Loading...
HomeMy WebLinkAbout06.C- Successor Agency 6.0 RESOLUTION (ID # 4112) DOC ID: 4112 CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION Budget From: Lisa Connor M/CC Meeting Date: 11/02/2015 Prepared by: Lisa Connor, (909) 663- 1044 Dept: Successor Agency Ward(s): All Subject: Resolution of the Mayor and Common Council of the City of San Bernardino Acting as the Successor Agency to the Redevelopment Agency of the City of San Bernardino Approving a Form of Preliminary Official Statement in Connection with the Sale and Delivery of Its Tax Allocation Refunding Bonds; Making Certain Determinations Relating Thereto; and Authorizing Certain Other Action in Connection Therewith (#4112) Current Business Registration Certificate: Not Applicable Financial Impact: The 2015 Refunding TABs will not be a debt of the City's general fund or the State, or any of its political subdivisions (except the Successor Agency). The repayment of principal and interest on the 2015 Refunding TABs is payable solely from Pledged Tax Revenues, which is tax increment revenues from the redevelopment project areas deposited into the Agency's Redevelopment Property Tax Trust Fund ("RPTTF") for payment of the Successor Agency's enforceable obligations. It is important to note that during the Successor Agency's first nine (9) six-month Recognized Obligation Payment Schedule ("ROPS") periods, the Successor Agency has been cash-flow insolvent (i.e., it did not receive enough RPTTF to satisfy all of its enforceable obligations). Once the 2015 Refunding TABs close, it is projected that the Successor Agency is likely to have sufficient RPTTF to be able to fund all of its enforceable obligations when due and that there will likely be surplus RPTTF that will be distributed to the taxing entities, including the City, throughout the remainder of the former redevelopment agency's wind-down period (i.e., through 2031). Motion: Adopt the Resolution. Synopsis of Previous Council Action: On April 6, 2015, the Successor Agency adopted Resolution No. 2015-72 authorizing the commencement of a refunding of certain outstanding bonds and notes to achieve debt service savings and avoid the possibility of default, and approving certain related actions. May 18, 2015, the Successor Agency adopted Resolution No. 2015-104 authorizing the issuance of its refunding bonds; approving a form of indenture, a form of bond purchase agreement and a form of continuing disclosure agreement; making certain determinations relating thereto; and authorizing certain other action in connection therewith. Updated: 10/28/2015 by Georgeann "Gigi" Hanna Packet Pg. 636 4112 Background: Pursuant to Health and Safety Code ("HSC") § 34172 (a)(1), the Redevelopment Agency of the City of San Bernardino was dissolved on February 1, 2012. Consistent with the provisions of the HSC, on January 9, 2012 the Mayor and Common Council of the City of San Bernardino elected to serve in the capacity of the Successor Agency to the Redevelopment Agency of the City of San Bernardino ("Successor Agency"). The Oversight Board for the Successor Agency ("Oversight Board") has been established pursuant to HSC § 34179 to assist in the wind-down of the dissolved redevelopment agency. On April 6, 2015, the Successor Agency adopted Resolution No. 2015-72 and on April 13, 2015 the Oversight Board adopted Resolution No. SBOB/2015-03. Both resolutions authorized the initiation of the process related to the issuance of bonds to refund all or a portion of certain currently outstanding debt obligations ("Outstanding Obligations") to provide debt service savings to the Successor Agency and to finance debt service spikes, including balloon maturities, to avoid the possibility of default on certain Outstanding Obligations. On May 18, 2015, the Successor Agency adopted Resolution No. 2015-104 and on May 19, 2015 the Oversight Board adopted Resolution No. SBOB/2015-05. Both resolutions authorized the issuance of Tax Allocation Refunding Bonds, Series 2015A (tax-exempt) and Series 2015B (Federally taxable) (collectively, the "2015 Refunding TABs") by the Successor Agency. Upon adoption, Oversight Board Resolution No. SBOB/2015-05 was then sent to the California Department of Finance ("DOF") for review. On July 24, 2015, DOF issued a letter approving Resolution No. SBOB/2015-05. Following approval of the issuance of the 2015 Refunding TABs by DOF, the Successor Agency has, with the assistance of bond counsel, disclosure counsel and its financial advisor, caused to be prepared a form of the Preliminary Official Statement describing the 2015 Refunding TABs and containing material information relating to the redevelopment project areas and tax increment revenues, the preliminary form of which is being submitted to the Successor Agency for approval for distribution by Stifel, Nicolaus & Company, Incorporated (the "Underwriter") to persons and institutions interested in purchasing the Refunding Bonds. The final interest rates and terms of the 2015 Refunding TABs will not be determined until the 2015 Refunding TABs are priced and sold by the Underwriter, which is expected to occur by the second week of December. FISCAL IMPACT: The 2015 Refunding TABs will not be a debt of the City's general fund or the State, or any of its political subdivisions (except the Successor Agency). The repayment of principal and interest on the 2015 Refunding TABs is payable solely from Pledged Tax Revenues, Updated: 10/28/2015 by Georgeann "Gigi" Hanna I Packet Pg. 637 4112 which is tax increment revenues from the redevelopment project areas deposited into the Agency's Redevelopment Property Tax Trust Fund ("RPTTF") for payment of the Successor Agency's enforceable obligations. It is important to note that during the Successor Agency's first nine (9) six-month Recognized Obligation Payment Schedule ("ROPS") periods, the Successor Agency has been cash-flow insolvent (i.e., it did not receive enough RPTTF to satisfy all of its enforceable obligations). Once the 2015 Refunding TABs close, it is projected that the Successor Agency is likely to have sufficient RPTTF to be able to fund all of its enforceable obligations when due and that there will likely be surplus RPTTF that will be distributed to the taxing entities, including the City, throughout the remainder of the former redevelopment agency's wind-down period (i.e., through 2031). City Attorney Review: Supporting Documents: Reso - Approving POS for 2015 Refunding TABs V10-27-15 (DOC) 11-2-15 Exhibit B-POS - San Bernardino 2015 TABS (DOCX) i Updated: 10/28/2015 by Georgeann "Gigi" Hannacket P 838 6.C.a, 1 RESOLUTION NO. a 0 m 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL ACTING AS .tM r- THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF 3 THE CITY OF SAN BERNARDINO APPROVING A FORM OF , 4 PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH THE SALE AND DELIVERY OF ITS TAX ALLOCATION REFUNDING BONDS; o 5 MAKING CERTAIN DETERMINATIONS RELATING THERETO; AND AUTHORIZING CERTAIN OTHER ACTION IN CONNECTION o 6 THEREWITH (#4112) a X 7 WHEREAS, pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the = 8 Health and Safety Code of the State of California and referred to herein as the "Law"), the Mayor 0) 0 9 and Common Council of the City of San Bernardino (the "City") created the Redevelopment m 10 Agency of the City of San Bernardino (the "RDA"); and "" O 11 WHEREAS, the RDA was a redevelopment agency, a public body, corporate and politic c 12 duly created, established and authorized to transact business and exercise its powers, all under and 13 a. pursuant to the Law, and the powers of such agency included the power to issue bonds for any of its N 14 corporate purposes; and LO �r 15 WHEREAS, the City agreed to serve as the successor agency (referred to herein as the ti 16 «Successor Agency") to the RDA commencing upon the dissolution of the RDA on February 1, 17 2012 pursuant to Assembly Bill X1 26 ("AB X1 26"); and m 18 WHEREAS, on June 27, 2012 as part of the Fiscal Year 2012-2013 State of California = 19 budget bill, the Governor signed into law Assembly Bill 1484 (the "AB 1484"), which modified or 0 20 added to some of the provisions of AB X1 26, including provisions related to the refunding of LO 21 outstanding redevelopment agency bonds and the expenditure of remaining bond proceeds derived N 0 22 from redevelopment agency bonds issued on or before December 31, 2010; and p a. 23 WHEREAS, California Health & Safety Code (the "HSC") § 34177.5(a)(1) authorizes c 24 0 successor agencies to refund outstanding bonds provided that (i) the total interest cost to maturity on 0 L 25 a the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other o 26 indebtedness shall not exceed the total remaining interest cost to maturity on the bonds or other 27 indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be E 28 refunded, and (ii) the principal amount of the refunding bonds or other indebtedness shall not w a 1 Packet;Pg 639` 1 exceed the amount required to defease the refunded bonds or other indebtedness, to establish 0 2 customary debt service reserves, and to pay related costs of issuance; and a, 3 WHEREAS, HSC § 34177.5(a)(2) authorizes successor agencies to refund outstanding a� 4 bonds or other indebtedness to finance debt service spikes, including balloon maturities, on existing 0 5 indebtedness, provided that: (i) the existing indebtedness is not accelerated, except to the extent M 0 6 necessary to achieve substantially level debt service; and (ii) the principal amount of the bonds or Q x 0 7 other indebtedness shall not exceed the amount required to finance the debt service spikes, including d 8 establishing customary debt service reserves and paying related costs of issuance; and E 0 9 WHEREAS, on May 18, 2015, the Successor Agency adopted Resolution No. 2015-104 U) 10 (the "Successor Agency Bond Resolution"), determining to proceed with the issuance of bonds to 0 11 refund all or a portion of certain Outstanding RDA Obligations identified in Exhibit A to the � 12 Successor Agency Bond Resolution (the "Outstanding RDA Obligations") to provide debt service E 13 savings to the Successor Agency and to finance debt service spikes, including balloon maturities, to a N 14 avoid the possibility of default on certain Outstanding RDA Obligations; and LO 15 WHEREAS, on May 19, 2015, the Oversight Board adopted Resolution No. SBOB 2015- ~ N 16 05 authorizing the Successor Agency to refund the Outstanding RDA Obligations; and o 17 WHEREAS, on July 24, 2015 the California Department of Finance issued its letter m a 18 approving the Oversight Board's Resolution No. SBOB 2015-05 authorizing the Successor Agency a, 19 to refund the Outstanding RDA Obligations; and 3 m 20 WHEREAS, the Successor Agency has determined, to the extent authorized by HSC § LO 21 34177.5(a), to issue its Successor Agency to the Redevelopment Agency of the City of San N 0 22 Bernardino Tax Allocation Refunding Bonds, in one or more series, one of which may be federally O a 23 taxable if determined by bond counsel to be required under federal tax law, and with such other 0 E 24 name and series designation as shall be deemed appropriate (the "Refunding Bonds"), for the 0- CL 25 purpose of(i) refunding all or a portion of the Outstanding RDA Obligations, (ii)paying the costs of a 0 26 issuing the Refunding Bonds, (iii) funding a reserve account and/or providing for a reserve policy or 0 27 surety for deposit to the reserve account for the Refunding Bonds and (iv) if advisable, paying for 28 a 2 Packet;Pg 640 1 the cost of municipal bond insurance and/or a surety to fund the reserve account for the Refunding 0 2 Bonds in lieu of funding all or a portion of such reserve account with bond proceeds; and M, c 3 WHEREAS, a copy of a form of Official Statement in preliminary form, a final form of a� 4 which will be executed by the Successor Agency in connection with the issuance, sale and delivery c 0 5 of the Refunding Bonds, is on file with the Secretary and is appended to the staff report that 0 6 accompanies this Resolution; and Q X M 7 WHEREAS, this Resolution has been reviewed with respect to applicability of the F' 41 c as 8 California Environmental Quality Act (the "CEQA"), the State CEQA Guidelines (California Code m 4a 9 of Regulations, Title 14, §§ 15000 et seq., hereafter the "Guidelines"), and the City's environmental vn 10 guidelines; and .2 0 11 WHEREAS, this Resolution is not a "project" for purposes of CEQA, as that term is 12 defined by Guidelines § 15378, because this Resolution is an organizational or administrative E 13 activity that will not result in a direct or indirect physical change in the environment, per § a N 14 15378(b)(5) of the Guidelines; and Ln 15 WHEREAS, all of the prerequisites with respect to the approval of this Resolution have ti N 16 been met. o 17 NOW, THEREFORE, BE IT RESOLVED by the Successor Agency to the m Q 18 Redevelopment Agency of the City of San Bernardino, as follows: a, c 19 Section 1. Recitals. The foregoing recitals are true and correct and are a substantive as 20 part of this Resolution. Ix LO 21 Section 2. Acknowledgement of Prior Approval of Issuance of Refunding Bonds. N L- 0 22 The Mayor and Common Council of the City acting for the Successor Agency, acknowledges that it o a. 23 adopted the Successor Agency Bond Resolution No. 2015-104, and through such Resolution it 0) 24 approved the issuance of the Refunding Bonds and related financing documents. n Q 25 Section 3. Approval of Preliminary Official Statement. The form, terms and Q 0 26 provisions of the Preliminary Official Statement on file with the Secretary are approved and the 0 27 Successor Agency hereby approves the distribution of the Preliminary Official Statement to E 28 prospective purchasers of the Refunding Bonds. The Successor Agency Chairperson, the Successor a 3 Packet,Pg 641 I Agency Executive Director, the Deputy City Manager and the Successor Agency Secretary (each an _ 0 2 "Authorized Officer," acting for the Successor Agency), each acting alone, is authorized to certify _ 3 on behalf of the Successor Agency that the Preliminary Official Statement is deemed final as of its w d 4 date, within the meaning of rule 15c2-12 promulgated under the Securities Exchange Act of 1934. _ 0 5 Any Authorized Officer, acting alone, is authorized to execute, at the time of sale of the Refunding 0 6 Bonds, said form of Preliminary Official Statement as revised to including pricing information in Q X M 7 the form of a final Official Statement (the "Official Statement"), with such changes and insertions as 8 therein as may be necessary to cause the same to carry out the intent of this Resolution and as are d �a 9 approved by counsel to the Successor Agency, such approval to be conclusively evidenced by the in Ii 10 delivery thereof. O 11 Section 4. Other Acts. The officers and staff of the Successor Agency are hereby 2 _ 12 authorized and directed, jointly and severally, to do any and all things, which in consultation with E L 13 Orrick, Herrington & Sutcliffe LLP, the Successor Agency's bond counsel, they may deem a N 14 necessary or advisable in order to consummate the issuance, sale and delivery of the Refunding LO 15 Bonds, or otherwise effectuate the purposes of this Resolution, and any and all such actions ti N 16 previously taken by such officers or staff members are hereby ratified and confirmed. o 17 Section 5. This Resolution shall take effect upon its adoption and execution in the m a 18 manner as required by the City Charter. 19 d 20 LO 21 L 0 W 22 /// o a 23 24 /// 0 CL a 25 0 26 27 E 28 a 4 Packet Pg 642'' N 1 0 _ O 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL ACTING AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF 3 THE CITY OF SAN BERNARDINO APPROVING A FORM OF w 4 PRELIMINARY OFFICIAL STATEMENT IN CONNECTION WITH THE SALE AND DELIVERY OF ITS TAX ALLOCATION REFUNDING BONDS; o 5 MAKING CERTAIN DETERMINATIONS RELATING THERETO; AND AUTHORIZING CERTAIN OTHER ACTION IN CONNECTION o 6 THEREWITH (#4112) a x 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Successor Agency 8 to the Redevelopment Agency of the City of San Bernardino, at a meeting thereof, held on the 2°d �a 9 day of November, 2015,by the following vote, to wit: N 10 11 Council Members Ayes Nays Abstain Absent 0 12 MARQUEZ BARRIOS 13 a VALDIVIA N 14 SHORETT � Ln 15 NICKEL ti N 16 JOHNSON ° 17 MULVIHILL m a 18 19 = Georgeann Hanna, City Clerk 20 21 The foregoing Resolution is hereby approved this 2°a day of November 2015. N O 22 0 23 R. Carey Davis, Chairman o. a> Successor Agency to the 24 Redevelopment Agency of the a City of San Bernardino a 25 a Approved as to Form: O 26 Gary D. Saenz, City Attorney 27 By: s 28 R r a x 5 Packet Pg 643 Stradling Yocca Carlsoi ° Draft of 10129115 w ° PRELIMINARY OFFICIAL STATEMENT DATED ,2015 0 — NEW ISSUE—BOOK-ENTRY ONLY Rating: S&P: "_"(Insured) S&P: "_"(Underlying) N See the caption"CONCLUDING INFORMATION—Ratings" ° In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Agency, based upon an analysis of existing laws, m regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with rn certain covenants,interest on the Series 2015A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the = ° Internal Revenue Code of 1986 In the further opinion of Bond Counsel, interest on the Series 2015A Bonds is not a specific preference item = 0 o for purposes of the federal individual or corporate alternative minimum taxes,although Bond Counsel observes that such interest is included ° 0 in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel is also of the opinion that � •° interest on the Series 2015 Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of or the amount,accrual or receipt of interest on,the Series 2015 Bonds. See 2 'o "TAXMATTERS"herein. v O Y $ $ °° o SUCCESSOR AGENCY TO THE SUCCESSOR AGENCY TO THE X d REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE as 0 CITY OF SAN BERNARDINO CITY OF SAN BERNARDINO ti TAX ALLOCATION REFUNDING BONDS, TAX ALLOCATION REFUNDING BONDS, Q o SERIES 2015A(TAX-EXEMPT) SERIES 2015B(FEDERALLY TAXABLE) E Dated: Closing Date Due: December 1,as shown on the inside front cover page P The Successor Agency to the Redevelopment Agency of the City of San Bernardino Tax Allocation Refunding Bonds,Series 2015A N ~ (Tax-Exempt) (the "Series 2015A Bonds") and the Successor Agency to the Redevelopment Agency of the City of San Bernardino Tax 6 o o Allocation Refunding Bonds, Series 2015B (Federally Taxable) (the"Series 2015B Bonds"and,together with the Series 2015A Bonds,the v Y "Series 2015 Bonds")will be delivered as fully registered bonds,registered in the name of Cede&Co. as nominee of The Depository Trust 0 Company,New York,New York("DTC"),and will be available to ultimate purchasers("Beneficial Owners")in integral multiples of$5,000 under the book-entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of bonds representing their R ownership interest in the Series 2015 Bonds. The principal of,premium if any,and interest(which interest is due June 1 and December 1 of c v each year,commencing June 1,2016)on the Series 2015 Bonds will be payable by U.S.Bank,National Association,as trustee(the"Trustee"), E w to DTC for subsequent disbursement to DTC Participants, so long as DTC or its nominee remains the registered owner of the Series 2015 L Bonds. See the caption"THE SERIES 2015 BONDS—Book-Entry System." d The Series 2015 Bonds are being issued pursuant to an Indenture of Trust,dated as of December 1,2015(the"Indenture"),by and N between the Trustee and the Successor Agency to the Redevelopment Agency of the City of San Bernardino (the"Agency"): (i)to refund •� i certain bonds of the former Redevelopment Agency of the City of San Bernardino (the "Former Agency") currently outstanding in the aggregate principal amount of$58,745,000, as described under the caption"REFUNDING PLAN"; (ii)to purchase a bond insurance policy N and a Municipal Bond Debt Service Reserve Insurance Policy from[Insurer] for deposit in the Reserve Account;and(iii)to pay certain costs M o ~ 0 of issuance of the Series 2015 Bonds. H o ^ ti [The Series 2015A Bonds are subject to optional redemption and mandatory sinking fund redemption prior to maturity. The o Series 2015B Bonds are not subject to optional redemption.] See the caption"THE SERIES 2015 BONDS—Redemption." N The Series 2015 Bonds are payable from and secured by the Tax Revenues deposited in the Redevelopment Property Tax Trust Fund c on a subordinate basis to certain bonds currently outstanding in the aggregate principal amount of$61,510,000 and certain other ongoing :5 o obligations of the Agency,as more fully described under the caption"SECURITY FOR THE SERIES 2015 BONDS—Obligations with Senior b Right to Payment." Taxes levied on the property within the project areas on that portion of the taxable valuation over and above the taxable C o valuation of the base year property tax roll, will be deposited in the Redevelopment Obligation Retirement Fund and administered by the m ,-, Agency and the Trustee in accordance with the Indenture. y This cover page of the Official Statement contains information for quick reference only. It is not a complete summary of the N Series 2015 Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed .0 3 investment decision. Attention is hereby directed to certain risk factors more fully described herein. O •� The Series 2015 Bonds are not a debt of the City of San Bernardino,the State of California,or any of its political subdivisions,and d •c neither said City,said State,nor any of its political subdivisions is liable hereon,nor in any event shall the Series 2015 Bonds be payable out of m 5 any funds or properties other than those of the Agency. The Series 2015 Bonds do not constitute an indebtedness within the meaning of any Y ,°, • constitutional or statutory debt limitation or restriction. The principal of and interest on the Series 2015 Bonds are payable solely from the Tax Revenues allocated to the Agency from the Project Areas (all as defined herein and in the Indenture) and other funds as set forth in the t j i� •> -, Indenture. LO The Series 2015 Bonds are offered, when, as and if issued, subject to the approval of Orrick, Herrington & Sutcliffe LLP, San N Francisco, California, as Bond Counsel to the Agency and Stradling Yocca Carlson &Rauth, a Professional Corporation, Newport Beach, vL y • California,as Disclosure Counsel to the Agency. Certain legal matters will be passed on for the Agency by the City Attorney of the City of San r i u Bernardino,as counsel to the Agency,for the Underwriter by its counsel,Norton Rose Fulbright US LLP,Los Angeles, California,and for the = NTrustee by its counsel. It is anticipated that the Series 2015 Bonds will be available for delivery through the facilities of DTC on or about 4) 2015. s v ' [STIFEL LOGO] r e Y a Dated: 12015 Q a � T v; >^• Preliminary,subject to change. DOC SOC/1725450v4/200430-0012 MATURITY SCHEDULES N $ O M SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX ALLOCATION REFUNDING BONDS,SERIES 2015A(TAX-EXEMPT) r-. a� Base CUSIPt _ O Maturity Date v (December 1) Principal Amount Interest Rate Yield Price CUSIPt 0 x R F r _ N E d .2 4= O R _ E d L $ a SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO TAX ALLOCATION REFUNDING BONDS,SERIES 2015B (FEDERALLY TAXABLE) Cn M Maturity Date Q (December 1) Principal Amount Interest Rate Yield Price CUSIPt � r $ % % N O _ L _ L M� W _ W 0 m x W N T_ r Preliminary,subject to change. t CUSIP®is a registered trademark of the American Bankers Association. Copyright©1999-2015 American Bankers Association. All rights =y reserved. CUSIP9 data herein is provided by CUSIP Global Services,managed by Standard&Poor's Financial Services LLC on behalf of the E American Bankers Association. This data is not intended to create a database and does not serve in anyway as a substitute for CUSIP Global V Services. CUSIP®numbers are provided for convenience of reference only. Neither the Agency nor the Underwriter takes any responsibility for the accuracy of such numbers. Q DOC SOC/1725450v4/200430-0012 Packet Pg 645 . SUCCESSOR AGENCY TO THE y REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO _ San Bernardino,California m BOARD OF DIRECTORS _ R.Carey Davis,President m Virginia Marquez Benito J.Barrios o John Valdivia Fred Shorett o Henry Nickel Q Rikke Van Johnson James Mulvihill ~ c m AGENCY STAFF E d ro Allen J.Parker,Executive Director David C.Kennedy, Treasurer 76 Georgeann"Gigi"Hanna, City Clerk 2 r- Gary D. Saenz,City Attorney O m SPECIAL SERVICES = E Bond Counsel a AF I Orrick,Herrington&Sutcliffe LLP San Francisco,California a Disclosure Counsel co Q H Stradling Yocca Carlson&Rauth Un A Professional Corporation N Newport Beach,California o _ Trustee _ L U.S.Bank,National Association m Los Angeles,California R U) Financial Advisor and Fiscal Consultant to O a Urban Futures,Inc. pp Orange, California = Verification Agent w LO Causey Demgen&Moore P.C. c� Denver,Colorado c d E Q DOCSOC/1725450v4/200430-0012 Packet Pg �46 '� 6.C.b GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT N 'a No Offering May Be Made Except by this Official Statement. No dealer,broker,salesperson or other person has been p authorized by the Agency or the Underwriter to give any information or to make any representations with respect to the Series m 2015 Bonds other than as contained in this Official Statement, and,if given or made, such other information or representation = must not be relied upon as having been given or authorized by the Agency or the Underwriter. =p C Use of Official Statement. This Official Statement is submitted in connection with the sale of the Series 2015 Bonds described in this Official Statement and may not be reproduced or used,in whole or in part,for any other purpose. This Official Statement does not constitute a contract between any Series 2015 Bond owner and the Agency or the Underwriter. p r Preparation of this Official Statement. The information contained in this Official Statement has been obtained from p sources that are believed to be reliable,but this information is not guaranteed as to accuracy or completeness. The Underwriter Q has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in X this Official Statement in accordance with,and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriter does not guarantee the accuracy or completeness of Y such information. E Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure made by the Agency, � the words or phrases"will likely result,""are expected to,""will continue,""is anticipated,""estimate,""project," "forecast," N "expect," "intend"and similar expressions identify"forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ v materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. 0 Inevitably,some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore,there are likely to be differences between forecasts and actual results,and those differences may be material. �% This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this E_ Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Series 2015 Bonds will,under any circumstances,create any implication that there has been no change in the affairs of the Agency or d the other parties described in this Official Statement,since the date of this Official Statement. " N r Document Summaries. All summaries of the Indenture or other documents contained in this Official Statement are d made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. All N references in this Official Statement to the Indenture and such other documents are qualified in their entirety by reference to such m documents,which are on file with the Agency. LO No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or a solicitation of an o offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or N solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. L No Registration with the SEC. The issuance and sale of the Series 2015 Bonds have not been registered under the c Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections 3(a)(2)and 3(a)(12),respectively,for the issuance and sale of municipal securities. OD c R Public Offering Prices. The Underwriter may offer and sell the Series 2015 Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, rn and the Underwriter may change such public offering prices from time to time. p CL Website. The City of San Bernardino maintains an Internet website. However, the information maintained on such m r website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Series 2015 Bonds. t X W [Insurer](the"Insurer")makes no representation regarding the Series 2015 Bonds or the advisability of investing in the LO Series 2015 Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not N accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained r herein,or omitted herefrom,other than with respect to the accuracy of the information regarding Insurer,supplied by Insurer and presented under the caption"[BOND INSURANCE]." d t v Q DOCS OC/1725450v4/200430-0012 Packet'3? 6.C.b [INSERT MAP] N _ 0 m a� _ �a a� 0 w 0 0 Q x c� r m E a) ca m 2 t O _ E m N 74 cn m Q H to r O N O L R _ L m _ N O a m x w Ln N Ar r C d E s Q DOCSOC/1725450v4/200430-0012 Packet�Pg .64„8. TABLE OF CONTENTS INTRODUCTORY STATEMENT............................................1 RISK FACTORS......................................................................47 Authority and Purpose............................................................1 Reduction in Taxable Value.................................................48 The City and the Agency........................................................1 Challenges to Dissolution Act..............................................48 0 The Redevelopment Plans......................................................2 Risks to Real Estate Market.................................................49 ca Tax Allocation Financing.......................................................3 Reduction in Inflation Rate..................................................49 0) Security for the Series 2015 Bonds................:........................4 Levy and Collection of Taxes...............................................50 Obligations with Senior Right to Payment..............................5 State Budget Issues...............................................................50 Reserve Policy........................................................................5 Recognized Obligation Payment Schedule...........................51 Further Information................................................................6 Santa Ana Unified School District Case...............................53 REFUNDING PLAN...... ..................6 Last and Final Recognized Obligation Payment '*******'****.......­­­*­­...*­ Schedule...............................................................................53 The Refunded Obligations......................................................6 Verification of Mathematical Computations...........................7 Bankruptcy and Foreclosure................................................54 Sources and Uses of Funds.....................................................8 Effect of City of San Bernardino Bankruptcy......................55 2 Potential Tax Liability Relating to Previously- < THE SERIES 2015 BONDS.......................................................8 Issued Bonds........................................................................56 X Authority for Issuance............................................................8 Estimated Revenues.............................................................56 Description of the Series 2015 Bonds.....................................8 Hazardous Substances..........................................................56 Book-Entry System.................................................................9 Natural Disasters..................................................................57 a) Redemption.............................................................................9 Changes in the Law..............................................................58 E 0) Annual Debt Service.............................................................12 Investment Risk....................................................................58 as Secondary Market................................................................58 to SECURITY FOR THE SERIES 2015 BONDS........................13 No Validation Proceeding Undertaken.................................59 76 General.................................................................................13 IRS Audit of Tax-Exempt Bond Issues................................59 Security of Bonds;Equal Security........................................14 Loss of Tax Exemption........................................................59 Redevelopment Obligation Retirement Fund;Tax Bonds Are Limited Obligations............................................60 0 Increment Fund;Deposit of Tax Revenues...........................15 Bond Insurance.....................................................................60 ca Deposit of Amounts by Trustee............................................16 Limitations on Remedies......................................................61 S Tax Increment Financing......................................................18 E Recognized Obligation Payment Schedule...........................20 TAX MATTERS......................................................................61 Last and Final Recognized Obligation Payment Series 2015A Bonds.............................................................61 Schedule...............................................................................23 Series 2015B Bonds.............................................................63 Obligations with Senior Right to Payment............................24 C14 CONTINUING DISCLOSURE...............................................66 Subordinate Obligations.......................................................28 Limitation on Additional Indebtedness.................................28 CONCLUDING INFORMATION...........................................67 Underwriting........................................................................67 [BOND INSURANCE]............................................................30 LegalOpinion.......................................................................67 PROPERTY TAXATION IN CALIFORNIA..........................30 Litigation..............................................................................68 LO Property Tax Collection and Distribution Ratings.................................................................................68 Procedures............................................................................30 Miscellaneous.......................................................................68 CD C14 UnitaryProperty...................................................................32 0 Article XIIIA of the State Constitution.................................32 APPENDIX A FISCAL CONSULTANT'S REPORT............A-1 Appropriations Limitation—Article XIIIB...........................33 APPENDIX B SUMMARY OF THE INDENTURE..............B-1 Articles XIIIC and XIIID of the State Constitution..............34 APPENDIX C FORM OF BOND COUNSEL OPINION.......C-1 Proposition 87.......................................................................34 APPENDIX D BOOK-ENTRY ONLY SYSTEM..................D-1 Appeals of Assessed Values.................................................34 APPENDIX E COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED Proposition8.........................................................................34 JUNE 30,[2015].............................................E-1 (n Propositions 218 and 26........................................................35 APPENDIX F STATE DEPARTMENT OF FINANCE Future Initiatives...................................................................35 LETTER.............. ..F-1 THE SUCCESSOR AGENCY TO THE APPENDIX G FORM OF CONTINUING DISCLOSURE 0 1� REDEVELOPMENT AGENCY OF THE CITY OF CERTIFICATE...............................................G-1 co SAN BERNARDINO...............................................................35 AgencyPowers.....................................................................36 X THE PROJECT AREAS...........................................................36 UJ General.................................................................................37 Ln Project Area Characteristics..................................................40 C i Levy and Collection..............................................................42 Assessment Appeals.............................................................42 TAX REVENUES....................................................................43 a�i Projected Tax Revenues........................................................43 E Debt Service Coverage.........................................................46 DOCSOC/1 725450v4/200430-0012 Packet Pg. 649 l :6 4 j""'" $ , $ y SUCCESSOR AGENCY TO THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE O m CITY OF SAN BERNARDINO CITY OF SAN BERNARDINO TAX ALLOCATION REFUNDING BONDS, TAX ALLOCATION REFUNDING BONDS, SERIES 2015A(TAX-EXEMPT) SERIES 2015B(FEDERALLY TAXABLE) m INTRODUCTORY STATEMENT o This Official Statement, including the cover page, is provided to furnish information in connection o with the sale by the Successor Agency to the Redevelopment Agency of the City of San Bernardino (the d "Agency") of its $ # Tax Allocation Refunding Bonds, Series 2015A (Tax-Exempt) (the "Series 2015A Bonds") and its $ * Tax Allocation Refunding Bonds, Series 2015B (Federally Taxable) ~ (the"Series 2015B Bonds"and,together with the Series 2015A Bonds,the"Series 2015 Bonds"). E m Authority and Purpose a U) The Series 2015 Bonds are being issued pursuant to the Constitution and laws of the State of California (the "State"), including Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code (the "Bond Law") and an Indenture of Trust, dated as of O December 1, 2015 (the "Indenture"), by and between the Agency and U.S. Bank, National Association, as trustee(the"Trustee"). See the caption"THE SERIES 2015 BONDS—Authority for Issuance." _ E The Series 2015 Bonds are being issued: (i)to refund certain bonds of the former Redevelopment m Agency of the City of San Bernardino (the "Former Agency")currently outstanding in the aggregate principal a amount of $58,745,000, as described under the caption "REFUNDING PLAN;" (ii)to purchase a bond r insurance policy (the "Policy") and a Municipal Bond Debt Service Reserve Insurance Policy (the "Reserve Policy") from [Insurer] (the "Insurer") for deposit in the Reserve Account; and (iii)to pay certain costs of issuance of the Series 2015 Bonds. See the caption"SOURCES AND USES OF FUNDS." m Q h Section 34177.5 of the Dissolution Act (defined under the caption "—The City and the Agency") LO authorizes the Successor Agency to issue bonds for limited purposes only, including for the purpose of N refunding bonds and other obligations of the Agency for debt service savings and to finance debt service O spikes,including balloon maturities. The Series 2015 Bonds are being issued for these purposes. _ E L As permitted by the Dissolution Act,the Series 2015 Bonds are payable from and secured by the Tax Revenues deposited in the Redevelopment Property Tax Trust Fund (also referred to herein as the "RPTTF") m on a subordinate basis to certain bonds currently outstanding in the aggregate principal amount of$61,510,000 and certain other ongoing obligations of the Agency, as more fully described under the caption "SECURITY N FOR THE SERIES 2015 BONDS—Obligations with Senior Right to Payment." O a The City and the Agency m w The Mayor and Common Council of the City of San Bernardino (the "City") acts as the governing body of the Agency and staff of the City provides administrative support for the Agency. The City is located w in the County of San Bernardino (the "County"). The City encompasses approximately 59.6 square miles in in the San Bernardino foothills and the eastern portion of San Bernardino Valley, approximately 60 miles east of N Los Angeles. The City is the county seat of the County. The January 1, 2015 population of the City was r estimated by the California Department of Finance to be 213,933. The City was first incorporated in 1857,and operates under and is governed by the laws of the State of California and its own Charter as periodically E m Preliminary,subject to change. Q 1 DOCSOC/1725450v4/200430-0012 �Pac[Cet=Pg:650° amended since the original City Charter was adopted by the electorate in 1905. The most recent Charter was N passed in 2004. The City of San Bernardino has a full-time, elected Mayor, a City Manager, an elected City Attorney,City Clerk,and City Treasurer,and seven Councilmembers who are elected in a ward system. 