HomeMy WebLinkAbout2006-170
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CITY OF SAN BERNARDINO
LOCAL AGENCY RESOLUTION
NUMBER 2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
WHEREAS, local agencies are authorized by Section 53850 to 53858, both
inclusive, of the Government Code of the State of California (the "Act") (being Article 7.6,
Chapter 4, Part I, Division 2, Title 5 of the Government Codc) to borrow money by the
issuance of temporary notes;
WHEREAS, the legislative body (thc "Legislative Body") of the local agency
specified in Section 25 hereof (the "Local Agency") has determined that a sum (the
"Principal Amount"), not to exceed the Maximum Amount of Borrowing specified in
Scction 25 hcreof, which Principal Amount is to be confirmed and set in the Pricing
Confirmation (as defined in Section 4 hereof), is needed for the requirements of the Local
Agency, to satisfy obligations of the Local Agency, and that it is necessary that said
Principal Amount be borrowed for such purpose at this time by the issuance of a note or
notes therefore in anticipation of the receipt of taxes, income, revenue, cash receipts and
other moncys to bc reccived by the Local Agency for the general fund of the Local Agency
attributable to its fiscal year ending June 30, 2007 ("Fiscal Year 2006-2007");
WHEREAS, the Local Agency hereby determines to borrow, for the purposes set
forth above, the Principal Amount by the issuance ofthc Notc (as hereinafter defined);
WHEREAS, it appears, and this Legislative Body hereby finds and determines, that
the Principal Amount, when added to the interest payable thereon, does not exceed eighty-
five percent (85%) of the estimated amount of the uncollected taxes, income, revenue
(including, but not limited to, revenue from the state and federal governments), cash
receipts and other moneys of the Local Agency attributable to Fiscal Year 2006-2007 and
available for the payment of the principal of the Note and the interest thereon;
WHEREAS, no money has heretofore been borrowed by or on behalf of the Local
Agency through the issuance of tax anticipation notes or temporary notes in anticipation of
the receipt of, or payable from or secured by, taxes, income, revenue, cash receipts or other
moneys for Fiscal Year 2006-2007;
WHEREAS, pursuant to Section 53856 of the Act, certain moneys which will be
received by the Local Agency during and attributable to Fiscal Year 2006-2007 can be
pledged for the payment of the principal of the Note and the interest thereon (as hereinafter
provided);
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
WHEREAS, the Local Agency has determined that it is in the best interests of the
Local Agency to participate in the California Communities Cash Flow Financing Program
(the "Program"), whereby participating local agencies (collectively, the "Issuers") will
simultaneously issue tax and revenue anticipation notes;
WHEREAS, the Program requires the participating Issuers to sell their tax and
revenue anticipation notes to the California Statewide Communities Development
Authority (the "Authority") pursuant to note purchase agreements (collectively, "Purchase
Agreements"), each between such individual Issuer and the Authority, and dated as of the
datc of thc Pricing Confirmation, a form of which has been submitted to the Legislative
Body;
WHEREAS, the Authority, in consultation with RBC Capital Markets, as financial
advisor for the Program (thc "Financial Advisor"), will form one or more pools of notes
(thc "Pooled Notes") and assign each note to a particular pool (the "Pool") and sell a series
(the "Series") of bonds (the "Bonds") secured by each Pool pursuant to an indenture (the
"Indenture") between the Authority and Wells Fargo Bank, National Association, as trustee
(the 'Trustee"), each Series distinguished by whether or what type(s) of Crcdit
Instrument(s) (as hereinafter defined) secure(s) such Series, by the principal amounts of the
notes assigned to the Pool, by whether interest on the Series of Bonds is a fixed rate of
interest or a variable rate of interest swapped to a fixed rate by the Authority, by whether
interest on the Series of Bonds is includable in gross income for federal income tax
purposes, or by other factors, and the Local Agency hereby acknowledges and approves the
discretion of the Authority to assign the Note to such Pool and such Indenture as the
Authority may determine;
WHEREAS, as additional security for the owners of each Series of Bonds, all or a
portion of the payments by all of the Issuers of the notes assigned to such Series mayor
may not be secured (by virtue or in form of the Bonds, as indicated in the Pricing
Confirmation, being secured in whole or in part) by an irrevocable letter (or letters) of
credit or policy (or policies) of insurance or other credit instrument (or instruments)
(collectively, the "Credit Instrument") issued by the credit provider or credit providers
designated in the Indenture, as finally executed (collectively, the "Credit Provider"),
pursuant to a credit agreement or agreements or commitment letter or letters (collectively,
the "Credit Agreement") between the Authority and the respective Credit Provider;
WHEREAS, the net proceeds of the Note may be invested by the Local Agency in
Permitted Investments (as defined in the Indenture) or in any other investment permitted by
the laws of the State of California, as now in effect and as hereafter amended, modified or
supplemented from time to time;
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
WHEREAS, as part of the Program each partIcIpating Issuer approves the
Indenture, the alternative forms of Credit Agreements, if any, in substantially the forms
presented to the Legislative Body, with the final form of Indenture, type of Credit
Instrument and corresponding Credit Agreement to be determined and approved by
delivery of the Pricing Confirmation;
WHEREAS, pursuant to the Program each participating Issuer will be responsible
for its share of (a) the fees of the Trustee and the costs of issuing the applicable Series of
Bonds, and (b), if applicable, the fees of the Credit Provider (which shall be payable from,
among other sources, moneys in the Costs of Issuance Fund established and held under the
Indenture), the Issuer's allocable share of all Predefault Obligations and the Issuer's
Reimbursement Obligations, if any (each as defined in the Indenture);
WHEREAS, pursuant to the Program, the underwriter will submit an offer to the
Authority to purchase, in the case of each Pool of Notes, the Series of Bonds which will be
secured by the Indenture to which such Pool will be assigned;
WHEREAS, it is neccssary to engage the services of certain professionals to assist
the Local Agency in its participation in the Program;
NOW, THEREFORE, the Legislative Body hereby finds, determines, declares and
resolves as follows:
Section 1. Recitals. This Legislative Body hereby finds and determines that all the
above recitals are true and correct.
Section 2. (A) Authorization of Issuance. This Legislative Body hereby
determines to borrow solely for the purpose of anticipating taxes, income, revenue, cash
receipts and other moneys to be received by the Local Agency for the general fund of the
Local Agency attributable to Fiscal Year 2006-2007, by the issuance of a note or notes in
the aggregate Principal Amount under Sections 53850 et seq. of the Act, designated the
Local Agency's "2006 Tax and Revenue Anticipation Note," with an appropriate series
designation if more than one note is issued (collectively, the "Note"), to be issued in the
form of a fully registered note or notes at the Principal Amount thereof, to be dated the date
of its delivery to the initial purchaser thereof, to mature (without option of prior
redemption) not more than fifteen months thereafter on a date indicated on the face thereof
and determined in the Pricing Confirmation (the "Maturity Date"), and to bear interest,
payable at maturity (and if the maturity is more than twelve months from the date of
issuance, payable on the interim payment date set forth in the Pricing Confirmation) and
computed upon the basis of a 360-day year consisting of twelve 30-day months, or a 365 or
366-day year, as the case may be, and actual days elapsed, at a rate or rates, if more than
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
one Note is issued, not to exceed twelve percent (12%) per annum as determined in the
Pricing Confirmation and indicated on the face of the Note (the "Note Rate"). If the Series
of Bonds issued in connection with the Note is secured in whole or in part by a Credit
Instrument or such Credit Instrument secures the Note in whole or in part and all principal
of and interest on the Note is not paid in full at maturity or if payment of principal of and/or
interest on the Note is paid (in whole or in part) by a draw under, payment by or claim upon
a Credit Instrument which draw, payment or claim is not fully reimbursed on such date,
such Note shall become a Defaulted Note (as defined in the Indenture), and the unpaid
portion (including the interest component, if applicable) thereof (or the portion (including
the interest component, if applicable) thereof with respect to which a Credit Instrument
applies for which reimbursement on a draw, payment or claim has not been fully made)
shall be deemed outstanding and shall continue to bear interest thereafter until paid at the
Default Rate (as defined in the Indenture). If the Note or the Series of Bonds issued in
connection with the Note is unsecured in whole or in part and the Note is not fully paid at
maturity, the unpaid portion thereof (or the portion thereof to which no Credit Instrument
applies which is unpaid) shall be deemed outstanding and shall continue to bear interest
thereafter until paid at the Default Rate. In each casc, howcvcr, the obligation of the Local
Agency with respect to such Defaulted Note or unpaid Note shall not be a debt or liability
of the Local Agency prohibited by Article XVI, Section 18 of the California Constitution
and the Local Agency shall not be liable thereon except to the extent of any available
revenues attributable to Fiscal Year 2006-2007, as provided in Section 8 hereof. The
percentage of the Note to which a Credit Instrument, if any, applies (the "Secured
Percentage") shall be cqual to the amount of the Credit Instrument divided by the aggregate
amount of unpaid principal of and interest on the unpaid notes (or portions thereof) of all
Issuers, expressed as a percentage (but not greater than 100%) as of the maturity date.
