account and (ii) any amount earned on
a bona fide debt service fund shall not be taken into account.
Capitalized terms herein that are not defined herein shall have the meaning set
forth in the Bond Indenture.
11
Gross Proceeds. The term "Gross Proceeds" means the following:
(1) Original proceeds, Le., the amount received by the Issuer as a result of the
sale of the Bonds and any amounts actually or constructively received from
investing the amount received from the sale of the Bonds;
(2) Amounts, other than original proceeds, in the Reserve Fund and in any other
fund established as a reasonably required reserve or replacement fund;
(3) Amounts, other than as specified above, that are reasonably expected to be or
are used to pay debt service with respect to the Bonds; and,
(4) Amounts received as a result of investing amounts described above.
Investment Property. The term "Investment Property" means any security, obligation,
annuity contract or investment-type property in which Gross Proceeds are invested,
excluding, however, the following:
(a) United States Treasury - State and Local Government Series, Demand Deposit
securities; and
(b) tax-exempt obligations.
For purposes of these Instructions, the term "tax-exempt Obligations" shall include
only obligations the interest on which is (i) excludable from gross income for
federal income tax purposes and (ii) not treated as an item of tax preference under
Section 57(a)(5) of the Code. The term "tax-exempt obligation" shall, however, also
include stock in a "qualified regulated investment company," which is a corporation
that (i) is a regulated investment company within the meaning of Section 85l(a) of
the Code and meets the requirements of Section 852 (a) of the Code for the taxable
year; (ii) has only one class of stock authorized and outstanding; (iii) invests all
of its assets in tax-exempt obligations (as defined above) to the extent practic-
able; and (iv) has at least 98\ of its gross income derived from interest on, or
gain from the sale or other disposition of, tax-exempt obligations, or the weighted
average value of its assets is represented by investments in tax-exempt obligations.
Nonpurpose Investment. The term "Nonpurpose Investment" means any Investment
Property which is acquired with the Gross Proceeds of the Bonds and is not acquired
in order to carry out the governmental purpose of the Bonds.
Purchase Price. The term "Purchase Price", for the purpose of computation o~ the
Yield of the BondS, has the same meaning as the term "Issue Price" in Sections
l273(b) and 1274 of the Code, and, in general, means the initial offering price to
the public (not including bond houses and brokers, or similar persons or organiza-
tions acting in the capacity of underwriters or wholesalers) at which price a
substantial amount of each maturity (at least 10 percent) of the Bonds was sold.
The term "Purchase Price", for the purpose of computation of Yield of Nonpurpose
Investments means the fair market value of the Nonpurpose Investment on the date of
use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date
that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose
Investment of the Bonds.
12
Regulations. The term "Regulations" means temporary and permanent Regulations
promulgated under Section 148 of the Code.
Yield. The term "Yield" means that discount rate which, when used in computing the
present value. of all payments of principal and interest (Or other payments in the
case of Nonpurpose Investments which require payments in a form not characterized .as
principal and interest) on a Nonpurpose Investment or on the Bonds produces an
amount equal to the purchase Price of such Nonpurpose Investment or the Bonds, all
computed as prescribed in applicable Regulations. The yield on Nonpurpose
Investments must be computed by the use of the same frequency interval of
compounding interest as is used with respect to the Bonds.
REBATE REQUIREMENT
Calculation of Excess Investment Earnings. No later than the last day of the fifth
Bond Year, each succeeding fifth Bond Year and on the date the last Bond is
discharged, the Issuer shall calculate or cause to be calculated the Excess Invest-
ment Earnings and shall deposit an amount equal to the Excess Investment Earnings
into the Rebate Fund. This calculation shall be made or caused to be made by the
Issuer in accordance with the following rules:
(1) For purposes of calculating the Yield on any investment as required under these
Instructions, the purchase price of the investment will be the fair market
price of the investment on an established market. This means that the Issuer
will not pay a premium and will not accept a lower interest rate than is
usually paid to adjust the Yield on an investment.
(2) The market price of certificates of deposit issued by a commercial bank may be
regarded as being at a fair market price if they are determined by reference to
the bona fide bid price quoted by a dealer who maintains an active secondary
market in such certificates, or, if no. secondary market exists, by satisfying
subparagraph (3) below relating to investment agreements.
(3) Investments pursuant to an investment agreement may be regarded as being made
at a fair market price if (i) at least three (3) bids are received on the
investment contract from persons without an interest in the Bonds; (ii) the
winning bidder provides a certificate that, based on its reasonable expecta-
tions on the date the investment agreement is entered into, investments will
not be purchased or sole at a price other than their fair market value; (iii)
the yield on the investment agreement is at least equal to the yield offered
under the highest bid received from a non-interested party/ and (iv) the yield
on the investment agreement is at least equal to the yield offered on similar
contracts.
(4) For other investments traded on an established market, the fair market price
shall be the mean between the bid and offered prices for such obligations on
the date of purchase or, if subsequent thereto, the date the investment becomes
a Nonpurpose Investment.
(5) Where amounts must be restricted to a certain Yield and investments cannot be
purchased on an established market or a bona fide fair market price cannot be
established at a Yield that does not exceed the maximum permissible Yield, the
13
Issuer may acquire or hold tax-exempt securities, currency or United States
Treasury Certificates of Indebtedness, Notes and Certificates - State and Local
Government Series ("SLGs") that Yield no more than the maximum permissible
Yield. SLGs are available at the Federal Reserve Bank.
Payment to united states. The Issuer shall payor cause to be paid from the Rebate
Fund and from other funds as are necessary an amount equal to Excess Investment
Earnings (after application of any available credits) to the United States of
America in installments with the first payment to be made not later than thirty (30)
days after the end of the fifth Bond Year, and with subsequent payments to be made
not later than five (5) years after the preceding payment was due. The Issuer shall
assure that each such installment is in an amount equal to at least ninety percent
(90\) of the Excess Investment Earnings with respect to the Bonds as of the close of
the computation period. Not later than sixty (60) days after the retirement of the
Bonds, the Issuer shall payor cause to be paid to the United States one hundred
percent (100\) of the theretofore unpaid Excess Investment Earnings of the Bonds.
The Issuer shall remit payments to the United States at the address prescribed by
the Regulations as the same may be from time to time in effect with such reports and
statements as may be prescribed by such Regulations. The Issuer shall assure that
such payments are made to the United States on a timely basis from any funds
lawfully available therefor.
Further Obligation of Issuer. The Issuer shall assure that Excess Investment
Earnings are not paid or disbursed except as provided in these instructions. To
that end, the Issuer shall assure that investment transactions are on an arms-length
basis. In the event that Nonpurpose Investments consist of certificates of deposit
or investment contracts, investment in such NonPurpose Investments shall be made in
accordance with the procedures described in applicable Regulations as from time time
in effect.
REBATE EXCEPTIONS. Absent an opinion of nationally recognized bond counsel, the
exception of section l48(f)(4)(C) of the Code will be considered satisfied only if
the Six-Month Exception (set forth below) is satisfied. If either of such require-
ments are satisf ied, the Rebate Requirement will be treated as having been
satisfied.
Six-Month Exception. The Six-Month Exception will be treated as having been
satisfied if all Gross Proceeds of the Bonds are expended for the governmental
purposes of the Bonds no later than the day that is six (6) months after the
date of delivery of the Bonds, and if all amounts, if any, determined to be
required to be paid to the United States Treasury in compliance with the Rebate
Regulations are paid to the United States Treasury. Gross Proceeds which are
held in the Reserve Fund and the Redemption Fund and Gross Proceeds which arise
after such six (6) months and which were not reasonably anticipated as of the
date of delivery of the Bonds shall not be considered Gross Proceeds for
purposes of this paragraph.
MAINTENANCE OF RECORDS. With respect to all Nonpurpose Investments acquired in a
fund or account established and held by the Issuer, the Issuer shall record or cause
to be recorded the following information: (i) purchase date, (ii) purchase price,
(iii) information establishing that the purchase price is the fair market value as
of such date (~, the published quoted bid by a dealer in such an investment on
14
the date of purchase), (iv) any accrued interest paid, (v) face amount, (vi) coupon
rate, (vii) periodicity of interest payments, (viii) disposition price, (ix) any
accrued interest received, and (x) disposition date. To the extent any investment
becomes a Nonpurpose Investment by becoming Gross Proceeds after it was originally
purchased, it, shall be treated as if it were acquired at its fair market value at
the time it becomes a Nonpurpose Investment. The Issuer shall keep and retain for a
period of six (6) years following the retirement of the Bonds, records of all
determinations made pursuant to these Instructions.
AMENDMENT. In order to comply with the covenants in the Bond Indenture regarding
compliance with the requirements of the Code and the continued exclusion from gross
income for purposes of federal income taxation of interest paid on the Bonds, the
procedures described in these Instructions may be modified as necessary, without the
consent of Bond owners, and based on the opinion of nationally recognized bond
counsel acceptable to the Issuer, to comply with regulations, rulings, legislation
or judicial decisions as may be applicable to the Bonds. Neither the Issuer nor any
of its members, agents, officers or employees shall be liable for any action taken
or for its failure to take any action in connection with these Instructions. The
Issuer may rely conclusively on the advice of its Bond Counsel with respect to the
requirements of these Instructions.
...
15
..
[PFOS 167 REV 5/20/92]
~
PRELIMINARY OFFICIAL SfAlHIfNT DATFJl JUNE _, 1992
NEW ISSUE
In the opinion of Brown, Diven & Hentschke, Bond Counsel, under existing
statutes, regulations, rulings and judicial decisions, and assuming, among
other matters, certain representations and compliance with certain covenants
and requirements described herein, interest on the Bonds is excluded from
gross income for federal income tax purposes, and not an item of tax
preference for purposes of calculating the alternative minimum tax imposed on
individuals and corporations. In the further opinion of Bond Counsel,
interest on the Bonds is exempt from California personal income tax. Bond
Counsel expresses no opinion regarding other tax consequences relating to the
Bonds. See "TAX EXEMPTION" herein.
$857,058.82*
CIIT OF SAN BFRNARDINO
ASSESSMFNf DISIRICf NO. 1003
(CAJON BOOLEVARD AND I'twtK LINDEN mlVE)
LIMITFJl OBLIGATION IMPROVEMENT BONDS
Dated: July I, 1992
Due: September 2, as shown below
The City of San Bernardino Assessment District No. 1003 (Cajon Boulevard
and Pepper Linden Drive) Limited Obligation Improvement Bonds (the "Bonds"),
are issued pursuant to provisions of the Improvement Bond Act of 1915
(Division 10 of the California Streets and Highways Code) (the "Act") by the
City of San Bernardino, California (the "City"). The Bonds are limited
obligation bonds issued to pay the cost of acquiring certain public
improvements within the City of San Bernardino Assessment District No. 1003
(Cajon Boulevard and Pepper Linden Drive) (the "District"). The acquisition
of the public improvements shall be undertaken as provided by the Municipal
Improvement Act of 1913 (Division 12 of the California Streets and Highways
Code) (the "1913 Act").
The Bonds are issued only as fully registered bonds in denominations of
$5,000 or any integral multiple thereof with the exception of one Bond in an
odd amount due in 1993. Principal of and premium, if any, on the Bonds are
payable at the offices of Bank of America, National Trust and Savings
Association, San Francisco, California, Paying Agent, Registrar and Transfer
Agent (the "Paying Agent"). Interest is payable by check mailed to the
registered owners thereof semiannually on March 2 and September 2 (each, an
"Interest Payment Date") commencing March 2, 1993.
.,
"
The Bonds are subject to redemption prior to maturity, from prepayments of
assessments and, at the option of the City, from other sources on any interest
payment date, in whole, or in part, at a redemption price equal to the
principal amount thereof and a premium, if any, as described herein. See "THE
BONDS -- Optional Redemption of the Bonds" herein.