0 m The Former Agency was established pursuant to the Community Redevelopment Law (Part 1, _ Division 24, commencing with Section 33000 of the Health& Safety Code of the State) (the Redevelopment Law") and was activated by Resolution No. 2361 adopted by the Mayor and Common Council on June 23, 1952, at which time the Mayor and Common Council declared itself to be the governing board of the Former Agency. 0 c� On June 28, 2011, Assembly Bill No. 26 ("AB X1 26") was enacted as Chapter 5, Statutes of 2011, 0 together with a companion bill, Assembly Bill No. 27 ("AB X1 27"). A lawsuit entitled California Q Redevelopment Association, et al. v. Matosantos, et al., was brought in the State Supreme Court challenging X the constitutionality of AB X1 26 and AB X1 27. In a published decision (53 Cal. 4th 231 (Dec. 29, 2011)), the State Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the State E m Supreme Court,as of February 1,2012,all redevelopment agencies in the State, including the Former Agency, were dissolved, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. The primary provisions of AB X1 26 relating to the dissolution and winding down of former O redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health & Safety Code of the State, as amended on June 27, 2012 by =_ Assembly Bill No. 1484 ("AB 1484"), enacted as Chapter 26, Statutes of 2012, and as further amended on E September 22, 2015 by Senate Bill 107 ("SB 107"), enacted as Chapter 325, Statutes of 2015 (collectively, as m amended from time to time,the"Dissolution Act"). N On January 9, 2012, pursuant to Resolution No.2012-12 and Section 34173 of the Dissolution Act, v the Mayor and Common Council of the City elected to serve as the governing body of the successor agency to the Former Agency. Subdivision (g) of Section 34173 of the Dissolution Act, which was added by AB 1484, pNp expressly affirms that the Agency is a separate public entity from the City,that the two entities shall not merge and that the liabilities of the Former Agency will not be transferred to the City, nor will the assets of the LO Former Agency become assets of the City. N 0 The Redevelopment Plans =a Tax Revenues are derived from redevelopment project areas of the Former Agency. Redevelopment F plans were adopted by the Mayor and Common Council for the following fourteen redevelopment project areas m (each, a"Project Area"and collectively,the"Project Areas"): U) 1. Meadowbrook Redevelopment Project(the"Meadowbrook Project"); cA O a 2. Central City Project No. 1 (the"Central City Project No. 1"); pp :Q 3. State College Redevelopment Project(the"State College Project"); L X w 4. Central City North Redevelopment Project(the"Central City North Project"); LO N 5. Central City West Redevelopment Project(the"Central City West Project"); 6. Central City East Redevelopment Project(the"Central City East Project"); a=i t 7. Central City South Redevelopment Project(the"Central City South Project"); � a 2 DOCS OC/1725450v4/200430-0012 Packet:Pg 65 8. Southeast Industrial Park Redevelopment Project(the"Southeast Industrial Park Project"); N -a c 9. Northwest Redevelopment Project(the"Northwest Project"); O m rn 10. Tri-City Redevelopment Project(the"Tri-City Project"); 11. South Valle Redevelopment Project(the"South Valle Project"); 12. Uptown Redevelopment Project(the"Uptown Project");and o M 13. Mt.Vernon Corridor Redevelopment Project(the"Mt.Vernon Corridor Project");and o Q 14. 40th Street Redevelopment Project(the"40th Street Project"). @ The above-listed Project Areas constitute all of the Former Agency's active redevelopment project Q areas. The Central City Project No. 1,the Meadowbrook Project,the Central City East Project and the Central E City South Project were merged together into one redevelopment project for financing purposes; however, each of these Project Aras continued to operate under its own Redevelopment Plan. The Redevelopment Plans U) for the various Project Areas contain separate time and financial limitations applicable to each of the Project @ Areas and Component Areas thereof; however, SB 107, which became effective on September 22, 2015, V amended the Dissolution Act to provide that the time limits for receiving property tax revenues and the O limitation on the amount of property tax revenues that may be received by the Former Agency and the Agency set forth in the Redevelopment Plan are not effective for purposes of paying the Agency's enforceable c obligations. Accordingly, the projections set forth in this Official Statement and in the Fiscal Consultant's E Report attached to this Official Statement as Appendix A do not take into account the time and financial limitations set forth in the Redevelopment Plans for the Project Areas. The Redevelopment Plans and the a Project Areas are discussed in more detail under the caption"THE PROJECT AREAS—General." T The Agency covenants and agrees in the Indenture that, subject to the prior application and lien in favor of the Senior Obligations, all Tax Revenues when and as received, will be received by the Agency in pNp trust under the Indenture and will be transferred to the Trustee within a reasonable period of time from the receipt by the Agency thereof, for deposit by the Trustee in the Tax Increment Fund and will be accounted for Un through and held in trust in the Tax Increment Fund,and the Agency will have no beneficial right or interest in N any of such money, except only as specifically provided otherwise in the Indenture. All such Tax Revenues, o whether received by the Agency and held in trust pending transfer or deposited with the Trustee, all as herein provided,will nevertheless be disbursed, allocated and applied solely to the uses and purposes set forth in the @ Indenture, and will be accounted for separately and apart from all other money, funds, accounts or other resources of the Agency. See the caption"SECURITY FOR THE SERIES 2015 BONDS." m c M Tax Allocation Financing N Prior to the enactment of AB X1 26, the Redevelopment Law authorized the financing of a redevelopment projects through the use of tax increment revenues. This method provided that the taxable o0 valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation. Assuming that the taxable valuation never drops below the base year level, the taxing agencies thereafter w received that portion of the taxes produced by applying then current tax rates to the base year valuation, and tn the redevelopment agency was allocated the remaining portion produced by applying then current tax rates to C� the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency were authorized to be pledged to the payment of agency obligations. m Section 34177.5 of the Dissolution Act authorizes the Successor Agency to issue bonds for limited purposes only, including for the purpose of refunding bonds and other obligations of the Agency for debt U w. Q 3 DOC S OC/1725450v4/20043 0-0012 =Packet Pg.;652 service savings and to finance debt service spikes, including balloon maturities. The Series 2015 Bonds are y being issued for these purposes. Successor Agency bonds issued pursuant to Section 34177.5(a) of the V c Dissolution Act may be secured by a pledge of moneys deposited from time to time in a Redevelopment o m Property Tax Trust Fund held by a county auditor-controller with respect to a successor agency, which are equivalent to the tax increment revenues that were formerly allocated under the Redevelopment Law to the = redevelopment agency and formerly authorized under the Redevelopment Law to be used for the financing of C redevelopment projects. Under the Indenture, Tax Revenues consist of taxes annually allocated and paid to the Agency o pursuant to Article 6 of Chapter 6 (commencing with Section 33670)of the Law, Section 16 of Article XVI of u the Constitution of the State and other applicable state laws and as provided in the Redevelopment Plans o available and deposited in the RPTTF,to the extent not pledged to Senior Obligations,payable with respect to Q Pass Through Obligations (defined to include obligations to pay Statutory Pass-Through Amounts and under X the Pass-Through Agreements), and subject to the equal and senior claims of indebtedness, if any. If, and to ~ the extent, that the provisions of Section 34172 or paragraph (2) of subdivision (a) of Section 34183 of the 0) Dissolution Act are invalidated by a final judicial decision, then Tax Revenues will include all tax revenues d allocated to the payment of indebtedness pursuant to California Health and Safety Code Section 33670 or such o other section as may be in effect at the time providing for the allocation of tax increment revenues in accordance with Article XVI, Section 16 of the California Constitution. See the caption "SECURITY FOR THE SERIES 2015 BONDS—Tax Increment Financing." O Successor agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See the caption "RISK FACTORS." Also see the caption "RISK FACTORS— Effect of City of San Bernardino Bankruptcy" for a discussion of the potential impacts of the City's Chapter 9 bankruptcy case, including the risk that creditors of the City may make claims against the Agency's Tax Revenues. a N r Security for the Series 2015 Bonds The Dissolution Act requires the Auditor-Controller of the County of San Bernardino (the "County pip Auditor-Controller") to determine the amount of property taxes that would have been allocated to the Former Agency had the Former Agency not been dissolved pursuant to the operation of AB X1 26, using current u, assessed values on the last equalized roll on August 20, and to deposit such amount in the Redevelopment N Property Tax Trust Fund pursuant to the Dissolution Act. Section 34177.5(g) of the Dissolution Act provides o that any bonds authorized to be issued by the Agency will be considered indebtedness incurred by the dissolved Former Agency, with the same legal effect as if such bonds had been issued prior to the effective date of AB X 1 26, in full conformity with the applicable provisions of the Redevelopment Law that existed F prior to that date, and will be included in the Agency's Recognized Obligation Payment Schedule. See m Appendix B and the caption "SECURITY FOR THE SERIES 2015 BONDS—Recognized Obligation C Payment Schedule." N The Dissolution Act further provides that bonds authorized to be issued by the Agency will be secured o0. by a pledge of,and lien on,and will be repaid from moneys deposited from time to time in,the Redevelopment m Property Tax Trust Fund, and that property tax revenues pledged to any bonds authorized under the Dissolution Act, such as the Series 2015 Bonds,are taxes allocated to the Agency pursuant to the provisions of :c the Redevelopment Law and the State Constitution which provided for the allocation of tax increment revenues w under the Redevelopment Law,as described in the foregoing paragraph. LO N In accordance with the Dissolution Act, the Series 2015 Bonds are payable from and secured by, and Tax Revenues include, taxes annually allocated and paid to the Agency pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law, Section 16 of Article XVI of the Constitution of the State and E other applicable state laws and as provided in the Redevelopment Plans available and deposited in the RPTTF, M to the extent not pledged to Senior Obligations,payable with respect to Pass Through Obligations,and subject Q 4 DOCSOC/1725450v4/200430-0012 ,Packet Pg 653 ` `6.Cb to the equal and senior claims of indebtedness, if any. If, and to the extent, that the provisions of N Section 34172 or paragraph(2)of subdivision(a)of Section 34183 of the Dissolution Act are invalidated by a final judicial decision, then Tax Revenues will include all tax revenues allocated to the payment of 0 m indebtedness pursuant to California Health and Safety Code Section 33670 or such other section as may be in effect at the time providing for the allocation of tax increment revenues in accordance with Article XVI, Section 16 of the California Constitution. w- m Pursuant to the Indenture,and except as provided therein,all of the Tax Revenues and all amounts on deposit from time to time in the funds and accounts established thereunder (other than the Expense Account o and the Rebate Fund)are pledged to the payment of the principal of and interest on the Outstanding Bonds and v any Additional Bonds. The Agency irrevocably grants in the Indenture, to the Trustee for the benefit of the 0 Owners of the Outstanding Bonds,a first charge and lien on,and a security interest in,and pledges and assigns Q the Tax Revenues,whether held by the Agency,the County Auditor-Controller or the Trustee,and all amounts X in the funds and accounts established thereunder (other than the Expense Account and the Rebate Fund), including the"Successor Agency to the Redevelopment Agency of the City of San Bernardino Tax Increment Fund" (the"Tax Increment Fund"), which is created by the Agency pursuant to the Indenture and which fund m the Agency covenants and agrees to maintain with the Trustee so long as any Bonds are Outstanding under the Indenture,to the Trustee for the benefit of the Owners of the Outstanding Bonds. N R Taxes levied on the property within the Project Areas on that portion of the taxable valuation over and 2 above the taxable valuation of the applicable base year property tax roll with respect to the various territories O within the Project Areas, to the extent that such taxes constitute Tax Revenues as described in this Official Statement, will be deposited in the Redevelopment Property Tax Trust Fund for transfer by the County =_ Auditor-Controller to the Agency's Redevelopment Obligation Retirement Fund on January 2 and June 1 of E each year (adjusted for holidays and weekends) to the extent required for payments listed in the Agency's Recognized Obligation Payment Schedule in accordance with the requirements of the Dissolution Act. See the °- caption "SECURITY FOR THE SERIES 2015 BONDS—Recognized Obligation Payment Schedule." Moneys deposited by the County Auditor-Controller into the Agency's Redevelopment Obligation Retirement Fund will be transferred by the Agency to the Trustee for deposit in the Tax Increment Fund established under the Indenture and administered by the Trustee in accordance with the Indenture. m 4 The Agency has no power to levy property taxes and must look specifically to the allocation of taxes LO as described above. See the caption"RISK FACTORS." Also see the caption"RISK FACTORS—Effect of N City of San Bernardino Bankruptcy" for a discussion of the potential impacts of the City's Chapter 9 0 bankruptcy case, including the risk that creditors of the City may make claims against the Agency's Tax Revenues. cLa L Obligations with Senior Right to Payment m c c� The use of tax increment revenues from the Project Areas to pay debt service on the Series 2015 Bonds is subject to the prior pledge or priority of payment of certain obligations with a prior.claim on tax cn increment revenues to the Bonds. See the captions "SECURITY FOR THE SERIES 2015 BONDS— a Obligations with Senior Right to Payment—Senior Obligations," "—Prior Agreements," "—Pass-Through ap Agreements"and'—Statutory Pass-Through Amounts"for a description of each of these senior obligations. Reserve Policy w LO A Reserve Account for the Series 2015 Bonds is established pursuant to the Indenture in an amount C: equal to the Reserve Account Requirement of $ [The Insurer has committed to issue, simultaneously with the issuance of the Series 2015 Bonds, the Reserve Policy in the principal amount of the C m E t Preliminary,subject to change. 5 DOCSOC/1725450v4/200430-0012 Packet Pg.654 '��61✓b Reserve Account Requirement for deposit in the Reserve Account. See the caption "SECURITY FOR THE w SERIES 2015 BONDS—Deposit of Amounts by Trustee—Reserve Account."] 0 m Further Information rs� _ Brief descriptions of the Series 2015 Bonds, the Indenture, the Agency, the Former Agency and the City are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bond Law, the Redevelopment Law, the Dissolution Act, the Constitution and the laws of the State as well as the proceedings of the Former o Agency, the Agency and the City are qualified in their entirety by reference to such documents. References M herein to the Series 2015 Bonds are qualified in their entirety by the form thereof included in the Indenture and o the information with respect thereto included herein. Q X Capitalized terms used herein and not defined have the meanings set forth in Appendix B. ~ REFUNDING PLAN E 4) cu The Refunded Obligations N The Agency expects to apply a portion of the proceeds of the Series 2015 Bonds,together with other funds on hand, to refund on a current basis all amounts payable pursuant to the debt obligations described O below,which are referred to collectively in this Official Statement as the"Refunded Obligations." 1. Loan Agreement, dated as of March 1, 1998 (the "1998 Loan Agreement"), between the E Agency and the San Bernardino Joint Powers Financing Authority (the "Authority"), which secures the San L Bernardino Joint Powers Financing Authority Subordinated Tax Allocation Bonds, Series 1998B, originally a issued in the amount of$8,590,000 of which$3,300,000 is currently outstanding(the"Series 1998B Authority r Bonds"). The 1998 Loan Agreement additionally secures the San Bernardino Joint Powers Financing Authority Tax Allocation Refunding Bonds, Series 1998A, originally issued in the amount of$19,000,000 of which$6,165,000 is currently outstanding(the"Series 1998A Senior Authority Bonds"), and only that portion m of the 1998 Loan Agreement related to and securing Series 1998B Bonds is intended to be refunded and defeased by the Agency. LO 0 N 2. Seven Loan Agreements, each dated as of April 1, 2002 (the "2002 Loan Agreements"), C between the Agency and the Authority, which secures the San Bernardino Joint Powers Financing Authority = v Tax Allocation Refunding Bonds, Series 2002, originally issued in the amount of $30,330,000 of which $17,420,000 is currently outstanding(the"Series 2002 Authority Bonds"). F m 3. Loan Agreement, dated as of January 1, 2002 (the "2002A Loan Agreement"), between the Agency and the Authority, which secures the San Bernardino Joint Powers Financing Authority Tax Cn Allocation Bonds, Series 2002A, originally issued in the amount of $3,635,000 of which $2,690,000 is C� currently outstanding(the"Series 2002A Authority Bonds"). a M 4. Loan Agreement, dated as of April 1, 2006 (the "2006 Loan Agreement"), between the Agency and the Authority, which secures the San Bernardino Joint Powers Financing Authority Tax Allocation Bonds,Taxable Series 2006, originally issued in the amount of$28,665,000 of which$17,305,000 W is currently outstanding(the"Series 2006 Authority Bonds"). 'o N 5. Loan Agreement, dated as of September 1, 2010 (the "2010 Loan Agreement"), between the Agency and the Inland Valley Development Agency (the "IVDA"), which secures the Inland Valley Development Agency Revenue Bond Series 2010, originally issued and currently outstanding in the amount of 0) $8,000,000(the"Series 2010 IVDA Bonds"). s Q 6 DOCSOC/1725450v4/200430-0012 Packet Pg P,655; 6. Redevelopment Agency of the City of San Bernardino Tax Exempt Promissory Note, Series N 2011 originally issued and currently outstanding in the amount of$10,000,000(the"2011 Notes"). _ O Pursuant to separate Escrow Agreements, each dated as of the Closing Date(collectively,the"Escrow m Agreements"), by and between the Agency and the respective trustees for the Refunded Obligations (in such capacity, the"Escrow Bank"),the Agency will cause a portion of the proceeds of the Series 2015 Bonds to be delivered to the Escrow Bank for deposit in the applicable escrow funds established under the Escrow Agreements(each,an"Escrow Fund"and collectively,the"Escrow Funds"). Such amounts to be delivered by or on behalf of the Agency to the Escrow Bank on the Closing Date, together with amounts transferred from o funds and accounts established in connection with each series of the Refunded Obligations,will be held in cash M and invested in Federal Securities in amounts sufficient to pay principal and accrued interest and thereby O redeem all of the Refunded Obligations on dates ranging from to (each, a"Redemption Date"). Q X Rf Sufficiency of the deposits into each Escrow Fund for such purposes will be verified by Causey ~ Demgen & Moore P.C., Denver, Colorado (the "Verification Agent"). Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in the Escrow Agreements, the E m applicable series of Refunded Obligations will be defeased pursuant to the provisions of the indentures under which they were issued as of the date of issuance of the Series 2015 Bonds. m 76 The amounts held by the Escrow Bank in each Escrow Fund are pledged solely to the redemption of V the applicable series of outstanding Refunded Obligations. Neither the moneys deposited in the Escrow Funds O nor the interest on the invested moneys will be available for the payments of principal of and interest on the 2 Series 2015 Bonds. __ E Verification of Mathematical Computations 0. Upon issuance of the Series 2015 Bonds, the Verification Agent will deliver a report on the N mathematical accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to the adequacy of the cash to be deposited in the respective Escrow Funds to pay the Redemption Price of the applicable series of Refunded Obligations. pNp a LO 0 N O C L L d m cu co O a m X W Ln N r r G d E V a 7 DOCSOC/1725450x4/200430-0012 Packet Rg 656>! b Sources and Uses of Funds* N The estimated sources and uses of funds are summarized as follows: 0 m rn Series 2015A Series 2015B _ Bonds Bonds Total a Sources t'l: d Principal Amount of Series 2015 Bonds $ $ $ Prior Reserve Funds o Plus Other Moneysl�1 Plus/Less Original Issue a Premium/Discount Q Total Sources: $ $ $ x F- Usest [Refunded Obligations Escrow Funds] $ $ $ E Costs of Issuance Fund(3) a Underwriter's Discount co Total Uses: $ �° c1> Amounts rounded to nearest dollar. O (2) Reflects moneys held in funds and accounts established in connection with the Refunded Obligations. (3) Includes fees and expenses of Bond Counsel, Disclosure Counsel, Financial Advisor, Fiscal Consultant, Trustee, Escrow = Agent, Underwriter's counsel and Verification Agent,printing expenses,rating agency fees, premiums for the Policy and E Reserve Policy and other miscellaneous costs. a THE SERIES 2015 BONDS Authority for Issuance U) The Series 2015 Bonds were authorized for issuance pursuant to the Indenture,the Bond Law, and the m Dissolution Act. Direction to undertake the issuance of the Series 2015 Bonds and the execution of the related H LO documents was authorized by the Agency pursuant to Resolution No. 2015-104 adopted on May 18,2015,and by the Oversight Board of the Agency pursuant to Resolution No. SBOB 2015-05 adopted on May 19, 2015 c°.i (the"Oversight Board Action"). 0 L Written notice of the Oversight Board Action was provided to the State Department of Finance (the _ "DOF"). On July 24, 2015, the DOF provided a letter to the Agency stating that based on the DOF's review y and application of the law, the Oversight Board Action approving the Series 2015 Bonds is approved by the m DOF. A copy of the DOF's letter is set forth in Appendix F. N Description of the Series 2015 Bonds N O IL The Series 2015 Bonds will be issued as fully-registered bonds in denominations of$5,000, or any m w integral multiple thereof(not exceeding the principal amount of such Bonds maturing at any one time)for each maturity, initially in the name of Cede&Co., as nominee of The Depository Trust Company,New York,New s X York("DTC"), as registered owner of all Series 2015 Bonds. See the caption "—Book-Entry System." The W LO Series 2015 Bonds will be dated the Closing Date and mature on December 1 in the years and in the amounts shown on the inside front cover page of this Official Statement. Interest on the Series 2015 Bonds will be N calculated at the rates shown on the inside cover page of this Official Statement, payable semiannually on June 1 and December 1 in each year,commencing on June 1,2016(each, an"Interest Payment Date"). aD E s m Preliminary,subject to change. Q 8 DOCSOC/1725450v4/200430-0012 �P,acket�P;g X657,, Cab Each Series of Series 2015 Bonds will bear interest from the Interest Payment Date next preceding the N date of authentication thereof, unless such date of authentication is an Interest Payment Date, in which event = they will bear interest from such Interest Payment Date, or unless such date of authentication is prior to the 0 m first Interest Payment Date, in which event they will bear interest from the Closing Date, provided, however, 0 that if,at the time of authentication of any Series 2015 Bond, interest is then in default on such Series of Series = 2015 Bond, such Series of Series 2015 Bond will bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment. Interest on the Series 2015 Bonds will be computed on the basis of a 360-day year of twelve 30-day months. 0 Payment of interest on the Series 2015 Bonds will be made to Cede&Co.as registered owner,or such M other person whose name appears on the bond registration books of the Trustee as the registered owner of the 0 Series 2015 Bonds, as of the close of business on the fifteenth (15th) day of the calendar month preceding the Q Interest Payment Date (the "Record Date"), or if otherwise instructed, by check mailed to such registered X owner at its address as it appears on such books or at such other address as it may have filed with the Trustee h for that purpose prior to the Record Date. Principal and redemption premiums, if any, on the Series 2015 Bonds will be payable in immediately available funds. Principal and redemption premiums, if any, and E d interest on the Series 2015 Bonds will be paid in lawful money of the United States of America. u Book-Entry System .2 w DTC will act as securities depository for the Series 2015 Bonds. The Series 2015 Bonds will be O issued as fully-registered securities registered in the name of Cede&Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will = be issued for each maturity of the Series 2015 Bonds,each in the aggregate principal amount of such maturity, E and will be deposited with DTC. See Appendix D for further information with respect to DTC and its book- m entry system. N N Redemption` Optional Redemption. The Series 2015A Bonds maturing on or after December 1, 2026, are subject m too optional redemption before maturity on or after December 1 2025 at the option of the Agency,in whole or Q p p Y P � in part, on any date, at a redemption price equal to the principal amount of the Series 2015A Bonds to be to redeemed,plus accrued but unpaid interest to the redemption date. N 0 [The Series 2015B Bonds are not subject to optional redemption before maturity.] Mandatory Sinking Fund Redemption. The Series 2015A Bonds maturing on December 1,20_are m subject to mandatory redemption in part by lot on December 1 in each year commencing December 1,20_,at m the principal amount thereof plus accrued interest thereon to the date fixed for redemption in accordance with the following schedule: Series 2015A Term Bonds Maturing December 1,20_ n0. m Sinking Fund Redemption Date Principal Amount (December 1) to be Redeemed 7 X W r N r r t Final Maturity. _ d E t L) Preliminary,subject to change. Q 9 DOCSOC/1725450v4/200430-0012 Packet Pg F658 _.; The Series 2015A Bonds maturing on December 1, 20_are subject to mandatory redemption in part N by lot on December 1 in each year commencing December 1, 20 the principal amount thereof plus accrued interest thereon to the date fixed for redemption in accordance with the following schedule: 0 m Series 2015A Term Bonds Maturing December 1,20_ E Sinking Fund Redemption Date Principal Amount d (December 1) to be Redeemed c 0 0 Q X t Final Maturity. The Series 2015B Bonds maturing on December 1, 20 are subject to mandatory redemption in part _ by lot on December 1 in each year commencing December 1, 20_, at the principal amount thereof plus m accrued interest thereon to the date fixed for redemption in accordance with the following schedule: P g Cn Series 2015B Term Bonds Maturing December 1,20_ Sinking Fund Redemption Date Principal Amount 0 (December 1) to be Redeemed _ E z t a N t Final Maturity. r �t In the event that a Series 2015 Bond subject to mandatory redemption is redeemed in part prior to its stated maturity date from any moneys other than Principal Installments, the remaining Principal Installments H for such Series 2015 Bond will be reduced as directed in a Written Request of the Agency. ,n r O Notice of Redemption; Rescission. In the case of any redemption of Bonds, the Trustee will give N notice as provided in the Indenture that Bonds, identified by serial numbers, Series,maturity date, and interest 0 rate in the case of bifurcated maturities, have been called for redemption and, in the case of Bonds to be redeemed in part only,the portion of the principal amount thereof that has been called for redemption(or if all E the Outstanding Bonds are to be redeemed, so stating, in which event such serial numbers may be omitted), m that they will be due and payable on the date fixed for redemption (specifying such date) upon surrender c=o thereof at the Principal Corporate Trust Office, at the redemption price (specifying such price), together with v) any accrued interest to such date, and that all interest on the Bonds,the respective series of Bonds, or portions I thereof, as applicable, so to be redeemed will cease to accrue on and after such date and that from and after a such date such Bond or such portion will no longer be entitled to any lien, benefit or security under the o0 Indenture, and the Owner thereof will have no rights in respect of such redeemed Bond or such portion except w to receive payment from such moneys of such redemption price plus accrued interest to the date fixed for redemption. w LO Such notice will be mailed by first class mail, postage prepaid, at least twenty(20) but not more than N sixty(60)days before the date fixed for redemption,to the Security Depository,the MSRB and the Owners of r such Bonds, or portions thereof,so called for redemption, at their respective addresses as the same last appears on the Bond Register. No notice of redemption need be given to the Owner of a Bond to be called for redemption if such Owner waives notice thereof in writing, and such waiver is filed with the Trustee prior to E the redemption date. Neither the failure of an Owner to receive notice of redemption of Bonds under the Indenture nor any error in such notice will affect the validity of the proceedings for the redemption of Bonds. Q 10 DOCS OC/1725450v4/200430-0012 Packe#�Pg 659'_ Any notice of redemption may be expressly conditional and may be rescinded by Written Request of w the Agency given to the Trustee not later than the date fixed for redemption. Upon receipt of such Written c Request of the Agency, the Trustee will promptly mail notice of such rescission to the same parties that were O m mailed the original notice of redemption. _ Selection of Bonds for Redemption. Whenever less than all the Outstanding Bonds of any one C maturity are to be redeemed on any one date,the Trustee will select the particular Bonds to be redeemed by lot and in selecting the Bonds for redemption the Trustee will treat each Bond of a denomination of more than five thousand dollars ($5,000) as representing that number of Bonds of five thousand dollars ($5,000) o denomination which is obtained by dividing the principal amount of such Bond by five thousand dollars M ($5,000), and the portion of any Bond of a denomination of more than five thousand dollars ($5,000) to be o redeemed will be redeemed in an Authorized Denomination. The Trustee will promptly notify the Agency in Q writing of the numbers of the Bonds so selected for redemption in whole or in part on such date. X y Payment of Redeemed Bonds. If notice of redemption has been given or waived as provided in the Indenture, the Bonds or portions thereof called for redemption will be due and payable on the date fixed for E redemption at the redemption price thereof, together with accrued interest to the date fixed for redemption, M upon presentation and surrender of the Bonds to be redeemed at the office specified in the notice of N redemption. If less than the full principal amount of a Bond is called for redemption,the Agency will execute E and deliver and the Trustee will authenticate, upon surrender of such Bond, and without charge to the Owner thereof, Bonds of like interest rate and maturity in an aggregate principal amount equal to the unredeemed O portion of the principal amount of the Bonds so surrendered in such authorized denominations as will be specified by the Owner. _ E Effect of Redemption. If any Bond or any portion thereof will have been duly called for redemption L and payment of the redemption price, together with unpaid interest accrued to the date fixed for redemption, will have been made or provided for by the Agency, then interest on such Bond or such portion will cease to T accrue from such date,and from and after such date such Bond or such portion will no longer be entitled to any lien,benefit or security under the Indenture,and the Owner thereof will have no rights in respect of such Bond or such portion except to receive payment of such redemption price, and unpaid interest accrued to the date pNp fixed for redemption. LO Purchase in Lieu of Redemption. In lieu of redemption of any Bond pursuant to the Indenture, N amounts on deposit in the Term Bonds Sinking Account may also be used and withdrawn by the Trustee at any o time prior to selection of Bonds for redemption having taken place with respect to such amounts, upon a = Written Request of the Agency,for the purchase of such Term Bonds at public or private sale as and when and at such prices(including brokerage and other charges)as the Agency may in its discretion determine,but not in excess of par plus accrued interest. Any accrued interest payable upon the purchase of Bonds will be paid m from amounts held in the Tax Increment Fund for the payment of interest on the next following Interest C Payment Date. Any Term Bonds so purchased will be cancelled by the Trustee forthwith and will not be N reissued. The principal of any Term Bonds so purchased by the Trustee in any twelve-month period ending 60 to days prior to any Sinking Account Payment Date in any year will be credited towards and will reduce the a principal of such Term Bonds required to be redeemed on such Sinking Account Payment Date in such year. ap X W T 1 N r r _ E M c� w. Q 11 DOCSOC/1725450v4/200430-0012 Packet Pg 660 m®WmgS mPmO eemmlllad : ZMI Sg¥IS ompeUe§ ueS-SOd-■m!