Both the principal of and interest on the Note shall be payable in lawful money of
the United States of America. The principal of and interest on the Note at maturity shall be
paid upon surrender of the Note at the corporate trust office of Wells Fargo Bank, National
Association in Los Angeles, California.
The Note shall be issued in conjunction with the note or notes of one or more other
Issuers as part of the Program and within the meaning of Section 53853 of the Act.
(B) Anything in this Resolution to the contrary notwithstanding, the Pricing
Confirmation may specify that a portion of the authorized Principal Amount of the Note
shall be issued as a taxable Note the interest on which is includable in the gross income of
the holder thereof for federal income tax purposes (a "Taxable Note"). In such event, the
Taxable Note shall be issued with an appropriate series designation and other terms
reflecting such taxability of interest income, including without limitation, a taxable Note
Rate and a taxable Default Rate; the term Note, and other terms as appropriate, shall be
deemed to include or refer to such Taxable Note; and the agreements, covenants and
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
provisions set forth in this Resolution to be performed by or on behalf of the Local Agency
shall be for the equal and proportionate benefit, security and protection of the holder of any
Note without preference, priority or distinction as to security or otherwise of any Note over
and other Note.
Section 3. Form of Note. The Note shall be issued in fully registered form without
coupons and shall be substantially in the form and substance set forth in Exhibit A as
attached hereto and by reference incorporated herein, the blanks in said forms to be filled in
with appropriate words and figures.
Section 4. Sale of Note; Delegation. The Note shall be sold to the Authority
pursuant to the Purchase Agreement. The form of the Purchase Agreement, including the
form of the pricing confirmation supplement (the "Pricing Confirmation") set forth as
Exhibit A thereto, presented to this meeting are hereby approved. The authorized
representatives set forth in Section 25 hercof (the "Authorized Representatives") are each
hereby authorized and directed to execute and deliver the Purchase Agreement in
substantially said form, with such changes thereto as such Authorized Representative shall
approve, such approval to be conclusively evidenced by his or her execution and delivery
thereof; provided, however, that the Purchase Agreement shall not be effective and binding
on the Local Agency until the execution and delivery of the Pricing Confirmation. The
Authorized Representatives are each hereby further authorized and directed to execute and
deliver the Pricing Confirmation in substantially said form, with such changes thereto as
such Authorized Representative shall approve, such approval to be conclusively evidenced
by his or her execution and delivery thereof; provided, however, that the interest rate on the
Note shall not exceed twelve percent (12%) per annum, the discount on the Note, when
added to the Local Agency's share of the costs of issuance of the Bonds, shall not exceed
one percent (1.0%), and the Principal Amount shall not exceed the Maximum Amount of
Borrowing. Delivery of an executed copy of the Pricing Confirmation by fax or telecopy
shall be deemed effective execution and delivery for all purposes.
Section 5. Program Approval. The Pricing Confirmation shall indicate whether
and what type of Credit Instrument will apply.
The forms of Indenture, alternative general types and forms of Credit Agreements,
if any, presented to this meeting are hereby acknowledged, and it is acknowledged that the
Authority will execute and deliver the Indenture, one or more Credit Agreements, if
applicable, which shall be identified in the Pricing Confirmation, in substantially one or
more of said forms with such changes therein as the Authorized Representative who
executes the Pricing Confirmation shall require or approve (substantially final forms of the
Indenture and the Credit Agreement are to be delivered to the Authorized Representative
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
concurrent with the Pricing Confirmation), such approval of the Authorized Representative
and this Legislative Body to be conclusively evidenced by the execution of the Pricing
Confirmation.
Anyone of the Authorized Representatives of the Local Agency is hereby
authorized and directed to provide the Financial Advisor or the underwriter with such
information relating to the Local Agency as the Financial Advisor or the underwriter shall
reasonably request for inclusion in the Preliminary Official Statement and Official
Statement of the Authority. Upon inclusion of the information relating to the Local Agency
therein, the Preliminary Official Statement and Official Statement or such other offering
document is, except for certain omissions permitted by Rule I 5c2- I 2 of the Securities
Exchange Act of 1934, as amended (the "Rule"), hereby deemed final within the meaning
of the Rule with respect to the Local Agency and any Authorized Representative of the
Local Agency is authorized to execute a certificate to such effect. If, at any time prior to the
end of the underwriting period, as defined in the Rule, any event occurs as a result of which
the information contained in the Preliminary Official Statement or other offering document
relating to the Local Agency might include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Local Agency shall
promptly notify the Financial Advisor and the underwriter.
Subject to Section 8 hereof, the Local Agency hereby agrees that if the Note shall
become a Defaulted Note, the unpaid portion (including the interest component, if
applicable) thereof or the portion (including the interest component, if applicable) to which
a Credit Instrument applies for which full reimbursement on a draw, payment or claim has
not been made by the Maturity Date shall be deemed outstanding and shall not be deemed
to be paid until (i) any Credit Provider providing a Credit Instrument with respect to the
Note or the Series of Bonds issued in connection with the Note, has been reimbursed for
any drawings, payments or claims made under or from the Credit Instrument with respect to
the Note, including interest accrued thereon, as provided therein and in the applicable
Credit Agreement, and, (ii) the holders of the Note, or Series of the Bonds issued in
connection with the Note, are paid the full principal amount represented by the unsecured
portion of the Note plus interest accrued thereon (calculated at the Default Rate) to the date
of deposit of such aggregate required amount with the Trustee. For purposes of clause (ii)
of the preceding sentence, holders of the Series of Bonds will be deemed to have received
such principal amount upon deposit of such moneys with the Trustee.
The Local Agency agrees to payor cause to be paid, in addition to the amounts
payable under the Note, any fees or expenses of the Trustee and, to the extent permitted by
law, if the Local Agency's Note is secured in whole or in part by a Credit Instrument (by
virtue of the fact that the Series of Bonds is secured by a Credit Instrument), any Predefault
Obligations and Reimbursement Obligations (to the extent not payable under the Note), (i)
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR
AND PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH
FLOW FINANCING PROGRAM
arising out of an "Event of Default" hereunder (or pursuant to Section 7 hereof) or (ii)
arising out of any other event (other than an event arising solely as a result of or otheIWise
attributable to a default by any other Issuer). In the case described in (ii) above with respect
to Predefault Obligations, the Local Agency shall owe only the percentage of such fees,
expenses and Predefault Obligations equal to the ratio of the principal amount of its Note
over the aggregate principal amounts of all notes, including the Note, of the Series of which
the Note is a part, at the time of original issuance of such Series. Such additional amounts
will bc paid by the Local Agency within twenty-five (25) days of receipt by the Local
Agency of a bill therefor from the Trustee.
Section 6. No Joint Obligation. The Note will be issued in conjunction with a note
or notes of one or more other Issuers, assigned to secure a Series of Bonds. In all cases, the
obligation of the Local Agency to make payments on or in respect to its Note is a several
and not ajoint obligation and is strictly limitcd to the Local Agency's repayment obligation
under this Resolution and the Note.
