HomeMy WebLinkAbout05-15-2017 Agenda BackupCITY OF SAN BERNARDINO
AGENDA
FOR THE
JOINT REGULAR MEETING OF THE MAYOR AND CITY COUNCIL
OF THE CITY OF SAN BERNARDINO, MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS
THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY, MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SUCCESSOR HOUSING AGENCY TO THE REDEVELOPMENT AGENCY, MAYOR AND
CITY COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE HOUSING AUTHORITY, AND THE MAYOR AND
CITY COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
MONDAY, MAY 15, 2017
2:00 PM – CLOSED SESSION 4:00 PM – OPEN SESSION
COUNCIL CHAMBER • 300 NORTH "D" STREET (LOBBY) • SAN BERNARDINO, CA 92418 • WWW.SBCITY.ORG
Virginia Marquez R. Carey Davis James Mulvihill
COUNCIL MEMBER, W ARD 1 MAYOR COUNCIL MEMBER, WARD 7
Benito Barrios
Mark Scott
COUNCIL MEMBER, W ARD 2 CITY MANAGER
John Valdivia Gary D. Saenz
COUNCIL MEMBER, W ARD 3 CITY ATTORNEY
Fred Shorett Georgeann “Gigi” Hanna
COUNCIL MEMBER, W ARD 4 CITY CLERK
Henry Nickel David Kennedy
COUNCIL MEMBER, W ARD 5 CITY TREASURER
Bessine L. Richard
COUNCIL MEMBER, W ARD 6
Welcome to a meeting of the Mayor and City Council of the City of San Bernardino.
o Anyone who wishes to speak during public comment or on a particular item will be required to fill out a
speaker slip. Speaker slips must be turned in to the City Clerk by 4:30 pm the day of the meeting.
o You may email your request to speak to publiccomments@sbcity.org if you cannot turn it in in person
prior to 4:30 pm. Each request will cover one speaker. Those who wish to speak must submit their
own request to be called on by the Mayor.
o Public comments for agenda items that are not public hearings will be limited to three minutes.
o There is a 6-minute-per-person time limit for all comments, excluding public hearings.
o All who wish to speak, including Council members and staff, need to be recognized by the Mayor or
Mayor Pro Tempore before speaking.
o Please contact the City Clerk’s Office (384-5002) two working days prior to the meeting for any
requests for reasonable accommodation to include interpreters.
o All documents for public review are on file with the City Clerk’s Office or may be accessed online by
going to www.sbcity.org.
o Please turn off or mute your cell phone while the meeting is in session.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 2 Printed 05/09/2017
Call to Order
Attendee Name Present Absent Late Arrived
Council Member, Ward 1 Virginia Marquez
Council Member, Ward 2 Benito Barrios
Council Member, Ward 3 John Valdivia
Council Member, Ward 4 Fred Shorett
Council Member, Ward 5 Henry Nickel
Council Member, Ward 6 Bessine L. Richard
Council Member, Ward 7 James Mulvihill
Mayor R. Carey Davis
City Clerk Georgeann "Gigi" Hanna
City Attorney Gary D. Saenz
City Manager Mark Scott
CLOSED SESSION
PUBLIC COMMENTS ON CLOSED SESSION ITEMS
A three-minute limitation shall apply to each member of the public who wishes to
address the Mayor and City Council and the Mayor and City Council Acting as
the Successor Agency to the Redevelopment Agency. No member of the public
shall be permitted to “share” his/her three minutes with any other member of the
public.