Under the provisions of the Act, assessment installments sufficient to
meet aggregate annual payments of principal of and interest on the Bonds are
to be included on the regular County of San Bernardino property tax bills sent
to owners of property against which there are unpaid assessments. These
annual assessment installments are to be collected by the Treasurer-Tax
Collector of the City (the "Treasurer") and paid into the Redemption Fund
established by the Bond Indenture, dated June I, 1992. The Redemption Fund
will be used to pay principal of and interest on the Bonds as they become due.
To provide funds for payment of the Bonds and the interest thereon as a
result of any delinquent assessment installments, the Bond Indenture shall
establish a Reserve Fund (the "Reserve Fund") into which there will be
deposited Bond proceeds equal to the Reserve Requirement (defined herein).
Upon the issuance of the Bonds, the amount of moneys held in the Reserve Fund
wi 11 be approximately $85,705.88*. See "SECURITY FOR THE BONDS -- Reserve
Fund." The City's obligation to advance funds to the Redemption Fund in the
event of delinquent assessment installments is limited to moneys available in
the Reserve Fund. There is no assurance that sufficient funds will be
available from the Reserve Fund for this purpose. Thus, if during the period
of delinquencies, there are insufficient available funds to pay debt service
on the Bonds as it becomes due and payable, a delay may occur in payments to
the Bond owners. In accordance with Section 8769(b) of the Streets and
Highways Code, the City has determined that it will not obligate itself to
advance funds from its treasury to cure any deficiency in the Redemption Fund.
Nei ther the fai th and credit nor the taxing power of the City, the County
of San Bernardino, the State of California or any political subdivision
thereof is pledged to the payment of the Bonds or the interest thereon, and no
owner of the Bonds may compel the exercise of the taxing power of the City or
the forfeiture of any of its property. The principal of, premium, if any, and
interest on the Bonds are not a debt of the City nor a legal or equitable
pledge, charge, lien or encumbrance upon any of its property or upon any of
its income, receipts or revenues other than the assessments.
See the section of this Official Statement entitled ''BOODOIfNERS RISKS'"
for a discussion of certain risk factors which should be considered in
addition to other matters set forth herein in considering the investment
qua li ty of the Bonds.
This cover page contains certain information for quick reference only. It
is not intended to be a summary of all factors relating to an investment in
the Bonds. Purchasers should review the entire Official Statement before any
investment decision.
1:.
!
MATIJRIlY SCJIEIlULE*
Due
SeDt. 2
Principal
Amount
Due Principal
h.iil Sept. 2 Amount Rate Price
% 2003 $ % %
2004
2005
2006
2007
2008
2009
2010
2011
2012
Rate
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
$
%
The Bonds are offered when, as and if issued and delivered to the
Underwriter subject to the approval of Brown, Diven & Hentschke, San Diego,
California, Bond Counsel. It is expected that the Bonds will be available for
delivery on or about July ____, 1992.
Stone & Youngberg
Dated:
, 1992
* Preliminary, subject to change.
The purpose of this Official Statement is to supply information to
prospective purchasers of the Bonds proposed to be issued by the City pursuant
to provisions of the Act. The District was formed pursuant to the 1913 Act.
The acquisition of certain public improvements in and for the District was
ordered by Resolution No. adopted by the Mayor and Common Council (the
"Common Council") on , 1992 and the intention of the Common Council
to issue the Bonds to finance such acquisition was established by Resolution
No. adopted by the Common Council on May 4, 1992, (the "Resolution of
Intention "). The Common Council of the City adopted Resolution No.
on June 15, 1992, (the "Bond Resolution") which authorizes the issuance of the
Bonds pursuant to the Act and the Bond Indenture.
The information set forth herein has been obtained from the City and from
certain other sources which are believed to be accurate and reliable but is
not guaranteed as to accuracy or completeness. Statements contained in this
Official Statement which involve estimates, forecasts, or other matters of
opinion, whether or not expressly so described herein, are intended solely as
such and are not to be construed as representations of fact. Further, the
information and expressions of opinion contained herein are subject to
completion or amendment.
No dealer, broker, salesperson or other person has been authorized by the
Underwriter to give any information or to make any representations other than
those contained in this Official Statement, and, if given or made, such other
information or representations must not be relied upon as having been
authorized by the Underwriter or the City. This Official Statement does not
constitute and offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of the Bonds, by any person in any jurisdiction in which it
is unlawful for such person to make such offer, solicitation or sale.
The summaries and references to the Act, the 1913 Act, the Bond
Resolution, the Bond Indenture approved and authorized by the City in
connection with the District, and to other statutes and documents referred to
herein do not purport to be comprehensive or definitive, and are qualified in
their entireties by reference to each such statue and document.
This Official Statement does not constitute a contract between any
Bondowner and the City or the Underwriter.
IN COONECfION WIm mIS OFFERING, TIlE UNDERWRITER MAY 0VBlALL0T m EFFECf
mANSACTIooS WHIOI SfABILIZE m MAINfAIN TIlE MARKEl' PRICE OF TIlE BOODS AT A
LEVEL ABOVE mAT WHIOI MIGIT UllltHllISE PREVAIL IN TIlE OPEN MARKEI'. SUOl
SfABILIZING, IF COMMENCED, MAY BE DISCOOTINUFJl AT ANY TIME. TIlE UNDERWRITER
MAY OFFER AND SELL TIlE BOODS TO CFRfAIN DF.AIBS AND DEALFR BANKS AND BANKS
ACTING AS AGENfS AT PRICES LOWER mAN TIlE PUBLIC OFFERING PRICES SfATFJ> 00 TIlE
CllV:ffi PAGE HEREOF AND SAID PRICES AND SAID PUBLIC OFFERING PRICES MAY BE
QlANGED FI<<II TIME TO TIME BY TIlE UNDERWRITER.
TIlE BOODS HAVE NOT BEEN REGISTBID> UNDER TIlE SEQlRITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPOO AN EXEMPfIoo COOTAINED IN SUOl ACT. TIlE BOODS HAVE
NOT BEEN REGISTBID> OR QUALIFIED UNDER TIlE SEQlRITIES LAWS OF ANY Sf ATE.
TABLE OF awrFNI'S
~
INTRODUCf I ON
THE BONDS ............................................................ 1
Authori ty for Issuance........................................... 1
Amount and Purpose of the Bonds .................................. 1
Description of the Bonds......................................... I
Optional Redemption of the Bonds................................. 2
Creation of Funds................................................ 2
Sources and Uses of Funds ........................................ 4
Annual Debt Service Payments on the Bonds........................ 5
SECURITY FOR THE BONDS ............................................... 6
Genera I .......................................................... 6
Limi ted Ci ty ObI igat ion. . . . .. . . .. . .. . .. . . . . .. . .. . ... . . . . . . . .. . .. . 6
Reserve Fund ..................................................... 6
Covenant to Commence Superior Court Foreclosure. .... .... ......... 7
Investment of Moneys ............................................. 8
Priority of District Lien ........................................ 8
Amendments to Bond Indenture ..................................... 9
BONDOWNERS' RISKS................................................... 10
Failure to Develop Properties; Delays ............................ 10
Future Land Use Regulations and Growth Control Initiatives....... 11
Concentration of Ownership....................................... 11
Land Values ...................................................... 12
Parity Taxes and Special Assessments..... ...... ... .... .... ....... 12
Direct and Overlapping Debt ...................................... 13
Property Held by FDIC/RTC ........................................ 13
Bankruptcy ....................................................... 14
No Acceleration Provision........................................ 15
Endangered Species ............................................... 15
Loss of Tax Exempt ion ............................................ 16
THE IMPROVEMENT PROJECf .............................................. 17
The Improvements ................................................. 17
Construction Costs............................................... 18
Method and Formula of Assessment Spread.......................... 18
THE DISTRICf ......................................................... 20
Loca t ion ......................................................... 20
Zoning ........................................................... 20
S tree t s .......................................................... 20
Utilities ........................................................ 20
The Apprai sal .................................................... 21
Assessment Installment Delinquencies ............................. 21
PROPERTY OWNERSHIP AND PROPOSED DEVELOPMENT...... .................... 22
The Propos ed Deve I opmen t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Deve I oper .................................................... 23
LEGAL OPINION ........................................................ 25
TAX EXEMPTION ........................................................ 25
NO LITIGATION ........................................................ 26
NO RATING ............................................................ 26
UNDERWRITING ......................................................... 26
APPENDIX A ASSESSMENT DIAGRAM
APPENDIX B APPRAISAL REPORT
APPENDIX C GENERAL AND ECONOMIC DATA FOR THE CITY OF SAN BERNARDINO AND
SURROUNDING AREAS
APPENDIX D FORM OF LEGAL OPINION
APPENDIX E PROPERTY OWNERSHIP AND ASSESSMENT LIENS
CITY OF SAN BERNARDINO
San Bernardino County, California
MAYlR AND <DIMm COUNCIL
W.R. Holcomb, Mayor
Esther R. Estrada, Council Member First Ward
Jack Reilly, Council Member Second Ward
Ralph Hernandez, Council Member Third Ward
Michael Maudsley, Council Member Fourth Ward
Tom Minor, Council Member Fifth Ward
Valerie Pope-Ludlam, Council Member Sixth Ward
Norine Miller, Council Member Seventh Ward
CITY ATTmNEY
James Penman
CITY Cl.HD(
Rache I Krasney
CITY IREASURFR
David Kennedy
CITY SfAFF
Shauna Clark, City Administrator
Andrew Green, Director of Finance
Roger E. Hardgrave, Director of Public Works/City Engineer
ASSESSMFNT FBGINEER
GFB-Friedrich & Associates, Inc.
Riverside, California
BmD COUNSEL
Brown, Diven & Hentschke
San Diego, California
PAYING AGFBT
Bank of America, National Trust and Savings Association
San Francisco, California
APAlAISER
Michael Frauenthal & Associates, Inc.
Capistrano Beach, California
INfRODUCfIOO
THIS INTRODUCTION IS NOT A SUMMARY OF THIS OFFICIAL STATEMENT. IT IS ONLY
A BRIEF DESCRIPTION OF AND GUIDE TO, AND IS QUALIFIED BY, MORE COMPLETE AND
DETAILED INFORMATION CONTAINED IN THE ENTIRE OFFICIAL STATEMENT AND THE
DOCUMENTS SUMMARIZED OR DESCRIBED HEREIN. A FULL REVIEW SHOULD BE MADE OF THE
ENTIRE OFFICIAL STATEMENT. THE SALE AND DELIVERY OF BONDS TO POTENTIAL
INVESTORS IS MADE ONLY BY MEANS OF THE ENTIRE OFFICIAL STATEMENT. TERMS NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THAT MEANING ASCRIBED TO THEM IN THE BOND
INDENTURE DATED JUNE 1, 1992.
Puroose
The District has been formed and the Bonds will be sold to fund (I) the
acquisition of certain street, water, sewer, storm drain and street light
improvements and (2) the engineering, administrative and incidental costs
associated therewi th (together, the "Improvements"). The Bond proceeds wi II
also pay the costs of issuing the Bonds and to fund a Reserve Fund.
Security for the Bonds
The Bonds are issued by the City of San Bernardino (the "City") upon and
secured by the unpaid assessments within the District that, together with
interest thereon, constitute a trust fund for the redemption and payment of
the principal of, and premium, if any, on the Bonds and the interest thereon.