Section 7. Disposition of Proceeds of Note. A portion of the moneys received
from the sale of the Note in an amount equal to the Local Agency's share of the costs of
issuance (which shall include any fees and expenses in connection with any Credit
Instrument applicable to the Note or Series of Bonds) shall be deposited in the Costs of
Issuance Fund held and invcsted by the Trustee under the Indenture and expended as
directed by the Authority on costs of issuance as provided in the Indenture. The balance of
the moneys received from the sale of the Note to the Authority shall be deposited in the
Local Agency's Proceeds Subaccount hereby authorized to be created pursuant to, and held
and invested by the Trustee under, the Indenture for the Local Agency and said moneys
may be used and expended by the Local Agency for any purpose for which it is authorized
to use and expend moneys, upon requisition from the Proceeds Subaccount as specified in
the Indenture. Amounts in the Proceeds Subaccount are hereby pledged to the payment of
the Note. The Trustee will not create subaccounts within the Proceeds Fund, but will keep
records to account separately for proceeds of the Bonds allocable to the Local Agency's
Note on deposit in the Proceeds Fund which shall constitute the Local Agency's Proceeds
Subaccount.
Section 8. Source of Payment.
(A) The principal amount of the Note, together with the interest thereon, shall
be payable from taxes, income, revenue (including, but not limited to, revenue from the
state and federal governments), cash receipts and other moneys which are received by the
Local Agency for the general fund of the Local Agency and are attributable to Fiscal Year
2006-2007 and which are available for payment thereof. As security for the payment of
the principal of and interest on the Note, the Local Agency hereby pledges certain
umestricted revenues (as hereinafter provided, the "Pledged Revenues") which are
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
received by the Local Agency for the general fund of the Local Agency and are
attributable to Fiscal Year 2006-2007, and the principal of the Note and the interest
thereon shall constitute a first lien and charge thereon and shall be payable from the first
moneys received by the Local Agency from such Pledged Revenues, and, to the extent not
so paid, shall be paid from any other taxes, income, revenue, cash receipts and other
moneys of the Local Agency lawfully available therefor (all as provided for in Sections
53856 and 53857 of the Act). The term "unrestricted revenues" shall mean all taxes,
income, revenue (including, but not limited to, revenue from the state and federal
governments), cash receipts, and other moneys, intended as receipts for the general fund of
the Local Agency attributable to Fiscal Year 2006-2007 and which are generally available
for the payment of current expenses and other obligations of the Local Agency. The
Noteholders, Bondholders and Credit Provider shall have a first lien and charge on such
certain unrestricted revenues as hereinafter provided which are received by the Local
Agency and are attributable to Fiscal Year 2006-2007.
In order to effect the pledge referenced in the preceding paragraph, the Local
Agency hereby agrees and covenants to establish and maintain a special account within
the Local Agency's general fund to be designated the "2006 Tax and Revenue
Anticipation Note Payment Account" (the "Payment Account") and further agrees and
covcnants to maintain the Payment Account until the payment of the principal of the Note
and the interest thereon. Notwithstanding the foregoing, if the Local Agency elects to
have Note proceeds invested in Permitted Investments to be held by the Trustee pursuant
to the Pricing Confirmation, a subaccount of the Payment Account (the "Payment
Subaccount") shall be established for the Local Agency under the Indenture and proceeds
credited to such account shall be pledged to the payment of the Note. The Trustee need not
create a subaccount, but may keep a record to account separately for proceeds of the Note
so held and invested by the Trustee which record shall constitute the Local Agency's
Proceeds Subaccount. Transfers from the Payment Subaccount shall be made in
accordance with the Indenture. The Local Agency agrees to transfer to and deposit in the
Payment Account the first amounts received in the months specified in the Pricing
Confirmation as Repayment Months (each individual month a "Repayment Month" and
collectively "Repayment Months") (and any amounts received thereafter attributable to
Fiscal Year 2006-2007) until the amount on deposit in the Payment Account, together
with the amount, if any, on deposit in the Payment Subaccount, and taking into
consideration anticipated investment earnings thereon to be received by the Maturity Date,
is equal in the respective Repayment Months identified in the Pricing Confirmation to the
percentage of the principal and interest due on the Note specified in the Pricing
Confirmation. In making such transfer and deposit, the Local Agency shall not be
required to physically segregate the amounts to be transferred to and deposited in the
Payment Account from the Local Agency's other general fund moneys, but,
notwithstanding any commingling of funds for investment or other purposes, the amounts
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
required to be transferred to and deposited in the Payment Account shall nevertheless be
subject to the lien and charge created herein.
Anyone of the Authorized Representatives of the Local Agency is hereby
authorized to approve the determination of the Repayment Months and percentages of the
principal and interest due on the Note required to be on deposit in the Payment Account
and/or the Payment Subaccount in each Repayment Month, all as specified in the Pricing
Confirmation, by cxccuting and delivering the Pricing Confirmation, such execution and
delivery to be conelusive evidence of approval by this Legislative Body and such
Authorized Representative; provided, however, that the maximum number of Repayment
Months shall be six and the maximum amount of Pledged Revenues required to be
deposited in each Repayment Month shall not exceed fifty percent (50%) of the aggregate
principal and interest due on the Note. In the event on the day in each such Repayment
Month that a deposit to the Payment Account is required to be made, the Local Agency
has not received sufficient unrestricted revenues to permit the deposit into the Payment
Account of the full amount of Pledged Revenues to be deposited in the Payment Account
from said unrestricted revenues in said month, then the amount of any deficiency shall be
satisficd and madc up from any othcr moncys of thc Local Agency lawfully available for
the payment of the principal of the Note and the interest thereon, as and when such other
moneys are received or are otherwise legally available.
(B) Any moneys placed in the Payment Account or the Payment Subaccount shall
be for the benefit of (i) the holder of the Note and the holders of Bonds issued in
connection with the Notes and (ii) (to the extent provided in the Indenture) the Credit
Providcr, if any. The moneys in the Payment Account and the Payment Subaccount shall
be applied only for the purposes for which such Accounts are created until the principal of
the Note and all interest thereon are paid or until provision has been made for the payment
of the principal of the Note at maturity with interest to maturity (in accordance with the
requirements for defeasance of the Bonds as set forth in the Indenture) and, if applicable,
(to the extent provided in the Indenture and, if applicable, the Credit Agreement) the
payment of all Predefault Obligations and Reimbursement Obligations owing to the Credit
Provider.
(C) The Local Agency hereby directs the Trustee to transfer on the Note
Payment Deposit Date (as defined in the Indenture), any moneys in the Payment
Subaccount to the Bond Payment Fund (as defined in the Indenture). In addition, on the
Note Payment Deposit Date, the moneys in the Payment Account shall be transferred by
the Local Agency to the Trustee, to the extent necessary (after crediting any transfer
pursuant to the preceding sentence), to pay the principal of and/or interest on the Note, to
make payments to a Swap Provider, if any, as defined in the Indenture, pursuant to a Swap
Agreement, if any, as defined in the Indenture, or to reimburse the Credit Provider for
payments made under or pursuant to the Credit Instrument. In the event that moneys in the
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
Payment Account and/or the Payment Subaccount are insufficient to pay the principal of
and interest on the Note in full when due, such moneys shall be applied in the following
priority: first to pay interest on the Note; second to pay principal of the Note; third to
reimburse the Credit Provider for payment, if any, of interest with respect to the Note;
fourth to reimburse the Credit Provider for payment, if any, of principal with respect to the
Note; and fifth to pay any Reimburscment Obligations of the Local Agency and any of the
Local Agency's pro rata share of Predefault Obligations owing to the Credit Provider.
Any moneys remaining in or accruing to the Payment Account and/or the Payment
Subaccount after the principal of the Note and the interest thereon and any Predefault
Obligations and Reimbursement Obligations, if applicable, have been paid, or provision
for such payment has been made, shall be transferred to the general fund of the Local
Agency, subject to any other disposition required by the Indenture, or, if applicable, the
Credit Agreement. Nothing herein shall be deemed to relieve the Local Agency from its
obligation to pay its Note in full on the Maturity Date.
(D) Moneys in the Proceeds Subaccount and in the Payment Subaccount shall be
invested by the Trustee pursuant to the Indenture as directed by the Local Agency in
Pemlitted Investments as described in and under the terms of the Indenture. Any such
investment by the Trustee shall be for the account and risk of the Local Agency, and the
Local Agency shall not be deemcd to be relieved of any of its obligations with respect to
the Note, the Predcfault Obligations or Reimbursement Obligations, if any, by reason of
such investment of the moneys in its Proceeds Subaccount or the Payment Subaccount.