A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (Pursuant to
Government Code Section 54956.9(a) and (d)(1):
In re: City of San Bernardino, U.S. Bankruptcy Court Case No. 6:12-bk-28006 MJ
AMF 1278, LLC, et al. v. City of San Bernardino - San Bernardino Superior Court
Case No. CIVDS 1702219
Kush Concepts Collective, et al. v. City of San Bernardino - San Bernardino
Superior Court Case No. CIVDS 1702131
Michael Lee, et al. v. City of San Bernardino - San Bernardino Superior Court
Case No. CIVDS 1704539
Quiang Ye, et al. v. City of San Bernardino - San Bernardino Superior Court
Case No. CIVDS 1704276
Paul Triplett v. City of San Bernardino, et al., United States District Court Case
No. CV08-07257 MWF(AJWx)
Marisa Havins v. City of San Bernardino, WCAB Case Nos. ADJ10456478 &
ADJ10575237
Patrick Pritchett v. City of San Bernardino, WCAB Case Nos. ADJ8835913 &
ADJ8835829
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 3 Printed 05/09/2017
B. CONFERENCE WITH LABOR NEGOTIATOR – Pursuant to Government Code
Section 54957.6:
Negotiator: Helen Tran, Human Resources Director
Mark Scott, City Manager
Employee Organizations: Middle Management
CLOSED SESSION REPORT
PRESENTATIONS
1. Summer Reading Program 2017
2. Present a Citizen of the Month award to Cheryl Brown – Council Member
Richard
PUBLIC COMMENTS FOR ITEMS LISTED ON THIS AGENDA
A three-minute limitation shall apply to each member of the public who wishes to
address the Mayor and City Council on any item on the agenda, excluding public
hearings. There is no limit to the number of items that may be discussed within the
three-minute time limit. To be called on by the Mayor, please turn in individual speaker
slips to the City Clerk by 4:30 p.m. the day of the meeting. If you wish, you may email
your speaking request to publiccomments@sbcity.org prior to the beginning of the
meeting. Emailed requests to speak will not be accepted from anyone but the person
requesting to speak.
CONSENT CALENDAR
There will be no separate discussion of Consent Calendar items unless a Council
member requests that the item be considered in its normal sequence on the
agenda. Public comment on Consent Calendar items is limited to three minutes
total per person. There is no limit on the items that can be discussed within that
time.
3. Waive Full Reading of Resolutions and Ordinances
Recommendation: Waive full reading of resolutions and ordinances on
the agenda dated May 15, 2017.
4. City Council Approval of Commercial and Payroll Checks
Recommendation: Approve the commercial and payroll checks for April
2017.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 4 Printed 05/09/2017
5. Vacation of Century Avenue between Showcase Drive North and Camino
Real
Recommendation: Adopt a Resolution of Intention to conduct a Public
Hearing to consider the Vacation of Century Avenue
between Show Case Drive North and Camino Real.
6. Amendment One to Professional Services Agreement with R.T. Desai &
Associates for Accounting Consultant Services
Recommendation: Adopt a Resolution authorizing the Amendment One
to the Professional Services Agreement between the
City of San Bernardino, California, and R.T. Desai
and Associates for Accounting Consulting Services.
7. Authorization for the City Manager to Reinstate Payouts for all Employees’
Accrued Post-Petition Leave Bank Payoffs, Cash-outs, or Sellbacks
Recommendation: Adopt a Resolution of the Mayor and City Council of
the City of San Bernardino, California, authorizing the
City Manager to reinstate payouts for all employees’
accrued post-petition leave bank payoffs, cash-outs,
or sellbacks pursuant to Memorandums of
Understanding.
8. Second Amendment to the Consultant Services Agreement between the
City of San Bernardino and Flores & Associates
Recommendation: Adopt a Resolution of the Mayor and City Council of
the City of San Bernardino, California, approving the
Second Amendment to the Consultant Services
Agreement between the City of San Bernardino and
Flores & Associates.
PUBLIC HEARINGS
9. FY 2017-18 HUD Annual Action Plan
Recommendation: Adopt a Resolution of the Mayor and City Council of
the City of San Bernardino, California, adopting the
Fiscal Year 2017-18 United States Department of
Housing and Urban Development (HUD) Annual
Action Plan.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 5 Printed 05/09/2017
10. Refuse Accounts Liens
Recommendation: Conduct a Public Hearing related to the Placement of
Liens for Refuse Accounts delinquent as of December
2016 and January 2017, and adopt a Resolution of
the Mayor and City Council of the City of San
Bernardino, California, making determinations and
confirming assessments and proceedings for unpaid
solid waste collection services.