�]§bZL4 : em��nd �\ �\ �? � � � \ � } \ m \ � 2 _ m k � � � � 2 � \ � _ & � q / .) ƒ _ _ ƒ � . § k t § \ u \ kn S / � Q p ( y / \ ( § / � \ \ \ SECURITY FOR THE SERIES 2015 BONDS w General C m a� The Dissolution Act requires the County Auditor-Controller to determine the amount of property taxes S that would have been allocated to the Former Agency(pursuant to subdivision(b)of Section 16 of Article XVI of the State Constitution) had the Former Agency not been dissolved pursuant to the operation of AB X1 26, using current assessed values on the last equalized roll on August 20, and to deposit such amount in the Redevelopment Property Tax Trust Fund for the Agency established and held by the County o Auditor-Controller pursuant to the Dissolution Act. Section 34177.5(g) of the Dissolution Act provides that any bonds authorized thereunder to be issued by the Agency will be considered indebtedness incurred by the o dissolved Former Agency,with the same legal effect as if the bonds had been issued prior to the effective date a of AB X1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to X that date, will be included in the Agency's Recognized Obligation Payment Schedule and will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to the Dissolution Act. Property tax revenues pledged to any E m bonds authorized to be issued by the Agency under the Dissolution Act, including the Series 2015 Bonds, are o taxes allocated to the Agency pursuant to subdivision (b) of Section 33670 of the Redevelopment Law and M Section 16 of Article XVI of the State Constitution. See Appendix B and the caption "—Recognized Obligation Payment Schedule." O Pursuant to Section 33670(b) of the Redevelopment Law and Section 16 of Article XVI of the State 2 Constitution, and as provided in the redevelopment plans for the Project Areas, taxes levied upon taxable = property in the Project Areas each year by or for the benefit of the State, any city, county, district, or other E public corporation (herein sometimes collectively called "taxing agencies") after the effective date of the ordinance approving the applicable redevelopment plan, or the respective effective dates of ordinances n; approving amendments to the redevelopment plan that added territory to the applicable Project Area, as applicable,are to be divided as follows. y (a) To Taxing Agencies: That portion of the taxes which would be produced by the rate upon m which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the applicable Project Area as shown upon the assessment roll used in connection LO with the taxation of such property by such taxing agency last equalized prior to the effective date of the N ordinance adopting the applicable redevelopment plan, or the respective effective dates of ordinances o approving amendments thereto that added territory to the applicable Project Area, as applicable(each, a"base year valuation"), will be allocated to, and when collected will be paid into, the funds of the respective taxing M agencies as taxes by or for the taxing agencies on all other property are paid; and = m m (b) To the Former A ency/Agency: Except for that portion of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of m producing revenues in an amount sufficient to make annual repayments of the principal of,and the interest on, co any bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989 for the a acquisition or improvement of real property, which portion shall be allocated to, and when collected shall be op paid into, the fund of that taxing agency (as discussed under the caption "PROPERTY TAXATION IN CALIFORNIA—Article XIIIA of the State Constitution"), that portion of the levied taxes each year in excess of such amount, annually allocated within the redevelopment plan limit, when collected will be paid into a w special fund of the Former Agency. Section 34172(c) of the Dissolution Act provides that, for purposes of 'n Section 16 of Article XVI of the State Constitution, the Redevelopment Property Tax Trust Fund will be c� deemed to be a special fund of the Agency to pay the debt service on indebtedness incurred by the Former r Agency or the Agency to finance or refinance the redevelopment projects of the Former Agency. m That portion of the levied taxes described in paragraph (b) above, less amounts deducted pursuant to s Section 34183(a) of the Dissolution Act for permitted administrative costs of the County Auditor-Controller R a 13 DOCSOC/1725450v4/200430-0012 Y..Packet,,Pg 662;. (as discussed under the caption "PROPERTY TAX COLLECTION IN CALIFORNIA—Property Tax y Collection and Distribution Procedures—Property Tax Administrative Costs"),constitutes the amount required = under the Dissolution Act to be deposited by the County Auditor-Controller into the Redevelopment Property o m Tax Trust Fund. In addition, Section 34183 of the Dissolution Act effectively eliminates the January 1, 1989 date referred to in paragraph(b)above and provides that debt service override revenues approved by the voters for the purpose of supporting pension programs or capital projects or programs related to the State Water Project that are not pledged to or not needed for debt service on Agency debt will be allocated and paid to the entity that levies the override. Various taxing agencies have levied debt service overrides in the Project Areas. Pursuant to several Pass-Through Agreements, the Agency has agreed to pay to certain taxing agencies the o incremental override revenues it receives as a result of overrides levied by such taxing agencies. See "— Obligations with Senior Right to Payment—Pass-Through Agreements." The projections of Tax Revenues set o forth herein under the caption "TAX REVENUES—Projected Tax Revenues" and in the Fiscal Consultant's Q Report attached as Appendix A are based on the 1%general levy,without taking into account any debt service X override tax revenues that may be available to the Agency. ~ r c m Subject to the prior application and lien in favor of the Senior Obligations, Prior Agreements, Pass- E d Through Agreements and Statutory Pass-Through Amounts (as described under the captions "—Obligations with Senior Right to Payment—Senior Obligations," "—Prior Agreements," "—Pass-Through Agreements" Cn and"—Statutory Pass-Through Amounts"), the Series 2015 Bonds are payable from and secured by deposits into the Redevelopment Property Tax Trust Fund to be derived from the Project Areas. See the caption "- Security of Bonds;Equal Security." 0 The Agency has no power to levy and collect taxes,and various factors beyond its control could affect M_ the amount of Tax Revenues available in any fiscal year (defined as July 1 through June 30) to pay the £ principal of and interest on the Series 2015 Bonds. See the captions "—Tax Increment Financing," "— Recognized Obligation Payment Schedule," "PROPERTY TAXATION IN CALIFORNIA" and "RISK a FACTORS." Also see the caption "RISK FACTORS—Effect of City of San Bernardino Bankruptcy" for a r discussion of the potential impacts of the City's Chapter 9 bankruptcy case, including the risk that creditors of the City may make claims against the Agency's Tax Revenues. Cn M The Series 2015 Bonds are not a debt of the City, the State, or any of its political subdivisions, and neither said City, said State, nor any of its political subdivisions is liable thereon, nor in any event will the La Series 2015 Bonds be payable out of any funds or properties other than those of the Agency. The Series 2015 N Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or o restriction. _ L �Q Security of Bonds;Equal Security m M Pursuant to Section 34177.5(g) of the Dissolution Act, except as provided in the Indenture, the Series 2015 Bonds will be equally secured by a pledge of,security interest in and lien on all of the Tax Revenues and N the moneys in the Tax Increment Fund,and the Series 2015 Bonds will also be secured by a first and exclusive vn pledge of,security interest in and lien upon all of the moneys in the Tax Increment Fund,the Interest Account, a the Principal Account,the Redemption Account and the Reserve Account(including any subaccounts therein); ca provided, amounts held in the Reserve Account (or subaccounts therein) will secure only the issue to which s such account or subaccount relates to the extent specifically provided for in the Indenture and any M Supplemental Indenture,as applicable,without preference or priority for series, issue,number, dated date, sale w date, date of execution or date of delivery. Except for the Tax Revenues, which constitute the amounts 'n deposited in the Redevelopment Property Tax Trust Fund that are not pledged to other obligations of the c4 Former Agency or the Agency, and such moneys, no funds or properties of the Agency will be pledged to, or r otherwise liable for, the payment of principal of or interest or redemption premium(if any) on the Series 2015 Bonds. E k L V fC Q 14 DOCS OC/1725450v4/200430-0012 Packet Pg. 663 `�GCb As defined in the Indenture, "Tax Revenues" means taxes annually allocated and paid to the Agency y pursuant to Article 6 of Chapter 6 (commencing with Section 33670)of the Law, Section 16 of Article XVI of c the Constitution of the State and other applicable state laws and as provided in the Redevelopment Plans o 00 available and deposited in the RPTTF,to the extent not pledged to Senior Obligations,payable with respect to Pass Through Obligations, and subject to the equal and senior claims of indebtedness, if any. If, and to the = extent, that the provisions of Section 34172 or paragraph (2) of subdivision (a) of Section 34183 of the Dissolution Act are invalidated by a final judicial decision, then Tax Revenues will include all tax revenues allocated to the payment of indebtedness pursuant to California Health and Safety Code Section 33670 or such other section as may be in effect at the time providing for the allocation of tax increment revenues in o accordance with Article XVI, Section 16 of the California Constitution. See Appendix B. 0 Taxes levied on the property within the Project Areas on that portion of the taxable valuation over and a above the taxable valuation of the applicable base year property tax roll with respect to the various territories X within the Project Areas,to the extent that they constitute Tax Revenues as described below,will be deposited in the Redevelopment Property Tax Trust Fund for transfer by the County Auditor-Controller to the Agency's Redevelopment Obligation Retirement Fund on January 2 and June 1 of each year (adjusted for holidays and E a� weekends) to the extent required for payments listed in the Agency's approved Recognized Obligation c Payment Schedule in accordance with the requirements of the Dissolution Act. See the caption"—Recognized co Obligation Payment Schedule." Moneys deposited by the County Auditor-Controller into the Agency's R Redevelopment Obligation Retirement Fund will be transferred by the Agency to the Trustee for deposit in the U Tax Increment Fund established under the Indenture and administered by the Trustee in accordance with the O Indenture. See the caption"RISK FACTORS—Effect of City of San Bernardino Bankruptcy"for a discussion of the potential impacts of the City's Chapter 9 bankruptcy case, including the risk that creditors of the City = may make claims against the Agency's Tax Revenues. E d L See the caption"—Redevelopment Obligation Retirement Fund;Tax Increment Fund;Deposit of Tax n; Revenues"and Appendix B. N T Under the Dissolution Act, Tax Revenues derived from one Project Area and deposited in the Redevelopment Property Tax Trust Fund are available to pay debt service on the obligations incurred with m respect to other Project Areas of the Agency, after payments have been made on any Senior Obligations secured from Tax Revenues from the applicable Project Area and the Series 2015 Bonds. �n r O N Redevelopment Obligation Retirement Fund;Tax Increment Fund;Deposit of Tax Revenues o c =a The Agency has established the Redevelopment Obligation Retirement Fund pursuant to Section 34170.5(a) of the Dissolution Act. The Indenture establishes a special fund to be held by the Trustee F within the Redevelopment Obligation Retirement Fund to be known as the"Tax Increment Fund." m ca Pursuant to the Indenture,and except as provided therein, all of the Tax Revenues and all amounts on N deposit from time to time in the funds and accounts established thereunder (other than the Expense Account N and the Rebate Fund)are pledged to the payment of the principal of and interest on the Outstanding Bonds and a any Additional Bonds. The Agency irrevocably grants in the Indenture, to the Trustee for the benefit of the 6 Owners of the Outstanding Bonds,a first charge and lien on, and a security interest in, and pledges and assigns in the Indenture,the Tax Revenues,whether held by the Agency,the County Auditor-Controller or the Trustee, and all amounts in the funds and accounts established thereunder (other than the Expense Account and the w Rebate Fund), including the Tax Increment Fund, which is created by the Agency pursuant to the Indenture 'n r- and which fund the Agency covenants and agrees to maintain with the Trustee so long as any Bonds are C� Outstanding under the Indenture,to the Trustee for the benefit of the Owners of the Outstanding Bonds. The Agency further covenants and agrees in the Indenture that, subject to the prior application and lien 0 in favor of the Senior Obligations, all Tax Revenues,when and as received,will be received by the Agency in trust under the Indenture and will be deemed to be held by the Agency as agent for the Trustee and will, not Q 15 DOCSOC/1725450v4/200430-0012 Pecket Pg��664'- later than five (5) Business Days following such receipt, be deposited by the Agency with the Trustee in the N Tax Increment Fund and will be accounted for through and held in trust in the Tax Increment Fund, and the c Agency will have no beneficial right or interest in any of such money, except only as provided in the o Indenture;provided that the Agency will not be obligated to deposit in the Tax Increment Fund in any calendar 0) year an amount which exceeds the amounts required to be transferred to the Trustee for deposited in the Tax = Increment Fund pursuant to the Indenture. All such Tax Revenues,whether received by the Agency in trust or C deposited with the Trustee, all as provided in the Indenture, will nevertheless be disbursed, allocated and a applied solely to the uses and purposes set forth in the Indenture, and will be accounted for separately and W apart from all other money,funds,accounts or other resources of the Agency. o M V Deposit of Amounts by Trustee c Q There has been established under the Indenture a trust fund to be known as the Tax Increment Fund, X which will be held by the Trustee in trust. Subject to the prior application and lien in favor of the Senior w Obligations, all Tax Revenues in the Tax Increment Fund will be set aside by the Trustee in each Bond Year W when and as received in the following respective special accounts within the Tax Increment Fund (each of E d which is created by the Indenture and each of which the Agency covenants and agrees to cause to be c maintained with the Trustee so long as the Bonds are Outstanding under the Indenture), in the following order N of priority(except with respect to the Expense Account,as described below): M 'n Interest Account. The Trustee will set aside from the Tax Increment Fund and deposit in the Interest O Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. All moneys in the Interest Account will be used and withdrawn by �- the Trustee solely for the purpose of paying the interest on the Bonds as it becomes due and payable(including accrued interest on any Bonds purchased or redeemed prior to maturity). V- Principal Account. The Trustee will set aside from the Tax Increment Fund and deposit in the m Principal Account an amount of money which, together with any money contained therein, is equal to the H aggregate amount of principal becoming due and payable on all Outstanding Serial Bonds on the Principal LO P Payment Date in such Bond Year. No deposit need be made into the Principal Account if the amount N contained therein is at least e q ual to the aggregate amount of principal of all Outstandin g Serial Bonds o c becoming due and payable on the Principal Payment Date in such Bond Year. All money in the Principal — Account will be used and withdrawn by the Trustee solely for the purpose of paying principal of the Serial Bonds as they become due and payable. OD In the event that there are insufficient money in the Tax Increment Fund to pay in full all such C principal and Sinking Account Installments due pursuant to the Indenture in such Bond Year, then the money T available in the Tax Increment Fund will be applied pro rata to the payment of such principal and Sinking v7 Account Installments in the proportion which all such principal and Sinking Account Installments bear to each a other. m Term Bonds Sinking Account. The Trustee will deposit in the Term Bonds Sinking Account an amount of money which, together with any money contained therein, is equal to the Sinking Account W Installments payable on the Sinking Account Payment Date in such Bond Year. No deposit need be made in 'n the Term Bonds Sinking Account if the amount contained therein is at least equal to the aggregate amount of c4 all Sinking Account Installments required to be made on the Sinking Account Payment Date in such Bond r Year. All moneys in the Term Bonds Sinking Account will be used and withdrawn by the Trustee solely for the purpose of purchasing or redeeming the Term Bonds in accordance with the Indenture. t a 16 DOCSOC/1725450v4/200430-0012 Packet:Pg 665;; -6 C Reserve Account. The Indenture establishes a separate account known as the "Reserve Account," to N be set aside from the Tax Increment Fund by the Trustee, into which the Trustee will deposit an amount equal to the Reserve Account Requirement (defined below). No deposit need be made into the Reserve Account so 0 m long as there is on deposit therein an amount equal to the Reserve Account Requirement. All money in or 0 credited to the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of = replenishing the Interest Account,the Principal Account or the Term Bonds Sinking Account in such order, in the event of any deficiency in any of such accounts occurring on any Interest Payment Date,Principal Payment Date or Sinking Account Payment Date, or for the purpose of paying the interest on or the principal of the Bonds in the event that no other money of the Agency is lawfully available therefor,or for the retirement of all 0 Bonds then Outstanding, except that for so long as the Agency is not in default under the Indenture, any cc amount in the Reserve Account in excess of the Reserve Account Requirement will be transferred to the Tax 0 Increment Fund.The Reserve Account Requirement for the Series 2015 Bonds will be satisfied by the delivery <[ of the Reserve Policy by the Insurer to the Trustee on the Closing Date. The Agency will have no obligation to X replace the Reserve Policy or to fund the Reserve Account with cash if,at any time that the Series 2015 Bonds are Outstanding, amounts are not available under the Reserve Policy other than in connection with a draw on y the Reserve Policy. The Trustee will draw on the Reserve Policy in accordance with its terms and conditions E and the terms of the Indenture. v U) The term"Reserve Account Requirement"means $ ,*which is equal, as of the date of any calculation, with respect to all Outstanding Bonds an amount equal to the lesser of(i)the maximum annual debt service attributable to the Outstanding Bonds or (ii) 125% of average annual debt service attributable to O the Outstanding Bonds; provided however, that the Reserve Account Requirement when issuing a new Series of Bonds will be the lesser of r i or limited to the addition to the Reserve Account of no above but more =e than 10%of the proceeds from the sale of such new Series of Bonds. E L The amounts available under the Reserve Policy will be used and withdrawn by the Trustee solely for a the purpose of making transfers to the Interest Account and the Principal Account in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then y Outstanding. S M The Trustee will comply with all documentation relating to the Reserve Policy as required to maintain the Reserve Policy in full force and effect and as required to receive payments thereunder in the event and to LO the extent required to make any payment when and as required under the Indenture. The Agency has no c N obligation to replace the Reserve Policy or to fund the Reserve Account with cash if,at any time that the Series 0 2015 Bonds are Outstanding,amounts are not available under the Reserve Policy. _ L See Appendix B under the captions "SECURITY OF BONDS; FLOW OF FUNDS—Deposit of F Amounts by Trustee—Reserve Account" and "SECURITY OF BONDS; FLOW OF FUNDS—Provisions m Relating to 2015 Reserve Policy" for further information with respect to the procedure for drawing upon the ca Reserve Policy. N Expense Account. The Trustee will set aside from the Tax Increment Fund and deposit in the a Expense Account such amount as may be necessary to pay from time to time Compliance Costs as specified in m a Written Request of the Agency setting forth the amounts.All moneys in the Expense Account will be applied to the payment of Compliance Costs, upon presentation of a Written Request of the Agency setting forth the :c amounts, purposes, the names of the payees and a statement that the amounts to be paid are proper charges w against the Expense Account. So long as any of the Bonds herein authorized, or any interest thereon, remain unpaid,the moneys in the Expense Account will be used for no purpose other than those required or permitted c� by the Indenture and the Redevelopment Law. r (D E s U *Preliminary,subject to change. Q 17 DOCSOC/1725450v4/200430-0012 Pick etP 666 Tax Increment Financing a c General. Prior to the enactment of AB X1 26, the Redevelopment Law authorized the financing of o redevelopment projects through the use of tax increment revenues. This method provided that the taxable 0) valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the 9 effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation. Assuming that the taxable valuation never dropped below the base year level, the taxing agencies thereafter received that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency was allocated the remaining portion produced by applying then current tax rates to 0 the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment M agency were authorized to be pledged to the payment of agency obligations. c Q The Dissolution Act authorizes refunding bonds, including the Series 2015 Bonds, to be secured by a cxa pledge of moneys deposited from time to time in a Redevelopment Property Tax Trust Fund held by a county h auditor-controller with respect to a successor agency, which are equivalent to the tax increment revenues that were formerly allocated under the Redevelopment Law to the redevelopment agency and formerly authorized m under the Redevelopment Law to be used for the financing of redevelopment projects, less amounts deducted v pursuant to Section 34183(a) of the Dissolution Act for permitted administrative costs of the county N auditor-controller. Under the Indenture, Tax Revenues consist of the amounts deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to and as provided in the Dissolution Act J less payments on Senior Obligations, Prior Agreements and Statutory Pass-Through Amounts (as such terms O are defined under the caption"—Tax Sharing"). Successor agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See the caption"RISK FACTORS." E Prior to the dissolution of redevelopment agencies, tax increment revenues from one project area L could not be used to repay indebtedness incurred for another project area. However, the Dissolution Act requires only that county auditor-controllers establish a single Redevelopment Property Tax Trust Fund with r respect to each former redevelopment agency within the respective county. Additionally, the Dissolution Act now requires that all revenues equivalent to the amount that would have been allocated as tax increment to the former redevelopment agency will be allocated to the Redevelopment Property Tax Trust Fund of the m applicable successor agency,and this requirement does not require funds derived from separate project areas of h a former redevelopment agency to be separated. In effect, in situations where a former redevelopment agency LO had established more than one redevelopment project area (as did the Former Agency), the Dissolution Act N combines the property tax revenues derived from all project areas into a single trust fund, the Redevelopment o Property Tax Trust Fund, to repay indebtedness of the former redevelopment agency or the successor agency. To the extent that the documents governing outstanding bonds of a redevelopment agency have pledged revenues derived from a specific project area,the Dissolution Act states that"It is the intent... that pledges of revenues associated with enforceable obligations of the former redevelopment agencies are to be honored. It is m intended that the cessation of any redevelopment agency will not affect either the pledge,the legal existence of that pledge, or the stream of revenues available to meet the requirements of the pledge." The Agency believes U) that,subject to the prior claim or lien of the Senior Obligations,all of the Tax Revenues from all Project Areas O will secure all of the Series 2015 Bonds. d m Tax Sharing. The Redevelopment Law authorized redevelopment agencies to make payments to school districts and other taxing agencies to alleviate any financial burden or detriments to such taxing s agencies caused by a redevelopment project. The Former Agency entered into numerous agreements for this w purpose(the"Pass-Through Agreements"). Additionally, Sections 33607.5 and 33607.7 of the Redevelopment 'n Law required mandatory tax sharing applicable to redevelopment projects adopted after January 1, 1994, or C� amended thereafter in certain manners specified in such statutes (such payments and the 33676 Amounts r (defined below) are referred to herein and in the Indenture as the "Statutory Pass-Through Amounts"). Further, certain taxing agencies receive payments from the tax revenues generated from the Uptown Project pursuant to Section 33676 of the Redevelopment Law (the "33676 Amounts"). The Dissolution Act requires _ county auditor-controllers to distribute from the Redevelopment Property Tax Trust Fund amounts required to Q 18 DOCSOC/1725450v4/200430-0012 .Packet�P.g be distributed under the Pass-Through Agreements and for Statutory Pass-Through Amounts to the taxing N entities on each January 2 and June 1 before amounts are distributed by the County Auditor-Controller from the Redevelopment Property Tax Trust Fund to the Agency's Redevelopment Obligation Retirement Fund, 0 m unless: (i)pass-through payment obligations have been made subordinate to debt service payments for the as bonded indebtedness of the Former Agency, as succeeded to by the Agency; (ii)the Agency has reported, no later than the December 1 and May 1 preceding the applicable January 2 or June 1 distribution date, that the total amount available to the Agency from the Redevelopment Property Tax Trust Fund allocation to the Agency's Redevelopment Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that have or will become available through asset sales and all redevelopment operations is 0 insufficient to fund the Agency's enforceable obligations, pass-through payments and the Agency's administrative cost allowance for the applicable ROPS Period; and(iii)the State Controller has concurred with 0 the Agency that there are insufficient funds for such purposes. Q x ca If the requirements set forth in clauses (i) through (iii) of the foregoing paragraph have been met, the Dissolution Act provides for certain modifications in the distributions otherwise calculated to be distributed on m the applicable January 2 or June 1 property tax distribution date (as adjusted for weekends and holidays). To E d provide for calculated shortages to be paid to the Agency for enforceable obligations, the amount of the a deficiency will first be deducted from the residual amount otherwise calculated to be distributed to the taxing Cn entities under the Dissolution Act after payment of the Agency's enforceable obligations, pass-through payments and the Agency's administrative cost allowance. If such residual amount is exhausted, the amount of the remaining deficiency will be deducted from amounts available for distribution to the Agency for O administrative costs in order to fund the enforceable obligations. Finally, funds required for servicing bond g Y q c� debt may be deducted from the amounts to be distributed under Pass-Through Agreements and for Statutory Pass-Through Amounts, in order to be paid to the Agency for enforceable obligations, but only after the E amounts described in the previous two sentences have been exhausted. The Dissolution Act provides for a procedure by which the Agency may make Statutory Pass-Through Amounts subordinate to the Series 2015 d Bonds. The Agency has not undertaken the requisite procedures to obtain such subordination of the Statutory Pass-Through Amounts and,therefore, Statutory Pass-Through Amounts are senior to the Series 2015 Bonds. Further,the Pass-Through Agreements have not been subordinated to the Series 2015 Bonds and are therefore senior in priority of payment to the Series 2015 Bonds. See the captions "—Statutory Pass-Through m Amounts," "—Pass-Through Agreements" and"—Recognized Obligation Payment Schedule"and the caption "RISK FACTORS—Recognized Obligation Payment Schedule." See also the caption "TAX REVENUES— LO Projected Tax Revenues." N 0 Elimination of Housing Set Aside. Before the dissolution of the Former Agency,the Redevelopment Law required the Former Agency to set aside not less than 20% of the gross tax increment with respect to the Project Areas, referred to as the "Housing Set-Aside," in the Low- and Moderate-Income Housing Fund (the "Housing Fund") to be expended for low and moderate income housing purposes. Generally, the Former m Agency was authorized to use the Housing Set-Aside to pay debt service on bonds solely to the extent that the proceeds of such bonds were used to finance or refinance low and moderate income housing projects. The p gP J , Former Agency could not pledge, and did not use, the Housing Set-Aside to pay debt service on other O obligations. In contrast,under the Redevelopment Law, the Former Agency was authorized to use the portion o. of tax increment that was not part of the Housing Set-Aside(the"80 Percent Portion")to pay debt service on m all bonds and other indebtedness of the Former Agency incurred to finance or refinance redevelopment projects for the Project Areas,subject to limitations set forth in the indentures or other governing documents. x w The Dissolution Act has eliminated the Housing Fund and the requirement to deposit the Housing Set- `r' Aside into such fund. None of the property tax revenues deposited in the Redevelopment Property Tax Trust c5 Fund are designated as the Housing Set-Aside. The Redevelopment Property Tax Trust Fund flow of funds under the Dissolution Act makes no distinction between bonds that were, in whole or in part, secured by and payable from the Housing Set-Aside and bonds that were solely secured by and payable from the 80 Percent Portion. In effect, after the Former Agency's dissolution, all of the Agency's outstanding bonds are paid from s Redevelopment Property Tax Trust Fund disbursements without distinction between obligations related to w Q 19 DOCSOC/1725450v4/200430-0012 6.C.b housing and non-housing projects. It is unclear whether, if challenged,a court will find that the elimination of N the distinction among bonds that were secured by the Housing Set-Aside and bonds that were secured by the 80 Percent Portion is contrary to the declared intent of the Dissolution Act. The Agency does not have any C m outstanding obligations secured by Housing Set-Aside on a basis senior to the Series 2015 Bonds. Recognized Obligation Payment Schedule Before each June 1 property tax distribution date,with respect to each fiscal year, the Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency's oversight board and o the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations M (as such term is defined in the Dissolution Act) of the successor agency are listed, together with the source of o funds to be used to pay for each enforceable obligation. As defined in the Dissolution Act, "enforceable Q obligation" includes bonds, including the required debt service, reserve set-asides and any other payments X required under the indenture or similar documents governing the issuance of the outstanding bonds of the ~ former redevelopment agency, as well as other obligations such as loans,judgments or settlements against the former redevelopment agency, any legally binding and enforceable agreement that is not otherwise void as m violating the debt limit or public policy, contracts necessary for the administration or operation of the c successor agency, and amounts borrowed from the Housing Fund. The Dissolution Act permits a successor N agency to request additional amounts on a Recognized Obligation Payment Schedule to fund a reserve when required by a bond indenture or when the next property tax allocation will be insufficient to pay all enforceable V obligations due under the provisions of the bonds for the next payment due in the following half of the O calendar year. �% M c Under the Dissolution Act,the categories of sources of payments for enforceable obligations listed on E a Recognized Obligation Payment Schedule are the following: (i)the Housing Fund; (ii)bond proceeds; m (iii)reserve balances; (iv)administrative cost allowance; (v)the Redevelopment Property Tax Trust Fund (but °; only to the extent that no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or otherwise required under the Dissolution Act); or (vi)other revenue V_ sources (including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived '" from the former redevelopment agency,as approved by its oversight board). pip Q H The Dissolution Act provides that, commencing on the date that the first Recognized Obligation LO Payment Schedule is valid,only those payments listed in the Recognized Obligation Payment Schedule may be N made by the Agency from the funds specified in the Recognized Obligation Payment Schedule. Each annual o Recognized Obligation Payment Schedule may be amended once, p rovided that (i)the Agency submits the � amendment to DOF no later than October 1, (ii)the Oversight Board makes a finding that the amendment is necessary for the payment of approved enforceable obligations during the second half of the Recognized F Obligation Payment Schedule period (from January 1 to June 30, inclusive), and (iii)the Agency may only m amend the amount requested for payment of approved enforceable obligations. DOF shall notify the Agency and the County Auditor-Controller as to whether the Agency's requested amendment is approved at least N 15 days before the January 2 property tax distribution. O a The Recognized Obligation Payment Schedule must be submitted by the Agency, after approval by m the Oversight Board, to the County Administrative Officer, the County Auditor-Controller, the DOF and the State Controller by February 1 in each year, commencing February 1, 2016. If the Agency does not submit an s Oversight Board-approved Recognized Obligation Payment Schedule by such deadline, the City will be w subject to a civil penalty equal to $10,000 per day for every day that the schedule is not submitted. 