(E) At the written request of the Credit Provider, if any, the Local Agency shall,
within ten (10) Business Days following the receipt of such written request, file such
report or reports to evidence the transfer to and deposit in the Payment Account required
by this Section 8 and provide such additional financial information as may be required by
the Credit Provider, if any.
Section 9. Execution of Note. Anyone of the Authorized Representatives of the
Local Agency or any other officer designated by the Legislative Body shall be authorized
to execute the Note by manual or facsimile signature and the Secretary or Clerk of the
Legislative Body of the Local Agency, or any duly appointed assistant thereto, shall be
authorized to countersign the Note by manual or facsimile signature. Said Authorized
Representative of the Local Agency, is hereby authorized to cause the blank spaces of the
Note to be filled in as may be appropriate pursuant to the Pricing Confirmation. The
Authorized Representative is hereby authorized and directed to cause the Authority to
assign the Note to the Trustee, pursuant to the terms and conditions of the Purchase
Agreement, this Resolution and the Indenture. In case any Authorized Representative
whose signature shall appear on any Note shall cease to be an Authorized Representative
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
before the delivery of such Note, such signature shall nevertheless be valid and sufficient
for all purposes, the same as if such officer had remained in office until delivery. The Note
need not bear the seal of the Local Agency, if any.
Section 10. Intentionally Left Blank. This section has been included to preserve
the sequence of section numbers for cross-referencing purposes.
Section 11. Representations and Covenants of the Local Agency.
The Local Agency makes the following representations for the benefit of the
holder of the Note, the owners of the Bonds and the Credit Provider, if any:
(A) The Local Agency is duly organized and existing under and by virtue of the
laws of the State of California and has all necessary power and authority to (i) adopt this
Resolution and perform its obligations thereunder, (ii) enter into and perform its
obligations under the Purchase Agreement, and (iii) issue the Note and perform its
obligations thereunder.
(B) (i) Upon the issuance of the Note, the Local Agency shall have taken all action
required to be taken by it to authorize the issuance and delivery of the Note and the
performance of its obligations thereunder, and (ii) the Local Agency has full legal right,
power and authority to issue and deliver the Note.
(C) The issuance of the Note, the adoption of the Resolution and the execution and
delivery of the Purchase Agreement, and compliance with the provisions hereof and
thereof do not conflict with, breach or violate any law, administrative regulation, court
decree, resolution, charter, by-laws or other agreement to which the Local Agency is
subject or by which it is bound.
(D) Except as may be required under blue sky or other securities laws of any state
or Section 3(a)(2) of the Securities Act of 1933, there is no consent, approval,
authorization or other order of, or filing with, or certification by, any regulatory authority
having jurisdiction over the Local Agency required for the issuance and sale of the Note or
the consummation by the Local Agency of the other transactions contemplated by this
Resolution, except those the Local Agency shall obtain or perform prior to or upon the
issuance of the Note.
(E) The Local Agency has (or will have prior to the issuance of the Note) duly,
regularly and properly adopted a preliminary budget for Fiscal Year 2006-2007 setting
forth expected revenues and expenditures and has complied with all statutory and
regulatory requirements with respect to the adoption of such budget. The Local Agency
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
hereby covenants that it shall (i) duly, regularly and properly prepare and adopt its final
budget for Fiscal Year 2006-2007, (ii) provide to the Trustee, the Credit Provider, if any,
the Financial Advisor and the undetwriter, promptly upon adoption, copies of such final
budget and of any subsequent revisions, modifications or amendments thereto and (iii)
comply with all applicable laws pertaining to its budget.
(F) The sum of the principal amount of the Local Agency's Note plus the
interest payable thereon, on the date of its issuance, shall not exceed fifty percent (50%) of
the estimated amounts of the Local Agency's uncollected taxes, income, revenue
(including, but not limited to, revenue from the state and federal governments), cash
receipts, and other moneys to be receivcd by the Local Agency for the general fund of the
Local Agency attributable to Fiscal Year 2006-2007, all of which will be legally available
to pay principal of and interest on the Note.
(G) The Local Agency (i) has not defaulted within the past twenty (20) years, and
is not currently in default, on any debt obligation and (ii), to the best knowledge of the
Local Agency, has never defaulted on any debt obligation.
(H) The Local Agency's most recent audited financial statements present fairly the
financial condition of the Local Agency as of the date thercof and the results of operation
for the period covered thereby. Except as has been disclosed to the Financial Advisor and
the undetwriter and the Credit Provider, if any, there has been no change in the financial
condition of the Local Agency since the date of such audited financial statements that will
in the reasonable opinion of the Local Agency materially impair its ability to perform its
obligations under this Resolution and the Note. The Local Agency agrees to furnish to the
Authority, the Financial Advisor, the undetwriter, the Trustee and the Credit Provider, if
any, promptly, from time to time, such information regarding the operations, financial
condition and property of the Local Agency as such party may reasonably request.
(I) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, arbitrator, governmental or other board, body or official,
pending or, to the best knowledge of the Local Agency, threatened against or affecting the
Local Agency questioning the validity of any proceeding taken or to be taken by the Local
Agency in connection with the Note, the Purchase Agreement, the Indenture, the Credit
Agreement, if any, or this Resolution, or seeking to prohibit, restrain or enjoin the
execution, delivery or performance by the Local Agency of any of the foregoing, or
wherein an unfavorable decision, ruling or finding would have a materially adverse effect
on the Local Agency's financial condition or results of operations or on the ability of the
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
Local Agency to conduct its actJVltJes as presently conducted or as proposed or
contemplated to be conducted, or would materially adversely affect thc validity or
enforceability of, or the authority or ability of the Local Agency to perform its obligations
under, the Note, the Purchase Agreement, the Indenture, the Credit Agreement, if any, or
this Resolution.
(J) Upon issuance of the Note and execution of the Purchase Contract, this
Resolution, the Purchase Contract and the Note will constitute legal, valid and binding
agreements of the Local Agency, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy or other laws affecting
creditors' rights generally, the application of equitable principles if equitable remedies are
sought, the exercise of judicial discretion in appropriate cases and the limitations on legal
remedies against local agencies, as applicable, in the State of Cali fomia.
(K) The Local Agency and its appropriate officials have duly taken, or will take,
all proceedings necessary to be taken by them, if any, for the levy, receipt, collection and
enforcement of the Pledged Revenues in accordance with law for carrying out the
provisions of this Resolution and the Note.
(L) The Local Agency shall not incur any indebtedness secured by a pledge of its
Pledged Revenues unless such pledge is subordinate in all respects to the pledge of
Pledged Revenues hereunder.
(M) So long as the Credit Provider, if any, is not in payment default under the
Credit Instrument, the Local Agency hereby agrees to pay its pro rata share of all
Predefault Obligations and all Reimbursement Obligations attributable to the Local
Agency in accordance with provisions of the Credit Agreement, if any, and/or the
Indenture, as applicable. Prior to the Maturity Date, moneys in the Local Agency's
Payment Account and/or Payment Subaccount shall not be used to make such payments.
The Local Agency shall pay such amounts promptly upon receipt of notice from the Credit
Provider that such amounts are due to it.
(N) So long as any Bonds issued in connection with the Notes are Outstanding, or
any Predefault Obligation or Reimbursement Obligation is outstanding, the Local Agency
will not create or suffer to be created any pledge of or lien on the Note other than the
pledge and lien of the Indenture.
Section 12. Tax Covenants. (A) The Local Agency shall not take any action or
fail to take any action if such action or failure to take such action would adversely affect
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE OF A 2006-
2007 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
the exclusion from gross income of the interest payable on the Note or Bonds under
Section 103 of the Internal Revenue Code of 1986 (the "Code"). Without limiting the
generality of the foregoing, the Local Agency shall not make any use of the proceeds of
the Note or Bonds or any other funds of the Local Agency which would cause the Note or
Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code, a "private
activity bond" within the meaning of Section l41(a) of the Code, or an obligation the
interest on which is subject to federal income taxation because it is "federally guaranteed"
as provided in Section 149(b) of the Code. The Local Agency, with respect to the
proceeds of the Note, will comply with all requirements of such sections of the Code and
all regulations of the United States Department of the Treasury issued or applicable
thereunder to the extent that such requirements are, at the time, applicable and in effect.