11. San Bernardino County Code Related to the Abatement of Fire Hazards and
Hazardous Trees with local amendments (Chapter 3 of Division 3 of Title 2
of San Bernardino County Code) – Final Reading and Adoption
Recommendation: Accept for final reading and adopt an Ordinance of
the Mayor and City Council of the City of San
Bernardino, California, adopting by reference Chapter
3 of Division 3 of Title 2 of the San Bernardino County
Code related to the abatement of fire hazards and
hazardous trees with local amendments.
STAFF REPORTS
12. 2016 Audited Financial Statements
Recommendation: Receive a presentation of the completed audited
financial statements for Fiscal Year 2016.
13. Charter Implementation Update; Ordinance repealing and replacing
Chapter 2.50 of the City of San Bernardino Municipal Code to implement
the provisions of the newly adopted City Charter; Personnel Commissioner
Appointments; Amendments to the Civil Service/Personnel Rules; and
Delete the Chief Examiner Classification (U) and Establish the
Administrative Services Officer (U) Job Description and Classification
Recommendation: 1. Introduce for first reading an Ordinance of the
Mayor and City Council of the City of San Bernardino,
California, repealing Chapter 2.50 of the City of San
Bernardino Municipal Code related to the Civil
Service/Personnel rules and regulations and replacing
it with a new Chapter 2.50 related to the Personnel
Commission.
2. Appoint the Civil Service Board of Commissioners
to serve as the Personnel Commission until replaced
by further action of the Mayor and City Council.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 6 Printed 05/09/2017
3. Adopt a Resolution of the Mayor and City Council
of the City of San Bernardino, California, approving
amendments to Civil Service/Personnel Rules 513-
513.5 and 601 pursuant to Chapter 2.50 of the
Municipal Code; delegating authority for disciplinary
appeals referenced in Rules 513-513.5 and 601 to the
Personnel Commission; delegating authority for any
action in the Civil Service/Personnel Rules previously
assigned to the Civil Service Board other than
disciplinary appeals to a Human Resources
Department with approval from the appointing
authority; delegating authority for any action
referenced in the Civil Service/Personnel Rules
previously assigned to the Chief Examiner to a
designee of the appointing authority under the
auspices of the Human Resources Department.
4. Adopt a Resolution of the Mayor and City Council
of the City of San Bernardino, California, establishing
and approving the classification and job description of
Administrative Services Officer (U) and deleting the
classification of Chief Examiner (U).
14. Property Tax Exchange Related To Local Agency Formation Commission
3188A – Reorganization to Include Annexations to the City of San
Bernardino and to San Bernardino County Fire Protection District Zones
FP-5 and FP-5 San Bernardino and Detachment from County Service Area
70
Recommendation: Consider the recommended property tax exchange
agreement that has been adopted by San Bernardino
County and decide whether to accept it or to move
forward with alternate dispute resolution process.
15. Property Assessed Clean Energy (PACE) Programs
Recommendation: Review and discuss the Property Assessed Clean
Energy (PACE) Programs, recent changes to the San
Bernardino Council of Governments (SBCOG) Home
Energy Renovation Opportunity (HERO) Program and
provide direction.
16. Election of Mayor Pro Tempore
Recommendation: Open nominations for a member of the City Council to
serve as Mayor Pro Tempore until December 20,
2017.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 7 Printed 05/09/2017
17. Amendment of the CalPERS Contract to Establish a New Retirement
Benefit Formula for Police Safety – Final Reading and Adoption
Recommendation: Accept for final reading and adopt an Ordinance of
Mayor and City Council of the City of San Bernardino,
California, authorizing an amendment to the contract
between the Mayor and City Council of the City of
San Bernardino and the Board of Administration of
the California Public Employees’ Retirement System.
18. Settlement and Release Agreement with ACAA Limited Partnership Related
to 542 N. Mt. Vernon Avenue, San Bernardino
Recommendation: Adopt a Resolution of the Mayor and City Council of
the City of San Bernardino, California, approving the
Settlement and Release Agreement between the City
of San Bernardino and ACAA Limited Partnership
related to 542 N. Mt. Vernon Avenue, San
Bernardino, California, and approving certain related
actions.