All the Bonds are additionally secured by the moneys in the Redemption Fund,
the Reserve Fund and such additional funds as are specified in the Bond
Indenture. Principal of and premium, if any, and interest on the Bonds are
payable out of the Redemption Fund. The unpaid assessments represent fixed
liens on the lots and parcels assessed. They do not, however, constitute a
personal indebtedness of the respective owners of said lots and parcels. See
"SECURITY FOR THE BONDS -- General."
Under the provisions of the Act, installments of principal and interest
sufficient to meet annual debt service on the Bonds are to be included on the
regular County of San Bernardino (the "County") property tax bills sent to
owners of property against which there are unpaid assessments. These annual
ins tallmen t s are to be trans f erred by the Ci ty Treasurer (the "Treasurer") to
the Paying Agent. The assessment installments billed against each property
represent that property's pro rata share of the total principal of and
interest on the Bonds coming due that year. All assessments are based on
benefits received by the properties within the boundaries of the District.
In connection with the issuance of the Bonds, the Reserve Fund has been
established as additional security for the Bonds. Proceeds from the sale of
the Bonds in the amount of $85,705.88* shall be deposited into the Reserve
Fund. The Reserve Requirement (as defined herein). All moneys in the Reserve
Fund will be a source of available funds to advance to the Redemption Fund in
the event of delinquent assessment installments. See "SECURITY FOR THE BONDS
-- Reserve Fund,"
* Preliminary, subject to change
The City has determined, pursuant to Section 8769(b) of the Streets and
Highways Code, not to obligate itself to advance funds from the City treasury
to cure any deficiency in the Redemption Fund. Therefore, the City's
obligation to advance funds to the Redemption Fund in the event of delinquent
assessment installments is limited to moneys available in the Reserve Fund.
The City has no obligation to replenish the Reserve Fund except to the extent
that delinquent assessments are paid or proceeds from foreclosure sales are
real ized.
In addition to the Reserve Fund and the Redemption Fund, the Bond
Indenture establishes an Improvement Fund and a Rebate Fund. The Bond
Indenture provides that the Treasurer may, and shall upon the direction of the
City, establish other accounts within each fund as required or deemed
necessary. See "THE BONDS -- Creation of Funds".
For a more complete description see the sections herein entitled "SECURITY
FOR THE BONDS," "BONDOWNERS' RISKS," and the" IMPROVEMENT PROJECT -- Method of
Assessment Apportionment."
Covenant for Superior Court Foreclosure
The City has covenanted for the benefit of the Bondowners that in the
event of delinquencies in the payment of the assessments, the City will order
and cause to be commenced judicial foreclosure proceedings against parcels
with aggregate delinquent assessments in excess of $10,000 by April 1 and
August 1 of each Bond Year and will commence judicial foreclosure proceedings
against all parcels with delinquent assessments by April 1 and August 1 of
each Bond Year in which it receives assessments in an amount which is less
than 95% of the total assessment needed to pay principal and interest on the
Bonds for the current Bond Year, and diligently pursue to completion such
foreclosures. Notwithstanding the foregoing, the City, in its sole
discretion, may elect to defer foreclosure proceedings on any parcel so long
as the amount in the Reserve Fund is at least equal to the Reserve
Requirement. See "SECURITY FOR THE BONDS -- Covenant to Commence Superior
Court Foreclosure."
Form of Bonds
The Bonds are issued only as fully registered bonds in denominations of
$5,000 each or any integral multiple thereof with the exception of one Bond In
an odd amount due in 1993.
Redemot ion
Any Bond may be called for redemption prior to maturity in whole, or in
part, on any March 2 or September 2 upon payment of the redemption price
described herein under the heading "THE BONDS -- Optional Redemption of the
Bonds" plus accrued interest to the date of redemption.
11
Assess.ent District
The District is located northwest of the City, in an area generally known
as Muscoy. In general, the District is located on the south corner of Cajon
Boulevard and Pepper Linden Drive. The District lies less than one mile
southwest of the Interstate 215.
An appraisal of the land in the District (the "Appraisal") has been
prepared by Michael Frauenthal & Associates, Inc. Capistrano Beach, California
(the "Appraiser"). The Appraisal was commissioned by the Underwriter at the
request of the City. In the opinion of the Appraiser, the land in the
District, subject to assessment has an aggregate "as is" finished lot value of
approximately $3,960,000 as of April 3, 1992, assuming all of the Improvements
to be financed by the District were in place. Based on this valuation, the
overall value-to-lien ratio in the District relating to the total assessment
is 4.6* to 1. See "APPENDIX B -- Appraisal Report, and "APPENDIX E --
Property Ownership and Assessment Liens".
Property Ownership and DeveIoDment
The District consists of two individual tracts, totalling 18.23 net acres
subdivided into 101 single fami ly residential lots. The land in the District
is being developed as part of a larger development known as Cimarron Ranch, a
378 unit single family housing project. Cimarron Ranch Associates, the
owner-developer of the project, is a California limited partnership consisting
of Century Homes Communities, San Bernardino, California, a California
corporation as the general partner and Colony Oaks Development, Upland,
California, a California corporation, as the limited partner.
For more information on the District and its development, see "THE
DISTRICT" herein and "APPENDIX E -- Property Ownership and Assessment Liens".
Bondowners' Risks
To pay principal of, premium, if any, and interest on the Bonds, it is
necessary that unpaid assessment installments on parcels within the District
are paid in a timely manner. Should the assessment installments not be paid
on time, the Bond Indenture establishes a Reserve Fund to cover delinquencies
up to the amount of the Reserve Requirement. The assessment installments are
secured by a lien on the parcels within the District for which the assessments
remain unpaid. The City has covenanted to institute foreclosure proceedings
under certain circumstances and to sell parcels with delinquent assessment
installments in order to obtain funds to cover such delinquent assessment
installments and pay principal of and interest on the Bonds and to replenish
the Reserve Fund.
Failure by owners of the parcels to pay assessment installments when due,
depletion of the Reserve Fund, or the inability of the City to sell parcels
which have been subject to foreclosure proceedings for amounts sufficient to
cover the delinquent assessment installments may result in the inability of
the City to make full or punctual payments of debt service on the Bonds, and
Bondowners would therefore be adversely affected.
*Preliminary, subject to change.
'"
Unpaid assessments do not constitute a personal indebtedness of the owners
of the parcels within the District. There is no assurance the owners will be
able to pay the assessment installments or that they will pay such
installments even though financially able to do so.
For a more detailed discussion of certain risks of this Issue, refer to
"BONDOWNERS' RISKS" herein.
lV
$851,058.82*
CIIT OF SAN BmNARDINO
ASSFSSMFNT DISTIUer NO. 1003
(WOO BOULEVARD AND I'EPPER LIND~ DRIVE)
LIMITED OOLIGATIlIi IMmOVFlIENf Il(IIDS
TIIE Il(IIDS
Authoritv For Issuance
The formation proceedings for the District were conducted pursuant to the
1913 Act and Resolution of Intention. The Bonds, which represent the unpaid
assessments levied against property in the District, are issued pursuant to
the provisions of Resolution No. ~ approved by the Common Council of the
City on June 15, 1992 (the "Bond Resolution"), provisions of the Act and the
Bond Indenture.
Amount and Purpose of the Bonds
The Bonds are being issued in the aggregate principal amount of
$851,058.82* to finance the acquisition of $520,561.43 of public roads, sewer,
water, flood control and drainage improvements (the "Improvements"), to fund
the Reserve Fund to the Reserve Requirement (as defined herein) for the Bonds,
and to pay costs of issuing the Bonds. See "THE BONDS -- Sources and Uses of
Funds" and "THE IMPROVEMENT PROJECT."
Descrivtion of the Bonds
The Bonds are dated July 1, 1992.
The Bonds mature in various amounts on each September 2, commencing
September 2, 1993, and ending September 2, 2012. Interest is payable
commencing on March 2, 1993, and semiannually thereafter on March 2 and
September 2 of each year until maturity. The Bonds are issued only as fully
registered bonds in denominations of $5,000 or any integral multiple thereof
with the exception of one Bond in an odd amount due in 1993. Principal of,
and premium, if any, on the Bonds are payable at the offices of Bank of
America National Trust and Savings Association, the Paying Agent in San
Francisco, Cal ifornia. Interest shall be paid by check of the Paying Agent
mailed on each Interest Payment Date to the registered owners (as shown on the
registration books kept by the Paying Agent) as of the close of business on
the 15th day of the month next preceding each Interest Payment Date whether or
not such day is a business day (a "Record Date"). The Bonds mature in the
amounts and on the dates as shown on the cover page hereof.
*Preliminary, subject to change.
Optional Redemption of the Bonds
Any Bond may be redeemed in whole or in part in integral multiples of
$5,000 on any Interest Payment Date, at the option of the City upon 30 days'
notice to the Bondowner from moneys on deposit with the Paying Agent, at the
following prices, expressed as a percentage of the principal amount of Bonds
called for redemption, together with accrued interest to the date of
redemption:
103% if redeemed on or before September 2, 2000
102% if redeemed on March 2 or September 2, 2001
101% if redeemed on March 2 or September 2, 2002
100% if redeemed on March 2 or September 2, 2003 and thereafter
Any Bond shall be subject to redemption in whole, or in part, in integral
multiples of $5,000 on any Interest Payment Date from proceeds of refunding
bonds pursuant to Division 11.5 of the Act (if any such refunding bonds are
sold), from prepayments of assessments deposited in the Redemption Fund or
from surplus monies in the Improvement Fund, upon thirty (30) days' notice to
the Bondowner and payment of the principal amount thereof and interest accrued
thereon to the date of redemption, at the redemption prices shown above.
No interest will accrue on a Bond beyond the Interest Payment Date on
which said Bond is called for redemption provided that the amount necessary
for the redemption has been deposited with the Paying Agent. Notice of
redemption must be given to the applicable Bondowners by registered or
certified mail (postage prepaid) or by personal service at least (30) days
prior to the redemption date, if less than all of the outstanding Bonds are to
be redeemed. The selection of which Bond or Bonds are to be called will be
made by the City pursuant to Section 8768 of the Streets and Highways Code.
Development of parcels within the District, transfer of property ownership and
other similar circumstances could result in prepayment of the assessments.
Such prepayment would result in redemption of a portion of the Bonds prior to
their stated maturities. It is not possible to estimate the rate at which
such redemptions, if any, would occur.
Creation of Funds
The Treasurer, pursuant to the Bond Indenture, is authorized and directed
to establish and maintain the following funds for purposes of making payment
for the costs and expenses for the works of improvement and payment of
principal and interest on the Bonds. The funds to be created are designated,
and the terms and conditions of the funds are, as follows:
IMPROVEMENT FUND: The proceeds from the sale of the Bonds, after deposit
of required amounts in the Reserve Fund and Redemption Fund, shall be placed
in the fund created, pursuant to Sections 10602 and 10424 of the California
Streets and Highways Code, as amended, which shall be called the "Improvement
Fund", and the monies in said fund shall be used only for the purposes
authorized in said assessment proceedings, and specifically to pay for the
costs and expenses of the acquisition of the authorized public capital
Improvements, together with all incidental expenses. Any surplus in the
Improvement Fund after completion of the Improvements shall remain in the
2
.
Improvement Fund for a period of not less than two (2) years from the receipt
of Bond proceeds as provided in Section 10427.1 of the California Streets and
Highways Code. and thereafter shall be utilized or distributed as determined
by the City and authorized by the Act.
REDEMPTION FUND: The Treasurer is authorized and directed to keep a
Redempt ion Fund des ignated by the name of the proceedings, into which he shall
place accrued interest, if any, on the Bonds from the date of the Bonds to the
date of delivery, all sums received for the collection of the assessments and
the interest thereon, together with all penalties, if applicable. Principal
of and interest on said Bonds shall be paid to the registered owner out of the
Redemption Fund so created (pursuant to Section 8671 of the California Streets
and Highways Code).