(B) The Local Agency hereby (i) represents that the aggregate face amount of all
tax-exempt obligations (including any tax-exempt leases, but excluding private activity
bonds), issued and to be issued by the Local Agency during calendar year 2006, including
the Note, is not reasonably expected to exceed $5,000,000; or in the alternative, (ii)
covenants that the Local Agency will take all legally permissible steps necessary to ensure
that all of the gross proceeds of the Note will be expended no later than the day that is six
months after the date of issuance of the Note so as to satisfy the requirements of Section
148(t)(4)(B) of the Code.
(C) Notwithstanding any other provision of this Resolution to the contrary, upon
the Local Agency's failure to observe, or refusal to comply with, the covenants contained
in this Section 12, no one other than the holders or former holders of the Note, the owners
of the Bond, the Credit Provider, if any, or the Trustee on their behalf shall be entitled to
exercise any right or remedy under this Resolution on the basis of the Local Agency's
failure to observe, or refusal to comply with, such covenants.
(D) The covenants contained in this Section 12 shall survive the payment of the
Note.
(E) The provisions of this Section 12 shall not apply to a Taxable Note.
Section 13. Events of Default and Remedies.
If any of the following events occurs, it is hereby defined as and declared to be and
to constitute an "Event of Default":
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
(A) Failure by the Local Agency to make or cause to be made the transfers and
deposits to the Payment Account, or any other payment required to be paid hereunder,
including payment of principal and interest on the Note, on or before the date on which
such transfer, deposit or other payment is due and payable;
(B) Failure by the Local Agency to observe and perform any covenant, condition
or agreement on its part to be observed or perfornled under this Resolution, for a period of
fifteen (15) days after written notice, specifying such failure and requesting that it be
remedied, is given to the Local Agency by the Trustee or the Credit Provider, if
applicable, unless the Trustee and the Credit Provider shall all agree in writing to an
extension of such time prior to its expiration;
(C) Any warranty, representation or other statement by or on behalf of the Local
Agency contained in this Resolution or the Purchase Agreement (including the Pricing
Confirmation) or in any requisition or any financial report delivered by the Local Agency
or in any instrument furnished in compliance with or in reference to this Resolution or the
Purchase Agreement or in connection with the Note, is false or misleading in any material
respect;
(D) A petition is filed against the Local Agency under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or hereafter in effect and is not dismissed within 30
days after such filing, but the Trustee shall have the right to intervene in the proceedings
prior to the expiration of such thirty (30) days to protect its and the Bond Owners' (or
Noteholders') interests;
(E) The Local Agency files a petition in voluntary bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against it under such law; or
(F) The Local Agency admits insolvency or bankruptcy or is generally not paying
its debts as such debts become due, or becomes insolvent or bankrupt or makes an
assignment for the benefit of creditors, or a custodian (including without limitation a
receiver, liquidator or trustee) of the Local Agency or any of its property is appointed by
court order or takes possession thereof and such order remains in effect or such possession
continues for more than 30 days, but the Trustee shall have the right to intervene in the
proceedings prior to the expiration of such thirty (30) days to protect its and the Bond
Owners' or Noteholders' interests.
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
Whenever any Event of Default referred to in this Section 13 shall have happened
and be continuing, the Trustee, as holder of the Note, shall, in addition to any other
remedies provided herein or by law or under the Indenture, if applicable, have the right, at
its option without any further demand or notice, to take one or any combination of the
following remedial steps:
(I) Without declaring the Note to be immediately due and payable, require the
Local Agency to pay to the Trustee, as holder of the Note, an amount equal to the
principal of the Note and interest thereon to maturity,' plus all other amounts due
hereunder, and upon notice to the Local Agency the same shall become immediately due
and payable by the Local Agency without further notice or demand; and
(2) Take whatever other action at law or in equity (except for acceleration of
payment on the Note) which may appear necessary or desirable to collect the amounts
then due and thereafter to become due hereunder and under the Note or to enforce any
other of its rights hereunder.
Notwithstanding the foregoing, if the Local Agency's Note is secured in whole or
in part by a Credit Instrument or if the Credit Provider is subrogated to rights under the
Local Agency's Note, as long as the Credit Provider has not failed to comply with its
payment obligations under the Credit Instrument, the Credit Provider shall have the right
to direct the remedies upon any Event of Default hereunder, and the Credit Provider's
prior consent shall be required to any remedial action proposed to be taken by the Trustee
hereunder.
If the Credit Provider is not reimbursed for any drawing, payment or claim, as
applicable, used to pay principal of and interest on the Note due to a default in payment on
the Note by the Local Agency, or if any principal of or interest on the Note remains
unpaid after the Maturity Date, the Note shall be a Defaulted Note, the unpaid portion
(including the interest component, if applicable) thereof or the portion (including the
interest component, if applicable) to which a Credit Instrument applies for which
reimbursement on a draw, payment or claim has not been made shall be deemed
outstanding and shall bear interest at the Default Rate until the Local Agency's obligation
on the Defaulted Note is paid in full or payment is duly provided for, all subject to Section
8 hereof.
Section 14. Trustee. The Local Agency hereby directs and authorizes the payment
by the Trustee of the interest on and principal of the Note when such become due and
payable, from amounts received by the Trustee from the Local Agency in the manner set
forth herein. The Local Agency hereby covenants to deposit funds in such account or
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
fund, as applicable, at the timc and in the amount specified herein to provide sufficient
moneys to pay the principal of and interest on the Note on the Note Payment Deposit
Date. Payment of the Note shall be in accordance with the terms of the Note and this
Resolution.
Section 15. Sale of Note. The Note shall be sold to the Authority, in accordance
with the terms of thc Purchase Agreement, hereinbefore approved, and issued payable to
thc Trustee, as assignee of the Authority.
Section 16. Intentionally Left Blank. This section has been included to preserve
the sequence of section numbers for cross-referencing purposes.
Section 17. Approval of Actions. The aforementioned Authorized
Representatives of the Local Agency are hereby authorized and directed to execute the
Note and cause the Trustee to accept delivery of the Note, pursuant to the terms and
conditions of the Purchase Agreement and the Indenture. All actions heretofore taken by
the officers and agents of the Local Agency or this Legislative Body with respect to the
sale and issuance of the Note and participation in the Program are hereby approved,
confirmed and ratified and the Authorized Representatives and agents of the Local
Agency are hereby authorized and directed, for and in the name and on behalf of the Local
Agency, to do any and all things and take any and all actions and execute any and all
certificates, agreements and other documents which they, or any of them, may deem
necessary or advisable in order to consummate the lawful issuance and delivery of the
Note in accordance with, and related transactions contemplated by, this Resolution. The
Authorized Representatives of the Local Agency referred to above in Section 4 hereof are
hereby designated as "Authorized Local Agency Representatives" under the Indenture.
In the event that the Note or a portion thereof is secured by a Credit Instrument,
anyone of the Authorized Representatives of the Local Agency is hereby authorized and
directed to provide the Credit Provider, with any and all information relating to the Local
Agency as such Credit Provider may reasonably request.
Section 18. Proceedings Constitute Contract. The provisions of the Note and of
this Resolution shall constitute a contract between the Local Agency and the registered
owner of the Note, and such provisions shall be enforceable by mandamus or any other
appropriate suit, action or proceeding at law or in equity in any court of competent
jurisdiction, and shall be irrepealable. The Credit Provider, if any, is a third party
beneficiary of the provisions of this Resolution and the Note.
Section 19. Limited Liability. Notwithstanding anything to the contrary
contained herein or in the Note or in any other document mentioned herein or related to
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
the Note or to any Series of Bonds to which the Note may be assigned, the Local Agency
shall not have any liability hereunder or by reason hereof or in connection with the
transactions contemplated hereby except to the extent payable from moneys available
therefor as set forth in Section 8 hereof.
Section 20. Amendments. At any time or from time to time, the Local Agency
may adopt one or more Supplemental Resolutions with the written consents of the
Authority and the Credit Provider, if any, but without the necessity for consent of the
owner of the Note or of the Bonds issued in connection with the Note for anyone or more
of the following purposes:
(A) to add to the covenants and agreements of the Local Agency in this
Resolution, other covenants and agreements to be observed by the Local Agency which
are not contrary to or inconsistent with this Resolution as theretofore in effect;
(B) to add to the limitations and restrictions in this Resolution, other limitations
and restrictions to be observed by the Local Agency which arc not contrary to or
inconsistent with this Resolution as theretofore in effect;
(C) to confirm, as further assurance, any pledge under, and the subjection to any
lien or pledge created or to be created by, this Resolution, of any monies, securities or
funds, or to establish any additional funds or accounts to be held under this Resolution;
(D) to cure any ambiguity, supply any omission, or cure or correct any defect or
inconsistent provision in this Resolution; or
(E) to amend or supplement this Resolution in any other respect;
provided, however, that any such Supplemental Resolution does not adversely affect the
interests of the owners of the Note or of the Bonds issued in connection with the Notes.