19. Documents Effecting the Negotiated Debt Restructuring of the 2005
Pension Obligation Bonds, the 1996 Lease Revenue Refunding Bonds, and
the 1999 Refunding Certificates of Participation
Recommendation: Adopt the attached resolutions giving the City
Manager and other authorized officers, on behalf of
the City, and the Mayor and other authorized officers,
on behalf of the San Bernardino Joint Powers
Financing Authority (JPFA), authority to execute the
documents that effect the results of settlement
negotiations approved by the Federal Bankruptcy
Court relative to (i) the 2005 Pension Obligation
Bonds (2005 POBs), (ii) the 1996 Lease Revenue
Refunding Bonds (1996 Bonds), and (iii) the 1999
Refunding Certificates of Participation (1999 COPs).
20. League of California Cities 2017 Legislative Action Day
Recommendation: Receive an oral report by Council Member Valdivia.
21. PUBLIC COMMENTS FOR ITEMS NOT ON THE AGENDA
22. ITEMS TO BE REFERRED TO CITY COUNCIL COMMITTEES
23. ANNOUNCEMENTS BY MAYOR, CITY COUNCIL AND EXECUTIVE STAFF
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 8 Printed 05/09/2017
24. ADJOURNMENT
The next joint regular meeting of the Mayor and City Council and the Mayor and
City Council Acting as the Successor Agency to the Redevelopment Agency will
be held on Wednesday, June 7, 2017, in the Board Room located at 201
North E Street, San Bernardino, California 92401. Closed Session will begin at
4:00 p.m. Open Session will begin at 5:00 p.m.
Joint Regular Meeting Agenda May 15, 2017
Mayor and City Council of the City of San Bernardino Page 9 Printed 05/09/2017
NOTICE: Any member of the public may address this meeting of the Mayor and City Council
and the Mayor and City Council Acting as the Successor Agency to the Redevelopment Agency
on any item appearing on the agenda by approaching the microphone in the Council Chamber
when the item about which the member desires to speak is called and by asking to be
recognized.
Any member of the public desiring to speak to the Mayor and City Council and the Mayor and
City Council Acting as the Successor Agency to the Redevelopment Agency concerning any
matter not on the agenda but which is within the subject matter jurisdiction of the Mayor and City
Council and the Mayor and City Council Acting as the Successor Agency to the Redevelopment
Agency may address the body at the end of the meeting, during the period reserved for public
comments. Said total period for public comments shall not exceed 60 minutes, unless
such time limit is extended by the Mayor and City Council and the Mayor and City
Council Acting as the Successor Agency to the Redevelopment Agency. A three minute
limitation shall apply to each member of the public, unless such time limit is extended by the
Mayor and City Council and the Mayor and City Council Acting as the Successor Agency to the
Redevelopment Agency. No member of the public shall be permitted to “share” his/her three
minutes with any other member of the public.
Speakers who wish to present documents to the governing body may hand the documents to
the City Clerk at the time the request to speak is made.
The Mayor and City Council and the Mayor and City Council Acting as the Successor Agency to
the Redevelopment Agency may refer any item raised by the public to staff, or to any
commission, board, bureau, or committee for appropriate action or have the item placed on the
next agenda of the Mayor and City Council and the Mayor and City Council Acting as the
Successor Agency to the Redevelopment Agency. However, no other action shall be taken nor
discussion held by the Mayor and City Council and the Mayor and City Council Acting as the
Successor Agency to the Redevelopment Agency on any item which does not appear on the
agenda unless the action is otherwise authorized in accordance with the provisions of
subdivision (b) of Section 54954.2 of the Government Code.
Public comments will not be received on any item on the agenda when a public hearing has
been conducted and closed.
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Consent Calendar
City of San Bernardino
Request for Council Action
\
Date: May 15, 2017
To: Honorable Mayor and City Council Members
From: Gigi Hanna, City Clerk
Subject: Waive Full Reading of Resolutions and Ordinances
Recommendation
Waive full reading of Resolutions and Ordinances on the agenda dated May 15, 2017.