RESERVE FUND: Pursuant to Part 16 of the Act, there shall be created a
special reserve fund for the Bonds to be designated by the name of the
Assessment District and specified as the special "Reserve Fund". An amount
equal to the Reserve Requirement shall be deposited in the Reserve Fund out of
the Bond proceeds.
Monies in the Reserve Fund shall be applied as follows:
A. Amounts in said Reserve Fund shall be transferred to the Redemption
Fund for the Bonds if, as result of delinquencies in the payment of
assessments, there are insufficient monies in said Redemption Fund to
pay principal of and interest on the Bonds when due. Amounts so
transferred shall be repaid to the Reserve Fund from proceeds from
the redemption or foreclosure of property with respect to which an
assessment is unpaid and from payments of the delinquent assessments.
B. The "Reserve Requirement" shall be an amount equal to the lesser of
(i) the Maximum Annual Debt Service on the Bonds, (ii) 125% of the
average annual debt service on the Bonds, or (iii) 10% of the
following: initial principal amount of Bonds issued, less any
original issue discount, and less the principal amount of Bonds
redeemed by prepayments of assessments. Annual Debt Service on the
Bonds for each year ending September 2nd shall equal the sum of (a)
the interest falling due on the outstanding Bonds in such 12 month
period, assuming that the outstanding Bonds are retired as scheduled,
and (b) the principal amount of outstanding Bonds falling due during
such 12 month period. "Average Annual Debt Service" shall mean the
average Annual Debt Service during the term of the Bonds. "Maximum
Annual Debt Service" shall mean, as computed from time to time, the
largest Annual Debt Service during the period from the date of such
computation through the final maturity of any outstanding Bonds.
C. Interest earned on the permitted investment of monies on deposit In
the Reserve Fund shall remain in the Reserve Fund to the extent
required to maintain the Reserve Fund in an amount at least equal to
the Reserve Requirement. On July 15 of each fiscal year the amount
on deposit in the Reserve Fund in excess of the Reserve Requirement
may, in the sole discretion of the Issuer, be transferred from the
Reserve Fund to the Redemption Fund and used in the manner provided
3
in Section 8887 of the Act. If applicable, the [Auditor's] record
shal] reflect the credi ts against each of the unpaid assessments in
the manner provided in Streets and Highways Code Section 10427.1 in
amounts equal to each parcel's proportionate share of such transfer.
Notwithstanding the above, interest earnings on monies on deposit in
the Reserve Fund in excess of the "yield" on the Bonds, as that term
is defined in the Internal Revenue Code of 1986 (the "Code"), shall
be subject to transfer and rebate to the United States of America
pursuant to the terms and provisions contained in the Bond Indenture.
D. Whenever monies in the Reserve Fund, together with other available
monies in the Redemption Fund and the Improvement Fund, are
sufficient to retire all of the Bonds outstanding, plus accrued
interest thereon and any premium, such money shall be transferred to
the Redemption Fund for the retirement of the Bonds and collection of
the remaining unpaid assessments shall cease.
E. In the event assessments are paid in cash in advance of their final
maturity date, the City shall credit the prepaid assessment with a
proportionate share of the Reserve Fund and transfer an amount equal
to such credit to the Redemption Fund to be utilized for the advance
retirement of Bonds.
REBATE FUND: In order to comply wi th the investment and rebate
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), a
Rebate Fund has been created, to be held and administered by the City in
accordance with the Bond Indenture. Amounts in the Rebate Fund, and all
earnings thereon, shall only be applied to payments to the United States
Government in accordance with the Tax and Nonarbitrage Certificate of the
Ci ty. See "TAX EXEMPTION."
Sources and Uses of Funds*
Sources:
Principal Amount of the Bonds
Less Underwriter's Discount
Plus Accrued Interest
Total Sources
Uses:
Improvement Fund
Redemption Fund (1)
Reserve Fund
Total Uses
$
$
$
$
(1) Represents accrued interest from July 1, 1992, to the delivery date of
the Bonds.
'Preliminary, subject to change.
4
ANNUAL DEBT SERVICE PAYMfNfS
ON TIlE BONDS
Year
Ending Principal Interest Total
1992 $ $ $
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
201l
2012
TOTAL $ $ $
(I) Represents accrued interest from July I, 1992 to July _, 1992 paid
at closing.
~
.,
SEaJRIlY FOR 11IE BOODS
General
The Bonds are issued upon and secured by the unpaid assessments of the
District, together wi th interest thereon, which wi II be collected as herein
described for the redemption and payment of the principal of, premium, if any,
and interest on the Bonds. All the Bonds are secured by the moneys in all the
Funds established pursuant to the Bond Indenture except the Improvement Fund
and the Rebate Fund. Principal of, premium, if any, and interest on the Bonds
are payable out of the Redemption Fund.
The unpaid assessments constitute fixed liens on the lots and parcels
assessed, and do not constitute a personal indebtedness of the respective
owners of said lots and parcels; accordingly, in the event of delinquency,
proceedings may only be taken against the real property securing such
delinquent assessment installments.
The unpaid assessments will be collected in annual installments of
principal and interest on the tax roll on which general taxes on real property
within the County are collected and are payable, and shall become delinquent
at the same time and in the same proportionate amounts and bear the same
proportionate penalties and interest after delinquency as do said general
taxes. The properties upon which the assessments have been levied are subject
to the same provisions for sale and redemption as would be the case for
nonpayment of general taxes.
Limited City Obligation
The City's obligation to advance moneys to pay Bond debt service in the
event of delinquent assessment installments is limited to the moneys available
in the Reserve Fund. Bondowners should not rely upon the Ci ty to advance
moneys to the Redemption Fund should the Reserve Fund ever be depleted and the
City has made the express election under 8769(b) of the Streets and Highways
Code not to do so.
Neither the faith and credit nor the taxing power of the City, the
County, the State of California or any political subdivision thereof is
pledged to the payment of the Bonds or the interest thereon, and no owner of
the Bonds may compel the exercise of the taxing power of the City or the
forfeiture of any of its property. The principal of, premium, if any, and
interest on the Bonds are not a debt of the City nor a legal or equitable
pledge, charge, lien or encumbrance upon any of its property or upon any of
its income, receipts or revenues other than the assessments.
Reserve Fund
Amounts in the Reserve Fund will be transferred to the Redemption Fund
for the Bonds if, as result of delinquencies in the payment of assessments,
there are insufficient monies in the Redemption Fund to pay principal of and
interest on the Bonds when due. Amounts so transferred shall be repaid to the
Reserve Fund from proceeds from the redemption or foreclosure of property with
respect to which an assessment is unpaid and from payments of the delinquent
assessments.
Ii
Covenant to Commence Suoerior Court Foreclosure
The Bond Law provides that in the event any assessment or installment
thereof or any interest thereon is not paid when due, the City may order the
institution of a court action to foreclose the lien of the unpaid assessment.
In such an action, the real property subject to the unpaid assessment may be
sold at a judicial foreclosure sale. This foreclosure sale procedure is not
mandatory. However, the District covenants for the benefit of the Owners of
the Bonds that it will determine or cause to be determined, no later than
February IS and June 15 of each year, whether or not any owners of property
within the District are delinquent in the payment of assessments and, if such
delinquencies exist, the City will order and cause to be commenced no later
than April I (with respect to the February 15 determination) or August 1 (with
respect to the June 15 determination), and thereafter diligently prosecute, an
action in the superior court to foreclose the lien of any assessments or
installment thereof not paid when due, provided, however, that the City shall
not be required to order the commencement of foreclosure proceedings if (i)
the total assessments delinquent in the District for such fiscal year is less
than five percent (5%) of the total assessments levied in such fiscal year,
and (ii) the Reserve Fund remains at the Reserve Requirement. Notwithstanding
the foregoing, if the City determines that no single property owner in the
District is delinquent in excess of ten thousand dollars ($10,000) in the
payment of assessments, then it will diligently institute, prosecute and
pursue foreclosure proceedings against such property owner. The Finance
Director shall notify the Mayor and Common Council and the City Attorney of
any delinquency requiring the commencement of a foreclosure action pursuant
hereto and the City Attorney shall commence, or cause to be commenced, such
proceedings. The City may, but shall not be obligated to, advance funds from
any source of legally available funds in order to maintain the Reserve Fund at
the Reserve Requirement.
If the Reserve Fund is depleted, there could be a default or a delay in
payments to the Bondowners pending prosecution of foreclosure proceedings and
recaipt by the District of foreclosure sale proceeds, if any.
Under current law, a judgment debtor (property owner) has at least 140
days from the date of service of the notice of levy in which to redeem the
property to be sold and may have other redemption rights afforded by law. If
a judgment debtor fails to redeem and the property is sold, his or her only
remedy is an action to set aside the sale, which must be brought within 90
days of the date of sale if the purchaser is the judgment creditor. If, as a
result of such an action, a foreclosure sale is set aside, the judgment is
revived and the judgment creditor, i.e., the City, is entitled to interest on
the revived judgment as if the sale has not been made (Sections 701.540,
701.545 and 701.680 of the Code of Civil Procedure of the State of California).
Foreclosure by court action is subject to normal litigation delays, the
nature and extent of which are largely dependent upon the nature of the
defense, if any, put forth by the debtor and the condition of the calendar of
the Superior Court. Such foreclosure actions can be stayed by the Superior
Court on generally accepted equitable grounds or as the result of the debtor's
filing for relief under the Federal Bankruptcy laws. The City's ability to
foreclose may also be delayed and adversely affected by actions of the federal
7
government including, in particular, actions by the Resolution Trust
Corporation and the Federal Deposit Insurance Corporation. See "BONDOWNERS'
RISKS -- Property Held by FDIC/RTC."
Judicial Foreclosure Proceeding. The Act provides that the court in a
foreclosure proceeding has the power to order property securing delinquent
assessment installments to be sold for an amount not less than all assessment
installments, interest, penalties, costs, fees, and other charges that are
delinquent at the time the foreclosure action is ordered, and certain other
fees and amounts as provided therein. The court may also include subsequent
delinquent assessment installments and all other delinquent amounts.
If the property to be sold fails to sell for the mlD1mUm price, the City
may petition to modify the judgment so that the property may be sold at a
lesser price or without a minimum price. Notice of the hearing on such
petition must be given to all Bondowners. In certain circumstances, as
provided in the Act, the court may modify the judgment after the hearing if
the court makes certain determinations, including determinations that the sale
at less than the minimum price will not result in an ultimate loss to
Bondowners, that Bondowners of at least seventy-five percent (75%) of the
principal amount of Bonds outstanding have consented to the petition and that
the Reserve Fund has been depleted. Neither the property owner nor any holder
of a security interest in the property nor any defendant in the foreclosure
action may purchase the property at the foreclosure sale for less than the
. . .
mlDlmum pnce.
In the event such superior court foreclosure or foreclosures are
necessary, there may be a delay in payments to Bondowners pending prosecution
of the foreclosure proceedings and receipt by the City of the proceeds of the
foreclosure sale; it is also possible that no bid for the purchase of the
applicable property would be received at the foreclosure sale. See the
section herein entitled "BONDOWNERS' RISKS."
Investment of Moneys
Moneys held in any of the funds and accounts under the Bond Indenture
shall be invested at the direction of the City on behalf of the District only
in permitted investments as defined in the Bond Indenture which shall be
deemed at all times to be a part of such funds and accounts. The Bond
Indenture defines authorized investments to include certain government
obligations as well as other obligations which mayor may not be rated by a
national rating service.
Prioritv of District Lien
The assessments (and any further assessments) and each installment
thereof and any interest and penalties thereon constitute a lien against the
parcels in the District on which they were imposed until the same are paid.