Any modifications or amendment of this Resolution and of the rights and
obligations of the Local Agency and of the owner of the Note or of the Bonds issued in
connection with the Note may be made by a Supplemental Resolution, with the written
consents of the Authority and the Credit Provider, if any, and with the written consent of
the owners of at least a majority in principal amount of the Note and of the Bonds issued
in connection with the Note outstanding at the time such consent is given; provided,
however, that if such modification or amendment will, by its terms, not take effect so long
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
as the Note or any Bonds issued in connection with the Note remain outstanding, the
consent of the owners of such Note or of such Bonds shall not be required. No such
modification or amendment shall permit a change in the maturity of the Note or a
reduction of the principal amount thereof or an extension of the time of any payment
thereon or a reduction of the rate of interest thereon, or a change in the date or amounts of
the pledge set forth in this Resolution, without the consent of the owners of such Note or
the owners of all the Bonds issued in connection with the Note, or shall reduce the
percentage of the Note or Bonds the consent of the owners of which is required to effect
any such modification or amendment, or shall change or modify any of the rights or
obligations of the Trustee without its written assent thereto.
Section 21. Severability. In the event any provision of this Resolution shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provision hereof.
Section 22. Appointment of Bond Counsel. The law firm of Orrick, Herrington
& Sutcliffe LLP, Los Angeles, California is hereby appointed as Bond Counsel for the
Program. The Local Agency acknowledges that Bond Counsel regularly performs legal
services for many private and public entities in connection with a wide variety of matters,
and that Bond Counsel has represented, is representing or may in the future represent
other public entities, underwriters, trustees, rating agencies, insurers, credit enhancement
providers, lenders, financial and other consultants who may have a role or interest in the
proposed financing or that may be involved with or adverse to Local Agency in this or
some other matter. Given the special, limited role of Bond Counsel described above the
Local Agency acknowledges that no conflict of interest exists or would exist, waives any
conflict of interest that might appear to exist, and consents to any and all such
relationships.
Section 23. Appointment of Financial Advisor and Underwriter. RBC Dain
Rauscher, Inc., Los Angeles, California is hereby appointed as financial advisor for the
Program. Lehman Brothers, Inc., together with such co-underwriters, if any, identified in
the Purchase Contract, is hereby appointed as underwriter for the Program.
Section 24. Effective Date. This Resolution shall take effect from and after its
date of adoption.
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2006-170
RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
Section 25. Resolution Parameters.
(A) Name of Local Agency: City of San Bernardino
(B) Maximum Amount of Borrowing: $20,000,000
(C) Authorized Representatives:
TITLE
I. Mayor
2. City Clerk
3. City Manager
III
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RESOLUTION AUTHORIZING AND APPROVING THE BORROWING
OF FUNDS FOR FISCAL YEAR 2006-2007; THE ISSUANCE AND SALE
OF A 2006-2007 TAX AND REVENUE ANTICIPATION NOTE
THEREFOR AND PARTICIPATION IN THE CALIFORNIA
COMMUNITIES CASH FLOW FINANCING PROGRAM
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the
joint
Mayor and Common Council of the City of San Bernardino at a regular meeting
5th
day of June
, 2006 by the following vote, to
thereof, held on the
9 wit:
Council Members: AYES
NAYS
ABSTAIN ABSENT
ESTRADA
x
BAXTER
x
MCGINNIS
x
DERRY
x
KELLEY
x
JOHNSON
x
MCCAMMACK
x
f~L(' lLPl' )f. CJt:L';)<=--
I " . "Rachel G.par~,City.Clerk. r, .
'0 x)C;,YlU'f'ivt.-/)) L'1. It .,)ILI be l[bl
The foregoing resolution is hereby approved this --'------ day of June, 2006. U
t'~,r-~'~-
Patri k 1.' Morris~yor
CitX f San Bernardino
Approved as to Form:
/)
. V,
0' l./t..~
es F. Penman, City Attorney
( /
21
2006-170
CITY OF SAN BERNARDINO
2006 TAX AND REVENUE ANTICIPATION NOTE, SERIES
Interest Rate
Maturity Date
Date of
Original Issue
REGISTERED OWNER: WELLS FARGO BANK, NATIONAL ASSOCIATION
PRINCIPAL AMOUNT: $20,000,000
FOR VALUE RECEIVED, the Local Agency designated above (the "Local
Agency"), acknowledges itself indebted to and promises to pay to the registered owner identified
above, or registered assigns, on the maturity date set forth above, the principal sum specified above
in lawful money of the United States of America, and to pay interest thereon at maturity at the rate
of interest specified above (the "Note Rate"). Principal of and interest on this Note are payable in
such coin or currency of the United States as at the time of payment is legal tender for payment of
private and public debts. Principal and interest at maturity shall be paid upon surrender hereof at
the principal corporate trust office of Wells Fargo Bank, National Association in Los Angeles,
California, or at such other place as shall be designated in writing, or its successor in trust (the
'Trustee"). Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30-day
months. Both the principal of and interest on this Note shall be payable only to the registered
owner hereof as the same shall fall due; provided, however, no interest shall be payable for any
period after maturity during which the holder hereof fails to properly present this Note for
payment. If the Local Agency fails to pay this Note when due or the Credit Provider (as defined in
the Resolution hereinafter described and that certain Indenture of Trust, dated as of July I, 2006
(the "Indenture"), by and between the California Statewide Communities Development Authority
and Wells Fargo Bank, National Association, as trustee), if any, is not reimbursed in full for the
amount drawn on or paid pursuant to the Credit Instrument (as defined in the Resolution and the
Indenture) to pay all or a portion (including the interest component, if applicable) of this Note on
the date of such payment, this Note shall become a Defaulted Note (as defined in the Resolution
and the Indenture, including, without limitation, that this Note as a Defaulted Note (and any related
reimbursement obligation with respect to a credit instrument) shall bear interest at the Default
Rate, as defined in the Indenture).
It is hereby certified, recited and declared that this Note (the "Note") represents the
authorized issue of the Note in the aggregate principal amount authorized, executed and delivered
pursuant to and by authority of certain resolutions of the Local Agency duly passed and adopted
heretofore, under and by authority of Article 7.6 (commencing with Section 53850) of Chapter 4,
Part I, Division 2, Title 5 of the California Government Code (collectively, the "Resolution"), to
all of the provisions and limitations of which the owner of this Note, by acceptance hereof, assents
and agrees.
2006-170
The principal of the Note, together with the interest thereon, shall be payable from
taxes, income, revenue, cash receipts and other moneys which are received by the Local Agency
for the general fund of the Local Agency and are attributable to Fiscal Year 2006-2007 and which
are available for payment thereof. As security for the payment of the principal of and interest on
the Note, the Local Agency has pledged the first amounts of unrestricted revenues of the Local
Agency received on the last day of the Repayment Months (as defined in the Resolution) identified
in the Pricing Confirmation (as defined in the Resolution) (and any amounts received thereafter
attributable to Fiscal Year 2006-2007) until the amount on deposit in the Payment Account (as
defined in the Resolution) in each such month, is equal to the corresponding percentages of
principal of and interest due on the Note as set forth in the Pricing Confirmation (such pledged
amounts being hereinafter called the "Pledged Revenues"), and the principal of the Note and the
interest thereon shall constitute a first lien and charge thereon and shall be payable from the
Pledged Revenues, and to the extent not so paid shall be paid from any other moneys of the Local
Agency lawfully available therefor as set forth in the Resolution. The full faith and credit of the
Local Agency is not pledged to the payment of thc principal of or interest on this Note.
The Local Agency and the Trustee may deem and treat the registered owner hereof
as the absolute owner hereof for the purpose of receiving payment of or on account of principal
hereof and interest due hereon and for all other purposcs, and the Local Agency and the Trustee
shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to
have happened and to have been performed precedent to and in the issuance of this Note do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and that the amount of this Note, together with
all other indebtedness of the Local Agency, does not exceed any limit prescribed by the
Constitution or statutes of the State of California.