'n Additionally,the Agency's administrative cost allowance will be reduced by 25%for any fiscal year for which N the Agency does not submit an Oversight Board-approved Recognized Obligation Payment Schedule within 10 days of the February 1 deadline. If the Agency fails to submit a Recognized Obligation Payment Schedule by the February 1 deadline,any creditor of the successor agency or the department or any affected taxing entity E shall have standing to, and may request a writ of mandate to, require the Agency to immediately perform this duty. For additional information regarding procedures under the Dissolution Act relating to late Recognized Q 20 DOCSOC/1725450v4/200430-0012 Packet Pg 66 9 : Obligation Payment Schedules and implications thereof on the Series 2015 Bonds, see the caption "RISK w NOW FACTORS—Recognized Obligation Payment Schedule." c 0 With respect to each Recognized Obligation Payment Schedule submitted by the Agency, the 0) Dissolution Act requires the DOF to make a determination of the enforceable obligations and the amounts and c funding sources available to pay approved enforceable obligations no later than April 15. Within five business days of the determination by the DOF, the Agency may request additional review by the DOF and an - opportunity to meet and confer on disputed items, if any. The DOF will notify the Agency and the County Auditor-Controller as to the outcome of its review at least 15 days before the June 1 property tax distribution o date preceding the applicable Recognized Obligation Payment Schedule period. Additionally, the County M Auditor-Controller may review a submitted Recognized Obligation Payment Schedule and object to the o inclusion of any items that are not demonstrated to be enforceable obligations and may object to the funding Q source proposed for any items, provided that the County Auditor-Controller must provide notice of any such X objections to the Agency, the Oversight Board and the DOF at least 60 days prior to the next June 1 property ~ tax distribution date. 0 d E 4) With the exception of ROPS I(for the period of January 1 to June 30,2012),which was submitted one 2 day late, and ROPS 13-14A (for the period of July 1 to December 31, 2014), which was submitted to DOF in (n draft form by the deadline but not approved by the Oversight Board for nearly a month following the deadline E due to lack of a quorum), the Agency has submitted each Oversight Board-approved Recognized Obligation V Payment Schedule to DOF on or before the statutory deadline. O See the caption"—Last and Final Recognized Obligation Payment Schedule" for a description of the Last and Final Recognized Obligation Payment Schedule authorized by the Dissolution Act pursuant to E SB 107. d L a In connection with the allocation and distribution by the County Auditor-Controller of property tax revenues deposited in the Redevelopment Property Tax Trust Fund, under the Dissolution Act the County V_ Auditor-Controller must prepare estimates of the amounts of. (i)property tax to be allocated and distributed; and (ii)the amounts of pass-through payments to be made for the upcoming fiscal year, and provide those m estimates to the entities receiving the distributions and DOF by no later than October 1 and April 1 of each H year, as applicable. If, after receiving such estimate from the County Auditor-Controller, the Agency to determines and reports,no later than December 1 or May 1, as applicable,that the total amount available to the N Agency from the Redevelopment Property Tax Trust Fund allocation to the Agency's Redevelopment 0 Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that have c or will become available through asset sales and all redevelopment operations, is insufficient to fund the payment of pass-through obligations, Agency enforceable obligations listed on the Recognized Obligation F Payment Schedule and the Agency's administrative cost allowance,the County Auditor-Controller must notify m the State Controller and the DOF by no later than 10 days from the date of the Agency's notification. If the State Controller concurs that there are insufficient funds to pay required debt service, and if the Agency's tax N sharing obligations described in Section 38183(a)(1) of the Dissolution Act have been subordinated to the cn Agency's enforceable obligations, then the Dissolution Act provides for certain adjustments to be made to the a estimated distributions,as described in more detail under the caption"—Tax Increment Financing." pp r The Dissolution Act provides that any bonds authorized to be issued by the Agency will be considered s indebtedness incurred by the dissolved Former Agency, with the same legal effect as if such bonds had been W issued prior to the effective date of AB X1 26, in full conformity with the applicable provision of the W Redevelopment Law that existed prior to such date, will be included in the Agency's Recognized Obligation C� Payment Schedule and will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to the Dissolution Act. Additionally, if an enforceable obligation provides for an irrevocable commitment of property tax revenue and 0 where allocation of revenues is expected to occur over time, the Dissolution Act provides that a successor agency may petition the DOF to provide written confirmation that its determination of such enforceable a 21 DOC SOC/1725450v4/200430-0012 Packet�Pg X670;,; 6.C.b obligation as approved in a Recognized Obligation Payment Schedule is final and conclusive, and reflects the N DOF's approval of subsequent payments made pursuant to the enforceable obligation. If the confirmation is granted by the DOF, then the DOF's review of such payments in each future Recognized Obligation Payment o Schedule will be limited to confirming that they are required by the prior enforceable obligation. _ However,the Agency has covenanted to take all actions required under the Dissolution Act to include on its ROPS the amounts described below to be transmitted to the Trustee for the applicable ROPS Period in d order to satisfy the requirements of the Indenture,including any amounts required to pay principal and interest payments due on the Senior Obligations, Outstanding Bonds and any Parity Debt, any Compliance Costs, any o deficiency in the Reserve Account to the full amount of the Reserve Account Requirement and any deficiency M in the reserve accounts under the indentures for the Senior Obligations. The Agency shall submit an Oversight o Board-approved ROPS to the County Auditor-Controller and the Department of Finance (with a copy to the Q Agency) on or before each February 1 with respect to the ROPS Period commencing the following July 1. X Further,the Agency covenants to include expected Compliance Costs,if any,in each ROPS in accordance with w the Dissolution Act. a=i 1_ d [The amount due to the Trustee from the County Auditor-Controller for deposit in the Tax Increment o Fund on January 2 of the then-current calendar year from Tax Revenues required to be deposited into the m RPTTF shall equal (1) one-half of the sum of (a) all scheduled principal payments and Sinking Account Installments due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar 0 year as shown in the Indenture, and (b) all scheduled interest payments due and payable on the Outstanding O Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, plus (2) the 2 amount of any deficiency in the Reserve Account,less(3)the amounts,if any, on deposit in the Tax Increment =_ Fund as of the date of submission for the ROPS pursuant to the Indenture that are in excess of the amounts required to be applied to payment of principal of or interest or sinking account payments on the Outstanding d Bonds and any Parity Debt in the then current calendar year. The amount due to the Trustee from the County a- Auditor-Controller for deposit in the Tax Increment Fund on June 1 of the then-current calendar year from amounts required to be deposited into the RPTTF will be equal to the remainder due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year in an amount equal to not less than (1) the remaining one-half of the sum of (a) all scheduled principal payments and Sinking Account m Installments due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, and (b) all scheduled interest payments due and payable on the Outstanding Ln Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, plus (2) the N amount of any remaining deficiency in the Reserve Account.] See Appendix B. o v The estimated cash flow under the Recognized Obligation Payment Schedules covering the January 2, 2016, June 1, 2016 and January 2, 2017 RPTTF distribution dates is set forth below. The following table assumes the refunding of the Refunded Obligations and the issuance of the Series 2015 Bonds prior to m January 2,2016. m m O a m s X W Ul) N r _ d E t r a 22 DOCSOC/1725450v4/200430-0012 Packet�'g��67'I Table 1 N SUCCESSOR AGENCY TO THE _ REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 0 m ESTIMATED RECOGNIZED OBLIGATION PAYMENT SCHEDULES (January 2,2016 to January 2,2017) _ �a w a� January 2,2016 June 1,2016 January 2,2017 p Property Tax Property Tax Property Tax Fiscal Year Distribution Date Distribution Date Distribution Date v O Gross Tax Revenues(Based on Fiscal Year) a Tax Increment x R Unitary Revenue Total Gross Tax Revenues c O E Deductions Property Tax Administrative Fee to Statutory Pass-Through Amounts N Pass-Through Agreements 70 Total Deductions V O Tax Increment Revenues Available for Debt Service on Senior Obligations and 2015 Bonds to _ Obligations with Senior Right to Payment E L Senior Obligations d Prior Agreements N Total Prior Obligations Tax Revenues d Subordinate Obligations m a Series 2015 Bonds H LO 0 Remaining for Other Subordinate Obligations N O Source: Urban Futures,Inc.;Stifel,Nicolaus&Company,Incorporated. _ :O L Last and Final Recognized Obligation Payment Schedule m SB 107 amended the Dissolution Act to permit a successor agency to submit a Last and Final Recognized Obligation Payment Schedule(a"Last and Final ROPS") for approval by the oversight board and to DOF if: (i)The successor agency's only remaining debt is administrative costs and payments pursuant to v� enforceable obligations with defined payment schedules, (ii)All remaining obligations have been previously n0. listed on a Recognized Obligation Payment Schedule and approved by DOF, and(iii)The successor agency is pp not a party to outstanding or unresolved litigation. The Last and Final ROPS must list the remaining enforceable obligations of the successor agency in the following order: (A)enforceable obligations to be funded from the Redevelopment Property Tax Trust Fund, (B)enforceable obligations to be funded from bond W proceeds or other legally or contractually dedicated or restricted funding sources, and (C)loans or deferrals to authorized for repayment to the city that created the redevelopment agency or the successor to the former N redevelopment agency's housing functions and assets. The Last and Final ROPS must also include the total r outstanding obligation and a schedule of remaining payments for each enforceable obligation described in .j (A)and (B) above, and the total outstanding obligation and an interest rate of 4%, for any loans or deferrals a=i listed pursuant to (C) above. The Last and Final ROPS will also establish the maximum amount of t Redevelopment Property Tax Trust Funds to be distributed to the successor agency for each remaining fiscal a 23 DOCSOC/1725450v4/200430-0012 Packet Pg.672 "; year until all obligations have been fully paid. DOF approval is required for any Last and Final ROPS to N become effective. The county auditor-controller is also required to review the Last and Final ROPS and _ provide any objection to the inclusion of any items or amounts to DOF. Successor agencies may only amend O an approved Last and Final ROPS twice. Commencing on the effective date of the approved Last and Final a) ROPS,the successor agency will not prepare or transmit annual Recognized Obligation Payment Schedules. c a c _ After the Last and Final ROPS is approved by DOF, the county auditor-controller will continue to allocate moneys in the successor agency's Redevelopment Property Tax Trust Fund pursuant to Section 34183 of the Dissolution Act;however,the county auditor-controller will allocate such moneys in each fiscal period, o after deducting the county auditor-controller's administrative costs,in the following order of priority: (A)pass M through payments pursuant to Section 34183(a)(1)of the Dissolution Act,(B)scheduled debt service payments o on tax allocation bonds listed and approved in the Last and Final ROPS, (C)scheduled payments on revenue Q bonds listed and approved in the Last and Final ROPS,but only to the extent the revenues pledged for them are X insufficient to make the payments and only if the successor agency's tax increment revenues were also pledged ~ for the repayment of bonds, (D)scheduled payments for debts and obligations listed and approved in the Last and Final ROPS to be paid from the Redevelopment Property Tax Trust Fund, (E)payments listed and E d approved on the Last and Final ROPS that were authorized but unfunded in prior periods, (F)repayment of o loans and deferrals to the city that created the redevelopment agency or the successor to the former N redevelopment agency's housing functions and assets that are listed and approved on the Last and Final ROPS, and (G)any moneys remaining in the Redevelopment Property Tax Trust Fund after the payments and 2 transfers described in (A) to (F), above, will be distributed to taxing entities in accordance with O Section 34183(a)(4)of the Dissolution Act. If the successor agency reports to the county auditor-controller that the total available amounts in the E Redevelopment Property Tax Trust Fund will be insufficient to fund the successor agency's current or future fiscal year obligations, and if the county auditor-controller concurs that there are insufficient funds to pay the a required obligations, the county auditor-controller may distribute funds pursuant to Section 34183(b) of the T Dissolution Act. See the caption"—Tax Increment Financing." The Agency is not currently eligible to submit a Last and Final ROPS and has no current plans to seek pNp approval of a Last and Final ROPS. [Further, the Agency covenants in the Indenture that it will not, without the prior written consent of the Bond Insurer, approve or submit for approval by the Oversight Board or the �n DOF a ROPS covering multiple ROPS Periods or any Last and Final Recognized Obligation Payment Co N Schedule as provided in the Dissolution Law.] o c Obligations with Senior Right to Payment _ L Senior Obligations. The Agency may not issue additional bonds or incur additional obligations that m are payable from moneys deposited in the Redevelopment Property Tax Trust Fund on a senior basis to the Series 2015 Bonds, except for the purpose of refunding the Agency's obligations pledged to payment of debt Cn service on the Senior Obligations (defined below). The Agency's pledge of moneys deposited in the cn Redevelopment Property Tax Trust Fund to payment on the Series 2015 Bonds is subordinate to its prior a pledge of or claim on certain tax revenues to pay debt service, make pass-through payments or make certain m other payments pursuant to the Senior Obligations listed below, as well as the Prior Agreements, the Pass- Through Agreements and the Statutory Pass-Through Amounts. X w The following bond issuances (the "Senior Obligations") are payable from moneys deposited in the to Redevelopment Property Tax Trust Fund on a senior basis to the Series 2015 Bonds,as described below. Each C� Senior Obligation has a prior claim on Redevelopment Property Tax Trust Fund moneys derived from the Project Area for which such bonds were issued,but not the Agency's other Project Areas. m 1. That portion of the 1998 Loan Agreement related to and securing Series 1998A Authority E Bonds (the "1998A Senior Loan Agreement") which 1998A Senior Loan Agreement is secured by tax R a 24 DOCSOC/1725450v4/200430-0012 ,P cket Pg:673 _ increment revenues generated by the Central City Merged Redevelopment Project Area (consisting of the N Meadowbrook Project,the Central City Project No. 1,the Central City South Project and the Central City East = Project). m rn 2. Reimbursement Agreement dated September 29, 1999, between the Former Agency and the City, which secures the portion of the San Bernardino Joint Powers Financing Authority 1999 Refunding Certificates of Participation (Police Station, South Valle Refundings and 201 Building Project) (the "1999 COPS") relating to the South Valle Refundings and 201 Building, originally issued in the total amount of $15,480,000 of which$8,750,000 pertained only to the South Valle Refundings and 201 Building portion and 0 for which the currently outstanding balance pertaining only to the South Valle Refundings and 201 Building M portion equals $4,475,000 (the Reimbursement Agreement relating to the South Valle Refundings and 201 0 Building Portion of the 1999 COPS is referred to herein as the"1999 Reimbursement Agreement"). Q X ca 3. Seven Loan Agreements, each dated as of September 1, 2005 (the "2005 Senior Loan Agreements"), between the Agency and the Authority, which secure (A) the San Bernardino Joint Powers d Financing Authority Tax Allocation Revenue Refunding Bonds, Series 2005A,originally issued in the amount E of$55,800,000 of which$31,095,000 is currently outstanding (the "Series 2005A Authority Bonds"), and(B) the San Bernardino Joint Powers Financing Authority Tax Allocation Revenue Refunding Bonds, Series N 2005B, originally issued in the amount of$21,105,000 of which $11,570,000 is currently outstanding (the "Series 2005B Authority Bonds"), which 2005 Senior Loan Agreements are each secured by tax increment 2 revenues generated by one of the following Project Areas: the Central City North Project, the State College O Project, the Southeast Industrial Park Project, the Northwest Project, the South Valle Project, the Uptown Project and the Tri-City Project. E 4. Loan Agreement, dated as of December 1, 2010 the "2010 Senior Loan Agreement"), between the Agency and the Authority, which secures the San Bernardino Joint Powers Financing Authority CL Tax Allocation Bonds, Series 2010A, originally issued in the amount of$7,065,000 of which $5,765,000 is currently outstanding (the "Series 2010A Authority Bonds"), which 2010 Senior Loan Agreement is secured by tax increment revenues generated by the Northwest Project. 0o 5. Loan Agreement, dated as of January 1, 2011 (the "2011 Senior Loan Agreement"), between F the Agency and the Authority, which secures the San Bernardino Joint Powers Financing Authority Tax LO Allocation Bonds, Series 2010B, originally issued in the amount of $3,220,000 of which $2,440,000 is N currently outstanding (the "Series 2010B Authority Bonds"), which 2010 Senior Loan Agreement is secured 0 by tax increment revenues generated by the Northwest Project = M Pass-Through Agreements. The Agency's obligations pursuant to the following Pass-Through F Agreements are payable from moneys deposited in the Redevelopment Property Tax Trust Fund and have not m been expressly subordinated to the Bonds; therefore the payments under these Pass-Through Agreements are excluded from the definition of"Tax Revenues"in the Indenture and are deducted from the projections of Tax N Revenues set forth in this Official Statement and the Fiscal Consultant's Report attached as Appendix A. O a m X w LO N r C W V Q 25 DOCSOC/1725450v4/200430-0012 PacketR x674 The following table summarizes the provisions of each of the Agency's Pass-Through Agreements. N c 0 Project Area Taxing Entity Pass Through Provisions m Northwest .County and County Flood Control 100%pass through of County's share and District's share of annual T.I. _ Northwest S.B.Community College District One-time payment(satisfied) 'a Tri-City Colton Joint Unified School Dist. 90%of District's share of inflationary T.I.and any District overrides _ Tri-City Redlands Unified School Dist. 90%of District's share of inflationary T.I.and any District overrides $35,000 annual payment to District,adjusted by Assessor's inflation Tri-City S.B.Valley Muni Water District factor each year(less amounts payable to District from South = Valle project revenues) 0 Tri-City S.B.Unified School District (Payments satisfied) Tri-City S.B.Community College District One-time payment(satisfied) 0 $35,000 annual payment to District,adjusted by Assessor's inflation Q South Valle S.B.Valley Muni Water District factor each year(less amounts payable to District from Tri-City project revenues) R South Valle Colton Joint Unified School District No payments currently due,or expected(although unlikely,District y could argue financial impact in the future,per agreement) 0 South Valle S.B.Community College District One-time payment(satisfied) 0 Uptown S.B.Community College District One-time payment(satisfied) N To District: District's tax overrides and 80%of District's share of annual T.I. N Mt.Vernon County and County Flood Control To County: 35%of 80%of County's share of annual T.1.for annual � growth over the preceding year up to 7.5%;65%of 80%of the County's share of annual T.I generated by annual growth over t) the preceding year exceeding 7.5% Mt.Vernon Rialto Unified School District District's share of inflationary T.I.,plus 12.5%of District's share of 0 annual T.I.(increasing to 15%in FY 16-17,and thereafter) 0 Mt.Vernon S.B.Community College District One-time payment(satisfied) C District's share of inflationary T.I.,and any District overrides,plus Mt.Vernon S.B.Unified School District 12.5%of District's share of annual T.I.(increasing to 15%in FY 16-17,and thereafter) a District's share of inflationary T.I.,and any District overrides,plus Mt.Vernon Colton Joint Unified School Dist. 12.5%of District's share of annual T.I.(increasing to 15%in FY N 16-17,and thereafter) District's share of inflationary T.I.,and any District overrides,plus 40% Mt.Vernon County Supt.of Schools of 80%of District's share of annual T.I.in excess of inflationary T.I. U) Mt.Vernon S.B.Valley Muni Water District 100%pass through of District's tax override T.I. m H Statutory Pass-Through Amounts. The Agency is obligated to make certain tax sharing payments to c taxing agencies as described below under the subheadings "—AB 1290 Statutory Pass-Through," "—SB 211 a Triggered Statutory Pass-Through" and "-33676 Amounts." These payment obligations are referred to 0 collectively in this Official Statement as the"Statutory Pass-Through Amounts." `a L M AB 1290 Statutory Pass-Through. Redevelopment plans that were adopted on or after January 1, 1994 0) were subject to the statutory pass-through requirements of Assembly Bill ("AB") 1290 which provided for = payments to taxing agencies calculated pursuant to specific statutory formulas, set forth in Health and Safety to Code Section 33607.5. Because it was adopted in 2000, the 40th Street Project is subject to the AB 1290 Statutory Pass Throughs,which are calculated as follows: N O R Section 33607.5 describes the statutory pass through formula in three"tiers"of payment, described as m follows: (Tier 1) commencing from the first fiscal year in which the agency receives tax increments, 25% of the tax increments received are passed-through to the entities (net of 20% of the amount for Housing Set K Aside); (Tier 2)commencing in the 11th year in which the agency receives tax increments, an additional 21% W of the portion of tax increment received, which is calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value(i.e. N IL the value of the project area in the 10th year in which tax increment is received) and net of 20% for Housing t' Set Aside;and(Tier 3)commencing in the 31 st year in which the agency receives tax increments,an additional c 14% of the portion of tax increment received, which is calculated by applying the tax rate against the amount E of assessed value by which the current year assessed value exceeds the second adjusted base year assessed a 26 DOC S OC/1725450v4/20043 0-0012 :Pfiackef-Pg 675 " — a value(i.e. the value of the project area in the 30th year in which tax increment is received)and net of 20%for N Housing Set Aside. 0 m SB 211 Triggered Statutory Pass-Through. A statutory pass through obligation could also be 0 triggered by amendments to pre-AB 1290 redevelopment plans to increase the tax increment revenue limit, _ extend the time for the incurrence of debt or to extend the duration of the redevelopment plan. This provision applied when SB 211 was adopted by the State Legislature, enabling the Former Agency to adopt a summary y ordinance electing to eliminate the debt incurrence time limitations for qualifying Redevelopment Plans adopted before January 1, 1994. SB 211 Statutory Pass-Through Payments were triggered for all of the Project o Areas other than the 40th Street Project. M 0 If a Pass-Through Agreement was already entered into prior to January 1, 1994, then the payments Q required by that agreement remain in effect. If no Pass-Through Agreement existed with an affected taxing X entity, then the provisions under Health and Safety Code Sections 33607.5 and 33607.7 apply and require ~ statutory pass-through payments to these entities. The calculation described above under the caption "- AB 1290 Statutory Pass-Through" applies, adjusted to use the year in which the amended plan limit would E have been reached as the adjusted base year,with payments starting the following year. co These tax sharing payments continue for the life of the applicable Project Area. Because the Agency i has not requested any subordination,the Fiscal Consultant has deducted the projected Statutory Pass-Through v Amounts in connection with its calculation of Tax Revenues (see the Fiscal Consultant's Report attached O hereto as Appendix A and the projections of Tax Revenues set forth in Tables 7 and 8). 33676 Amounts. Prior to the enactment of AB 1290, redevelopment project areas adopted between E January 1, 1985 and January 1, 1994 were subject to payments to schools and to other affected taxing agencies d that elected to receive tax revenue payments set forth under Section 33676 of the Law ("33676 Amounts"). a The annual payments represent that portion of property taxes that are, or otherwise would be, calculated r annually pursuant to subdivision(f)of Section 110.1 of the Revenue and Taxation Code(and referred to as the 2% inflation allocation). As with Statutory Pass-Through Amounts, the County Auditor-Controller administers the payment of 33676 Amounts and such 33676 Amounts are deducted from the tax revenues m included in the definition of Tax Revenues under the Indenture. The Uptown Project is subject to the two percent inflation allocation to qualifying affected taxing entities. to 0 The full estimated future Statutory Pass-Through Amounts calculated by the Fiscal Consultant are 0 deducted from the Tax Revenues projections set forth in Tables 7 and 8, under the heading "TAX S REVENUES—Projected Tax Revenues." See Appendix A. For purposes of the projections of Tax Revenues in this Official Statement, Statutory Pass-Through Amounts are calculated as described above. F m Prior Agreements. The Agency's obligations pursuant to the agreements described below(the"Prior Agreements")are payable from Tax Revenues on a senior basis to the Bonds. Projections of Tax Revenues set N forth in this Official Statement reflect payments projected to become due under certain of the Prior to Agreements, as noted below and in Tables 7 and 8 under the caption "TAX REVENUES—Projected Tax a Revenues." ca r :e [HUD Section 108 Loan Payments. In 2006, the City received a loan in the original principal amount s of $7,500,000 (the "Section 108 Loan") from the United States Department of Housing and Urban W Development("HUD")pursuant to Section 108 of Title I of the Housing and Community Development Act of 1974. The City's obligation to repay the Section 108 Loan was secured by a subrecipient loan agreement and c� subrecipient note executed by the Former Agency in favor of the City and HUD,pursuant to which the Former Agency pledged its tax increment revenues from the [ Project/certain real property that was planned for development using the Section 108 Loan proceeds], among other revenues and real property d interests, to repayment of the Section 108 Loan. The Agency's obligation to repay the Section 108 Loan is = 0 Q 27 DOCSOC/1725450v4/200430-0012 �Packet�Pg�67fi ; [subordinate] to the Agency's obligation to pay debt service on the Series 2015 Bonds.] [Please provide the a Cooperation Loan Agreement between the City and Agency. Is this obligation senior or subordinate?] _ 0 m [City staff to provide information regarding any additional DDAs, OPAs or other agreements 0) that may pledge tax increment.] c `a 0 Subordinate Obligations m The Agency has various significant enforceable obligations that are, or will be, listed on the Agency's 0 Recognized Obligation Payment Schedules and paid from moneys deposited in the Agency's Redevelopment M Property Tax Trust Fund from time to time. The Agency has determined that these obligations are either 0 subordinate to the Series 2015 Bonds or not secured by a pledge of Tax Revenues. Q X M Limitation on Additional Indebtedness ~ r c a� Future Refunding of Senior Obligations. The Indenture permits the Agency to issue bonds secured by Tax Revenues or any part thereof, on a senior basis to the Bonds and Additional Bonds to refund Senior Obligations,to the extent such refunding would be permitted by Section 34177.5(a)of the Dissolution Act. in Parity Obligations. The Agency may issue tax allocation bonds pursuant to the Indenture w (collectively, "Additional Bonds")payable from Tax Revenues and secured by a lien and charge upon the Tax O Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture, for the purpose of refunding bonds or other indebtedness of the Agency or the Former c Agency (including, without limitation, refunding Bonds outstanding under the Indenture) in accordance with E the Law, including payment of all costs incidental to or connected with such refunding and funding or m providing for the funding of related reserves, but only subject to the following specific conditions, which are n; conditions precedent to the issuance of any such Additional Bonds under the Indenture: r v (a) A Written Request of the Agency will have been filed with the Trustee containing a statement to the effect that the Agency will be in compliance with all covenants set forth in the Indenture and any m Supplemental Indentures,and no event of default will have occurred and be continuing. (b) The issuance of such Additional Bonds will have been duly authorized pursuant to the Law N and all applicable laws, and the issuance of such Additional Bonds will have been provided for by a 0 Supplemental Indenture;which specifies the following: v L (i) The authorized principal amount of such Additional Bonds; F m (ii) The date and the maturity date or dates of such Additional Bonds; provided that (i)Principal Payment Dates and Sinking Account Payment Dates may occur only on Interest Payment Dates, (ii) [all such Additional Bonds of like maturity will be identical in all respects, except as to number], and cn (iii)fixed serial maturities or mandatory Sinking Account Installments, or any combination thereof, will be a established to provide for the retirement of all such Additional Bonds on or before their respective maturity pp dates; .a (iii) The Interest Payment Dates for such Additional Bonds; provided that Interest W Payment Dates will be on the same semiannual dates as the Interest Payment Dates for Series 2015 Bonds; '0 N (iv) The denomination and method of numbering of such Additional Bonds; (v) The redemption premiums, if any, and the redemption terms, if any, for such a=) Additional Bonds; s a 28 DOC SOC/1725450v4/200430-0012 Packet,Pg 677 , 6.C.b (vi) The amount and due date of each mandatory Sinking Account Installment, if any,for such Additional Bonds; 0 M (vii) The amount, if any, to be deposited from the proceeds of such Additional Bonds in rn the Reserve Account; provided that the amount deposited in or credited to such Reserve Account will be = increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, and that an amount — at least equal to the Reserve Account Requirement on all Outstanding Bonds will thereafter be maintained in or credited to such Reserve Account; 0 0 (viii) The form of such Additional Bonds;and 0 Q (ix) Such other provisions, as are necessary or appropriate and not inconsistent with the X Indenture. ~ c m (c) Such Additional Bonds may be issued only for the purpose of refunding bonds or other E indebtedness of the Agency or its Former Agency(including,without limitation,refunding Bonds outstanding under the Indenture) in accordance with the Law, including payment of all costs incidental to or connected in with such refunding and funding or providing for the funding of related reserves, and the payment of all costs incidental to or connected with such refunding, provided that the issuance of such Additional Bonds will V comply with the terms of California Health and Safety Code Section 34177.5. O Prior to issuance by the Agency of such Additional Bonds, the Trustee must receive the following c documents or money or securities: E L (a) A certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds; et (b) A Written Request of the Agency as to the authentication and delivery of such Additional Bonds; m m Q H (c) An opinion of Bond Counsel to the effect that(1)the Agency has the right and power under Un the Law to enter into the Indenture and all Supplemental Indentures thereto, and the Indenture and all such N Supplemental Indentures have been duly executed by the Agency and are valid and binding upon the Agency 0 and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, _ v insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights, by application of equitable principles and by exercise of judicial discretion in appropriate cases), and no other authorization for the Indenture or such Supplemental Indentures is required; (2)the Indenture creates the valid m pledge which it purports to create of the Tax Revenues as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; and (3)such Additional Bonds are N valid and binding special obligations of the Agency, enforceable in accordance with their terms (except as v� enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the a enforcement of creditors' rights,by application of equitable principles and by exercise of judicial discretion in pp appropriate cases) and the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures and the Law, and such Additional Bonds have _ been duly and validly authorized and issued in accordance with the Law and the Indenture and all such w Supplemental Indentures; Tto - N (d) A Written Request of the Agency containing such statements as may be reasonably necessary r to show compliance with the requirements of the Indenture;and 4.; d (e) Such further documents, money and securities as are required by the provisions of the _ Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds. Q 29 DOC SOC/1725450v4/200430-0012 Packet Pg 678 ,x Subordinate Obligations. The Indenture permits the Agency to issue or incur Subordinate Debt in N such principal amount as may be determined by the Agency. Such Subordinate Debt may be payable from any assets or property of the Agency, including Tax Revenues, on a subordinate basis to the payment of debt 0 m service on the Series 2015 Bonds. c [BOND INSURANCE] m c 0 PROPERTY TAXATION IN CALIFORNIA 0 Property Tax Collection and Distribution Procedures Q X M Classification. In the State,property which is subject to ad valorem taxes is classified as"secured"or "unsecured." Secured and unsecured property is entered on separate parts of the assessment roll maintained by county assessors. The secured classification includes property on which any property tax levied by a county E becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed 41 unsecured property,but may become a lien on certain other property owned by the taxpayer. Every tax which N becomes a lien on secured property has priority over all other liens on the secured property arising pursuant to State law, regardless of the time of the creation of other liens. See the caption "RISK FACTORS— Bankruptcy and Foreclosure" for certain limitations on the priority of secured tax liens under federal law, O however. _ Generally, ad valorem taxes are collected by a county for the benefit of the various taxing agencies E (cities, schools and special districts) that share in the ad valorem tax (each, a taxing entity) and successor d agencies eligible to receive distributions from the respective Redevelopment Property Tax Trust Fund. a Collections. The method of collecting delinquent taxes is substantially different for secured and d, unsecured property. Counties have four ways of collecting unsecured personal property taxes: (i) initiating a civil action against the taxpayer; (ii)filing a certificate in the office of the county clerk specifying certain facts co in order to obtain a judgment lien on certain property of the taxpayer; (iii)filing a certificate of delinquency for h record in the county recorder's office to obtain a lien on certain property of the taxpayer; and(iv)seizing and 0 selling personal property, improvements or possessory interests belonging or assessed to the assessee. The N exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is 0 the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. _ v ca Penalty. A 10%penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in m default by operation of law and declaration of the tax collector on or about June 30 of each fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a N redemption penalty of 1.5%per month to the time of redemption. If taxes are unpaid for a period of five years to or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% a0 penalty also applies to delinquent taxes with respect to property on the unsecured roll, and further, an pp additional penalty of 1.5%per month accrues with respect to such taxes beginning on varying dates related to the tax bill mailing date. X W Delinquencies. The valuation of property is determined as of the January 1 lien date as equalized in T August of each year and equal installments of taxes levied upon secured property become delinquent on the ci following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31. The County has not implemented a Teeter Plan with respect to the collection and distribution of .j taxes to redevelopment agencies, although the County distributes taxes to other taxing agencies pursuant to a a=i Teeter Plan. Therefore, delinquencies in the payment of property taxes could have an adverse effect on the s c� a 30 DOCSOC/1725450v4/200430-0012 Pticket P;g Iii79„ Agency's ability to make timely debt service payments. See Table 6 under the caption "THE PROJECT y AREAS—Levy and Collection"for historic property tax collection rates within the Project Areas. 