Such lien is subordinate to all fixed special assessment liens previously
imposed upon the same property, but has priority over all private liens and
over all fixed special assessment liens which may thereafter be created
against such property. The District lien is co-equal to and independent of
s
the lien for general and special taxes. [The direct and overlapping bonded
debt statement for the District indicates that there are no additional Act
liens or Mello-Roos special tax liens on properties located within the
District.] See "BONDOWNERS' RISKS -- Pari ty Taxes and Special Assessments".
Amendments To Bond Indenture
The City may, by adoption of a resolution from time to time, and at any time,
without notice to or consent of any of the Bondowners, approve an amendment or
supplemental indenture hereto for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make
any other provision wi th respect to matters or questions arising under
the Bond Indenture or in any supplemental indenture, provided that such
action shall not materially adversely effect the interests of the
Bondowners;
(b) to add to the covenants and agreements of and the limitations and the
restrictions upon the City contained in the Bond Indenture, other
covenants, agreements, limitations and restrictions to be observed by
the City which are not contrary to or inconsistent with the Bond
Indenture as theretofore in effect;
(c) to modify, alter, amend or supplement the Bond Indenture In any other
respect which is not materially adverse to the interests of the
Bondowners; or
(d) to maintain the tax exempt status of the interest payable on the Bonds.
Exclusive of the supplemental indentures hereto provided for in the
Bond Indenture, the owners of not less than 60% in aggregate principal amount
of the Bonds then outstanding shall have the right to consent to and approve
the adoption by the City of such supplemental indentures as shall be deemed
necessary or desirable by the City for the purpose of waiving, modifying,
altering, amending, adding to or rescinding, in any particular, any of the
terms or provisions contained in the Bond Indenture; provided, however, that
nothing in the Bond Indenture shall permit, or be construed as permitting, (a)
an extension of the maturity date of the principal of, or the payment date of
interest on, any Bond, (b) a reduction in the principal amount of, or
redemption premium on, any Bond or the rate of interest thereon, (c) a
preference or priority of any Bond or Bonds over any other Bond or Bonds, or
(d) a reduction in the aggregate principal amount of the Bonds the owners of
which are required to consent to such resolution or order, without the consent
of the owners of all Bonds then outstanding.
9
BOOIJOWNFllS' RISKS
Failure to Develop Prooerties; Delavs
The ultimate development and/or sale of parcels are subject to a number of
contingencies, many of which are beyond the direct control of the landowners
and subsequent property owners in the District. The fact that the District is
not fully developed and that a number of contingencies exist which could slow
or prevent future development presents certain risks to the Bondowners.
A major risk to Bondowners is that proposed development within the
District may be subject to unexpected delays, disruptions and changes which
may affect the wi 11 ingness and abi I i ty of the landowners and subsequent
property owners to pay the assessments when due. For example, land
development operations may be adversely affected by changes in interest rates,
unexpected increases in development costs, natural phenomena such as drought
and earthquakes, discovery of hazardous substances and any development
restrictions imposed to address the problems generated by such conditions, and
by other similar factors.
Land development operations are subject to comprehensive federal, State
and local regulations. Approval is required from various agencies in
connection with the layout and design of developments, the nature and extent
of improvements, construction activity, land use, zoning, school and health
requirements, as well as numerous other matters. There is always the
possibility that such approvals will not be obtained on a timely basis.
Failure to obtain any such agency approval or satisfy such governmental
requirements would adversely affect land development operations. In addition,
there is the risk that lawsuits challenging the approval of certain
development plans may be instituted.
Moreover, there can be no assurance that the means and incentive to
conduct land development operations within the District will not be adversely
affected by a future deterioration of the real estate market and economic
effects of future local, State and federal governmental policies relating to
real estate development, changes in the income tax treatment of real property
ownership, or changes in the national economy. A slowdown of the development
process and the absorption rate (the rate at which newly - constructed
properties are occupied) could adversely affect land values and reduce the
ability or desire of the property owners to pay the assessments, In that
event, there could be a default in the payment of principal of, and interest
on, the Bonds.
Another risk to the Bondowners involves the value of undeveloped
property. The failure to complete development as planned, or substantial
delays in the completion of development, due to litigation or other causes,
may reduce the value of the property within the District, will extend the time
during which a substantial portion of the assessments is levied upon
undeveloped property, and may affect the willingness and ability of the owners
of land within the District to pay the assessments when due. Undeveloped
property also provides less security to the Bondowners than the developed
property should it be necessary for the District to foreclose on undeveloped
]0
property due to the nonpayment of the assessments. Furthermore, an inability
to develop the land wi thin the District as currently proposed wi II likely
reduce or delay the diversification of ownership of land within the District.
See "Concentration of Ownership" below. A slowdown or stoppage in the
continued development of the District could reduce the willingness and ability
of such owners of undeveloped property to make assessments and could greatly
reduce the value of such property and the price which could be obtained for it
in any foreclosure sale instituted to collect delinquent assessments. See
"Land Values" below.
Future Land Use Regulations and Growth Control Initiatives
In addi tion to the risk that the landowners and subsequent property owners
may be unable to obtain all discretionary approvals required under existing
law to complete their proposed development, completion could be delayed or
made impossible by the imposition of future land use regulations.
During the past several years, citizens of a number of local communities
In Southern California have placed measures on the ballot designed to control
the rate of future growth in those areas. It is possible that future
initiatives could be enacted, could be applicable to the development in the
District and have a negative impact on the ability to the landowners to
complete their proposed developments. Bondowners should assume that any event
that significantly affects the ability to develop land in the District could
cause the land values within the District to decrease substantially and could
affect the willingness and ability of the owners of land within the District
to pay the assessments when due.
There can be no assurance that land development within the District will
not be adversely affected by future governmental policies, including, but not
limited to, governmental policies to restrict or control development. Under
current California law, it is generally accepted that proposed development is
not exempt from future land use regulations until building permits have been
issued and substantial work has been performed and substantial liabilities
have been incurred in good faith reliance on the permits prior to the adoption
of such regulations. As of [June IS, 1992], the Developer reports that 25
building permits have been issued by the City. See "PROPERTY OWNERSHIP AND
PROPOSED DEVELOPMENT -- Development and Ownership" herein.
Concentration of Ownership
All of the land within the District is currently owned by the Cimarron
Ranch Associates, a California limited partnership (the "Developer"). For a
discussion regarding the current property owners, see "PROPERTY OWNERSHIP AND
PROPOSED DEVELOPMB~T. Failure of the owners of property to pay the
assessments when due could result in the rapid, total depletion of the Reserve
Fund prior to replenishment from the sale of property upon a foreclosure or
otherwise or delinquency redemptions after a foreclosure sale, if any. In
that event, there could be a default in payments of the principal of, and
interest on, the Bonds. Such risk may be greater or its consequence more
severe when ownership is concentrated and may be expected to decrease as
ownership is diversified through development and sales.
II
Land Values
The value of land within the District is a critical factor in determining
the investment quality of the Bonds. If a property owner defaults in the
payment of assessment installments, the Ci ty' s only remedy is to commence
foreclosure proceedings in an attempt to obtain funds to pay the delinquent
assessment. See the caption "Bankruptcy" and "Property Held By FDlC/RTC"
herein.
An appraisal report prepared by Michael Frauenthal & Associates, Inc.
dated April 3, 1992, a copy of which is contained in Appendix B hereto,
summarizes that firm's opinion with respect to the probable market value of
the land within the District based upon the current land use approvals and
assuming the installation of the public improvements which constitute the
Improvements.
The Appraiser has determined that the "as is" finished lot value of the
parcels in the District, assuming all the Improvements are in place, was
$3,960,000 as of April 3, 1992. See "APPENDIX B -- Appraisal Report."
Prospective purchasers of the Bonds should not assume that the property
within the District could be sold for the appraised amount at a foreclosure
sale for delinquent assessments. The actual value of the property is subject
to future events which might render invalid the basic assumptions of the
Appraiser that the land within the District can be sold as finished lots. As
discussed under the caption "Failure to Develop Properties; Delays" and
"Future Land Use Regulations and Growth Control Initiatives," many factors
could prevent or delay the sale of the finished lots.
Additionally, reductions in District property values could occur due to a
downturn in the economy, occurrences such as earthquakes or floods or other
events, all of which will adversely impact the value of the security
underlying the assessments.
Parity Taxes and SDecial Assessments
The assessments and any penalties thereon will constitute liens against
the lots and parcels of land on which they will be annually imposed until they
are paid. Such I ien is on a pari ty wi th all special taxes levied by the Ci ty
and other agencies and is coequal to and independent of the lien for general
property taxes regardless of when they are imposed upon the same property.
The assessment has priority over all existing and future private liens and all
future fixed special assessment liens imposed on the property. The District,
however, has no control over the ability of other entities and districts to
issue indebtedness secured by special taxes or assessments payable from all or
a portion of the property within the District. In addition, the landowners
within the District may, without the consent or knowledge of the District,
petition other public agencies to issue public indebtedness secured by special
taxes or assessments. Any such special taxes or assessments may have a lien
on such property on a parity with the assessment.
Set forth below is the existing authorized indebtedness payable from taxes
and assessments that may be levied on property within the District. The
12
District has no control over the amount of indebtedness that could be issued
by other public agencies in the future, and the liens on the property within
the District could greatly increase, without any corresponding increase in the
value of the property within the District and thereby severely reduce the
ratio that exists at the time the Bonds are issued between the value of the
property and the debt secured by all taxes and assessments thereon. The
imposition of such additional indebtedness could also reduce the willingness
and abi I i ty of the property owners wi thin the District to pay the assessments
when due.
Moreover, in the event of a delinquency in the payment of the assessment
levy, no assurance can be given that the proceeds of any foreclosure sale
would be sufficient to pay the del inquent assessments and any other del inquent
assessments, special taxes or taxes. See "Land Values" herein.
CITY OF SAN BfRNARDINO
ASSESSMENT DISlRICf NO. 1003
(CAlOO BOULEVARD AND PEPPER LINDFN DRIVE)
DIRECf AND OVFRlAPPING DEBT
A99raised Valuation: $3,960,000
DIRECT AND OVERLAPPING BONDED DEBT:
% Aopl icable
%
Deb t 6/1/92
$
[TO COME]
TOTAL DIRECT AND OVERLAPPING BONDED DEBT
$
(1) 1915 Act bonds to be sold.
Ratios to Appraised Valuation:
Di rect Debt %
Total Debt %
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/92: $0
Source: California Municipal Statistics
Prooertv Held bv fOIC/RTC
The ability of the District to collect interest and penalties specified by
State law and to foreclose the lien of a delinquent assessments may be limited
in certain respects with regard to properties in which the Federal Deposit
Insurance Corporation (the "FDIC") or the Resolution Trust Company (the "RTC")
has or obtains an interest. On June 4, 1991, the RTC issued a Statement of
Policy Regarding the Payment of State and Local Real Property Taxes (the "Policy
13
Statement"). (The FDIC had previously joined with the RTC in a July 12, 1990
joint statement of policy addressing the same subject.) The Policy Statement
provides that the RTC intends to pay its property tax obI igations when they come
due and to pay claims for del inquencies as promptly as is consistent wi th sound
business practice and the orderly administration of the institution's affairs.
It may decline to pay property tax claims in situations where abandonment of its
interest in the property is appropriate. The Policy Statement also provides
that real property owned by the RTC is subject to state and local real' property
taxes if those taxes are assessed according to the property's value, but that
the RTC is immune from real property taxes assessed on other bases. The Policy
Statement further provides that:
If allY property taxes (illcludillg interest) on [RIel owned property
are secured by a valid liell (ill effect before the property became owned
by the [RTC}), the [RTC} will pay those claims. With respect to property
IlOt oWlled by the [RTC}, but ill which the [RTC} has a lien illterest, alld
[sic} property taxes (including interest) secured by a valid lien with
priority OWller the [RTC's} lien interest will be paid. However, if
abandonment of its interest in the property is appropriate, the [RTC}
may elect /lot to pay such claims.