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2006-170
IN WITNESS WHEREOF, the Legislative Body of the Local Agency has caused
this Note to be executed by the manual or facsimile signature of a duly Authorized Representative
of the Local Agency and countersigned by the manual or facsimile signature of the Secretary or
Clerk of the Legislative Body as of the date of authentication set forth below.
CITY OF SAN BERNARDINO
BY:~~-
Pa .ck J. Mo~ayor
Countersigned:
r~ . "., 'I
By: Kf\.rl1Jl LlWLfJ
Rachel Clark, City Clerk
J01.0cl nrLu~YiLf di(;L{)j tef(tto
3
2006-170
2006.
CERTIFICATE OF AUTHENTICIATION AND REGISTRATION
This Note, described in the within-mentioned Resolution, was authenticated on July 5,
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:
Authorized Signatory
4
2006-170
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(Insert name, address, zip code and Social Security, taxpayer or other identification numbers of
Assignee) the within-mentioned registered Bond and hereby irrevocably constitute(s) and
appoint(s) attorney, to transfer the same on the books of the Bond Registrar with full power of
substitution in the premises.
Dated:
Notice:The signature on this Assignment must
Correspond with the name of the Registered
owner as it appears upon the face of the
within Bond in every particular without
alteration or enlargement or any change
whatsoever.
Signature guaranteed:
(Bank, Firm or Trust Company)
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2006-170
CERTIFICATE OF THE LOCAL AGENCY
In connection with the California Communities Cash Flow Financing Program (the
"Program"), the undersigned duly elected (or appointed) and qualified officers identified in and
executing Section 4.7 hereof (the "Authorized Representatives") of the local agency identified in
Section 4.7 hereof (the "Local Agency"), acting for and on behalf of the Local Agency, hereby
certify, as of July 5, 2006 (the "Closing Date"), as follows with respect to the 2006 Tax and
Revenue Anticipation Note (the "Note") issued by the Local Agency:
I. CERTIFICATIONS REGARDING CERTAIN LOCAL AGENCY MATTERS
1.1. At all times mentioned herein, the Local Agency is a duly organized, validly
existing and operating local agency (as defined in Section 53850 of the California Government
Code), under the laws of the State of California (the "State"). The Local Agency represents that,
pursuant to Government Code Section 5451, the Resolution creates a valid and binding pledge of
and lien on the Pledged Revenues, as defined in the Resolution for the benefit of the owner of the
Note as security for the payment of the Note to the extent set forth in the Resolution, enforceable
in accordance with the terms thereof.
1.2. The undersigned Authorized Representatives, under the resolution (the
"Resolution") adopted by the legislative body of the Local Agency (the "Legislative Body")
authorizing the borrowing of funds for Fiscal Year 2006-2007, are duly authorized to make this
certification for and on behalf of the Local Agency pursuant to the Resolution.
1.3. Attached hereto as Exhibit A is a true, correct and complete copy of the
Resolution, duly adopted by the Local Agency after an agenda of the meeting of the Legislative
Body at which such Resolution was adopted was posted at least 72 hours before said meeting, at
a location freely accessible to members of the public, and all of the members of the Legislative
Body had due notice of said meeting and a quorum thereof were present at said meeting. The
Local Agency has previously provided the California Statewide Communities Development
Authority (the "Authority") with a true, accurate and complete copy of the Resolution.
1.4. The Resolution has not been amended or revoked and is in full force and effect on
the date hereof, and there is no proceeding of the Legislative Body in conflict with or in any way
altering the Resolution.
1.5. The information contained in the Credit Questionnaire (including the Cashflow
Worksheet therein) (the "Credit Questionnaire") completed by the Local Agency and submitted
to the Authority and RBC Capital Markets as financial advisor (the "Financial Advisor") in
connection with the Program, was at the time submitted and is on the date of this Certificate true
and accurate. Representatives of the Local Agency have reviewed the Indenture, hereinafter
defined, including the Continuing Disclosure Agreement set forth in Article Xl thereof. The
Local Agency shall notify the Trustee of the occurrence of any "Listed Event" which relates in
any way to the Local Agency, and will otherwise cooperate with the Trustee and the Authority in
satisfying any continuing disclosure obligation.
1.6. The Local Agency does not have a negative cash balance at the beginning of
Fiscal Year 2006-2007 in its general fund.
DOCSLAl:517862.1
2006-170
1.7. The Local Agency has authorized or acknowledged, by all necessary action, the
execution, delivery, receipt and due performance of the Resolution, the Note, the Purchase
Agreement by and between the Authority and the Local Agency (severally and not jointly with
other local agencies), including the Pricing Confirmation Supplement attached thereto (the
"Purchase Agreement"), the Indenture, dated as of July I, 2006 (the "Indenture"), by and
between Wells Fargo Bank, National Association (the "Trustee") and the Authority, pertaining to
the issuance of the California Statewide Communities Development Authority 2006 Local
Agency Tax and Revenue Anticipation Bonds, Series _ (the "Bonds"), and any and all other
agreements and documents (the "Other Agreements") as may be required to be executed,
delivered and received by the Local Agency or the Authority in order to carry out, give effect to
and consummate the transactions contemplated by the Resolution. The Resolution, the Note, the
Indenture, the Purchase Agreement, and the Other Agreements are collectively referred to herein
as the "Documents. II
1.8. None of the Documents applicable to the Local Agency have been amended,
modified or rescinded by the Local Agency and each of such Documents is in full force and
effect on the date hereof.
1.9. The representations and warranties of the Local Agency set forth in the applicable
Documents were on the date made and are on the date hereof true and accurate as though made
on and as of the date hereof.
1.10. The Purchase Agreement and the Note of the Local Agency have been duly
executed and delivered by the duly authorized officers of the Local Agency, and the Note and the
Purchase Agreement, when executed and delivered by the other parties thereto (where necessary)
and the obligations of the Local Agency under the Indenture will constitute legal, valid and
binding agreements of the Local Agency, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy or other laws affecting creditors'
rights, the application of equitable principles if equitable remedies are sought, the exercise of
judicial discretion in appropriate cases and the limitations on legal remedies against public
entities in the State.
1.11. The Local Agency has complied with all provIsIOns of applicable law in
connection with the adoption of the Resolution and the transactions contemplated under the
Resolution and the documents approved thereby.
1.12. The execution, delivery and performance by the Local Agency of the Note and the
Purchase Agreement and the execution, delivery and performance by the Authority of the
Indenture and the Bonds and, in each case the borrowing thereunder or in connection therewith
(and the application of the proceeds thereof) have been duly authorized or acknowledged by all
necessary action on the part of the Local Agency.
1.13. The Local Agency has full power and authority to acknowledge the Authority's
execution and delivery of the Indenture. The execution and delivery by the Authority of the
Indenture (and the Local Agency's obligations thereunder) (i) do not and will not contravene the
laws of the State providing for the organization and government of the Local Agency and (ii) do
not and will not conflict with, or result in the violation of, any applicable law.
2006-170
1.14. The Local Agency covenants that upon receipt from the Trustee of a request to
confirm that amounts constituting such Local Agency's repayment obligation described in
Section 8 of the Resolution have been transferred to and set aside in the Payment Account (as
defined in the Resolution), the Local Agency shall within five (5) Business Days (as defined in
the Indenture) after the date of such request, confirm such transfer to the Trustee by submitting
the Payment Account Deposit Certification in the form set forth in Exhibit C of the Indenture.
1.15. If prior to the Closing Date the Local Agency should have any reason to believe
that any of the representations or certifications contained herein or in the Documents are not true
and correct, the Local Agency covenants that it will notify Orrick, Herrington & Sutcliffe LLP,
("Bond Counsel").