0 m Supplemental Assessments. California Revenue and Taxation Code Section 75.70 provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion = of new construction. Prior to the enactment of this law,the assessment of such changes was permitted only as of the next tax lien date following the change, which delayed the realization of increased property taxes from the new assessments for up to 14 months. Revenue and Taxation Code Section 75.70 provides increased revenue to the Redevelopment Property Tax Trust Fund to the extent that supplemental assessments of new 0 construction or changes of ownership occur within the boundaries of the Project Areas subsequent to the M January 1 lien date. To the extent that such supplemental assessments occur within the Project Areas, Tax 0 Revenues may increase. However, because supplemental assessments cannot be accurately projected, no Q provision has been made by the Fiscal Consultant to reflect the impact of supplemental assessments on Tax X Revenues. See Appendix A. ~ r CD Property Tax Administrative Costs. In 1990, the State Legislature enacted Senate Bill ("SB") 2557 E (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and r allocating property tax revenues to local government jurisdictions in proportion to the tax-derived revenues m allocated to each. SB 1559 (Chapter 697, Statutes of 1992)explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. In addition, Sections 34182(e) and 34183(a) of the Dissolution Act allow administrative costs of the County Auditor-Controller for the cost of administering the O provisions of the Dissolution Act,as well as the foregoing SB 2557 amounts,to be deducted from property tax revenues before moneys are deposited into the Redevelopment Property Tax Trust Fund. For Fiscal Year =_ 2014-15,the County's administrative charge to the Agency for the Project Areas was$420,252, approximately E 1.15%of gross tax increment revenues received by the Agency in such Fiscal Year. a Pass-Through Agreements. Prior to 1994, under the Redevelopment Law, a redevelopment agency could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project in an amount which in the redevelopment agency's determination was appropriate to alleviate any financial burden or detriment caused by the redevelopment project. Such pmp agreements normally provide for payment or pass-through of tax increment revenue directed to the affected taxing agency,and,therefore,are commonly referred to as pass-through agreements or tax sharing agreements. LO The Agency's agreements with affected taxing agencies are referred to herein as "Pass-Through Agreements." N See the caption "THE PROJECT AREAS" for a discussion of Pass-Through Agreements for each Project 0 Area. See also the caption "SECURITY FOR THE SERIES 2015 BONDS—Tax Increment Financing" for additional discussion of the treatment of Pass-Through Agreements under the Dissolution Act. R c Statutory Pass-Through Amounts. The payment of Statutory Pass-Through Amounts results from: m (i)redevelopment plan amendments which add territory in existing project areas on or after January 1, 1994; and(ii)redevelopment plan amendments which eliminate one or more limitations within a redevelopment plan N (such as the removal of the time limit on the establishment of loans, advances and indebtedness). The O calculation of the amount due to affected taxing entities is described in Sections 33607.5 and 33607.7 of the d Redevelopment Law. See the captions "THE PROJECT AREAS" and"SECURITY FOR THE SERIES 2015 m BONDS—Tax Increment Financing" for further information regarding the applicability of the statutory pass- through provisions of the Redevelopment Law and the Dissolution Act to the Project Areas. t X W 33676 Amounts. The Agency is required to pay certain inflationary increases in tax increment 'n revenues referred to herein as 33676 Amounts to certain educational taxing agencies. See the caption C� "SECURITY FOR THE BONDS—Statutory Pass-Through Amounts" for a discussion of the Agency's obligation to pay 33676 Amounts. c m Recognized Obligation Payment Schedule. The Dissolution Act provides that, commencing on the = date that the first Recognized Obligation Payment Schedule is valid, only those payments listed in the r Q 31 DOCSOC/1725450v4/200430-0012 Packe#° 680. s c Recognized Obligation Payment Schedule may be made by the Agency from the funds specified in the N Recognized Obligation Payment Schedule. Before each February 1, with respect to the following fiscal year, -0 the Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency's o oversight board and the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which 0 enforceable obligations(as defined in the Dissolution Act)of the successor agency are listed,together with the = source of funds to be used to pay for each enforceable obligation. Tax Revenues will not be distributed from C the Redevelopment Property Tax Trust Fund by the County Auditor-Controller to the Agency's Redevelopment Obligation Retirement Fund without a duly approved and effective Recognized Obligation Payment Schedule obtained in sufficient time prior to each June 1 property tax distribution date. See the o caption "SECURITY FOR THE SERIES 2015 BONDS—Recognized Obligation Payment Schedule" and M "RISK FACTORS—Recognized Obligation Payment Schedule." See also"SECURITY FOR THE BONDS— o Last and Final Recognized Obligation Payment Schedule" for a description of the Last and Final ROPS Q authorized by the Dissolution Act pursuant to SB 107. Y Unitary Property E 0 AB 2890(Statutes of 1986,Chapter 1457)provides that,commencing with State Fiscal Year 1988-89, c assessed value derived from State-assessed unitary property(consisting mostly of operational property owned U) by utility companies) is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and O (ii)if values to be allocated are greater than in the previous fiscal year,each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula. Additionally,the lien date on = State-assessed property was changed from March 1 to January 1. E m AB 454 (Statutes of 1987, Chapter 921) further modified Chapter 1457 regarding the distribution of tax revenues derived from property assessed by the State Board of Equalization. AB 454 provides for the T consolidation of all State-assessed property,except for regulated railroad property,into a single tax rate area in each county. AB 454 further provides for a new method of establishing tax rates on State-assessed property and distribution of property tax revenue derived from State-assessed property to taxing jurisdictions within m each county in accordance with a new formula. Railroads will continue to be assessed and revenues allocated F to all tax rate areas where railroad property is located. The intent of AB 2890 and AB 454 is to provide LO redevelopment agencies with their appropriate share of revenue generated from property assessed by the State N Board of Equalization. o c The County Auditor-Controller allocated an aggregate total of$ of unitary tax revenue to the Project Areas for Fiscal Year 2013-14. Tax Revenues from unitary property are assumed to remain at [Fiscal Year 2013-14] levels for each Project Area for purposes of gross tax increment projections in the Fiscal m Consultant's Report. See Appendix A for a breakdown of the Fiscal Year 2013-14 unitary property values in c=a each of the Project Areas. N Article XIIIA of the State Constitution O a m On June 6, 1978, State voters approved an amendment (commonly known as Proposition 13 or the Jarvis-Gann Initiative) which added Article XIIIA to the State Constitution. Article XIIIA limits the amount s of ad valorem taxes on real property to 1% of"full cash value"of such property, as determined by the county w assessor. Article XIIIA defines "full cash value"to mean "the county assessor's valuation of real property as 'n shown on the State Fiscal Year 1975-76 tax bill under `full cash value,' or, thereafter, the appraised value of c14 real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 r assessment." Furthermore, the "full cash value" of all real property may be increased to reflect the rate of w inflation,as shown by the consumer price index,not to exceed 2%per year,or may be reduced. W s M Q 32 DOCSOC/1725450v4/200430-0012 Pac�Cet4Pg 681; Article XIIIA has subsequently been amended to permit reduction of the"full cash value"base in the N event of declining property values caused by substantial damage, destruction or other factors, and to provide c that there would be no increase in the"full cash value"base in the event of reconstruction of property damaged o m or destroyed in a disaster and in other special circumstances. _ Article XIIIA: (i)exempts from the I% tax limitation taxes to pay debt service on: (a)indebtedness approved by the voters prior to July 1, 1978; or(b)bonded indebtedness for the acquisition or improvement of y real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition; (ii)requires a vote of two-thirds of the qualified electorate to impose special taxes, or certain o additional ad valorem taxes; and (iii) requires the approval of two-thirds of all members of the State U Legislature to change any State tax laws resulting in increased tax revenues. C Q The validity of Article XIIIA has been upheld by both the State Supreme Court and the United States X Supreme Court. F- 0 In the general election held on November 4, 1986, voters of the State approved two measures, m Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to provide that the terms "purchase" and"change of ownership," for the purposes of determining full cash value N of property under Article XIIIA, do not include the purchase or transfer of: (1)real property between spouses; and (2)the principal residence and the first $1,000,000 of other property between parents and children. This amendment to Article XIIIA may reduce the rate of growth of local property tax revenues. O Proposition 60 amended Article XIIIA to permit the State Legislature to allow persons over the age of 55 who sell their residence and buy or build another of equal or lesser value within two years in the same E county to transfer the old residence assessed value to the new residence. As a result of the State Legislature's m action,the growth of property tax revenues may decline. N r Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement is shown at 100%of assessed value and all general tax rates pNp reflect the $1 per $100 of taxable value (except as noted). Tax rates for voter-approved bonded indebtedness and pension liabilities are also applied to 100%of assessed value. �n 0 N Appropriations Limitation—Article XIIIB o On November 6, 1979,State voters approved Proposition 4(also known as the Gann Initiative),which added Article XIIIB to the State Constitution. Article XIIIB limits the annual appropriations of the State and = its political subdivisions to the level of appropriations for the prior fiscal year, as adjusted for changes in the m cost of living, population and services rendered by the government entity. The "base year" for establishing such appropriations limit is State Fiscal Year 1978-79, and the limit is to be adjusted annually to reflect N changes in population, consumer prices and certain increases in the cost of services provided by these public to agencies. a M Section 33678 of the Redevelopment Law provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of,or interest on, loans,advances,or indebtedness is not deemed to t be the receipt by an agency of proceeds of taxes levied by or on behalf of an agency within the meaning of w Article XIIIB, nor will such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation 'n subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution c1 and laws of the State, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678 has been upheld in two State appellate court decisions. On the basis of these decisions, the Agency does not believe that it is subject to Article XIIIB and has not adopted an appropriations limit. E s U ca a 33 DOCSOC/1725450v4/200430-0012 VPacCe#Pg 682 y Articles XIIIC and XIIID of the State Constitution N c At the election held on November 5, 1996, Proposition 218 was passed by the voters of California. 0 m The initiative added Articles XIIIC and XIIID to the State Constitution. Provisions in the two articles affect 0) the ability of local government to raise revenues. The Bonds are secured by sources of revenues that are not _ subject to limitation by Proposition 218. See the caption"—Propositions 218 and 26." m Proposition 87 0 On November 8, 1988, the voters of the State approved Proposition 87, which amended Article XVI, ca Section 16 of the State Constitution to provide that property tax revenue attributable to the imposition of taxes 0 on property within a redevelopment project area for the purpose of paying debt service on certain bonded Q indebtedness issued by a taxing entity (not the Former Agency or the Agency) and approved by the voters of H the taxing entity after January 1, 1989 will be allocated solely to the payment of such indebtedness, and not to redevelopment agencies. SB 107 (Chapter 325, Statutes of 2015), which became effective on September 22, 2015, amended Section 34183(a)(1)of the Dissolution Act to provide that such debt service override revenues m approved by the voters for the purpose of supporting pension programs or capital projects or programs related to the State Water Project that are not pledged to or not needed for debt service on Agency debt will be allocated and paid to the entity that levies the override. U t Appeals of Assessed Values 0 Pursuant to State law, a property owner may apply for a reduction of the property tax assessment for such owner's property by filing a written application, in a form prescribed by the State Board of Equalization, E with the appropriate county board of equalization or assessment appeals board. a In the County, a property owner desiring to reduce the assessed value of such owner's property in any r one year must submit an application to the County Assessment Appeals Board (the "Appeals Board"). d Applications for any tax year must be submitted by November 30 of such tax year. Following a review of each application by the staff of the County Assessor's Office, the staff makes a recommendation to the Appeals pNp Board on each application which has not been rejected for incompleteness or untimeliness or withdrawn. The Appeals Board holds a hearing and either reduces or confirms the assessment. The Appeals Board generally is Ln required to determine the outcome of appeals within two years of each appeal's filing date. Any reduction in N the assessment ultimately granted applies only to the year for which application is made and during which the 0 written application is filed. The assessed value increases to its pre-reduction level for fiscal years following = the year for which the reduction application is filed. However, if the taxpayer establishes through proof of comparable values that the property continues to be overvalued(known as "ongoing hardship"), the Assessor has the power to grant a reduction not only for the year for which application was originally made,but also for m the then current year as well. Appeals for reduction in the"base year"value of an assessment,which generally must be made within three years of the date of change in ownership or completion of new construction that co determined the base year, if successful, reduce the assessment for the year in which the appeal is taken and v� prospectively thereafter. Moreover, in the case of any reduction in any one year of assessed value granted for a "ongoing hardship" in the then current year, and also in any cases involving stipulated appeals for prior years op relating to base year and personal property assessments, the property tax revenues from which Tax Revenues are derived attributable to such properties will be reduced in the then current year. In practice,such a reduced assessment may remain in effect beyond the year in which it is granted. See Appendix A for information i t regarding the appeals pending with respect to the assessed valuations of the top ten property owners within 'n each Project Area. C� Proposition 8 w d Proposition 8, approved in 1978 (California Revenue and Taxation Code Section 51(b)),provides for s the assessment of real property at the lesser of its originally determined (base year) full cash value R a 34 DOCSOC/1725450v4/200430-0012 Packet Pg 683'> compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account N reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market "0 _ value. Reductions pursuant to Proposition 8 may be initiated by the County Assessor or requested by the C M property owner,and such reductions apply only to a single tax year. co _ After a roll reduction is granted pursuant to Proposition 8,the property is reviewed on an annual basis C to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and may W exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the o State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is M subject to the annual inflationary factor growth rate allowed under Article XIIIA. o Q The County Assessor has the ability to use Proposition 8 criteria to apply blanket reductions in X valuation to classes of property affected by particular negative economic conditions. The Agency is aware that w the County Assessor made such reductions to assessed values of residential property in the Project Areas and (D the City generally in recent fiscal years, a portion of which reductions have now been restored. The Fiscal m Consultant's Report does not assume any future reductions in assessed valuations as a result of Proposition 8, o but there can be no assurance that such reductions will not be made in the future. See table 3 under the caption N "THE PROJECT AREAS" for further information with respect to reductions in assessed value within the @ Project Areas in the last four fiscal years. V O For a summary of the recent history of Proposition 8 reductions in the Project Areas, see "THE PROJECT AREAS—Assessment Appeals." _ E Propositions 218 and 26 m a On November 5, 1996, State voters approved Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and pNp charges. On November 2, 2010, California voters approved Proposition 26, the "Supermajority Vote to Pass a N New Taxes and Fees Act." Proposition 26 amended Article XIIIC of the State Constitution by adding an to expansive definition for the term "tax," which previously was not defined under the State Constitution. Tax N Revenues securing the Bonds are derived from property taxes which are outside the scope of taxes, o assessments and property-related fees and charges which are limited by Proposition 218 and outside of the = �a scope of taxes which are limited by Proposition 26. L Future Initiatives m C Articles XIIIA, XIIIB, XIIIC and Article XIIID to the State Constitution and certain other N propositions affecting property tax levies were each adopted as measures which qualified for the ballot u� pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further O R_ affecting Agency revenues or the Agency's ability to expend revenues. pp :a THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO W LO T The Former Agency was established pursuant to the Redevelopment Law and was activated by c5 Resolution No. 2361 adopted by the Mayor and Common Council on June 23, 1952, at which time the Mayor and Common Council declared itself to be the governing board of the Agency. On June 28, 2011, AB X1 26 was enacted as Chapter 5, Statutes of 2011, together with a companion bill, AB X1 27. A lawsuit entitled 0) California Redevelopment Association, et al. v. Matosantos, et al., was brought in the State Supreme Court E challenging the constitutionality of AB X1 26 and AB X1 27. In a published decision (53 Cal. 4th 231 a 35 DOC S OC/172545 0v4/200430-0012 PacketrPg =6$4 (Dec. 29, 2011)), the State Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that N AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the = decision of the State Supreme Court,as of February 1,2012,all redevelopment agencies in the State, including o m the Former Agency,were dissolved, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. _ °a On January 9, 2012, pursuant to Resolution No. 2012-12 and Section 34173 of the Dissolution Act, the Mayor and Common Council of the City elected to serve as the Successor Agency to the Redevelopment Agency of the City of San Bernardino. Subdivision (g) of Section 34173 of the Dissolution Act, added by o AB 1484, expressly affirms that the Successor Agency is a separate public entity from the City, that the two cc entities shall not merge and that the liabilities of the Former Agency will not be transferred to the City nor will o the assets of the Former Agency become assets of the City; however, the assets and liabilities of the Former Q Agency were transferred by operation of law to the Successor Agency on February 1,2012. H r The Agency is governed by an eight-member Board of Directors (the "Board") which consists of the members of the Mayor and Common Council of the City of San Bernardino. The seven members of the d Common Council serve as the governing body of the Agency. The Mayor of the City serves as Agency c Chairperson. Agency Powers O All powers of the Agency are vested in its eight members, who are the elected Mayor and seven members of the Common Council. Pursuant to the Dissolution Act,the Agency is a separate public body from =_ the City and successor to the organizational status of the Former Agency, but without any legal authority to E participate in redevelopment activities except to complete any work related to an approved enforceable m obligation. The Agency is tasked with expeditiously winding down the affairs of the Former Agency pursuant a to the procedures and provisions of the Dissolution Act. Under the Dissolution Act,many Agency actions are r subject to approval by the Oversight Board,as well as review by the DOF. The State has strict laws regarding public meetings (known as the Ralph M. Brown Act) which generally make all Agency and Oversight Board meetings open to the public in a similar manner as Mayor and Common Council meetings. pmp Q H Previously, Section 33675 of the Redevelopment Law required the Former Agency to file not later 'n than the first day of October of each year with the County Auditor of a statement of indebtedness certified by N the chief fiscal officer of the Former Agency for each redevelopment plan which provides for the allocation of o taxes(i.e.,the Redevelopment Plan). The statement of indebtedness was required to contain the date on which = the bonds were delivered, the principal amount, term, purposes and interest rate of the bonds and the M outstanding balance and amount due on the bonds. Similar information was required to be given for each loan, advance or indebtedness that the Former Agency had incurred or entered into which is payable from tax m increment. Section 33675 also provided that payments of tax increment revenues from the County Auditor- Controller to the Former Agency could not exceed the amounts shown on the Former Agency's statement of co indebtedness. The Dissolution Act eliminates this requirement and provides that,commencing on the date that cn the first Recognized Obligation Payment Schedule is valid thereunder, the Recognized Obligation Payment IL Schedule supersedes the statement of indebtedness previously required under the Redevelopment Law, and op that, commencing on such date, the statement of indebtedness will no longer be prepared nor have any effect under the Redevelopment Law. See the caption"SECURITY FOR THE SERIES 2015 BONDS—Recognized s Obligation Payment Schedule." W to THE PROJECT AREAS c� Under the Redevelopment Law, a city or county that activated a redevelopment agency was required s., to adopt, by ordinance, a redevelopment plan for each redevelopment project to be undertaken by the E redevelopment agency. A redevelopment agency could only undertake those activities within a redevelopment _ project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, U r Q 36 DOCSOC/1725450x4/200430-0012 P,acket=Rg :685 ; the content of which is largely prescribed in the Redevelopment Law, rather than a "plan" in the customary N sense of the word. 0 Each Redevelopment Plan originally included separate time and financial limitations applicable to 0) each Project Area. SB 107, which became effective September 22, 2015, amended the Dissolution Act to = provide that the time limits for receiving property tax revenues and the limitation on the amount of property tax revenues that may be received by the Former Agency and the Agency set forth in the Redevelopment Plan are not effective for purposes of paying the Agency's enforceable obligations. Accordingly,the projections set forth in this Official Statement and in the Fiscal Consultant's Report attached to this Official Statement as 0 Appendix A do not take into account the time and financial limitations set forth in the Redevelopment Plans M the Project Areas. See also "--General" and "—Project Area Characteristics" for additional information o regarding the Project Areas, including information on land use, assessed valuation and property ownership, Q assessed valuation and Tax Revenues generated within the Project Areas. See "SECURITY FOR THE m SERIES 2015 BONDS—Tax Revenues." ~ m General E a� A brief description of the location and land uses within each Project Area is set forth below. [City co Staff to review/confirm project area descriptions.] 1° .0 Meadowbrook Project/Central City Project No. 1. The Redevelopment Plan for the Meadowbrook O Project was adopted on July 21, 1958 by Ordinance No.2233 and the Redevelopment Plan for the Central City Project No. 1 was adopted on February 23, 1965 by Ordinance No.2649. The Meadowbrook Project and the c Central City Project No. 1 were merged in 1977 as permitted by the Law at that time. Together,these Project Areas contain 192.5 acres located in the center of the City. The County Auditor-Controller does not report tow RPTTF moneys separately for the Meadowbrook Project and the Central City Project No. 1. a N T State College Project. The Redevelopment Plan for the State College Project was adopted on y April 27, 1970 by Ordinance No. 3067. The State College Project spans 1,800 acres. The Project Area is located within the northwest sector of the City and consists of single and multi-family residential, open space, m recreational,commercial and industrial uses. LO The Central City North Project. The Redevelopment Plan for the Central City North Project was N adopted on August 6, 1973 by Ordinance No. 3366 and contains 278 acres. Located east of the I-215 Freeway 0 near the City's Civic Center, Central City North is a mixture of retail, commercial, restaurant, professional service and single family residential uses. c The Central City West Project. The Redevelopment Plan for the Central City West Project was m adopted on February 17, 1976 by Ordinance No. 3553. The Central City West Project encompasses four acres located at the northeast corner of Fifth Street and Mountain Vernon Avenue. The Central City West Project N serves as the gateway to the upper Mt.Vernon Avenue retail and commercial area. vn O a The Central City East Project. The Redevelopment Plan for the Central City East Project was op adopted on May 3, 1976 by Ordinance No. 3571, and consists of 225 acres. Located in the northeast portion of the Merged Central City Projects, in the Center of the City, the Central City East Project is primarily devoted _ to governmental and associated uses. Governmental facilities located within the Project Area include the Civic w Center Complex, Courthouse, State General Services Administration Facilities, County Administrative 'n Offices,Hall of Records,Caltrans and associated federal offices. Professional office use has also developed in c4 this Project Area. Abut twenty-five percent(25%) of the Project Area has been designated for open space and recreational use: Seccombe Lake, a State Urban Recreation Area comprised of 55 acres of land, is located in the northeast section of the Project Area. s 0 w Q 37 DOCSOC/1725450v4/200430-0012 P66ketP. .;6,86 scb . The Central City South Project. The Redevelopment Plan for the Central City South Project was y adopted on May 3, 1976 by Ordinance No. 3572. The Central City South Project covers approximately c 590 acres and links the City's two major shopping centers, the Central City Mall and the Inland Central Mall. C It is bounded by Interstate 215 on the west and Sierra Way and a portion of Arrowhead Avenue on the east. "E"Street dissects the Project Area with the adjacent properties devoted to retail commercial or service related commercial uses. Also located within the Project Area is the National Orange Show, whose 136 acre site includes exhibit buildings, the fairground, race track and stadium and has the potential of developing into a major entertainment complex. 0 After the passage of the Jarvis-Gann Initiative (Article XIIIA of the Constitution of the State of M California) in 1978, the Central City-Meadowbrook Project Area suffered a substantial reduction in tax o increment revenues. Because of the age of the Project Area and the limited amount of vacant land left for Q development,tax increment revenue growth was severely limited. So substantial was the decline and reduction X in growth that there were not sufficient revenues to service the Project's annual debt payments. To rectify the problem, the State Legislature, upon the Agency's request, enacted special legislation for inclusion into California's Redevelopment Law (Sections 33476, 33476.3 and 33476.5 of the Redevelopment Law) that E merged, for the purposes of financing,the Central City-Meadowbrook Project Area with Central City East and Central City South to create the Central City Merged Project Area. a7 is The Southeast Industrial Park Project. The Redevelopment Plan for the Southeast Industrial Park Project was adopted on June 21, 1976 by Ordinance No. 3583. The Southeast Project includes 870 acres. The O Project Area is located in the southeast quadrant of the City and is divided into a 520 acre western section and L a 350-acre eastern section. The western end is devoted primarily to commercial complexes and professional = offices,while the eastern area is zoned for light industrial. E m L The western section is adjacent to the 1-10 and 1-215 Freeways interchange and offers a restaurant °; row, a mix of professional office complexes, a Hilton hotel with convention facilities and various motels, retail, commercial, and light industrial properties. West of the I-215 Freeway is the San Bernardino Auto Plaza. Cn M The eastern section has both I-10 Freeway and rail access and is in close proximity to the San Bernardino International Airport.Approximately acres of vacant land is located in this Project Area. LO 0 N The Northwest Project. The Redevelopment Plan for the Northwest Project was adopted on July 6, o 1981 by Ordinance No.MC-189. Located in the northwest quadrant of the City of San Bernardino, the =a Northwest Project is divided into Subarea A and Subarea B. The Northwest Project primarily encompasses the parcels along thoroughfares in the northwest area of the City. This includes portions of Highland Avenue, F Muscoy Street and Mount Vernon Avenue. Subarea A, encompassing 940 acres, is located south of Cajon m Boulevard, north of Seventh Street and west of Interstate 215. This area focuses on commercial corridors along portions of Highland Avenue, Baseline Avenue, Medical Center Drive and Mount Vernon Avenue. N San Bernardino Community Hospital and the Westside Shopping Center are major employers within this area: v; Subarea B, encompassing 500 acres, is located north of Devil's Creek Diversion Channel, southeasterly of a Palm, south of Interstate 215,and east and west of Cajon Boulevard. This area is designated for industrial uses ca and includes approximately acres of vacant land. A bridge was built connecting the industrial area to the State College Business Park industrial area, allowing for better freeway access. The area is in close proximity to Interstate 215 and Interstate 15 freeway interchange. The Northwest Project has a community shopping W center, which was constructed with the assistance of the Agency, a four-story, 100,000 square-foot medical r office building, a 316,000 sq. ft. adhesive manufacturing and distribution center and a 75 unit senior housing 1� complex,among other development. r The Tri-City Project. The Redevelopment Plan for the Tri-City Project was adopted on June 20, 1983 m and contains 378 acres. Located in the southeast section of San Bernardino, the Tri-City Project Area is s divided into two areas: Subarea 1 and Subarea 2. ca a 38 DOC S OC/1725450v4/200430-0012 Packet Pg '68T Subarea 1 spans 95 acres and is located west of Del Rosa Avenue and north of Sixth Street to N Baseline. This subarea is zoned for residential and is occupied by apartment units on a 12-acre site. The remainder of the land is owned by the Agency. 0 m rn Subarea 2 consists of 283 acres and is located east of Waterman Avenue,west of Tippecanoe Avenue, _ and north of the I-10 Freeway. This subarea is highlighted by the Tri-City Corporate Center which is a mix of office,light industrial,retail,and commercial uses,including a variety of restaurants. The South Valle Project. The Redevelopment Plan for the South Valle Project was adopted on July 9, o 1984 by Ordinance No. MC-389 and contains 289 acres. The South Valle Project is located south of the 1-10 cc Freeway within the southern portion of the city limits. The South Valle Project is adjacent to the commerce 0 center of the Southeast Industrial Park and Subarea 2 of the Tri-City Project Area. Q X R South Valle is ideal for commercial and light industrial uses and is within the sphere of two commercial and industrial centers. The Project Area has rail service through the center with a transcontinental a=i truck terminal located adjacent to the project at the southwest corner of Hunts Lane and Redlands Boulevard. E The Uptown Project. The Redevelopment Plan for the Uptown Project was adopted on June 16, 1986 by Ordinance No.MC-527. The Uptown Redevelopment Project encompasses approximately 433 acres and is divided into two subareas,identified as Subarea A and Subarea B. 2 O Subarea A comprises approximately 348 acres located along Highland Avenue and Baseline Street between Interstate 215 on the west and Waterman Avenue on the east, and along"E" Street, south of Highland =_ Avenue and north of Eighth Street. This subarea has a predominance of commercial land uses. E d L Subarea B comprises approximately 84 acres and is bounded by Santa Fe Railroad yards to the north, a Interstate 215 on the east,Rialto Avenue and King Street on the South and Mount Vernon Avenue to the west. �+ This subarea includes a variety of land uses,such as commercial,industrial and residential. The Mt. Vernan Corridor Project. The Redevelopment Plan for the Mt.Vernan Corridor Project was pNp adopted on June 25, 1990 by Ordinance No. MC-733. The Mt. Vernan Corridor Project consists of three separate subareas, totaling 1,938 acres. Subarea A consists of 1,722 acres and incorporates commercial uses LO along its main thoroughfares, Mt. Vernon Avenue and Foothill Boulevard. The northwest portion of this N subarea is public flood control land. Subarea B consisting of 115 acres is generally located south of Rialto 0 Avenue,west of the I-215 Freeway, north of Inland Center Drive and east of"I" Street. It is a combination of =0 commercial,industrial,residential and public land uses. With residential predominately located along the west side of the I-215 freeway between Fifth Street and Baseline, Subarea C consists of 101 acres of flood control = land,adjacent and west of the I-215 freeway and northwesterly of Orange Show Road. m _ R The 40th Street Project. The Redevelopment Plan for the 40th Street Project was adopted on July 10, N 2000 by Ordinance No. MC-1077. The 40th Street Project contains 432 acres and is comprised of two N noncontiguous areas known as Subarea 1 and Subarea 2. Subarea 1 is the larger of the two subareas and is a generally bordered by 44th Street to the north, Sepulveda and Waterman Avenues to the east, Ralston Avenue pp and Sonora Street to the south, and Electric and Mountain Avenues to the west. The local neighborhood is served by a mix of retail and commercial uses. Residential uses are primarily north and south of 40th Street, and east of Sierra Way. Subarea 2 consists of multi-unit residential and vacant land just east of Sierra Way and W along Waterman Avenue. LO N r _ d E s 0 Q 39 DOCSOC/1725450v4/200430-0012 Placket,Pg y,688: 6.C.b Project Area Characteristics y c A breakdown of the taxable valuations and resulting gross tax increment in each Project Area for 0 Fiscal Year 2015-16 is set forth in the below table: m as Table 2 SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Assessed and Incremental Values(Fiscal Year 2015-16) o 2015-16 Incremental V O Project Area Base Year Assessed Valuation Base Year Value Taxable Value Q 1. Meadowbrook/CC 1964-65 $ 112,397,045 $ 18,929,244 $ 93,467,801 X 2. State College 1969-70 967,504,671 9,639,738 957,864,933 3. Central City North 1972-73 92,523,015 29,368,137 63,154,878 4. Central City West 1975-76 1,981,287 110,520 1,870,767 5. Central City East 1975-76 72,650,307 8,423,256 64,227,051 a� 6. Central City South 1975-76 256,085,672 42,967,721 213,117,951 7. S.E.Industrial Park 1975-76 467,860,925 8,174,754 459,686,171 Cl) 8. Northwest 1981-82 556,108,627 34,418,781 521,689,846 as 9. Tri-City 1982-83 429,125,874 15,090,647 414,035,227 w 10. South Valle 1983-84 130,406,729 21,214,633 109,192,096 � 11. Uptown 1985-86 202,314,636 91,055,177 111,259,459 ?_, 12. Mt.Vernon 1989-90 205,103,381 79,769,401 125,333,980 13. 