The assessment is not based upon a property's value, and the Policy
Statement is unclear as to whether assessments such as those levied by the
District are considered to be "real property taxes" which are intended to be
paid. Moreover, the Policy Statement provides that, with respect to parcels
on which the RTC holds a mortgage lien, it will not permit its lien to be
foreclosed out by a taxing authority without its specific consent and that it
will not payor recognize liens for any penalties, fines or similar claims
imposed for the nonpayment of taxes, whether arising before or after
acquisition of the parcel in question, nor will it pay attorneys' costs
incurred by a taxing authori ty or other person in pursuing a tax claim.
The District is unable to predict what affect the application of the
Policy Statement would have in the event of a delinquency on a parcel within
the District in which the FDIC or RTC has or obtains an interest, although
prohibiting the lien of the FDIC or RTC from being foreclosed out at a
judicial foreclosure sale would likely reduce or eliminate the persons willing
to purchase a parcel at a foreclosure sale. Such an outcome would cause a
draw on the Reserve Fund and perhaps, ultimately, a default in payment on the
Bonds.
Bankruptcv
The collection of property owners' taxes and the ability of the District
or to foreclose the lien of a delinquent assessment pursuant to its covenant
to pursue judicial foreclosure proceedings, may be limited by bankruptcy,
reorganization, insolvency, or other laws generally affecting creditors'
rights or by the laws of the State relating to judicial foreclosure. See
"SECURITY FOR THE BONDS -- Covenant to Commence Superior Court Foreclosure."
In addition, the prosecution of a foreclosure could be delayed due to crowded
local court calendars or legal delaying tactics. The various legal opinions
14
to be delivered concurrently wit the delivery of the Bonds (including Bond
Counsel's approving legal opinion) will be qualified, as to the enforceability
of the various legal instruments, by reference to moratorium, bankruptcy,
reorganization, insolvency or other similar laws affecting the rights of
creditors generally.
Although bankruptcy proceedings would not cause the I ien secured by the
assessments to become extinguished, bankruptcy of a property owner or of a
partner or other equity owner of a property owner could result in a
court-imposed delay in the establishment of the lien for the assessments, a
delay in prosecuting Superior Court foreclosure proceedings or an adverse
effect upon the property owner's ability or willingness to pay the
assessments, and could result in the possibility of delinquent assessment
installments not being paid in full. Such delay or partial non-payment would
increase the likelihood of a delay or default in payment of the principal of,
and interest on, the Bonds.
No Acceleration Provision
The Bonds and the Bond Indenture do not contain a provision allowing for
the acceleration of the Bonds in the event of a payment default or other
default under the terms of the Bonds or the Bond Indenture or in the event
interest on the Bonds becomes included in gross income for federal income tax
purposes. Pursuant to the Bond Indenture, in the event of a payment or other
default, any owner of any of the Bonds is given the right for the equal
benefit and protection of all Bondowners similarly situated to pursue certain
remedies described in the Bond Indenture.
Endangered SDecies
During 1991, the there has been an increase in actIvIty at the State and
federal level related to the possible listing of certain plant and animal
species found in the Southern California area as endangered species. An
increase in the number of endangered species is expected to curtail
development in a number of areas. At present, the property within the
District is not known to be inhabited by any plant or animal species which
either the California Fish and Game Commission or the United States Fish and
Wildlife Service has proposed for addition to the endangered species list.
Notwithstanding this fact, new species are proposed to be added to the State
and federal protected lists on a regular basis. Any action by the State or
federal governments to protect species located on or adjacent to the property
within the District could negatively affect the property owner's ability to
complete the development of the property within the District as planned.
This, in turn, could reduce the likelihood of timely payment of the assessment
installments and would likely reduce the value of the land estimated by the
Appraiser and the potential revenues available at a foreclosure sale for
delinquent assessment installments. See "Failure to Develop Properties;
Delays" and "Future Land Use Regulations and Growth Control Initiatives."
15
Loss of Tax Exemption
As discussed under the caption "TAX EXEMPTION" herein, interest on the
Bonds couJd 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 City in violation of its covenants in the Bond
Indenture. Should such an event of taxabi lity occur, the Bonds are not
subject to a special redemption and will remain outstanding until maturity or
untiJ redeemed under one of the other redemption provisions contained in the
Bond Indenture.
16
TIlE IMPROVI'lIINf PROJECT
A portion of the information in the following section, '1l!E IMPROVEMENT
PROJECT", is taken from the fn--&inee.,'s Report for (Cajon BOl!levard and Pepper
Linden Drive) Assessment District No. 1003 prepared by GFB-Friedrich &
Associates, Inc., Riverside, California on file with the City Clerk (the
"Engineer's Report").
The Improvements
The publ ic improvements proposed to be acqoired and instal led by
Assessment District No. 1003 (Cajon Boulevard and Pepper Linden Drive)
consists of street, sewer, water, storm drain, and street light improvements.
The proposed works of improvement to be acquired in the District are
generally described as follows:
Street and Storm Drain Imorovements
Street and storm drainage improvements include earthwork, paving, curbs
and gutters, cross gutters, A.C. overlay, street lights, detention basin,
headwall, parkway culvert, outlet structure, catch basins, 30" and 18" R.C-P.,
and concrete encasement. All permanent street and storm drain improvements
shall be constructed within public rights-of-way.
Specific streets and their associated dimensions are given below:
Cajon Boulevard street widening improvements from Sta. 162+65.00 to Sta.
178+40.67 (1,575.67 linear feet).
Maiestic Avenue (60' R/W, 40' curb to curb) from Cristy Avenue @ Sta. 10+00.00
east and north to Cajon Boulevard @ Sta. 24+08.28 (1,408.28 linear feet).
Don Diego Street (50' R/W, 36" curb to curb) from Majestic Avenue @ Sta.
20+00.00 north to Sta. 21+89.00 (189.00 linear feet).
Jadestone Avenue (50' R/W, 36" curb to curb) from Cristy Avenue @ Sta.
10+00.00 southeasterly to Majestic Avenue @ Sta. 17+20.00 (720 linear feet).
Cristy Avenue (50' R/W, 36' curb to curb) from Tract No. 14185 boundary near
Bronson Street @ Sta. 21+55.51 northeasterly to Jadestone Avenue @ Sta.
33+88.90 (1,231.39 linear feet).
San Miguel Avenue (50' R/W, 36' curb to curb) from Cristy Avenue @ Sta.
10+00.00 southeasterly to Majestic Avenue @ Sta. 16+84.58 (684.58 linear feet).
Sewer Improve~ents
Sewer improvements include pIpe, manholes, excavation, bedding, backfill,
compaction, testing of completed mains and adjusting sewer manholes to proper
street grade. All permanent sewer improvements will be constructed within
public rights-of-way.
17
Furnish and install 3,979 linear feet of 8-inch diameter sewer main per
Ci ty of San Bernardino Standards, 16 sewer manholes (Std. No. 301), 101 4-inch
sewer laterals (2,875 linear feet total) to property lines (Std. No. 305), and
other appurtenant items.
Water Improvcm€uts
Water improvements' New water mains, valves, fire hydrants, and water
meters and services to property lines. Also included are the excavation,
bedding, backfi 1 J, testing and disinfection of the water system. All
permanent water system improvements wi I I be constructed wi thin pub! ic
r igh t s-of way.
Furnish and install 5,764 linear feet of 6" through 16" diameter water
mains, 101 each 5/8" water meters, and other appurtenant items.
Construction Costs
FSflMATED COSTS AND EXPENSFS
Class of Work
Pre I iminarv
Sewer Improvements
Water Improvements
Storm Drain Improvements
Street Improvements
Grading and Miscellaneous
$ 90,140.25
164,496.63
34,600.00
194,27 I. 55
37.053.00
$520,561. 43
52.056.14
$572,617.57
Total Construction
Construction Contingencies
Total Construction & Contingencies
Source:
Confirmed
$ 90,140.25
164,496.63
34,600.00
194,271. 55
37.053.00
$520,561.43
0.00
$520,561. 43
Engineer's Report, GFB-Friedrich & Associates, Inc., Riverside,
Cal i fornia
Method and Formula of Assessment Snread
The law requires and the statutes provide that assessments, as levied
pursuant to the provisions of the "Municipal Improvement Act of 1913", must be
based on the benefit that the properties receive from the works of
improvement. It is further necessary that the property owners receive a
special and direct benefit distinguisbed from that of the general public.
The special benefits that inure to the property owners within the
boundary of Assessment District No. 1003 are the construction of street, storm
drainage, water system, and sewerage improvements, and the necessary
appurtenant work to provide complete, functional improvements for all houses
within The Assessment District. The construction cost and proportionate share
of the incidental costs for bid items will be spread on an assessment
18
unit basis to those areas or subareas of the Assessment District that benefit
from the works of improvement. The benefit received from the above-cited
works of improvement is estimated to be in direct proportion to the number of
assessment units per parcel.
Assessment units (AU's) are applied to all non-exempt parcels within the
Assessment District in the following manner:
All assessable lots or parcels within Assessment District No. 1003 each
contain one (I) residential dwelling unit and have approximately the same
land areas. Therefore, the direct benefit to each assessable parcel from
the works of improvement is essentially the same. Accordingly, each
assessable parcel is assigned one (1) AU. The amount of assessment on
each assessable parcel in the Assessment District is determined by
dividing the total amount of costs to assessment by the total number of
AU's.
The lot designated by Assessment Number 102, also designated as Lot "A",
is a parcel containing a flood detention basin owned by the City of San
Bernardino. Therefore, it is not assessed. The lots designated by
Assessment Numbers 103 and 104 have been dedicated to the City of San
Bernardino on Tract Map No. 14503 and comprise the future Pepper Linden
Drive right-of-way. These lots are not assessed.
19
1lIE DISIRICf
Location
The District is located southwest of Cajon Boulevard, north of Rosari ta
Street, in the City of San Bernardino, California. The District site lies
approximately one-third mile southwest of the Interstate 215, commonly known
as the Barstow Freeway.
The District is located in an area generally known as Muscoy, an
unincorporated portion of San Bernardino County. However, the District
comprises <1 portion of land which was annexed by the Ci ty of San Bernardino.
In addition, the land along the east side of Cajon Boulevard, within the
District, is an incorporated portion of the City of San Bernardino as well.
Access into the area is avai lable off of Interstate 215 and the Universi ty
Parkway exit, which is approximately 1.5 miles southeast of the District.
Additional access to Interstate 215 Freeway is available approximately 1.5
miles northwest of the District at Palm Avenue. The area generally is
considered to be bounded by the Interstate 215 Freeway to the northeast, the
Cable Creek/Devils Canyon Channel to the northwest, and First Street to the
south. The District is approximately 5.5 miles northwest of downtown San
Bernardino.
Zoning:
TI1e District's 101 single family residential parcels are contained within
Tract Maps 14503-1 and 14503. These sites are zoned RS by the City which
permits residential subdivision development for single family homes, with
minimum lot sizes of 7,200 square feet and a maximum density of 4.5 units per
acre.
Streets
The Assessment District can be accessed from two streets. The primary
entrance is from Majestic Avenue which intersects Cajon Boulevard and enters
the District on the east. Christy Avenue is an interior road that enters the
District from the west.
Utilities
Utility suppliers for the regIon are detailed below;
Water
City of San Bernardino
Natural Gas
Southern California Gas Company
Electricity
Southern California Edison
Telephone
GTE
Flood Control
San Bernardino County Flood Control
Sewe I'
City of San Bernardino
20
The Aovraisal.