II. CERTIFICATIONS REGARDING TAX MATTERS
2.1. The Local Agency shall not take, or fail to take, any action that would cause
interest on the Bonds to be included in gross income for federal income tax purposes or cause the
Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal
Revenue Code of 1986 (the "Code"). In addition, the Local Agency:
a) shall not allow the use of any proceeds of the Note to be used in the trade or
business of any nongovernmental person;
b) shall not loan any proceeds of the Note to any nongovernmental person;
c) shall take no actions that would cause the Bonds to be treated as "federally
guaranteed," within the meaning of Section I 49(b) of the Code;
d) shall not use any proceeds of the Note to repay any principal or interest of any
outstanding tax-exempt obligation of the Local Agency apart from interest that accrues during a
one-year period commencing July 5, 2006;
e) shall not set aside or specifically earmark amounts to be used to satisfy the Local
Agency's repayment obligation described in Section 8 of the Resolution earlier than the date
which is one year prior to the final maturity date of the Note of the Local Agency; and
f) shall retain all records relating to the use, investment and repayment of the Note
and Note proceeds.
III. CERTIFICATIONS REGARDING ARBITRAGE AND REBATE
The following are the certifications and the reasonable expectations of the Local Agency,
stated pursuant to Treasury Regulations Section 1.148-2(b), relating to the use and investment of
the proceeds of the Note:
3.1. The Note is being issued in anticipation of taxes or other revenues and will be
spent to pay lawful expenses of the Local Agency payable from its general fund.
3.2. Based upon the Local Agency's cashflow projections which are set forth in
Appendix C of the Official Statement relating to the Bonds (the "Cash flow Projections"), the
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Local Agency expects to allocate the proceeds of the Note to working capital expenditures within
13 months after July 5, 2006, using the methodology described in the next section.
3.3. Proceeds of the Note will be allocated to working capital expenditures of the
Local Agency on any date that the Local Agency's working capital expenditures exceed the
Local Agency's "available amounts." "Available amounts" include any cash, investments, or
other amounts held in any fund or account by the Local Agency that is available for the Local
Agency to use for working capital expenditures without legislative or judicial action and without
a legislative, judicial, or contractual requirement that those amounts be reimbursed. "Available
amounts" do not include proceeds of the Notes or amounts held in a reasonable working capital
reserve that is limited to either ten percent (10%) of the amount of the Note or the lesser of either
(i) five percent (5%) of the Local Agency expenditures paid out of current revenues during Fiscal
Year 2005-2006 or (ii) the amount that the Local Agency has historically and customarily
maintained as a working capital reserve.
3.4. The funds and accounts maintained by or for the benefit of the Local Agency that
are considered available for payment of the Local Agency's expenditures have been described in
the Credit Questionnaire, and their cash balances as of the date of issue have been taken into
account in the Cash flow Projections.
3.5. In preparing its cash flow analysis for Fiscal Year 2006-2007, the Local Agency
has reviewed its Fiscal Year 2005-2006 cash flows and has, where applicable, compared the
Fiscal Year 2005-2006 actual cash flows with the Fiscal Year 2005-2006 cash flows projected
just before the beginning of Fiscal Year 2005-2006. Taking this information into account and
such other information as is available to the Local Agency, the Local Agency believes that the
projected cash flow analysis for Fiscal Year 2006-2007 is reasonable and is based on reasonable
assumptions.
3.6. All of the proceeds of the Note, together with earnings thereon, less amounts
allocable to the Local Agency's costs of issuance set forth in the Purchase Agreement, will be
deposited into the Proceeds Fund established under the Indenture.
3.7. The Note will be repaid from the general funds of the Local Agency received after
all Note Proceeds are spent as described above. The moneys to be so used will be separately
accounted for until used to repay the Note.
3.8. If the Local Agency is unable to make the small issuer certification set forth in the
Pricing Confirmation Supplement, then the Agency hereby makes the following certifications:
All of the proceeds of the Note, together with earnings thereon, will be deposited into the Local
Agency's General Fund (the "General Fund") or a special fund created solely to hold proceeds of
the Note (the "Special Note Fund"). Note proceeds, together with earnings thereon, so deposited
may be withdrawn and expended by the Local Agency on any given day during Fiscal Year
2006-2007 for any purpose for which the Local Agency is authorized to expend funds from its
General Fund, but only after exhausting all funds that are available amounts as of such given
day, and for purposes of this requirement, available amounts excludes amounts that are held or
set aside in a reasonable working capital reserve that is limited to either ten percent (10%) of the
amount of the Note or the lesser of either (i) five percent (5%) of the Local Agency expenditures
paid out of current revenues during Fiscal Year 2005-2006 or (ii) the amount that the Local
2006-170
Agency has historically and customarily maintained as a working capital reserve; provided, that
if on the date that is five (5) months from the date of issuance of the Note or on any date
thereafter, it appears that all remaining amounts in the Special Note Fund (or, if appropriate, all
remaining proceeds of the Note, including earnings thereon, held in the General Fund) will not
have been so withdrawn and spent by the date that is six (6) months from the date of issuance of
the Note, the Local Agency shall promptly notify Bond Counsel and, to the extent of its power
and authority, comply with the instructions from Bond Counsel as to the means of satisfying the
rebate requirements of Section 148 of the Code. The working capital reserve shall be funded
with any revenues of the Local Agency's General Fund but will not be funded with proceeds of
the Note. The working capital reserve will be tracked and administered as a separate account or
subaccount within the General Fund.
On the basis of the facts, estimates and circumstances in existence on the date of delivery,
it is not expected that the proceeds of the Note will be used in a manner that would cause the
Note to be an issue of arbitrage bonds within the meaning of Section 148 of the Code.
3.9. To the best knowledge and belief of the undersigned, there are no other facts,
estimates, or circumstances which would materially change the foregoing statements, and the
foregoing expectations are reasonable.
3.10. The Local Agency understands that Bond Counsel will rely upon this Certificate
in giving its opinion that interest on the Bonds is excluded from federal gross income.
IV. REQUEST TO AUTHORITY AND TRUSTEE, CERTIFICATIONS RELATING
THERETO AND SIGNATURE CERTIFICATIONS OF THE LOCAL AGENCY
4.1. The Trustee is hereby requested and authorized to authenticate and deliver the
2006 Tax and Revenue Anticipation Note of the Local Agency upon receipt of the purchase price
thereof. The Trustee is also hereby requested and authorized to authenticate and deliver the
Bonds upon receipt thereof from the Authority.
4.2. It is hereby acknowledged that the Authority is authorized to issue the Bonds,
upon receipt of the purchase price of the Note of the Local Agency together with the aggregate
purchase price of all other notes of the other Local Agencies participating in the Program and
whose notes will be pooled with the Local Agency's Note in connection with the issuance of the
Bonds.
4.3. The Trustee is hereby directed to deposit the proceeds of the Note in the amounts
as set forth in the Pricing Confirmation Supplement into the Costs of Issuance Fund and in the
Proceeds Fund.
4.4. Upon the deposit of proceeds as set forth in Section 4.3 hereof, the Trustee is
requested and authorized to pay, from amounts held for the benefit of the Local Agency in the
Proceeds Account within the Proceeds Fund, the amounts on deposit in such Proceeds Account,
as indicated in Schedule I of the Pricing Confirmation Supplement to the Purchase Agreement, to
the Local Agency by [wire/check (circle one)]. If the Local Agency is to receive such amounts
2006-170
by wire, the Local Agency shall provide the Trustee with appropriate wiring instructions for the
financial institution which will receive such amounts
4.5. The amount requisitioned hereby will be applied to a purpose for which the Local
Agency is authorized to use and expend funds from the general fund of the Local Agency and
pending such application will be invested in investments which are legal for the investment of
funds of the Local Agency.
4.6. As of the date hereof, no event has occurred and is continuing which constitutes
an Event of Default under the Resolution or would constitute an Event of Default but for the
requirement that notice be given, or time elapse, or both.
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4.7. .. The following named persons are duly elected (or appointed), qualified and acting
officers of the Local Agency presently holding the offices set forth opposite their respective
names below and by execution hereof each certifies that the signatures of the other officer or
officers hereto are the genuine signatures of such officer or officers (signatures of the officers
executing the Note, the Purchase Agreement and the Amended and Restated Joint Exercise of
Powers Agreement relating to the Authority (if applicable) must appear below):
AUTHORIZED REPRESENTATIVES OF CITY OF SAN BERNARDINO:
NAME
TITLE
SIGNATURE
Rachel G. Clark
City Clerk
4f
Patrick J. Morris
Mayor
Fred Wilson
City Manager
.. Please complete the following items of information, including the name of the Local Agency's
Authorized Representatives and the signatures of such Authorized Representatives.