40th Street 1999-00 98,416.424 43,827,320 54,589,104 Total $ 3,592,478,593 $ 402,989,329 $ 3,189,489,264 E L Source: Urban Futures,Inc.;County. d N Taxable values for each Project Area for the current and past four fiscal years are set forth in the below table. rn Table 3 m a SUCCESSOR AGENCY TO THE l' REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO T'' T 0 Historic Taxable Values N 0 c 'v Project Area Base Year A.V. FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 c Meadowbrook/CC $ 18,929,244 $ 135,046,435 $ 108,484,512 $ 143,480,596 $ 143,142,236 $ 112,397,045 y State College 9,639,738 869,605,478 859,930,099 854,505,540 933,487,829 967,504,671 M Central City North 29,368,137 88,773,244 86,962,399 115,960,715 117,930,483 92,523,015 Central City West 110,520 2,131,797 1,946,482 2,375,647 2,351,037 1,981,287 N Central City East 8,423,256 67,086,463 65,676,157 67,958,142 71,097,582 72,650,307 Central City South 42,967,721 227,189,786 223,580,492 234,959,266 239,727,072 256,085,672 p S.E.Indust.Park 8,174,754 500,983,598 473,293,298 467,840,594 453,117,563 467,860,925 C. Northwest 34,418,781 493,480,545 514,652,636 500,177,657 498,639,183 556,108,627 M Tri-City 15,090,647 421,334,520 400,168,012 398,908,581 392,957,643 429,125,874 South Valle 21,214,633 124,109,511 122,028,082 122,477,003 126,130,031 130,406,729 Uptown 91,055,177 197,608,966 194,646,183 197,204,956 195,433,864 202,314,636 X W Mt.Vernon 79,769,401 194,714,958 200,143,916 209,808,060 211,362,633 205,103,381 ,n 40th Street 43,827,320 95,071,175 95,611,952 92,895,213 95,376,176 98,416,424 r Total $ 402,989,329 $3,417,136,476 $3,347,124,220 $3,408,551,970 $3,480,753,332 $3,592,478,593 N c m E .s= Q 40 DOCSOC/1725450v4/200430-0012 .Packet Pg 689 6.C.b The top ten taxpayers for the combined Project Areas in the current fiscal year are set forth in the H below table. -a c O Table 4 at c SUCCESSOR AGENCY TO THE - v REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO To Ten Taxpayers Fiscal Year 2015-16 P ( ) � %o %of = Secured Secured Secured Assessed Incremental v O Property Owner Assessed Value Value Value Q 1. Teachers Insurance&Annuity Assoc.') $ 73,438,560 2.32% 2.59% @ 2. LIT Industrial Limited PartnershipM 66,128,303 2.09 2.33 I- 3. Opus Real Estate CA VII Northpointe(l) 61,000,000 1.93 2.15 4. IIT Cajon DC LP 55,476,474 1.75 1.95 w 5. IE Logistics Inc. 53,910,903 1.70 1.90 m 6. Industrial Parkway LLC 42,172,000 1.33 1.49 a 7. Interchange Business Center LLC(') 41,394,276 1.31 1.46 Cl) 8. Rancon Realty Fund IV ) 41,164,099 1.30 1.45 a 9. Rancon Realty Fund V Subsidiary Two(') 37,798,989 1.19 1.33 2 10. 701 Arrowhead Avenue LLC 35,166,034 1.11 1.24 t O FY 2015-16 TOP TEN TOTALS $ 507,649,638 Combined Project Area Secured Total Value $ 3,168,606,518 16.02% Combined Project Area Secured Incremental Value $ 2,838,021,712 17.89% - •d L tl� Currently has assessment appeals on file. See"-Assessment Appeals"herein and the Fiscal Consultant's Report attached as Appendix A. N Source: Urban Futures,Inc. r et Information with respect to the top taxpayers for each Project Area is set forth in Appendix A. v) m a The assessed valuation of the combined Project Area for the current fiscal year by land use category is E- set forth in the below table. c N Table 5 c SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO c Assessed Valuations by Land Uses(Fiscal Year 2015-16) m 2015-16 Percentage in Number of Secured Value by of Secured Property Use Parcels Land Use Value p a Commercial 1,427 $ 1,200,455,487 37.89% m Industrial 521 849,238,092 26.80 w Single Family Residential 4,609 559,238,784 17.65 -_ Multifamily Residential 599 239,025,551 7.54 x Vacant Land 1,834 159,961,428 5.05 W Governmental/Institutional/Other 659 122,258,833 3.86 Recreational 37 34,235,768 1.08 cv Vacant Governmental/Institutional/Other 607 3,108,126 0.10 r Agricultural 6 1,084,450 0.03 Totals 10,299 $ 3,168,606,518 100.00% E Source: Urban Futures,Inc.,County. v Q 41 DOCSOC/1725450v4/200430-0012 Packet P.g 690 t' 6.C:b Levy and Collection N c The following table sets forth property tax levy and collections in the Project Areas from Fiscal Year o 2010-11 through 2014-15. The County has not adopted the "Teeter Plan"alternative method for collection of a) taxes and,therefore,the receipt of property taxes is subject to delinquencies. Actual receipts of tax increment = have averaged %of the levy for the Project Areas. w m Table 6 SUCCESSOR AGENCY TO THE o REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Tax Levy and Collections(Fiscal Years 2009-10 to 2013-14) o Q Fiscal Year Actual Based on Percent X Ending June 30 Computed Levy") Collections Rate(2) Variance Collected C 2011 E 2012 2013 rn 2014 2015 .0 Computed Levy based on reported incremental value multiplied by the tax rate to compute gross tax increment. Computed Levy 0 also includes Unitary Taxes,if any,as reported by the County Auditor-Controller. (2) Amounts represent the annual current year tax increment revenues allocable up to Fiscal Year 2010-11 and prior to dissolution of redevelopment agencies pursuant to AB XI 26. For purposes of identifying the collection of property taxes,amounts shown do not E include deductions for administrative fees, tax refunds or pass through payments. Revenues are based on current year assessed values only and do not include supplemental taxes,prior year redemption payments,escaped assessments or mid-year adjustments d made by the Assessor or Auditor-Controller. , Source: Urban Futures,Inc.;County. N r Assessment Appeals Cn M Property taxable values determined by the County Assessor may be subject to an appeal by the H property owner. There are two basic types of assessment appeals provided for under California law. The first ,n type of appeal, commonly referred to as a base year assessment appeal, involves a dispute on the valuation c assigned by the Assessor immediately subsequent to a change in ownership or completion of new construction. N 0 If the base year value assigned by the Assessor is reduced, the valuation of the property cannot increase in = subsequent years more than 2% annually unless and until another change in ownership and/or additional new c� construction activity occurs. The second type of appeal, commonly referred to as a Proposition 8 appeal, can L result if factors occur causing a decline in the market value of the property to a level below the property's then m current taxable value. ca U) Assessment appeals are annually filed with the County Assessment Appeals Board for a hearing and N resolution. The resolution of an appeal may result in a reduction to the Assessor's original taxable value and a a tax refund to the property owner. A property owner can file for a regular assessment appeal with the County o0 between July 2 and November 30. Revenue and Taxation Code Section 1604 allows up to two years for an assessment appeal to be decided. Three of the top ten taxpayers within the Project Areas have filed assessment appeals that are currently pending. Additional appeals to assessed values in the Project Areas may be filed X W from time to time in the future. The Agency cannot predict the extent of these appeals or their likelihood of .n success. N The Fiscal Consultant researched the status of assessment appeals filed by property owners in the Project Areas based upon the latest information available as of October 16,2015. Current appeals pending in y the Project Areas represent real property with a total assessed valuation of$794,239,358. Based on the E s actual valuation reductions allowed by the Appeals Board for property in the Project Areas over the last Q 42 DOC S OC/1725450v4/200430-0012 PackethP`g X 691 `- 6.C.b five years, the amount of the allowed reductions represented approximately 34.97% of the requested y valuation reduction amount. Based on the current requested valuation reduction amount of$315,650,411, _ it is estimated that the resolution of the current appeals pending could potentially result in a valuation m reduction in the Project Areas of approximately $110,384,420 which could then result in a reduction to c the gross tax increment revenue of approximately$1,103,844. The Fiscal Consultant's estimates are based upon the historical averages of successful appeals and amounts of value reductions. Actual appeals, reductions and refunds may vary from historical averages. The = Fiscal Consultant's estimated reductions in values are reflected in its projections. 2 Y V Actual resolution of appeals are determined by a number of factors including vacancy and rental rates, _° circumstances of hardship and other real estate comparables, all of which are unique to the individual Q assessment. Therefore, actual reductions, if any, may be higher or lower than the reductions incorporated in the Fiscal Consultant's estimate. The estimated gross tax increment reduction amounts from pending appeals = have not been deducted from the projection of Tax Revenues in this Official Statement and the Fiscal w Consultant's Report attached in Appendix A, as the outcome of pending assessment appeals cannot be d predicted with certainty. M An appeal may be withdrawn by the applicant, the Appeals Board may deny or modify the appeal at hearing or by stipulation, or the final value may be adjusted to an amount other than the stated opinion of value. See "—Historical Assessed and Incremental Values" above, for a summary of historical assessed O property valuations in the Project Areas. For more information about appeals and the Fiscal Consultant's assumptions,see the Fiscal Consultant's Report attached to this Official Statement as Appendix A. TAX REVENUES °-' CM a Tax Revenues are to be deposited in the Redevelopment Obligation Retirement Fund, and thereafter and after transfers have been made by the Agency to the Tax Increment Fund,administered by the Trustee and v applied to the payment of the principal of and interest on the Series 2015 Bonds. co m Projected Tax Revenues tQ– The Agency has retained Urban Futures, Inc. to provide projections of taxable valuation and Tax C14 Revenues from developments in the Project Areas. The Agency believes that the assumptions (set forth in the c footnotes below and in Appendix A) upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur. See the caption "RISK FACTORS." Therefore, the actual Tax Revenues received during the forecast period may vary from m the projections and the variations may be material. A summary of the projected total taxable valuation and Tax m Revenues for all Project Areas is set forth in the following tables: The projections set forth in Table 7 assume in no growth in assessed value. The projections set forth in Table 8 assume assessed value growth at 2% in Fiscal Year 2016-17 and thereafter. N O a SB 107,which became effective September 22,2015, amended the Dissolution Act to provide that the m time limits for receiving property tax revenues and the limitation on the amount of property tax revenues that may be received by the Former Agency and the Agency set forth in the Redevelopment Plans are not effective x for purposes of paying the Agency's enforceable obligations. Accordingly, the projections set forth below in w LO this Official Statement and in the Fiscal Consultant's Report attached to this Official Statement as Appendix A do not take into account the time and financial limitations set forth in the Redevelopment Plans for the Project N Areas. r _ d s Q 43 DOCSOC/1725450v4/200430-0012 Packet P ;692 Iuawale;S le!al}}O fueuiwllaad : Z�4V) SOV.L S�OZ Oulp.eeuaa8 ueS-SOd-8 l!q!t!X3 S6-Z-L. :Iuawuae};V M M a. m as o `y 00 O •--�h;;;,o M r-Vw h N O ° O n 00 CA a �VO,M 00 n O M O •--�°� 0 0,0,D�� N N O Oi ^7 0,e V l-M N 01 0,,o w O 00 n y inn ' V l�O� d;,<t cl nM00 o,,O V,N ti •--NNNNNN NNN NNN N �y z •� ° d 9� 'oN y s°y � �Cy C� N R1 U N N •� WN C U I o W � 0 ° b Qa c ° on � z �" h r-C'I •--gym o.-•�00�l-O,oo m °�0 A i i .�-. ,ON00N 069W .�'- y O 'o,o N 00 0 t- V)1- N ^V 00 0 y 00 M,O[- N,O 0000 DO O O�1000 N LLO O d O 00 a0 h.-..-.W 00 00 N,O����b d o N 'D O O0000 O Vl Vl Vl Vi 7O W d 69 >GS Fx" Pr bw F e y O O o = mo000wwm00mwwwwo0w0000 m<t en m m m m md•7 V V•vv �yy 0.. b�A 0��q 00MMMMMMM MMMMMMMM LLGG [•••� °' i =,a. ° E e '060 if cv�Civ�C�Cvvvvv if if r- a U O�v O O NNNNNNNNNNNNNNNN 2 0 � N b o 0 .e y NNNN NNNN NNNN C N J U O ti N N a C-0 d V] V] zN 'CIO 11 It Cd C) `ney ° dT c s e o,o,D,D'0'0,o,o,D,o,o,o .� (� ° Z V,a U M M MMMMMM M M M MMM M M V] •O nai-rw .5 rf• C,.-O+b 0 oz U RS --Vl W)Vl Vl Vl%n Vl V1 Vl Wl Vl Vl h Vl Vl > N _ •, V � y°'. �+ M M M M M N 3 3 W y ?•, rVil 'O C N F� O ° O 0 A CJ V�7 7 7 7 7 7 7 7 7 7 7 7 7 7 C b �•2�+•�•2 Vl v1 W C H y 06.�y to O n/ U 0, y"" FY }O., w•5 0 °Oro Wx ^ ry O yr M M M M MMMM M M M M M M M M y I h O I y O i m m m 64 o\o\O,O,m O,0,61 O,m 00 O •-�V1 y c, o0 OO O0 oO O0 oO OO oO OO o0 o0 oO o0 oO oO oo G y 'A 8 A ` o Q a r a"vvvvvvvvvvvvvvv oo. ,zlg zd "c o°i0^o°`0 o°0 a OO o°o 000 0°o OOO O°O oO1 ooO OO10 o°O O°o oOO ° Cd D°i O v O O 0 0 lu �y •Z'1 ai M�M M M M M M M M M M M M M M M N� a C (]y 0 U ° N d d• N N•C ou a o ° U ti U R z cn .En t y NNNNNNNNNNNNNNNN z=0 r ti ON Oi O,o,o�°N o\of Q;O\ON a,°:Q;C,o: O v1 G7•G d 00 00 W 00 00 00 00 00 00 00 00 00 00 � C V vvvvv7�v_77vvvvv °' � F ..Gi1.� O 0 i y o,°,o,o,o,o,o,o,o,o,of o,o,rn°,°, a D'x E w o e o0 00 00 00 00 0o ao 00 00 00 00 W—W—o0 W—W— U ti, MM MMMMMM m M MMMMM FUi F (y0 "o trl -" U o a >v o d a M u m m m m m m m(n en en m o\o,o,o,o,a,o,o,o,o,o,o,o,as rn o, C p W o N w ti A a C v,�nhvivivi�ntn�nviviIn,n�n�n ° .. c aN .^ o d p oo Oo Oo 00 00 00 00 00 00 00 00 Oo 00 00 00 00 a C7 0; O ' U U o ❑ a' o > y ti v_v^ y,y NNNNNNNNN N N N N NNN y 0 '�"�� C� o U y > o,o,o,o,°, o,o,o,o,o,o,rn o,rn o o y o A ° a a q °' a ° A' • o rC; v v vi n n v vi to to to to vi n v n ❑r o ° o a�i o p^ a M M M M m M M In M M M M M M M M Q a W.G. •A�ro vi O W R R x .b W U G U cE U N w C !`rq C �. y,"'•f ,Dn00 O,O Nm ,t"'o n 00 a\0.-. O �bqN N O o N U C y N N N N N N N N N N m M U U U N h v°e o000000000.00OO Cn ccn5 Cn�dF ti wN N N N N N N N N N N N N N N N U auawale;S Ie!a1110 A,aeu!WIIOJd ULO S8dl 9W Ou!pJeuaa8 UeS-SOd-8 3!q!4x3 S6-Z-66 :Iuauayae;}y d s rn U to CL m ?' o o •= o Y 5 0,0 a � ,o, w a c3 00;70,N O,00 M 0,b'D Vl O7 a, 7 F� U I a .,� •--�MO,n N•-+h N•7 N,0 N[I lI y+ dM N M 7 M V n N V l N,0,0 M 7"I 0 0 +'�• ,>., f�..'� O I__h V 00 00 Vl a, M 01 3',;'0 � •�R > h 7 M V1 0 7 M O•-�N vl N a,W tC d <tOa,O,,O,ONO,N V10NOv1Nh � '� y W 0 1 b s WN O v' W w In ^ y Vl hN Mc) - OO,[,G,00 M N �p Y A �. ,Oh0,v1 ,O a, ,DN dN 69� •N O n N ntri lw N 7000 M y, N 77000 h :7 V)MO�M 00 CO ¢O .� M,O.h-i,O N,O w 00 W O O 10,O W ,�q7 0 W 00 Vl 00 00 W N,O a,.7-^.M-.^,O,O O N Z CIS ~O OO O O O O Vl Vl V1 Vl V' O O O w O U dpw a o 0 Cl)N,077 a,,0 a,hN7 t,m h-7 q w OOO7 h bb Vl OwwO N,0 [� ,O--m 00 b bo Oo O,O r-c-4 ma\O st 00 DOOM h m C.a,000 C-4 h00 h ❑'D W 0 O Cj,o �_. _ v-�c�,,C, o4'-, c� �U o Ova p 0 Lai .p d QQ h I`00 a,ON O•--�•--�N M M 7 vl,O,O!` r Q L N N N N N M M M M M M M M M M M r�7. 0 0A •,Oy U N U ate+ N^4 U O A > eo�oN ao. v'Qa'x y L•'' d 7 N00 r- M_T O•--x,000 TN ti ti '04 00 00 Y i d n O 7 O 00 rl°,N h M N M,O O n 'A to y CC O r C ,D V1 m N O O�00 00 h•n h[�f`00 00 s N ro A y m t a •p ,O h 00 Qi O O•--�N M 7 Vl b h 00 Q\O p�+•.M1� U In MMMM77777777777 V o a G 9 W Gs GO roJH va oo o E 0 o � D! a_,M,,D O 7 O,a,7 Vl MO, 0000 n to M0 b0 Vl7 > cd N �+Y_ �_ Q C� O >. U N. ,O 00 h V)Vl 00 m O ^M 0, N N 3 rab•3' .° h000 M Vl h OM,O a,N 0❑" a (y! y a y y a >, NM7Vlb r-:,C,0 mNM b!nao0 7 q . F gOgy (AG7� . a 7 V 7 7 7 7 kn Vi vi Vt In Vt vi In,D C O id C 56 Iblo E A M00 V r-C)M.-�M°,.�OMN000,a, O a,00 Vlh Vl hvl a\ VI N,ON 70,M FI y OO M N r- C'i O L �vI N O'd',O O•� = ,-:(.] Q O 0 Zi V r y y ,Z .5 Z m,O , t o Ny pbO�O Q 'I%�? 00 7 N O ,O w M M a] r 3 ^•+N m 7 7 Vl,0 h 00 00 a,0 N m 7 U .D N 'y, q 6M�9 M M M M M M M M M M 7 7�'7 .Na >, a fd V) V1 ay ° � 0O�O a U b ' N UN A U y 'j[�] N C y U � y L" N 00 M b O M O M z W ya1 W .' ON 00 Vl I`h I`Vl a, m N b N V 0+_m p a&n 18 N d 00 M N h N a,N M N hvl0 �•' Q w y 4 In-' Q N,0N 0 O U a H 0 dv O, 70,Vi m N m,O O,O m M 7 h Cr yam' y C .T. Ex r .0 U �( 00,OM 000,07 N 0O,["°Vl7 MM y N +�• F•p H ^N M 7 Vl b h 00 00 01 O -•�N M U > 'b Q fH ,� (V ti MMMMm M MMMM m77777 U 2 Fy go "p 2 O w w o U M V 00 M M O M V a, ,O 00 W"O_7 N y•C W F U O y 7 0,b N N,°Vl 00 h 7,O Vl 0o a,�. a, o O O N y N O '� O• Vl r+l�C M,O tel Vl N y O V1 5 r,C, • 0�00004C'I ,t -�O0,M V7iO�,O aai CJ C '�U U O y N y C 7M,0 M,OMI"0.-.t+1Nl�-+N -•�O ti N 7 r .N-i^00,O Vl,O 01 m(2,,O,O h O Vt A O 0. 0 ❑,, 7 U ) y --M 00,07�00,h,0 V177M y[� N C ro > 'Ou O Vl,O h o0 00 0,O N N M 7 Vl,0 h W y O O U O U O �M9^MMMMri7vvvvvv77v d ca ak. a.��( <d > b a U p U td Coe h N rr L N U Y cl a'O+ y Y U U4 00 O n) N N y .r. � U �+M ,OhDO a,O NM7 Vl,D h00 O, O•--� y•ON N O y U bb O U U 2 � o000000000000OOO F cs csaR'rn av�C7cn dF Debt Service Coverage y _ Set forth below is the estimated debt service coverage for the Series 2015 Bonds using actual Fiscal o m Year 2015-16 Tax Revenues assuming no growth in tax increment revenues in Fiscal Year 2016-17 and thereafter,through maturity of the Series 2015 Bonds. _ Table 9 y SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO o Estimated All-In Debt Service Coverage(Senior Obligations and Series 2015 Bonds) M Assumes No Value Growth O a Tax Increment X R Revenues Available i for Debt Service on Debt Service on Total Payments For *' _ Senior Obligations, Senior Obligations Debt Service on All-In Debt Service a) Fiscal Year Prior Agreements [and Prior Series 2015 Coverage All-In Debt Service Ending June 30 and Bondslll Agreements)Zl Bonds(')* Calculation(4) Coveragels� w 2016 Cl) 2017 75 2018 0 2019 2020 O 2021 �+ 2022 2023 2024 E 2025 2 2026 p, 2027 2028 N r 2029 2030 2031 W 2032 m 2033 2034 2035 r 2036 N 2037 0 2038 = 2039 2040 2041 i d See Table 7. m (2) Reflects debt service on Senior Obligations and Prior Agreements. See the captions"SECURITY FOR THE SERIES 2015 BONDS— R Obligations with Senior Right to Payment—Senior Obligations"and"—Prior Agreements." � Reflects debt service on Series 2015 Bonds payable in calendar year that begins in such Fiscal Year. Reflects sum of debt service on Senior Obligations,payments on certain Prior Agreements and debt service on Series 2015 Bonds. 0 (5) Tax Increment Revenues Available for Debt Service on Senior Obligations,Prior Agreements and Bonds divided by Total Payments For (L All-In Debt Service Coverage Calculation. m Source: Underwriter. .!Z t X ul 7 N T _ E V Preliminary,subject to change. Q 46 DOC S OC/1725450v4/200430-0012 Packet.Pg 695�" Set forth below is the estimated debt service coverage for the Series 2015 Bonds using actual Fiscal N Year 2015-16 Tax Revenues and assuming 2% growth in tax increment revenues in Fiscal Year 2016-17 through maturity of the Series 2015 Bonds. 0 m Table 10 S =o SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Estimated All-In Debt Service Coverage(Senior Obligations and Series 2015 Bonds) Assumes 2%Value Growth 0 Tax Increment O Revenues Available Q for Debt Service on Debt Service on Total Payments For X Senior Obligations, Senior Obligations Debt Service on All-lit Debt Service Fiscal Year Prior Agreements [and Prior Series 2015 Coverage All-lit Debt Service Ending June 30 and Bonds(') Agreementsf) Bonds")* Calculation(4) Coverage(5) C d 2016 E 2017 2018 N 2019 _ 2020 cti 2021 t) 2022 w 2023 0 2024 2025 _ 2026 E 2027 2028 i 2029 I- 2030 2031 r 2032 `- d' 2033 2034 In 2035 m 2036 2037 to 2038 r 0 2039 N 2040 0 2041 (t) See Table 8. t0 C (Z) Reflects debt service on Senior Obligations and Prior Agreements. See the captions"SECURITY FOR THE SERIES 2015 BONDS— d Obligations with Senior Right to Payment—Senior Obligations"and"—Prior Agreements." m Reflects debt service on Series 2015 Bonds payable in calendar year that begins in such fiscal year. C (4) Reflects sum of debt service on Senior Obligations,payments on certain Prior Agreements and debt service on Series 2015 Bonds. Ca (5) Tax Increment Revenues Available for Debt Service on Senior Obligations,Prior Agreements and Bonds divided by Total Payments For All-In Debt Service Coverage Calculation. N Source: Underwriter. 0 a m RISK FACTORS r z The following information should be considered by prospective investors in evaluating the Series 2015 X w Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations to which may be relevant to investing in the Series 2015 Bonds. In addition, the order in which the following N information is presented is not intended to reflect the relative importance of any such risks. r The various legal opinions to be delivered concurrently with the issuance of the Series 2015 Bonds d will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and E Preliminary,subject to change. Q 47 DOCSOC/1725450v4/200430-0012 Packet;P,g.'696 J 6.C.b federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of N general application affecting the enforcement of creditors' rights, and the application of equitable principles. _ See the caption"—Effect of City of San Bernardino Bankruptcy." 0 m co Reduction in Taxable Value _ c Tax Revenues allocated to the Redevelopment Property Tax Trust Fund are determined by the amount of incremental taxable value in the Project Areas and the current rate or rates at which property in the Project Areas is taxed. The reduction of taxable values of property in the Project Areas caused by economic factors o beyond the Agency's control, such as relocation out of the Project Areas by one or more major tenants, sale of ca property to a government entity or non-profit corporation exempt from property taxation or the complete or 0 partial destruction of such property caused by, among other eventualities, earthquake or other natural disaster, Q could cause a reduction in the Tax Revenues that provide for the repayment of and secure the Series 2015 X Bonds. Such reduction in Tax Revenues could have an adverse effect on the Agency's ability to make timely payments of principal of and interest on the Series 2015 Bonds. E m As described in greater detail under the caption "PROPERTY TAXATION IN CALIFORNIA— Article XIIIA of the State Constitution," Article XIIIA provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate,not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction O or other factors (as described above). Such measure is computed on a calendar year basis. Any resulting ca reduction in the full cash value base over the term of the Series 2015 Bonds could reduce Tax Revenues = securing the Series 2015 Bonds. E L In addition to the other limitations on and required application under the Dissolution Act of Tax °- Revenues on deposit in the Redevelopment Property Tax Trust Fund, as described in this Official Statement, r the State electorate or Legislature could adopt a constitutional or legislative property tax reduction with the effect of reducing Tax Revenues allocated to the Redevelopment Property Tax Trust Fund and available to the Agency. For example, the Dissolution Act authorizes counties to pay county administrative fees incurred to m administer the Dissolution Act prior to depositing any moneys in the Redevelopment Property Tax Trust Fund for distribution to successor agencies, although such moneys may previously have been pledged to LO bondholders. Although the federal and State Constitutions include clauses generally prohibiting the N Legislature's impairment of contracts,there are also recognized exceptions to these prohibitions. There is no 0 assurance that the State electorate or Legislature islature will not at some future time approve additional limitations S PP � that could reduce the Tax Revenues and adversely affect the source of repayment and security of the Series 2015 Bonds. Also,see the caption"—Challenges to Dissolution Act"below. F m Challenges to Dissolution Act Several successor agencies,cities and other entities have filed judicial actions challenging the legality u� of various provisions of the Dissolution Act. One such challenge is an action filed on August 1, 2012, by a Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, "Syncora") against the State, the op State Controller, the State Director of Finance, and the Auditor-Controller of San Bernardino County on his own behalf and as the representative of all other County Auditors in the State (Superior Court of the State of California, County of Sacramento, Case No. 34-2012-80001215). Syncora is a monoline financial guaranty ui insurer domiciled in the State of New York and has provided bond insurance and other related insurance 'n r policies for bonds issued by former California redevelopment agencies. C� The complaint alleged that the Dissolution Act, and specifically the "Redistribution Provisions" thereof(i.e., California Health and Safety Code sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188) m violate the "contract clauses" of the United States and California Constitutions (U.S. Const. art. 1, §10, cl.l; E Cal. Const. art. 1, §9) because they unconstitutionally impair the contracts among the former redevelopment Q 48 DOCS OC/1725450v4/200430-0012 Packet Pg. 697- 6C� agencies,bondholders and Syncora. The complaint also alleged that the Redistribution Provisions violate the a "Takings Clauses"of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 § 19) because they unconstitutionally take and appropriate bondholders' and Syncora's contractual right to 0 M critical security mechanisms without just compensation. CD After hearing by the Sacramento County Superior Court on May 3,2013,the Superior Court ruled that Syncora's constitutional claims based on contractual impairment were premature because no obligations were impaired. The Superior Court also held that Syncora's takings claims, to the extent based on the same arguments,were also premature. Pursuant to a Judgment stipulated to by the parties, the Superior Court on 0 October 3, 2013, entered its order dismissing the action. The Judgment, however, provides that Syncora M preserves its rights to reassert its challenges to the Dissolution Act in the future. The Agency does not 0 guarantee that any reassertion of challenges by Syncora or that the final results of any of the judicial actions Q brought by others challenging the Dissolution Act will not result in an outcome that may have a material X adverse effect on the Agency's ability to timely pay debt service on the Bonds. _ 0 Risks to Real Estate Market E 0 m The Agency's ability to make payments on the Series 2015 Bonds is dependent upon the economic W strength of the Project Areas. The general economy of the Project Areas is subject to all of the risks generally a associated with urban real estate markets. Real estate prices and development may be adversely affected by U changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected O increases in development costs, the supply of or demand for competitive properties in such area, the market 2:� value of property in the event of sale or foreclosure and other similar factors. Furthermore, real estate =_ development within the Project Areas could be adversely affected by limitations of infrastructure or future E governmental policies, including governmental policies to restrict or control development, changes in real °m a estate tax rates and other operating expenses, zoning laws and laws relating to threatened and endangered ,. species and hazardous materials and fiscal policies, as well as natural disasters (including, without limitation, N �✓ earthquakes, wildfires and floods), which may result in uninsured losses. In addition, if there is a decline in � the general economy of the Project Areas,the owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing m a delay or interruption in the receipt of Tax Revenues by the Agency from the Project Areas. LO Because assessed values do not necessarily indicate fair market values, the declines in fair market N values in recent years may have been even greater than the declines in assessed valuations, although it is also 0 possible that market values could be greater than assessed valuations at any given time. No assurance can be = given that the individual parcel owners will pay property taxes in the future or that they will be able to pay such taxes on a timely basis. See the caption "—Bankruptcy and Legal Delays" for a discussion of certain CD limitations on the City's ability to pursue judicial proceedings with respect to delinquent parcels. m _ ca Reduction in Inflation Rate W As described in greater detail above,Article XIIIA of the State Constitution provides that the full cash a value of real property used in determining taxable value may be adjusted from year to year to reflect the rate of m inflation, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, w there have been years in which the assessed values were adjusted by actual inflationary rates,which were less than 2%. The State Board of Equalization directed county assessors to use 1.998% as the inflation factor for C: purposes of preparing the 2015-16 tax roll. r The Agency is unable to predict if any adjustments to the full cash value of real property within the m Project Area,whether an increase or a reduction,will be realized in the future. U Q 49 DOC SOC/1725450v4/200430-0012 Packet Pg. 698 Levy and Collection of Taxes N The Agency has no independent power to levy or collect property taxes. Any reduction in the tax rate o or the implementation of any constitutional or legislative property tax decrease could reduce the Tax rn Revenues, and accordingly, could have an adverse impact on the security for and the ability of the Agency to °o repay the Series 2015 Bonds. 4- m Likewise, delinquencies in the payment of property taxes by the owners of land in the Project Areas, and the impact of bankruptcy proceedings on the ability of taxing agencies to collect property taxes, could o have an adverse effect on the Agency's ability to make timely payments on the Series 2015 Bonds. As M discussed under the caption "PROPERTY TAXATION IN CALIFORNIA—Property Tax Collection and o Distribution Procedures—Delinquencies," the County does not apply the Teeter Plan to the Agency. Q Therefore,delinquencies in the payment of property taxes could have an adverse effect on the Agency's ability X to pay the principal of and interest on the Series 2015 Bonds. See Table 6 under the caption"THE PROJECT ~ w AREAS—Levy and Collection." M E d State Budget Issues AB X1 26 and AB 1484 were enacted by the State Legislature and Governor as trailer bills necessary to implement provisions of the State's budget acts for its Fiscal Years 2011-12 and 2012-13, respectively, as efforts to address structural deficits in the State general fund budget. In general terms,these bills implemented O a framework to transfer cash assets previously held by redevelopment agencies to cities, counties, and special 2 districts to fund core public services,with assets transferred to schools offsetting State general fund costs(then = projected savings of$1.5 billion). E w L SB 107, which makes extensive amendments to the Dissolution Act, was enacted following the n adoption of the Fiscal Year 2015-16 Budget, after having initially been presented as AB 113, a trailer bill to the Fiscal Year 2015-16 Budget. SB 107 changes the process for submitting Recognized Obligation Payment f Schedules from a six-month to an annual process, authorizes successor agencies to submit and obtain DOF approval of a Last and Final ROPS to govern all remaining payment obligations of the successor agency, alters N m the provisions governing the distribution of Redevelopment Property Tax Trust Fund moneys attributable to F pension and State Water Project tax rate overrides, and eliminates the impact of financial and time limitations in redevelopment plans for purposes of paying enforceable obligations, among other changes to the N Dissolution Act. These statutory amendments impact the manner in which successor agencies claim o Redevelopment Property Tax Trust Fund moneys for enforceable obligations and,for some successor agencies, _ `a impact the amount of Redevelopment Property Tax Trust Fund moneys that will be available for payment of the successor agency's enforceable obligations. m There can be no assurance that additional legislation will not be enacted in the future to additionally implement provisions relating to the State budget or otherwise that may affect successor agencies or tax N increment revenues,including Tax Revenues. 0 a Information about the State budget and State spending is available at various State maintained m websites. Text of the Fiscal Year 2015-16 Budget and other documents related to the State budget may be found at the website of the State Department of Finance, www.dof.ca.gov. A nonpartisan analysis of the t budget is posted by the Legislative Analyst's Office at www.lao.ca.gov. In addition, various State official w statements, many of which contain a summary of the current and past State budgets may be found at the r website of the State Treasurer,www.treasurer.ca.gov. c� None of the websites or webpages referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The Agency makes no representation whatsoever as to the accuracy or completeness of any of the information on such websites. ca a 50 DOCSOC/1725450v4/200430-0012 Pac6tl:g.699. 