The Appraisal of the land in the District was prepared by the Appraiser.
The Appraisal expresses an opinion as to the market value of the land in the
District taking into account the Improvements to be acquired or constructed by
the District.
In the opinion of the Appraiser, the land in the District subject to
assessment bas an "as is" finished lot value of $3,960,000 as of Apri I 3,
1992 assuming all of the Improvements are in place. Based on this valuation,
the value-to-lien ratio in the District relating to the total assessment is
4.6* to I. See "APPENDIX B -- APPRAISAL REPORT" and "APPENDIX E -- PROPERTY
OWNERSHIP AND ASSESSMENT LIENS".
^SJL~s_s!!!eJ)J_Insta11mcnJ De I inq\lencies
The Ci ty has covenanted wi th the Bondowners to commence Superior Court
foreclosure proceedings by April 1 and June 1 of any fiscal year provided
certain conditions previously discussed are met (see "SECURITY FOR THE BONDS
-- Covenant to Commence Superior Court Foreclosure"). As of May 12, 1992
there were no property tax delinquencies on the land within the District.
(Source: Marilyn Taylor, Special Tax and Assessment Services, Highland,
Cal ifornia.)
*Preliminary, subject to change.
21
PROPBITY OWNERSHIP AND PROPOSED DEVEWPMENf
The landowner has provided the following information relevant to an
informed evaluation and analysis of the security for the Bonds and the
District. As the proposed land development progresses and parcels are sold,
it is expected that the ownership of the land within the District will become
more diversified. The assessments are not personal obligations of the
landowners; the Bonds are secured solely by the assessments and other amounts
on depos i t wi th the Treasurer and the Paying Agent. See "SEOJRIlY FOR THE
BONDS" and "BONDGTINERS' RISKS," herein.
]he Proposed Development
The Development consists of approximately 27 gross acres with 18.23 net
developable acres. The Development is located in the Muscoy Area, southwest
of Interstate 215 in the City of San Bernardino. The Development includes 101
single family detached residential dwelling units. Additionally, the
Development will contain public properties which will include a water
detention basin and various service streets.
Currently the entire site of the Development is undergoing grading,
construction of street improvements and the installation of underground
utilities. The Developer has estimated that 95% of this work is completed,
with the remaining minor work completed during the home construction phases.
final Tract Map Nos. 14503 and 14503-1 were recorded on August 12, 1991. The
Developer has been issued [25] building permits as of [June 15, 1992], and
estimates that construction will commence by June 15, 1992 and should be
completed within 18 months.
The Development is part of a larger housing project known as Cimarron
Ranch. The Development will feature homes in 6 plans, ranging from 1,026
square feet to 2,191 square feet. The uni ts wi II include two-car garages wi th
bonus area, traditional sized home sites with room for RV areas, wood burning
fireplaces, front yard landscaping with automatic sprinkler systems, complete
rear and side-yard fencing, concrete tile roofs and central air conditioning.
Description of Proposed Residential Development
Estimated
Plan No. Square feet Total Uni ts Pr i ce Range
1 1025-1143 13 $101,990-105,990
2 1262 22 113,990
3 1356-1542 32 121,990-125,990
4 1579-1758 22 131,990-135,990
5 1680 4 137,990
6 1989 --.a 141,990
TOTAL 101
22
The Developer has secured a $2,378,000 trust deed on the property for
offsite development with Union Bank. In addition, Union Bank is processing a
request by the Developer for a construction loan for the first 25 houses. The
Developer expects loan approval by June 1, 1992. The remaining 76 houses wi II
be submitted for approval as construction and sales progress.
The Dcve lopcI
The Developer, Cimarron Ranch Associates, is a California limited
partnership comprised of Century Homes Communities ("Century"), a California
Corporation as the general partner and Colony Oaks Development of Upland,
California as the limited partner.
Century Homes Communities is one of southern California's largest builders
of affordable single-family homes for the first-time and retirement community
homebuyer. Century's operations include location, acquisition and development
of land and the design, construction, marketing and sale of homes. The sales
price of Century's homes range from $60,000 to $150,000, with the average
price being approximately $125,000. The Developer and its predecessor John
Pavelak Construction Company has constructed and sold over 6,000 homes,
typically in new home communities, since its inception.
Century operates primarily in San Bernardino and Riverside Counties along
with San Diego, Los Angeles, Kern and Sacramento Counties as well as other
select areas of Northern California. Its administrative offices are located
at Fairway Commerce Center, 1535 South "D" Street, San Bernardino, CA 92408.
Its telephone number is (714) 381-6007 or 1-(800)-BUY-CENTURY. As of December
31, 1991, Century employed 85 persons full-time. Of these, 13 were in
executive positions, 5 in project management activities, 33 in administrative
and clerical activities and 34 in customer care and field operations.
Century's in-house sales department consists of 26 independent contractors.
Century was formed by John Pavelak in 1971 and was called John Pavelak
Construction Company. The company built and sold custom spec and contract
homes. Century Homes was formed as a joint venture between two custom
homebuilders, John Pavelak and Chester Squibb, each of who wanted to focus on
building outstanding but affordable single-family home communities. These two
individuals brought with them a combined 35 years of building industry
experience. Pavelak purchased all of Squibb's interest in 1985. (Pavelak and
his wife have retained 100 percent ownership to date.) In 1991 Century Homes
celebrated its 20th Anniversary.
Professional Builder magazine ranked Century as one of the nation's top
100 home builders. Based on its 1991 performance, Century was ranked No. 80
in the United States. Century closed 529, 639 and 532 homes in fiscal years
1989, 1990 and 1991 respectively, and projects closing 617 homes in 1992, 960
in 1993 and 1,000 in 1994.
As of December 31, 1991, Centurv had assets totalling $70,154,000 with net
Income as of November 30, 1991 of $2,261,000.
The following are a representative sample of Century homes In completed
developments:
23
Develooment
Century Homes Rialto
Wi ldwood
Heather Glen
Copper Cove
Chaparral at Rancho Las Rosas
Daybreak at Fox Fire Ranch
Chaparral at Laguna Creek
Chaparral at Sunset
Whispering Glen at Southpointe
California Location
Rial to
Fontana
Collon
Moreno Valley
Murrieta
Victorville
Sacramento
Stockton
San Be rnard i no
Numbe r
of Vni ts
500
118
2]()
163
]5]
33()
89
55
III
The following are a representative sample of homes 10 developments In
progress.
Development
The Fairways at High]and Springs
Villas at Sunnyside Estates
Copper Cove at Rancho Las Perris
Rancho de I Rey
Del Hey
Serrano Del Vista
Fox Fire Ranch - A Master
Planned Community
California Location
Beaumont
Indio
Perris
Temecula
Elsinore
Banning
Victorvi]le
24
Number
of
Vni ts
369
148
90
83
114
147
1,100
In $000
$90-]40
60-90
110-]40
115-140
115-140
60-120
90-140
LEGAL OPINION
Certain proceedings in connection with the issuance of the Bonds are
subject to the approval of Brown, Diven & Hentschke, San Diego, California,
(the "Bond Counsel") for the City in connection with the District. The
opinion of Bond Counsel approving the validity of the Bonds will be printed on
each Bond and a form of such opinion is attached hereto as Appendix D, The
opinion of Bond Counsel will be qualified as to the enforceability of certain
of the proceedings by limitations imposed by bankruptcy, insolvency, moratoria
and other similar laws affecting creditors' rights, heretofore or hereafter
enacted and by the exercise of judicial discretion in accordance with genera]
principles of equity.
TAX EXDIPTION
[Bond Counsel to ReviselUpdate]
[In the OpInIOn of Brown, Diven & Hentschke, San Diego, California, Bond
Counsel, under existing statutes, regulatious, rulings and judicial decisions,
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 calculating the
federal alternative minimum tax imposed on individuals and corporations;
however, Bond Counsel notes that, with respect to corporations, interest of
the Bonds may be included as an adjustment in the calculation of alternative
minimum taxable income which may affect such corporation's alternative minimum
tax liability. In the further opinion of Bond Counsel, interest on the Bonds
is exempt from California personal income tax.
The opinions expressed by Bond Counsel are based on an analysis of
existing statutes, regulations, rulings and judicial decisions. Such opinions
may be affected by actions taken (or not taken) or events occurring (or not
occurring) after the date hereof. Bond Counsel has not undertaken to
determine, or to inform any person, whether any such actions or events are
taken or do occur.
Additionally, Bond Counsel's opinions are based upon certain
representations made by the City, and others, and its opinion with respect to
the exclusion from gross income for federal income tax purposes is subject to
the condition that the City comply with certain covenants and the requirements
of the Internal Revenue Code of 1986, as amended, that must be satisfied
subsequent to the issuance of the Bonds to assure that interest on the Bonds
will remain excludable from gross income for federal income tax purposes.
Failure to comply ~ith such requirements possibly could cause interest on the
Bonds to be included in gross income for federal income tax purposes
retroactive to the date of issuance of the Bonds. The City has covenanted to
comply with all such requirements.
Although Bond Counsel has rendered an opinion that interest on the Bonds
IS excluded from gross income for federal income tax purposes, as provided
above, the ownership of the Bonds and the accrual or receipt of interest on
the Bonds may otherwise affect the tax liability of certain persons. Bond
Counsel expresses no opinion regarding any such tax consequences.
Accordingly, all potential purchasers of the Bonds should consult their tax
advisors with respect to collateral tax consequences of owning the Bonds.]
25
NO LITIGATION
There is no action, suit or proceeding known by the City to be pending at
the present time restraining or enjoining the delivery of the Bonds or in any
way contesting or affecting the val idity of the Bonds or any proceedings of
the City taken with respect to the execution or delivery thereof. A
no-litigation certificate executed by the City will be required to be
delivered to the Underwriter simultaneously with the delivery of the Bonds.
NO RATING
The City has not made, and does not contemplate making, application to any
rating agency for the assignment of a rating to the Bonds.
UNDFRWRITING
Stone & Youngberg, the Underwri tel', has purchased the Bonds from the Ci ty
at an aggregate discount of $ from their reoffering prices, as set
forth on the cover page of this Official Statement. The public offering
prices may be changed from time to time by the Underwriter. The Underwriter
may offer and sell Bonds to certain dealers and others at prices 1971' than
the offering price stated on the cover page hereof. /
ClIT OF SAN 8FRN~OJNO ~/ A
B/?:/7/lJJy. /
w. It. Holeo" t-L
Mayor
26
APPENDIX A
ASSESSMfNf DIAGRAM
[To Come]
A-I
APPENDIX B
APPRAISAL REPORT
[To Come]
B-1
APPENDIX C
GmERAL AND ECONOMIC DATA FOR TIlE
CITY OF SAN BERNARDINO AND SURROUNDING ARFAS
The following information concerning"h. Citv of San Bernardino and
SUfI'o\lnding areas are included onlv for the purpose oJ supplving general
informat ion regarding the communi tv. The Bonds are not a debt of the Ci tv of
San Bernardino, State of California or anI' QJ-1JLJ2olitical subdivisions. and
neither said Citv.said State nor any of its Dolitical subdivisions is liable
therefor.
General
l~e City of San Bernardino, county seat of San Bernardino County,
California, is located at the base of the San Bernardino Mountains, 58 miles
east of Los Angeles. The City was incorporated on April 13, 1854. The City
operates under a charter from of government, directed by the Mayor and Common
Counci J of seven counei Imen elected from their respective wards and the Mayor
elected at large by the voters.
Population
The City's population according to the 1980 census was 118,092. A summary
of the City's population from 1970 to 1991 is shown below.