6.C.b Recognized Obligation Payment Schedule N c The Dissolution Act provides that, commencing on the date that the first Recognized Obligation O Payment Schedule is valid thereunder, only those obligations listed in the Recognized Obligation Payment Schedule may be paid by the Agency from the funds specified in the Recognized Obligation Payment S Schedule. Before each June 1 property tax distribute date,with respect to each fiscal year,the Dissolution Act s requires successor agencies to prepare and approve, and submit to the successor agency's oversight board and the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations Q= (as described under the caption "SECURITY FOR THE SERIES 2015 BONDS—Recognized Obligation o Payment Schedule")of the successor agency are listed,together with the source of funds to be used to pay for M each enforceable obligation. Tax Revenues will not be distributed from the Redevelopment Property Tax o Trust Fund by the County Auditor-Controller to the Agency's Redevelopment Obligation Retirement Fund Q without a duly approved and effective Recognized Obligation Payment Schedule obtained in sufficient time X prior to each June 1 property tax distribution date. See the caption "SECURITY FOR THE SERIES 2015 BONDS—Recognized Obligation Payment Schedule" and "PROPERTY TAXATION IN CALIFORNIA— Property Tax Collection and Distribution Procedures—Recognized Obligation Payment Schedule." In the E m event that the Agency were to fail to file a Recognized Obligation Payment Schedule with respect to a fiscal o year,the availability of Tax Revenues to the Agency could be adversely affected for such period. U) R In the event that a successor agency fails to submit to the DOF an oversight board-approved V Recognized Obligation Payment Schedule complying with the provisions of the Dissolution Act within five O business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations, the DOF may determine if any amount should be withheld by the applicable county auditor-controller for payments for enforceable obligations from distribution to taxing E entities pursuant to clause(iv)below,pending approval of a Recognized Obligation Payment Schedule. Upon notice provided by the DOF to the county auditor-controller of an amount to be withheld from allocations to °- taxing entities, the county auditor-controller must distribute to taxing entities any moneys in the T Redevelopment Property Tax Trust Fund in excess of the withholding amount set forth in the notice, and the county auditor-controller must distribute withheld funds to the successor agency only in accordance with a Recognized Obligation Payment Schedule when and as approved by the DOR m Q Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the en Dissolution Act, the county auditor-controller is to distribute funds on each January 2 and June 1 (adjusted for N weekends and holidays)in the following order specified in Section 34183 of the Dissolution Act: o e (i) First, to each local agency and school entity, to the extent applicable, amounts required for pass-through payments that such entity would have received under provisions of the Redevelopment Law, as F those provisions read on January 1, 2011, including pursuant to the Pass-Through Agreements and Statutory m Pass-Through Amounts. Pension or State Water Project override revenues that are not pledged to or not r_ needed for debt service on Agency debt will be allocated and paid to the entity that levies the override; vi Cn (ii) Second,to the Agency for payments listed in its Recognized Obligation Payment Schedule; a m (iii) Third, to the Agency for the administrative cost allowance,as defined in the Dissolution Act; and X W (iv) Fourth,the remainder is distributed to the taxing entities in an amount proportionate to such 'n T taxing entity's share of property tax revenues in the tax rate area in such Fiscal Year(without adjustment for N pass-through obligations). If the Agency does not submit an Oversight Board-approved Recognized Obligation Payment d Schedule within five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations and the DOF does not provide a notice to the a 51 DOCSOC/1725450v4/200430-0012 Packet Pg. 700 6C.b County Auditor-Controller to withhold funds from distribution to taxing entities, amounts in the N Redevelopment Property Tax Trust Fund for such fiscal year would be distributed to taxing entities pursuant to clause (iv) above. As noted above under the caption "SECURITY FOR THE SERIES 2015 BONDS— 0 m Recognized Obligation Payment Schedule,"with two exceptions, ROPS I and ROPS 13-14A, the Agency has submitted each Oversight Board-approved Recognized Obligation Payment Schedule to DOF on or before the statutory deadline. However,the Agency has covenanted in the Indenture to take all actions required under the Dissolution Act to include on its ROPS the amounts described below to be transmitted to the Trustee for the applicable ROPS Period in order to satisfy the requirements of the Indenture, including any amounts required to pay principal and interest payments due on the Senior Obligations,Outstanding Bonds and any Parity Debt, 0 any Compliance Costs, any deficiency in the Reserve Account to the full amount of the Reserve Account Requirement and any deficiency in the reserve accounts under the indentures for the Senior Obligations. The 0 Agency further covenants in the Indenture to submit an Oversight Board-approved ROPS to the County Q Auditor-Controller and the Department of Finance (with a copy to the Agency) [on or before each February 1 X with respect to the ROPS Period commencing the following July 1.] Further,the Agency covenants to include expected Compliance Costs,if any,in each ROPS in accordance with the Dissolution Act. E 0 [The amount due to the Trustee from the County Auditor-Controller for deposit in the Tax Increment Fund on January 2 of the then-current calendar year from Tax Revenues required to be deposited into the U) RPTTF shall equal (1) one-half of the sum of (a) all scheduled principal payments and Sinking Account Installments due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, and (b) all scheduled interest payments due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, plus (2) the amount of any deficiency in the Reserve Account,less(3)the amounts,if any,on deposit in the Tax Increment Fund as of the date of submission for the ROPS pursuant to this Section that are in excess of the amounts E required to be applied to payment of principal of or interest or sinking account payments on the Outstanding Bonds and any Parity Debt in the then current calendar year. The amount due to the Trustee from the County Auditor-Controller for deposit in the Tax Increment Fund on June 1 of the then-current calendar year from r amounts required to be deposited into the RPTTF will be equal to the remainder due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year in an amount equal to not less than (1) the remaining one-half of the sum of (a) all scheduled principal payments and Sinking Account m Installments due and payable on the Outstanding Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, and (b) all scheduled interest payments due and payable on the Outstanding `n Bonds and any Parity Debt during the then-current calendar year as shown in the Indenture, plus (2) the N amount of any remaining deficiency in the Reserve Account.] See Appendix B. 0 c AB 1484 also added new provisions to the Dissolution Act implementing certain penalties in the event that the Agency does not timely submit a Recognized Obligation Payment Schedule by the deadline specified F in the Dissolution Act. Specifically, a Recognized Obligation Payment Schedule must be submitted by the m Agency, after approval by the Oversight Board, to the County Administrative Officer, the County Auditor- Controller, the DOF and the State Controller no later than each February 1, commencing February 1, 2016 Cn with respect to each subsequent fiscal year. If the Agency does not submit an Oversight Board-approved to Recognized Obligation Payment Schedule by such deadline,the City will be subject to a civil penalty equal to a $10,000 per day for every day the schedule is not submitted to the DOR Additionally, the Agency's co administrative cost allowance is reduced by 25% for any fiscal year for which the Agency does not submit an Oversight Board-approved Recognized Obligation Payment Schedule within 10 days of the February 1 c deadline. If the Agency fails to submit a Recognized Obligation Payment Schedule by the February 1 w deadline, any creditor of the successor agency or the department or any affected taxing entity shall have LO standing to, and may request a writ of mandate to, require the Agency to immediately perform this duty. For cv additional information regarding procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and implications thereof on the Bonds, see the caption"SECURITY FOR THE BONDS— Recognized Obligation Payment Schedule." L) c� 52 DOCS OC/1725450v4/200430-0012 'Pack' 6.C.b Santa Ana Unified School District Case _ The Fourth District of the California Court of Appeal has rendered a decision in Santa Ana Unified 0 School District vs. Orange County Development Agency (the "Santa Ana USD Case") which involves the allocation of tax increment revenues pursuant to Section 33676(a) of the Redevelopment Law as it existed = before the passage of AB 1290 (which is discussed under the caption"SECURITY FOR THE SERIES 2015 C BONDS—Obligations with Senior Right to Payment—Statutory Pass-Through Amounts." Generally, before AB 129.0, Section 33676(a) provided that, prior to the adoption of a redevelopment plan (or an amendment adding territory to a project area),under certain conditions, "any affected taxing agency may elect, and every o school and community college district shall elect,to be allocated all or any portion of the tax revenues"derived M based on an annual adjustment of the base year assessed value of real properties in the project area (or the 0 added territory). The words "every school and community college district shall elect"were added pursuant to Q a 1984 amendment. The amount of property taxes that a taxing entity may receive under the former Section X 33676(a) is derived by increasing the base year value of taxable real property in the project area(or the added ~ territory) by an inflationary factor of not greater than 2% per year (the "2% Allocation"). In effect, the 2% Allocation reduced the tax increment revenues that a redevelopment agency received from the project area(or, E as if applicable,an added area to the project area). U) In the Santa Ana USD Case,the redevelopment plan at issue was adopted in 1986. In 1996, the Santa E Ana Unified School District ("Santa Ana USD") adopted a resolution electing to be paid its share of the 2% Allocation. The Orange County Development Agency took the position that Santa Ana USD was not entitled O to the 2% Allocation because the election to receive such allocation should have been made before the adoption of the redevelopment plan for the project area. In turn, Santa Ana USD argued that the mandatory =_ nature of the words "shall elect"in the statute made the allocation mandatory with respect to a school district. E The lower court ruled in favor of Santa Ana USD. In an opinion published June 29,2001,the Court of Appeal affirmed. As a result, Santa Ana USD received the award it had requested, i.e., its share of the 2%Allocation n from 1996, the year Santa Ana USD made the Section 33676 election. The State Supreme Court denied review of the Santa Ana USD Case on September 19,2001. The case affects redevelopment agencies, such as the Agency, which amended or added territory between the years 1983 to 1994. See the caption"SECURITY FOR THE SERIES 2015 BONDS—Statutory Pass-Through Amounts-33676 Amounts." The projections of m Tax Revenues set forth in Tables 7 and 8 above and the Fiscal Consultant's Report attached to this Official Statement as Appendix A reflect the payment of 33676 Amounts to all education entities that would be entitled 10 to such payments under the Santa Ana USD Case. N 0 Last and Final Recognized Obligation Payment Schedule L SB 107 amended the Dissolution Act to permit certain successor agencies with limited remaining F obligations to submit a Last and Final ROPS for approval by the oversight board and DOR The Last and Final m ROPS must list the remaining enforceable obligations of the successor agency, including the total outstanding M obligation amount and a schedule of remaining payments for each enforceable obligation. The Last and Final U) ROPS will also establish the maximum amount of Redevelopment Property Tax Trust Funds to be distributed cn to the successor agency for each remaining fiscal year until all obligations have been fully paid. d m Any revenues, interest, and earnings of the successor agency, including proceeds from the disposition of real property,that are not authorized for use pursuant to the approved Last and Final ROPS will be remitted to the county auditor-controller for distribution to the affected taxing entities. A successor agency will not w expend more than the amount approved for each enforceable obligation listed on the approved Last and Final Ln ROPS and once the successor agency has received Redevelopment Property Tax Trust Fund moneys equal to C� the amount of the total outstanding obligations approved in the Last and Final ROPS, the county auditor- controller will not allocate further Redevelopment Property Tax Trust Fund moneys to the successor agency. m Successor agencies may only amend an approved Last and Final ROPS twice. If the Agency prepares and obtains DOF approval of a Last and Final ROPS and subsequently amends the Last and Final ROPS two Q 53 DOCSOC/1725450v4/200430-0012 Packet Pg. 702 6C� times,the Agency may be unable to make unexpected or unscheduled reserve deposits or payments due to the y 2016 Insurer or other Insurers of Bonds or other Additional Bonds. See the caption"SECURITY FOR THE BONDS—Last and Final Recognized Obligation Payment Schedule"for a discussion of the requirements for a o Last and Final Recognized Obligation Payment Schedule and the mechanics for allocation of Redevelopment m Property Tax Trust Fund moneys pursuant to an approved Last and Final Recognized Obligation Payment = Schedule. _ a� [The Agency is not currently eligible to submit a Last and Final ROPS and has no current plans to seek approval of a Last and Final ROPS.] [Further, the Agency covenants in the Indenture that it will not, o without the prior written consent of the Bond Insurer, approve or submit for approval by the Oversight Board M or the DOF a ROPS covering multiple ROPS Periods or any Last and Final Recognized Obligation Payment O Schedule as provided in the Dissolution Law.] Q X c� Bankruptcy and Foreclosure The payment of the property taxes from which Tax Revenues are derived and the ability of the County E to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights(such as the Soldiers' and Sailors' Relief Act of 1940 discussed below)or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Series 2015 Bonds (including Bond Counsel's O approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights, by the =_ application of equitable principles and by the exercise of judicial discretion in appropriate cases. E L Although bankruptcy proceedings would not cause the liens to become extinguished,bankruptcy of a a. property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal N bankruptcy laws may provide for an automatic stay of foreclosure and sale of tax sale proceedings. Such delay would increase the possibility of delinquent tax installments not being paid in full and thereby increase the likelihood of a delay or default in payment of the principal of and interest on the Series 2015 Bonds. m Moreover, if the value of the subject property is less than the lien of property taxes, such excess could be treated as an unsecured claim by the bankruptcy court. Further,should remedies be exercised under the federal LO bankruptcy laws, payment of property taxes may be subordinated to bankruptcy law priorities. Thus, certain N claims may have priority over property taxes in a bankruptcy proceeding even though they would not outside o of a bankruptcy proceeding. S a L In addition, the United States Bankruptcy Code might prevent moneys on deposit in the Redevelopment Obligation Retirement Fund from being applied to pay interest on the Series 2015 Bonds m and/or to redeem Series 2015 Bonds if bankruptcy proceedings were brought by or against a landowner and if the court found that any of such landowner had an interest in such moneys within the meaning of Section 541(a)(1)of the United States Bankruptcy Code. v� O a Other laws generally affecting creditors'rights or relating to judicial foreclosure may affect the ability m to enforce payment of property taxes or the timing of enforcement thereof. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a w tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if a court concludes that the ability to pay such taxes or assessments is materially affected by reason of C� such service. t- As discussed under the caption "PROPERTY TAXATION IN CALIFORNIA Property Tax c=i Collection and Distribution Procedures—Delinquencies," the County does not apply the Teeter Plan to the E Agency. Therefore, delinquencies in the payment of property taxes could have an adverse effect on the a 54 DOCSOC/1725450v4/200430-0012 Packet Pg. 703 6.C.b Agency's ability to pay the principal of and interest on the Series 2015 Bonds. See Table 6 under the caption N "THE PROJECT AREAS—Levy and Collection." 0 Effect of City of San Bernardino Bankruptcy M _ [The City is the debtor in an ongoing Chapter 9 bankruptcy case, Case No. 6:12-bk-28006 MJ, pending in the United States Bankruptcy Court for the Central District of California. The City is an affected taxing agency with respect to the Agency and its Project Areas and, therefore, a portion of the Tax Revenues consist of property taxes that would be allocated to the City if the Redevelopment Plans had not been adopted. o Further, the City, through its Mayor and Common Council, formed the Former Agency, adopted each of the v Redevelopment Plans for the Project Area, served as the governing body of the Former Agency and now o serves as the governing body of the Agency. Under the provisions of the Dissolution Act, tax increment Q revenues to which the Former Agency would have been entitled under the Redevelopment Plans are collected X by the County Auditor-Controller for deposit into the Redevelopment Property Tax Trust Fund, to be applied to pay the Agency's enforceable obligations, including the Series 2015 Bonds. See "SECURITY FOR THE CD BONDS." E m ca Section 34173(g)of the Dissolution Act provides that"[a] successor agency is a separate public entity N from the public agency that provides for its governance and the two entities shall not merge. The liabilities of the former redevelopment agency shall not be transferred to the sponsoring entity and the assets shall not become assets of the sponsoring entity." Further,the Dissolution Act describes the revenue stream available to O the Agency and does not provide the City with rights to such revenues except to the extent it receives money in its capacity as a taxing agency or through a valid enforceable obligation entered into between the City and = Agency and approved on a Recognized Obligation Payment Schedule of the Agency. See "SECURITY FOR E THE BONDS." 0. Further, Section 902 of the United States Bankruptcy Code defines "special revenues" to include N "incremental tax receipts from the benefited area in the case of tax-increment financing." Bond Counsel is of the view that(1) the Tax Revenues are special revenues and therefore not subject to interception or diversion as a result of the City's bankruptcy and (2) the County Auditor-Controller's obligation to deposit such Tax m Revenues to the Redevelopment Property Tax Trust Fund for payment of the Agency's enforceable obligations, including the Series 2015 Bonds, would be treated as an obligation payable from special revenues LO pursuant to Section 928 of the Bankruptcy Code; however, Bond Counsel's approving opinions expressly N exclude the impact of bankruptcy laws on the application of Tax Revenues to payment of debt service on the C Series 2015 Bonds. See Appendix C. 0 The City's bankruptcy, and the economic and political factors leading to it, has resulted in significant adverse impacts to the City, including increased crime and a severe reduction in City services. These factors m have had and are likely to continue to have a depressive effect on real estate values and development in the City,which adversely impacts the amount of Tax Revenues available to the Agency. The failure of the City to Cn successfully emerge from bankruptcy would likely prolong and worsen this effect.] [Subject to further u> review.] O a m Status of Bankruptcy Proceedings. On August 28, 2013, the Bankruptcy Court determined based upon uncontroverted facts that the City had satisfied the requirements for eligibility under Chapter 9, and subsequently issued orders setting forth those findings. While Ca1PERS appealed from the Bankruptcy Court's w eligibility orders, Ca1PERS is not pursuing the appeal as long as the City complies with a settlement agreement 'n reached with CalPERS. The City filed its Chapter 9 plan of adjustment and disclosure statement on May 29, c� 2015. The City is in the process of amending its disclosure statement, and a hearing on the disclosure statement and a status conference is scheduled for December 23, 2015. As of the date of this Official Statement, to the Agency's knowledge, no creditors of the City have asserted that moneys in the Agency's 0 Redevelopment Property Tax Trust Fund required to be allocated to the Agency under Section 34183(a)(2) or U Q 55 DOC SOC/1725450v4/200430-0012 Packet Pg:704 Section 34183(a)(3) of the Dissolution Act are available to pay debts of the City. [Update status of N Bankruptcy prior to printing.] 0 m Potential Tax Liability Relating to Previously-Issued Bonds 0 In connection with the due diligence undertaken for the issuance of the Series 2015 Bonds, the Agency discovered that the Series 1998A Authority Bonds and the Series 1998B Senior Authority Bonds were issued, in part, as a third advance refunding of prior bonds, in violation of federal tax laws. On October 23, 2015, the San Bernardino Joint Powers Financing Authority submitted a request to the Internal Revenue o Service (the "IRS") for a Closing Agreement under the Tax Exempt Bonds Voluntary Closing Agreement M Program(the"VCAP"). Pursuant to the 1998 Loan Agreement,the Agency will be liable for any ultimate tax o liability incurred by holders of the Series 1998A and 1998B Bonds. However, after discussions with IRS Q personnel, the Agency expects to enter into a Closing Agreement with the IRS to preserve the tax exempt X status of Series 1998A and Series 1998B Bonds. The Agency estimates the settlement amount it will pay to �- the IRS (the "VCAP liability") to be between approximately $1,000,000 and $1,400,000. The Agency anticipates that it will have money available to pay the VCAP liability, when such liability is finally a� determined by the IRS, from moneys held in an escrow account relating to the 2005 Senior Loan Agreement secured by the Tri-City Project. These moneys were escrowed under a provision of the Tri-City Project 2005 Senior Loan Agreement requiring tax increment revenues derived from the Tri-City Project to be diverted into an escrow account upon reaching a threshold relating to the cumulative limit on the number of dollars of taxes that the Agency was eligible to receive from the Tri-City Project (the "Tax Increment Cap"). As a result of O SB 107, the Tax Increment Cap is no longer effective for purposes of paying the Agency's enforceable co obligations, including the 2005 Senior Loan Agreement; therefore, these escrowed moneys are expected to be 0 available to the Agency for payment of the VCAP liability,if and when such liability is imposed by the IRS. E L Estimated Revenues °' N In estimating that Tax Revenues will be sufficient to pay debt service on the Series 2015 Bonds, the Agency has made certain assumptions with regard to present and future assessed valuation in the Project Areas, future tax rates and percentage of taxes collected. The Agency believes these assumptions to be m reasonable, but there is no assurance that these assumptions will be realized. To the extent that the assessed valuation and the tax rates are less than expected,the Tax Revenues available to pay debt service on the Series an 2015 Bonds will be less than those projected and such reduced Tax Revenues may be insufficient to provide N for the payment of principal of,premium(if any)and interest on the Series 2015 Bonds. 0 0 v Hazardous Substances 0 L While governmental taxes, assessments, and charges are a common claim against the value of a m taxable parcel,other less common claims may be relevant. One example is a claim with regard to a hazardous CU substance. The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In a general, the owners and operators of a taxable parcel may be required by law to remedy conditions of the m parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or s the "Superfund Act," is the most well-known and widely applicable of these laws, but State and local laws w with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner(or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or C� operator)has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxable parcels be affected by a hazardous substance is to reduce the marketability and value of the a.; parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become 00) obligated to remedy the condition just as is the seller. Further, such liabilities may arise not simply from the F= 0 Q 56 DOC SOC/1725450v4/200430-0012 Packet Pg. 705 6Cb existence of a hazardous substance but from the method of handling it. All of these possibilities could N significantly affect the value of the property that is realizable upon a delinquency and foreclosure. 0 Further, it is possible that liabilities may arise in the future with respect to any of the taxable parcels m resulting from the existence,currently,on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence,currently,on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further,such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a o taxable parcel that is realizable upon a delinquency. 0 Natural Disasters Q X The City, like all California communities, may be subject to unpredictable seismic activity, fires, y flood,or other natural disasters. Southern California is a seismically active area. Seismic activity,wildfires and other natural disasters represents a potential risk for damage to buildings, roads, bridges and property within m the City. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. [City staff to review and provide additional detail,if appropriate.] Earthquake. The State, including the City,is subject to periodic earthquake activity. San Bernardino is surrounded by earthquake faults. According to the Safety Element of the City's General Plan, the City is O located between several active fault zones including: the San Andreas Fault, the San Jacinto Fault, the Glen Helen Fault, and the Loma Linda Fault. If an earthquake were to substantially damage or destroy taxable =CU property within the Project Areas,the assessed valuation of such property would be reduced. Such a reduction E of assessed valuations could result in a reduction of the Tax Revenues that secure the Series 2015 Bonds, which in turn could impair the ability of the Agency to make payments of principal of and/or interest on the Series 2015 Bonds when due. N r v Wildfires. The City is susceptible to wildland fires due to the steep terrain and highly flammable chaparral vegetation of the foothills of the San Bernardino Mountains and high winds that correspond with m seasonal dry periods. The characteristics of the San Bernardino Mountains and winds in the area result in large uncontrollable fires on a recurring basis. Major fires have endangered the City on numerous occasions and in 'n several instances, have spread into the City causing extensive damage, most recently in 2003 with the Old N Waterman Canyon fire, the largest fire in recent history, which destroyed approximately 330 residential o properties, and the Panorama fire in 1980,which destroyed 345 structures and killed four people. Many of the areas burned during the Panorama fire were again burned in 2003. L The danger from wildland fires in foothill locations is increased by the number of structures and m encroachment of new development in the hillside areas. Specific concerns include the density of development, spacing of structures, brush clearance, building materials, access to buildings by fire equipment, adequacy of N evacuation routes, property maintenance, and water availability. The capacity of the water systems to provide u� sufficient water to fight fires is also a significant issue. Other areas in southern California are burned off a periodically by way of controlled burns to remove older vegetation. The controlled burn process is used very op carefully in the San Bernardino Mountains because of the unpredictability and force of the winds in the area that could make controlled burns a potential hazard. X w Wind. According to the Safety Element of the City's General Plan, the City is subject to extremely 'n high winds, which have resulted in significant property damage. For example, portions of roofs and block C� walls have been broken and blown away and public utility structures such as power lines and traffic signals have been damaged. The most significant wind problems occur at the canyon mouths and valleys extending downslope from the San Bernardino Mountains. The highest velocities are associated with downslope canyon aai and Santa Ana winds(90-100 mph). Santa Ana wind conditions are a reversal of the prevailing southwesterly winds and usually occur on a region-wide basis during late summer and early fall. Santa Ana winds are dry, w a 57 DOCS OC/1725450v4/200430-0012 Packet P g. 706 6.C.b warm winds that flow from the higher desert elevations in the north through the mountain passes and canyons. N Of the major fires in the San Bernardino Mountains,all have occurred during periods of high winds. The high wind velocity and property damage potential have resulted in the northern half of the City adjacent to the O m mountains being classified by the City as a"High Wind Area." In this area of the City,stringent conditions for the construction of buildings and public facilities are applied. =o c Changes in the Law ty There can be no assurance that the State electorate will not at some future time adopt initiatives or that o the State Legislature will not enact legislation that will amend the Dissolution Act,the Redevelopment Law or other laws or the Constitution of the State resulting in a reduction of Tax Revenues, which could have an o adverse effect on the Agency's ability to pay debt service on the Series 2015 Bonds. Q X M The Dissolution Act is new and implementation of its provisions have been and will be subject to ~ differing interpretations by different stakeholders, including the DOF, the State Controller, oversight boards, successor agencies, auditor-controllers, and others, and the Dissolution Act could be subject to further E legislative action or judicial review. The Agency cannot predict outcomes, or impact, of any such interpretations or reviews,on availability of Tax Revenues to pay the Series 2015 Bonds. Investment Risk 2 O Funds held under the Indenture are required to be invested in Permitted Investments as provided under the Indenture. See Appendix B for a summary of the definition of Permitted Investments. The funds and c accounts of the Agency, into which a portion of the proceeds of the Series 2015 Bonds will be deposited and E into which Tax Revenues are deposited,may be invested by the Agency in any investment authorized by law. All investments, including the Permitted Investments and those authorized by law from time to time for °- investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a N lower rate of return than expected and loss or delayed receipt of principal. Further, the Agency cannot predict the effects on the receipt of Tax Revenues if the County were to m suffer significant losses in its portfolio of investments or if the County or the City were to become insolvent or declare bankruptcy. See Appendix E for information regarding the City's finances. Also see the captions"— LO Bankruptcy and Foreclosure" and "—Effect of City of San Bernardino Bankruptcy" for a discussion of the N potential impacts of the City's Chapter 9 bankruptcy case, including the risk that creditors of the City may o make claims against the Agency's Tax Revenues. S L Secondary Market F m m There can be no guarantee that there will be a secondary market for the Series 2015 Bonds, or, if a secondary market exists,that the Series 2015 Bonds can be sold for any particular price. Although the Agency N has committed to provide certain financial and operating information on an annual basis, there can be no v� assurance that such information will be available to Bondowners on a timely basis. See the caption a "CONCLUDING INFORMATION—Continuing Disclosure" and Appendix G. Any failure to provide annual op financial information, if required, does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions or because of adverse history or economic L prospects connected with a particular issue,secondary marketing practices in connection with a particular issue W are suspended or terminated. Additionally,prices of issues for which a market is being made will depend upon LO the then prevailing circumstances. Such prices could be substantially different from the original purchase C� price. c m E .c U Q 58 DOCSOC/1725450v4/200430-0012 Packet Pg. 707 6.C.b No Validation Proceeding Undertaken N 'a c Code of Civil Procedure Section 860 authorizes public agencies to institute a process, otherwise o known as a "validation proceeding," for purposes of determining the validity of a resolution or any action m taken pursuant thereto. Section 860 authorizes a public agency to institute validation proceedings in cases where another statute authorizes its use. Relevant to the Series 2015 Bonds,Government Code Section 53511 authorizes a local agency to "bring an action to determine the validity of its bonds, warrants, contracts, obligations or evidences of indebtedness." Pursuant to Code of Civil Procedure Section 870, a final favorable judgment issued in a validation proceeding shall, notwithstanding any other provision of law, be forever o binding and conclusive, as to all matters therein adjudicated or which could have been adjudicated, against all v persons: "The judgment shall permanently enjoin the institution by any person of any action or proceeding o raising any issue as to which the judgment is binding and conclusive." Q X The Agency has not undertaken or endeavored to undertake any validation proceeding in connection with the issuance of the Series 2015 Bonds. The Agency and Bond Counsel have relied on the provisions of AB 1484 authorizing the issuance of the Series 2015 Bonds and specifying the related deadline for any E challenge to the Series 2015 Bonds to be brought. Specifically, Section 34177.5(e) of the Dissolution Act i provides that notwithstanding any other law, an action to challenge the issuance of bonds (such as the Series 2015 Bonds),the incurrence of indebtedness,the amendment of an enforceable obligation, or the execution of a financing agreement authorized under Section 34177.5, must be brought within 30 days after the date on which the oversight board approves the resolution of the successor agency approving such financing. Such O challenge period expired with respect to the Series 2015 Bonds and the Oversight Board Resolution on m October 21,2015. _ E It is possible that the definition of Tax Revenues could be affected by changes in law or judicial decisions relating to the dissolution of redevelopment agencies. Any action by a court to invalidate provisions n of the Dissolution Act required for the timely payment of principal of, and interest on,the Series 2015 Bonds N could be subject to issues regarding unconstitutional impairment of contracts and unconstitutional taking r without just compensation. The Agency believes that the aforementioned considerations would provide some protections against the adverse consequences upon the Agency and the availability of Tax Revenues for the m payment of debt service on the Series 2015 Bonds in the event of successful challenges to the Dissolution Act or portions thereof. However, the Agency provides no assurance that any other lawsuit challenging the LO Dissolution Act or portions thereof will not result in an outcome that may have a detrimental effect on the N Agency's ability to timely pay debt service on the Series 2015 Bonds. o a IRS Audit of Tax-Exempt Bond Issues _ L The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond m issues, including both random and targeted audits. It is possible that the Series 2015A Bonds will be selected r_ for audit by the Internal Revenue Service. It is also possible that the market value of the Series 2015A Bonds N might be affected as a result of such an audit of the Series 2015A Bonds (or by an audit of similar municipal cn obligations). See the caption"—Potential Tax Liability Relating to Previously-Issued Bonds"for a discussion a0. of a current application by the San Bernardino Joint Powers Financing Authority to the IRS for a Closing m Agreement under the VCAP program, relating to the Series 1998A Authority Bonds and the Series 1998B n Senior Authority Bonds and the Agency's potential liability in connection therewith. X w Loss of Tax Exemption r N As discussed under the caption "TAX MATTERS," in order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Series 2015A Bonds, the City and the Agency a., have covenanted in the Indenture and the Tax Certificate relating to the Series 2015A Bonds not to take any E action, or fail to take any action, if such action or failure to take such action would adversely affect the t exclusion from gross income of interest on the Series 2015A Bonds under Section 103 of the Internal Revenue Q 59 DOCS OC/1725450v4/200430-0012 Packet Pg. 708 6.C.b C) Code of 1986 as amended. Interest on the Series 2015A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the City or the Agency subsequent to the issuance of the Series 2015A Bonds in violation of such covenants with o respect to the Series 2015A Bonds. Should such an event of taxability occur,the Series 2015A Bonds are not 0 subject to redemption by reason thereof and will remain outstanding until maturity or unless earlier redeemed 2 pursuant to the redemption provisions of the Indenture. See the caption"—Potential Tax Liability Relating to Previously-Issued Bonds" for a discussion of a current application by the San Bernardino Joint Powers Financing Authority to the IRS for a Closing Agreement under the VCAP program, relating to the Series 1998A Authority Bonds and the Series 1998B Senior Authority Bonds. o U Bonds Are Limited Obligations o Q Neither the faith and credit nor the taxing power of the Agency(except to the limited extent set forth X in the Indenture),the City,the State or any political subdivision thereof is pledged to the payment of the Series !