1970
1980
1990
1991
1992
106,892
118,092
164,164
171 , 600
175,800
Source: U.S. Bureau of the Census.
Estimated by the Population Research Unit, California State Department
of Finance. as of January J.
C-1
The following lists annual average number of wage and salary employees by
industry within Riverside and San Bernardino Counties for 1987 to 1991.
Riverside and San Bernardino Counties
Annual Average Employment by Industry (1)
1987 liBB 1989 1990 12.21
Mining 1,300 1,300 1,300 1,400 1,400
Construction 53,400 48,800 65,400 67,500 46,800
Manufacturing, Nondurables 22,800 23,600 27,200 28,700 26,500
Manufacturing, Durables 57,900 57,400 61,000 61,000 57,500
Transportation & Utilities 32,200 30,300 33,300 35,400 35,400
Wholesale Trade 21,500 21,600 26,900 32,400 32,000
Retai I Trade 131,000 135,300 143,600 151,800 156,100
Finance. Insurance &
Real Estate 25,400 26,500 29,800 32,600 31,800
Service Industries 141,900 147,500 162,000 179,500 184,500
Federal Gove rnmen t 20,600 19,800 20,700 21,200 20,200
State & Local Government 103.900 105.000 137 . 800 128.300 134.300
Total Non Agricultural 611 , 900 617,100 688,200 739,900 726,200
Agricul tural, Forestry
& Fisheries 18,400 24,900 20,900 21 , 700 22,700
Total All Industries 630.300 642.000 709 .100 761. 600 749.000
(I) Employment reported by place of work excluding workers involved In labor
disputes, self-employed, unpaid family and domestic workers.
Source; State of California, Employment Development Department.
Emplovment
The civi I ian labor force in the County of San Bernardino increased to an
annual average of 605,500 in 1990, up 5.2 percent from the 1989 average of
575,800. The following table summarizes the labor force, employment and
unemployment figures over the past five years for the County, the State, and
the nation as a whole.
C-2
Labor Force, Employment and Unemployment
Yearly Average for Years 1986 through 1990
and First Three Quarters of 1991
Unemployment
Year Area Labor Force Emplovment Une1llJllQyment Rate
1986 San Bernardino County 484,200 456,000 28,200 5.8%
Cal ifornia 13 , 365 , 000 12 , 473 , 000 892,000 6.7
United States 119,540,000 111,303,000 8,237,000 6.9
1987 San Bernardino County 526,500 504,500 22 , 000 4.2
Cal ifornia 13,757,000 12,955,000 792,000 5.8
United States 121,602,000 114,177,000 7,425,000 5.1
1988 San Bernardino County 541,700 513,900 27,800 5. I
California 14,139,700 13 , 383 , 900 755,800 5.3
United States 121,669,000 114,968,000 6,701,000 5.5
1989 San Bernardino County 575,800 547,400 28,400 4.9
California 14,520,000 13,804,600 715,900 4.9
Uni ted States 126,246,000 119,588,000 6,658,000 5.3
1990 San Bernardino County 605,400 570,700 34,700 5.7
California 14,670,000 13,846,000 823,000 5.6
United States 124,787,000 117,914,000 6,874,000 5.5
1991* San Bernardino County 621,400 570,200 51,200 8.2
Cal i fornia 14,777,000 13,650,000 1,127,000 7.6
United States 125,285,000 116 , 812 , 000 8,473,000 6.8
*for the three quarters ending September 30, 1991
Source: California Employment Development Department
In terms of job growth, the San Bernardino-Riverside-Ontario Metropolitan
Statistical Area has performed remarkably during the 1991 recession. The
region has shown year-over-year job growth every month since the current
recession began (through September 1991) to make it the only region in
California to hold that distinction. By contrast, the State lost more than
200,000 jobs from September 1990 to September 1991. The San Bernardino-
Riverside-Ontario Metropolitan Statistical Area has been ranked as one of the
top 10 job growth regions in the nation for the last year and a half.
IndullIT
The San Bernardino area is one of the most dynamic economic areas in the
nation. Its close proximity to the Los Angeles basin marketplace, which IS
the second largest economic base in the nation, is a primary attribute. The
County is well equipped to accommodate growth, with an excellent
transportation network to carry goods into and out of the region.
C-3
Many companies have selected the San Bernardino area to base their West
Coast distribution facilities, taking advantage of tbe nearby Los Angeles
market. Moreover. several manufacturers have located within the San
Bernardino area to be near the Ports of Los Angeles and Long Beach for
importing and exporting purposes. A Fureign Trade Zone has been established
in the County of San Bernardino, serving as an extension of the Port of Long
Beach and offering favorable terms on duties and customs regulations.
Over 700 manufacturing firms are located in the County of San Bernardino
producing items such as steel products, materials made from concrete and
glass, canned foods, paper goods and commercial and scientific equipment.
The pending closure of George and Norton Air Force Bases continues to be
an i tern of intense communi ty interest. Two base re-use commi ttees, formed of
representatives of the County and the cities surrounding each base, have
initiated efforts to plan the orderly transition of these facilities to other
uses. Special legislation was obtained to amend the Community Redevelopment
Law to permit its use in this situation, and grant funds have been requested
to determine the best use of the facilities. Response to the aggressive
efforts of the re-use committees indicates the possibility of iignificant
benefits to the San Bernardino area from alternative uses of base facilities.
Closure wi 11 not begin unti I after fiscal year 1991-92; therefore, there wi II
be nu impact on the San Bernardino area this fiscal year.
The following chart presents the largest private sector employers in the
County of San Bernardino, their product or service and the number of employees.
Major Private
County of San Bernardino
Sector Employers in San Bernardino
As of September, 1991
County
Companv
Stater Bros. Market
Lorna Linda University Medical Center
Kaiser Foundation Hospital
General Dynamics
Lockheed Aircraft
San Antonio Community Hospital
St. Bernadine's Medical Center
Jerry L. Pettis Memorial Veterans Hospital
San Bernardino Community Hospital
Cal i fornia Steel Industries
Conte! of California
Redlands Communi ty Hospi tal
Space Systems Division
GE/Engineering Maintenance
Southern Cal ifornia Edison Company
Source: County of San Bernardino
C-4
Product/Service
Supermarket Chain
Hea 1 th Care
Health Care
Defense Weapons
Aircraft Maintenance
Heal th Care
Heal th Care
Hea I th
Hea 1 th Care
Steel Manufacturing
Telephone Communication
Heal th Care
Defense Weapons
Repair GE Aircraft
Electric Uti I i ty
Number of
Emplovees
6,221
5,500
3,588
2,500
2,500
1,900
1,713
1, 100
1,000
1,000
900
900
880
800
City of San Bernardino
Number of Permits and Valuation of Taxable Transactions
Retai I Stores Total All O~tlets
No. of Taxab 1 e No. of Taxable No. of
Year Permits Transactions Fermi t s Transact ions
1986 1,620 1,214,245,000 4,520 1,496,335,000
1987 1,614 1,295,158,000 4,456 1,61] ,047,000
1988 1,693 l,443,831,OOO 4,482 ],774,958,000
1989 1.760 1,5l7,409,OOO 4,396 1,898,847,000
1990 1,789 1,544,706,000 4,531 1,914,529,000
1991* 1,852 1,083,790,000 4,654 J ,346,213,000
*First 3 quarters.
Source: State Board of Equalization, California.
Construction Activitv
The following table shows building permit valuation for the City from 1987
through 1991.
Building Permit Valuation
(Valuation in Thousands of Dollars)
1987
1988
li8.2
1990
l22.l
Residential
New single-dwelling $ 53,699 $ 29,148 $ 65,333 $ 92, 126 $ 46,038
New multi-dwelling 18,441 157 15,012 7,703 1,327
Additions, alterations 5.056 1.193 6.639 ~}.428 7.084
Total Residential $ 77 , 196 $ 35,530 $ 86,984 $107,258 54,449
Non-Residential
New commercial $ 44,870 $ 37,740 $ 37,557 $ 17 , 153 13,879
New industrial 2,527 10,189 9,405 3,423 10,681
Othe r 3,153 9,095 1,266 1,913 2,325
Addi tions, a1 terations 23.076 15.994 18 . 148 18 .153 15.167
Total Non-Residential 73.626 73.018 66.376 40.642 42.052
Total Valuation $150.822 $108.548 $153.360 $147.900 96.501
No. of New Dwelling Unit
Single dwell ing
Mul ti-dwell ing
Total Units
681
_____183
1.164
292
4
296
659
352
1.011
848
202
1.050
412
~
440
Source: "California Building Activity," Economic Sciences Corporation.
C-5
TranSDortation
Four Interstate Highways traverse San Bernardino County. Interstate 10
crosses the San Bernardino Val ley in an east-west direction. Interstate 15
runs north and south, passing thruugh the cities of San Bernardino and
Riverside. Interstate 215 traverses he tween Temecula in Riverside County and
Devore in San Bernardino County where it joins Interstate 15. Interstate 40
runs easterly from the City of Barstow into Arizona.
U.S. Highway 95 serves the eastern sector of the County, and U.S. 395 the
wes tern part.
Santa Fe Railroad, Union Pacific Railroad and Southern Pacific Railroad
provide regularly scheduled service, wi th 24-hour swi tching service and
reciprocal-switching agreements between all three Railroads. "Piggy-back"
service is available. San Bernardino is also served by AMTRAK passenger
service to all points east.
All major trucking lines have terminals in the San Bernardino area,
providing daily-scheduled service to al I transcontinental points. Overnight
truck delivery is available to Los Angeles, Long Beach, San Diego, San
Francisco, Northern California, Arizona, and Nevada.
Ontario International Airport (20 miles west of the City) is served by
eleven commercial airlines. The airport is also a major distribution facility
for air cargo. Rialto Airport, a private and commuter airport, provides
general aviation service.
Greyhound Lines provides transcontinental bus service. The Southern
California Rapid Transit District (RTD) provides hourly service throughout the
San Bernardino/Riverside/Ontario Metropolitan Area. The Omnitrans System
operated by a Joint Powers Authori ty between the County of San Bernardino and
the cities of Chino, Colton, Fontana, Lama Linda, Montclair, Ontario,
Redlands, Rialto, San Bernardino and Upland provides regular bus service
within the City of San Bernardino and between the ten cities and county area,
from Pomona to Calimesa.
Utilities
The City provides domestic water service and sanitary sewer services.
Natural gas is supplied by Southern California Gas Company. Southern
California Edison Company provides electrical power. Telephone service is
provided by General Telephone Company.
Community Faci]It;~s
San Bernardino has four acute care hospitals with 919 total bed capacity,
491 physicians/surgeons, 205 dentists, 53 optometrists, and 44 chiropractors.
There are thirty-five elementary schools, eight junior high schools, four
high schools, San Bernardino Valley College (2 years), California State
Universi ty, San Bernardino (4 years), twelve parochial schools and twenty-five
business, trade, and professional schools in the City. Other institutions
C-6
located nearby are Lorna Linda University, the University of Redlands and the
University of California at Riverside.
There are 170 churches, five libraries, three newspapers, thirteen radio
stations, thirteen TV channels, three TV cable systems, twenty-six banks,
fifteen savings and loans, twenty parks and playgrounds, fourteen theaters and
five public golf courses in the City. Other recreational facilities include
the 1,80 seat California Theatre of Performing Arts, an outdoor bowl seating
5,000, and a baseball park seating 500. The City has a California League
baseball franchise, the "Spirit". The City has six recreation centers and a
cultural arts center.
C-7
APPF1IDIX D
FORM OF LEGAL OPINION
July_ _, 1992
[To Be Provided by Bond Counsell
D-l
APPENDIX E
PROPERlY OWNERSHIP AND ASSl'5SMfNf LIENS
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