�, 2015 Bonds. The Series 2015 Bonds are special obligations of the Agency; and, except as provided in the Indenture,they are payable solely from Tax Revenues. Tax Revenues could be insufficient to pay debt service E m on the Series 2015 Bonds as a result of delinquencies in the payment of property taxes or the insufficiency of proceeds derived from the sale of land within the Project Areas following a delinquency in the payment of the (n applicable property taxes. As discussed under the caption "PROPERTY TAXATION IN CALIFORNIA— m Property Tax Collection and Distribution Procedures—Delinquencies," the County does not apply the Teeter Plan to the Agency. Therefore,delinquencies in the payment of property taxes could have an adverse effect on O the Agency's ability to pay the principal of and interest on the Series 2015 Bonds. See Table 6 under the caption"THE PROJECT AREAS—Levy and Collection." The Agency has no obligation to pay debt service = on the Series 2015 Bonds in the event of insufficient Tax Revenues, except to the extent that money is E available for such purpose in the Redevelopment Obligation Retirement Fund,the Tax Increment Fund and the Reserve Account. See the caption "—Effect of City of San Bernardino Bankruptcy" for a discussion of the °- ' potential impacts of the City's Chapter 9 bankruptcy case, including the risk that creditors of the City may ! C4✓ make claims against the Agency's Tax Revenues. Bond Insurance m 4 [In the event of default of the payment of the scheduled principal of or interest on the Series 2015 LO Bonds when all or some becomes due,the Trustee on behalf of any owner of the Series 2015 Bonds shall have N a claim under the Policy for such payments. The Insurer may direct and must consent to any remedies with o respect to the Series 2015 Bonds and the Insurer's consent may be required in connection with amendments to La any applicable documents relating to the Series 2015 Bonds. See Appendix B—"SUMMARY OF THE INDENTURE—Security of Bonds; Flow of Funds—Provisions Relating to the 2015A Insurance Policy" and F Provisions relating to the 2015B Insurance Policy." m c CU The long-term ratings on the Series 2015 Bonds are dependent in part on the financial strength of the W Insurer and its claims paying ability. The Insurer's financial strength and claims paying ability are predicated cn upon a number of factors which could change over time. No assurance is given that the long-term ratings of a the Insurer and the ratings on the Series 2015 Bonds will not be subject to downgrade and such event could m adversely affect the market price of the Series 2015 Bonds or the marketability(liquidity) for the Series 2015 Bonds. See"RATINGS"herein. X ui The obligations of the Insurer are unsecured contractual obligations and in an event of default by the 'n Insurer,the remedies available may be limited by applicable bankruptcy law or state law related to insolvency c 4 of insurance companies. Neither the Agency nor the Underwriter has made independent investigation into the claims paying m ability of the Insurer and no assurance or representation regarding the financial strength or projected financial s strength of the Insurer is given. Thus, when making an investment decision, potential investors should d 60 DOC S OC/1725450v4/20043 0-0012 Packet Pg. 709 6.C.b carefully consider the ability of the Agency to make the payments on the Series 2015 Bonds and the claims N paying ability of the Insurer, particularly over the life of the investment. See `BOND INSURANCE" herein for further information regarding the Insurer and the Policy, which includes further instructions for obtaining o W current financial information concerning the Insurer.] c Limitations on Remedies _ Remedies available to the Owners of the Series 2015 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Series 2015 Bonds or to 0 preserve the tax-exempt status of the Series 2015 Bonds. Additionally,bondowners or bond insurers on Senior v Obligations may have the right to direct remedies in the event of default under the Senior Obligations in ways o that might be detrimental to Owners of the Series 2015 Bonds,including acceleration. Q X Bond Counsel has limited its opinion as to the enforceability of the Series 2015 Bonds and of the F' Indenture to the extent that enforceability may be limited by bankruptcy,insolvency,reorganization,fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditors' E rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the N Owners. U w Enforceability of the rights and remedies of the Owners of the Series 2015 Bonds,and the obligations O incurred by the Agency,may become subject to the United States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under E State law of certain remedies,the exercise by the United States of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police a powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a N significant and legitimate public purpose and the limitations on remedies against governmental entities in the State. See the captions "—Bankruptcy and Foreclosure" and "—Effect of City of San Bernardino Bankruptcy" m Q TAX MATTERS �n 0 Series 2015A Bonds N 0 _ =o In the opinion of Orrick,Herrington& Sutcliffe LLP,Bond Counsel to the Agency("Bond Counsel"), CU based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other F matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series m 2015A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond N Counsel is of the further opinion that interest on the Series 2015A Bonds is not a specific preference item for cn purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes a that such interest is included in adjusted current earnings when calculating corporate alternative minimum m taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX C......FORM OF BOND COUNSEL OPINION." X W To the extent the issue price of any maturity of the Series 2015A Bonds is less than the amount to be LO paid at maturity of such Series 2015A Bonds (excluding amounts stated to be interest and payable at least C� annually over the term of such Series 2015A Bonds), the difference constitutes "original issue discount," the r accrual of which,to the extent properly allocable to each Beneficial Owner thereof,is treated as interest on the «� Series 2015A Bonds which is excluded from gross income for federal income tax purposes and State of m California personal income taxes. For this purpose,the issue price of a particular maturity of the Series 2015A E Bonds is the first price at which a substantial amount of such maturity of the Series 2015A Bonds is sold to the Q 61 DOCSOC/1725450v4/200430-0012 Packet Pg. 710 6.C.b public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of N underwriters,placement agents or wholesalers). The original issue discount with respect to any maturity of the $ Series 2015A Bonds accrues daily over the term to maturity of such Series 2015A Bonds on the basis of a o m constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2015A Bonds to = determine taxable gain or loss upon disposition(including sale, redemption, or payment on maturity) of such Series 2015A Bonds. Beneficial Owners of the Series 2015A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2015A Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2015A Bonds in the original o offering to the public at the first price at which a substantial amount of such Series 2015A Bonds is sold to the M public. o Q Series 2015A Bonds purchased, whether at original issuance or otherwise, for an amount higher than X their principal amount payable at maturity(or,in some cases,at their earlier call date)("Premium Bonds")will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium W in the case of bonds, like the Premium Bonds,the interest on which is excluded from gross income for federal E income tax purposes. However,the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. O The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2015A Bonds. The = Agency has made certain representations and covenanted to comply with certain restrictions, conditions and E requirements designed to ensure that interest on the Series 2015A Bonds will not be included in federal gross m income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on a- the Series 2015A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2015A Bonds. The opinion of Bond Counsel assumes the accuracy of � these representations and compliance with these covenants. Bond Counsel has not undertaken to determine(or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any m other matters coming to Bond Counsel's attention after the date of issuance of the Series 2015A Bonds may adversely affect the value of, or the tax status of interest on, the Series 2015A Bonds. Accordingly, the LO opinion of Bond Counsel is not intended to, and may not,be relied upon in connection with any such actions, N events or matters. o Although Bond Counsel is of the opinion that interest on the Series 2015A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, F the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2015A m Bonds may otherwise affect a Beneficial Owner's federal, state or local tax liability. The nature and extent of CU these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Cn Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax cn consequences. O� m Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2015A Bonds to be subject, directly or indirectly, in whole or in t part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise w prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. For 'n T example, the Obama Administration's budget proposals in recent years have proposed legislation that would C� limit the exclusion from gross income of interest on the Series 2015A Bonds to some extent for high income individuals. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2015A Bonds. Prospective purchasers of the Series 2015A Bonds should consult their own tax advisors U lC Q 62 DOCSOC/1725450v4/200430-0012 Packet Pg. 711 6.C.b regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or N litigation,as to which Bond Counsel is expected to express no opinion. c 0 The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly M addressed by such authorities,and represents Bond Counsel's judgment as to the proper treatment of the Series S 2015A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service("IRS")or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Agency, or about the effect of future changes in the Code, the applicable regulations,the interpretation thereof or the enforcement thereof by the IRS. The Agency has covenanted,however,to comply o with the requirements of the Code. 0 Bond Counsel's engagement with respect to the Series 2015A Bonds ends with the issuance of the d Series 2015A Bonds, and,unless separately engaged, Bond Counsel is not obligated to defend the Agency or X the Beneficial Owners regarding the tax-exempt status of the Series 2015A Bonds in the event of an audit F' examination by the IRS. Under current procedures,parties other than the Agency and its appointed counsel, CD including the Beneficial Owners,would have little,if any,right to participate in the audit examination process. E Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is s difficult,obtaining an independent review of IRS positions with which the Agency legitimately disagrees,may not be practicable. Any action of the IRS,including but not limited to selection of the Series 2015A Bonds for m audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2015A Bonds, and may cause the Agency or Beneficial O Owners to incur significant expense. c Series 2015B Bonds E L Interest on the Series 2015B Bonds is not excluded from gross income for federal income tax purposes a. under Section 103 of the Code. Bond Counsel is of the opinion that interest on the Series 2015B Bonds is N exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of,or the amount,accrual,or receipt of interest on,the Series 2015B Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in m APPENDIX C----"FORM OF BOND COUNSEL OPINION." LO The following discussion summarizes certain U.S. federal tax considerations generally applicable to N holders of the Series 2015B Bonds that acquire their Series 2015B Bonds in the initial offering. The 0 discussion below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all of which are subject to change,possibly with retroactive effect. Prospective investors should note that no rulings have been or are expected to be sought from the IRS with respect to any of the U.S. federal tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. m Further,the following discussion does not deal with all U.S.tax consequences applicable to any given investor, nor does it address the U.S. tax considerations applicable to all categories of investors, some of which may be N subject to special taxing rules (regardless of whether or not such investors constitute U.S. Holders), such as cn certain U.S. expatriates, banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers or a traders in securities or currencies, partnerships, S corporations, estates and trusts, investors that hold their op Series 2015B Bonds as part of a hedge, straddle or an integrated or conversion transaction, or investors whose "functional currency" is not the U.S. dollar. Furthermore, it does not address (i)alternative minimum tax consequences, (ii)the net investment income tax imposed under Section 1411 of the Code, or(iii) the indirect w effects on persons who hold equity interests in a holder. This summary also does not consider the taxation of 'n r the Series 2015B Bonds under state,local or non-U.S.tax laws. In addition,this summary generally is limited c� to U.S. tax considerations applicable to investors that acquire their Series 2015B Bonds pursuant to this offering for the issue price that is applicable to such Series 2015B Bonds(i.e.,the price at which a substantial amount of the Series 2015B Bonds are sold to the public) and who will hold their Series 2015B Bonds as "capital assets"within the meaning of Section 1221 of the Code. s � U Q 63 DOCSOC/1725450v4/200430-0012 Packet Pg. 712 6.C.b '7!J As used herein,"U.S.Holder"means a beneficial owner of a Series 2015B Bond that for U.S. federal y income tax purposes is an individual citizen or resident of the United States, a corporation or other entity $ _ taxable as a corporation created or organized in or under the laws of the United States or any state thereof o m (including the District of Columbia), an estate the income of which is subject to U.S. federal income taxation M regardless of its source or a trust where a court within the United States is able to exercise primary supervision = over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust). As used herein,"Non-U.S.Holder"generally means a beneficial owner of a Series 2015B Bond (other than a partnership) that is not a U.S. Holder. If a partnership o holds Series 2015B Bonds,the tax treatment of such partnership or a partner in such partnership generally will cc depend upon the status of the partner and upon the activities of the partnership. Partnerships holding Series o 2015B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax a consequences of an investment in the Series 2015B Bonds(including their status as U.S.Holders or Non-U.S. X H- Holders). Prospective investors should consult their own tax advisors in determining the U.S.federal,state,local E or non-U.S. tax consequences to them from the purchase, ownership and disposition of the Series 2015B Bonds in light of their particular circumstances. U) U.S.Holders .2 O Interest. Interest on the Series 2015B Bonds generally will be taxable to a U.S. Holder as ordinary interest income at the time such amounts are accrued or received, in accordance with the U.S.Holder's method =_ of accounting for U.S.federal income tax purposes. To the extent that the issue price of any maturity of the Series 2015B Bonds is less than the amount to a- be paid at maturity of such Series 2015B Bonds (excluding amounts stated to be interest and payable at least �► annually over the term of such Series 2015B Bonds), the difference may constitute original issue discount ("OID"). U.S. Holders of Series 2015B Bonds will be required to include OID in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of m interest(which may be before the receipt of cash payments attributable to such income). Under this method, H U.S. Holders generally will be required to include in income increasingly greater amounts of OID in LO successive accrual periods. N 0 Series 2015B Bonds purchased for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date)will be treated as issued at a premium. A U.S. Holder of a Series 2015B Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S.Holder,to amortize such premium,using a constant yield method over the term of such m Series 2015B Bond. _ M U) Sale or Other Taxable Disposition of the Series 2015B Bonds. Unless a non-recognition provision of cn the Code applies,the sale,exchange,redemption,retirement(including pursuant to an offer by the Agency)or a0. other disposition of a Series 2015B Bond will be a taxable event for U.S.federal income tax purposes. In such ca event, in general, a U.S. Holder of a Series 2015B Bond will recognize gain or loss equal to the difference between(i)the amount of cash plus the fair market value of property received(except to the extent attributable :c to accrued but unpaid interest on the Series 2015B Bond,which will be taxed in the manner described above) w and (ii)the U.S. Holder's adjusted U.S. federal income tax basis in the Series 2015B Bond (generally, the r purchase price paid by the U.S. Holder for the Series 2015B Bond,decreased by any amortized premium, and CV increased by the amount of any OID previously included in income by such U.S. Holder with respect to such r Series 2015B Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non- corporate U.S. Holder of the Series 2015B Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will be lower than the maximum marginal U.S. federal income tax rate applicable _ U a 64 DOCSOC/1725450v4/200430-0012 Packet Pg. 713 6.C.b c to ordinary income if such U.S. holder's holding period for the Series 2015B Bonds exceeds one year. The N deductibility of capital losses is subject to limitations. 0 Defeasance of the Taxable Bonds. If the Agency defeases any Series 2015B Bond,the Series 2015B M Bond may be deemed to be retired and"reissued"for federal income tax purposes as a result of the defeasance. S In that event, in general, a holder will recognize taxable gain or loss equal to the difference between (i)the amount realized from the deemed sale,exchange or retirement(less any accrued qualified stated interest which will be taxable as such)and(ii)the holder's adjusted tax basis in the Series 2015B Bond. c 0 Information Reporting and Backup Withholding. Payments on the Series 2015B Bonds generally will v be subject to U.S. information reporting and possibly to "backup withholding." Under Section 3406 of the 0 Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate U.S. Holder of the Series Q 2015B Bonds may be subject to backup withholding at the current rate of 28% with respect to "reportable X payments,"which include interest paid on the Series 2015B Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2015B Bonds. The payor will be required to deduct and withhold the prescribed amounts if(i) the payee fails to furnish a U.S. taxpayer identification number E m ("TIN")to the payor in the manner required,(ii)the IRS notifies the payor that the TIN furnished by the payee s is incorrect, (iii)there has been a"notified payee underreporting"described in Section 3406(c) of the Code or (iv)the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S.Holder's federal income tax liability,if any,provided that the required information is O timely furnished to the IRS. Certain U.S. holders (including among others, corporations and certain tax- exempt organizations) are not subject to backup withholding. A holder's failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS. E L Non-U.S.Holders a- P Interest. Subject to the discussions below under the headings "Information Reporting and Backup Withholding"and"FATCA,"payments of principal of, and interest on, any Series 2015B Bond to a Non-U.S. Holder,other than(1)a controlled foreign corporation, as such term is defined in the Code,which is related to m the Agency through stock ownership and(2)a bank which acquires such Series 2015B.Bond in consideration of an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business, LO will not be subject to any U.S. federal withholding tax provided that the beneficial owner of the Series 2015B N Bond provides a certification completed in compliance with applicable statutory and regulatory requirements, 0 which requirements are discussed below under the heading"Information Reporting and Backup Withholding," E or an exemption is otherwise established. c L Disposition of the Series 2015B Bonds. Subject to the discussions below under the headings m "Information Reporting and Backup Withholding" and "FATCA," any gain realized by a Non-U.S. Holder upon the sale, exchange, redemption, retirement (including pursuant to an offer by the Agency or a deemed � retirement due to defeasance of the Series 2015B Bond)or other disposition of a Series 2015B Bond generally cn will not be subject to U.S.federal income tax,unless(i)such gain is effectively connected with the conduct by a such Non-U.S.Holder of a trade or business within the United States;or(ii) in the case of any gain realized by m an individual Non-U.S.Holder, such holder is present in the United States for 183 days or more in the taxable s year of such sale, exchange, redemption, retirement (including pursuant to an offer by the Agency) or other c disposition and certain other conditions are met. W LO P U.S. Federal Estate Tax. A Series 2015B Bond that is held by an individual who at the time of death cv is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of such individual's death, provided that at the time of such individual's death, payments of interest with respect to .t, such Series 2015B Bond would not have been effectively connected with the conduct by such individual of a a0i trade or business within the United States. E U Q 65 DOCSOC/1725450v4/200430-0012 Packet Pg. 714 Information Reporting and Backup Withholding. Subject to the discussion below under the heading N "FATCA," under current U.S. Treasury Regulations, payments of principal and interest on any Series 2015B c Bonds to a holder that is not a United States person will not be subject to any backup withholding tax C requirements if the beneficial owner of the Series 2015B Bond or a financial institution holding the Series m q g a� 2015B Bond on behalf of the beneficial owner in the ordinary course of its trade or business provides an appropriate certification to the payor and the payor does not have actual knowledge that the certification is false. If a beneficial owner provides the certification the certification must give the name and address of such "- p � g m owner, state that such owner is not a United States person, or, in the case of an individual, that such owner is neither a citizen nor a resident of the United States, and the owner must sign the certificate under penalties of o perjury. The current backup withholding tax rate is 28%. 0 Foreign Account Tax Compliance Act ("FATCA') — U.S. Holders and Non-U.S. Holders. Q Sections 1471 through 1474 of the Code, impose a 30%withholding tax on certain types of payments made to X F foreign financial institutions, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned y entities, annually report certain information about such accounts, and withhold 30% on payments to account E m holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition,FATCA imposes a 30% N withholding tax on the same types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each V substantial U.S. owner. Failure to comply with the additional certification, information reporting and other O specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on of interest and principal under the Series 2015B Bonds and sales proceeds of Series 2015B Bonds c payments P held by or through a foreign entity. In general, withholding under FATCA currently a pp lies to payments of U.S. source interest(including OID) and,under current Treasury Regulations, will apply to (i)gross proceeds from the sale, exchange or retirement of debt obligations paid after December 31, 2016 and(ii)certain"pass- a' thru" payments no earlier than January 1, 2017. However, the U.S. Treasury Department recently stated its intention to revise the current U.S. Treasury Regulations regarding FATCA to provide that withholding under FATCA generally will apply to (i)gross proceeds from the sale, exchange or retirement of debt obligations paid after December 31, 2018 and (ii)certain "pass-thru" payments no earlier than January 1, 2019. m Prospective investors should consult their own tax advisors regarding FATCA and its effect on them. LO The foregoing summary is included herein for general information only and does not discuss all N aspects of U.S. federal taxation that may be relevant to a particular holder of Series 2015B Bonds in light of o the holder's particular circumstances and income tax situation. Prospective investors are urged to consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of Series 2015B Bonds,including the application and effect of state,local,non-U.S.,and other tax laws. d m CONTINUING DISCLOSURE [The Agency has covenanted in a Continuing Disclosure Certificate (the "Continuing Disclosure v� Certificate") for the benefit of the holders and Beneficial Owners of the Series 2015 Bonds to provide certain a financial information and operating data relating to the Agency(the"Annual Report")on or before March 31, m beginning March 31,2016,commencing with the report for fiscal year[2014-15], and to provide notices of the occurrence of certain enumerated events. X W The Annual Report and the notices of enumerated events will be filed by the Agency with the LO T Municipal Securities Rulemaking Board's Electronic Municipal Market Access System for municipal c� securities disclosures, maintained on the Internet at http://emma.msrb.org/. The specific nature of the information to be contained in the Annual Report and the notices of enumerated events are set forth in Appendix G. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5)promulgated under the Securities Exchange Act of 1934("Rule 15c2-12"). E a 66 DOCSOC/1725450v4/200430-0012 Racket I?g:"7'15 The Continuing Disclosure Certificate will inure solely to the benefit of any Dissemination Agent,the N Underwriter and Owners or Beneficial Owners from time to time of the Series 2015 Bonds. A default under the Continuing Disclosure Certificate is not a default under the Indenture and the sole remedy following a o default is an action to compel specific performance by the Agency with the terms of the Continuing Disclosure Certificate. _ zz _ During the last five years, there were [list occasions/describe generally] in which the Agency, City, Authority or certain community facility districts formed by the City failed to comply in all material respects with certain of its previous undertakings with regard to Rule 15c2-12.] [Describe continuing disclosure o deficiencies over last 5 years,if any.] 0 CONCLUDING INFORMATION < X Underwriting ~ CD The Series 2015 Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the d "Underwriter") pursuant to a Bond Purchase Agreement, dated 2015 (the "Purchase Agreement"), by and between the Underwriter and the Agency. The Underwriter has agreed to purchase the m Series 2015 Bonds at a price of$ (being the aggregate principal amount thereof, plus an original issue premium of $ and less an Underwriter's discount of $ ). The Purchase Agreement provides that the Underwriter will purchase all of the Series 2015 Bonds if any are purchased. The O obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement,the approval of certain legal matters by counsel and certain other conditions. _ E The initial public offering prices stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Series 2015 Bonds a to certain dealers (including dealers depositing Series 2015 Bonds into investment trusts), dealer banks,banks acting as agents and others at prices lower than said public offering prices. t The Underwriter and its affiliates are full service financial institutions engaged in various activities, m which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriter and its Ln affiliates have, from time to time, performed, and may in the future perform, various financial advisory and N investment banking services for the Agency and the City, for which they received or will receive customary o fees and expenses. L In the ordinary course of their various business activities,the Underwriter and its affiliates may make E or hold a broad array of investments and actively trade debt and equity securities (or related derivative m securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such N securities and instruments. Such investment and securities activities may involve securities and instruments of v� the Agency. a m The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, _ securities or instruments and may at any time hold, or recommend to clients that they should acquire, long to and/or short positions in such assets,securities and instruments. LO r N Legal Opinion r The opinion of Orrick, Herrington & Sutcliffe, LLP, Bond Counsel, approving the validity of the a=i Series 2015 Bonds and stating that interest on the Series 2015 Bonds is excluded from gross income for federal E income tax purposes and that interest on the Series 2015 Bonds is exempt from California personal income Q 67 DOCSOC/1725450v4/200430-0012 PacketflPg 6 w taxes under present State income tax laws will be furnished to the purchaser at the time of delivery of the N Series 2015 Bonds at the expense of the Agency. _ 0 Copies of the proposed forms of Bond Counsel's final approving opinions with respect to the Series 0) 2015 Bonds are attached hereto as Appendix C. The legal opinions are only as to legality and is not intended c to be nor is it to be interpreted or relied upon as a disclosure document or an express or implied recommendation as to the investment quality of the Series 2015 Bonds. a Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official 0 Statement. Certain legal matters will be passed on for the Agency by Stradling Yocca Carlson & Rauth, a M Professional Corporation, as Disclosure Counsel, and by the City Attorney of the City of San Bernardino, as 0 counsel to the Agency. Bond Counsel and Disclosure Counsel will receive compensation contingent upon the Q sale and delivery of the Series 2015 Bonds. From time to time, [Bond Counsel and] Disclosure Counsel X represent the Underwriter in connection with matters unrelated to the Series 2015 Bonds. c d In addition, certain legal matters will be passed on for the Underwriter by Norton Rose Fulbright US m LLP,Los Angeles,California,as Underwriter's Counsel,and for the Trustee by its counsel. Cn Litigation .0 There is no action, suit or proceeding known to the Agency to be pending and notice of which has O been served upon and received by the Agency,or threatened,restraining or enjoining the execution or delivery of the Series 2015 Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or = any proceedings of the Agency taken with respect to any of the foregoing. [Confirm with City Attorney] E d Ratings a S&P has assigned a rating of" " to the Series 2015 Bonds. There is no assurance that the credit rating given to the Series 2015 Bonds will be maintained for any period of time or that the rating may not be lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any downward M revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2015 Bonds. Such rating reflects only the views of S&P and an explanation of the significance of such rating may be to r obtained from S&P. N 0 Miscellaneous L All of the preceding summaries of the Indenture, the Bond Law, the Dissolution Act, the E Redevelopment Law, other applicable legislation, the Redevelopment Plan for the Project Areas, agreements m and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file N with the Agency for further information in connection therewith. v� O a This Official Statement does not constitute a contract with the purchasers of the Series 2015 Bonds. op Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. x w N r r r C E V r Q 68 DOCS OC/1725450v4/200430-0012 PacketfPg 717 gq The execution and delivery of this Official Statement by the City Manager of the City of San Bernardino,acting as the executive director of the Agency,has been duly authorized by the Agency. c 0 CM SUCCESSOR AGENCY TO THE REDEVELOPMENT 0 rn AGENCY OF THE CITY OF SAN BERNARDINO S �a c By: City Manager of o the City of San Bernardino 0 Q X H c d E 0 Cn 2 r- O c E m L N r d' m a U) 0 N O C M L R C L m M Cn O a m w X w LO N r C d E V Q S-1 DOCSOC/1725450v4/200430-0012 Packet Pg 718 '' 6.C.b APPENDIX A c FISCAL CONSULTANT'S REPORT m rn c d 0 0 a x R H c m E m w O ca c E L N r et N m Q F- N T 0 N O C 'D L L m M U) O a m x w u� T N r C d t V Q A-1 DOCSOC/1725450v4/200430-0012 °'Packet Pg X19 .,: 6.C.b APPENDIX B -� N _ SUMMARY OF THE INDENTURE o m a� The following is a brief summary of certain provisions of the Indenture of Trust (the "Indenture') authorizing the Series 2015 Bonds that are not otherwise described in the text of this Official Statement. Such summary is not intended to be definitive, and reference is made to the actual Indenture (copies of which may W be obtained from the Trustee)for the complete terms thereof c c� 0 Q x F- _ m E d Co O Z E m L a t- Co m Q LO 0 N O _ L C L d Co _ M Cn O a m r x W LO T N T _ d E v c� Q B-1 DOCSOC/1725450v4/200430-0012 Packet Pg 720, 6��b APPENDIX C FORM OF BOND COUNSEL OPINION o m rn c m c 0 i� V 0 Q x _ d N _a 2 0 L _ E 0. L N T T d' Co m Q H T N O _ L _ L m _ Co Cn 0 a m w x w T N T _ d t U w a C-1 DOC S OC/1725450v4/200430-0012 Packet Pg. 721 APPENDIX D N a BOOK-ENTRY ONLY SYSTEM 0 ca The information in this Appendix concerning The Depository Trust Company ("DTC'), New York, a New York, and DTC's book-entry system has been obtained from DTC and the Agency takes no responsibility for the completeness or accuracy thereof. The Agency cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a)payments of interest, o principal or premium, if any, with respect to the Bonds, (b)certificates representing ownership interest in or 0 other confirmation or ownership interest in the Bonds, or(c)redemption or other notices sent to DTC or Cede o & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that Q DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The X current "Rules"applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures"ofDTC to be followed in dealing with DTC Participants are on file with DTC. c 0 E The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede &Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal v amount of such maturity,and will be deposited with DTC. DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System,a"clearing corporation"within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the a Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. N and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries)that DTC's participants("Direct Participants")deposit with DTC. DTC also facilitates the post- d. trade settlement among Direct Participants of sales and other securities transactions in deposited securities, cn through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This m d eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and F' non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other c organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation N ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed =° Income Clearing Corporation,all of which are registered clearing agencies. DTCC is owned by the users of its L regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. c securities brokers and dealers,banks,trust companies,and clearing corporations that clear through or maintain m a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC = has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the cn Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Cn O Purchases of Bonds under the DTC system must be made by or through Direct Participants,which will °,- receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each m Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. ra Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, x however, expected to receive written confirmations providing details of the transaction, as well as periodic W LO statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner r entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries N made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial r Owners will not receive certificates representing their ownership interests in Bonds, except in the event that a use of the book-entry system for the Bonds is discontinued. E U D-1 DOC SOC/1725450v4/200430-0012 Packet Pg.722 6Cb To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered y in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an c authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede o ca &Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants _ to whose accounts such Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct o Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners v will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the <t transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, X defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may r wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to E as the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being 1 redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such 1 It- maturity to be redeemed. O Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to c Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual E procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose a- accounts Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy). N �r Principal,premium(if any), and interest payments on the Bonds will be made to Cede&Co.,or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct m Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency or H the Trustee,on payable date in accordance with their respective holdings shown on DTC's records. Payments LO by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is N the case with securities held for the accounts of customers in bearer form or registered in "street name," and o will be the responsibility of such Participant and not of DTC, the Trustee, or the Agency, subject to any F statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respect to the Bonds to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such m payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. N DTC may discontinue providing its services as depository with respect to the Bonds at any time by 0 giving reasonable notice to the Agency or the Trustee. Under such circumstances,in the event that a successor m depository is not obtained,certificates representing the Bonds are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-entry-only transfers through DTC w (or a successor securities depository). In that event, representing the Bonds will be printed and delivered to 'n T DTC in accordance with the provisions of the Indenture. Cy T r The information in this section concerning DTC and DTC's book-entry system has been obtained ,s from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy m thereof. E U Q D-2 DOCSOC/1725450v4/200430-0012 Packet Pg. 723 APPENDIX E N 4 � COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR O FISCAL YEAR ENDED JUNE 30, [2015] c I � m c 0 0 Q x ca H c m m I y �a O c� c E m L r P M�M W Q Lo r 0 N O C L L m O a m 's x w N T r i+ Q E-1 DOCS OC/1725450v4/200430-0012 Packet Pg 724 '° xCb APPENDIX F N c STATE DEPARTMENT OF FINANCE LETTER m a� c c d c O U O Q x Ri H r.+ C d U cC N .0 0 cC C E d L a N T C" (n W LQ F W) r.. 0 N O C L t4 C L M� W 'N N 0 a m x w T N r d t U a F-1 DOCSOC/1725450v4/200430-0012 Packet Pg. 725 6.C.b APPENDIX G c FORM OF CONTINUING DISCLOSURE CERTIFICATE O m C Upon the issuance of the Series 2015 Bonds, the Agency proposes to enter into a Continuing 'a Disclosure Certificate in substantially the following form: m [To be Inserted] o .2 U O Q x R H C d E d N N 0 O C E i a N r T m Q LO r O N O C L L m Q a m r s x w U) r N r C O t V Q G-I DO C S OC/1725450v4/200430-0012 Packet Pg `7�6