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Packet Pg. 14 Attachment: Commercial Checks & Payroll. REPORT (4992 : City Council Approval of Commercial and Payroll Checks)
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Packet Pg. 15 Attachment: Commercial Checks & Payroll. REPORT (4992 : City Council Approval of Commercial and Payroll Checks)
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Packet Pg. 16 Attachment: Commercial Checks & Payroll. ATTACHMENT 1. Register #54 (4992 : City Council Approval
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Packet Pg. 73 Attachment: Proposed Vacation of Century. REPORT (4993 : Vacation of Century Avenue Between Showcase Drive North and Camino Real)
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Packet Pg. 95 Attachment: PSA - Desai. REPORT (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for Accounting
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Packet Pg. 100 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 101 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 102 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 103 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 104 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 105 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 106 Attachment: PSA - Desai. ATTACHMENT 2 (4994 : Amendment One to Professional Services Agreement with R.T. Desai & Associates for
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Packet Pg. 107 Attachment: Authorization of CM for payouts for all employees. REPORT (4995 : Authorization for the City Manager to Reinstate Payouts for All
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Packet Pg. 108 Attachment: Authorization of CM for payouts for all employees. REPORT (4995 : Authorization for the City Manager to Reinstate Payouts for All
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Packet Pg. 109 Attachment: Authorization of CM for payouts for all employees. ATTACHMENT 1 (4995 : Authorization for the City Manager to Reinstate
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Packet Pg. 110 Attachment: Authorization of CM for payouts for all employees. ATTACHMENT 1 (4995 : Authorization for the City Manager to Reinstate
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Packet Pg. 111 Attachment: Authorization of CM for payouts for all employees. ATTACHMENT 1 (4995 : Authorization for the City Manager to Reinstate
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Packet Pg. 112 Attachment: PSA - Flores and Associates. REPORT (4996 : Second Amendment to the Consultant Services Agreement Between the City of San
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Packet Pg. 113 Attachment: PSA - Flores and Associates. REPORT (4996 : Second Amendment to the Consultant Services Agreement Between the City of San
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Packet Pg. 114 Attachment: PSA - Flores and Associates. ATTACHMENT 1 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 115 Attachment: PSA - Flores and Associates. ATTACHMENT 1 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 116 Attachment: PSA - Flores and Associates. ATTACHMENT 1 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 117 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 118 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 119 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 120 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 121 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 122 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 123 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 124 Attachment: PSA - Flores and Associates. ATTACHMENT 2 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 125 Attachment: PSA - Flores and Associates. ATTACHMENT 3 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 126 Attachment: PSA - Flores and Associates. ATTACHMENT 3 (4996 : Second Amendment to the Consultant Services Agreement Between the City
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Packet Pg. 127 Attachment: HUD Annual Action Plan . REPORT (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 128 Attachment: HUD Annual Action Plan . REPORT (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 129 Attachment: HUD Annual Action Plan . REPORT (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 130 Attachment: HUD Annual Action Plan . REPORT (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 132 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 133 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 135 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 136 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 139 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 140 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 141 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 142 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 143 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 148 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 149 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 153 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 154 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 155 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 156 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 157 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 158 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 159 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 160 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 161 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 162 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 163 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 164 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 165 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 166 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 167 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 168 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 169 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 170 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 171 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 172 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 173 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 174 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 175 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 176 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 177 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 178 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 179 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 180 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 181 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 182 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 183 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 184 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 185 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 186 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 187 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 188 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 189 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 190 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 191 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 192 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 193 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 194 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 195 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 196 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 197 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 198 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 199 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 200 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 201 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 202 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 203 Attachment: HUD Annual Action Plan . ATTACHMENT 1 and EXHIBIT A (4997 : FY 2017-18 HUD Annual Action Plan)
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Packet Pg. 204 Attachment: Refuse Accounts Liens. REPORT (4980 : Refuse Accounts Liens)
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Packet Pg. 205 Attachment: Refuse Accounts Liens. REPORT (4980 : Refuse Accounts Liens)
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Packet Pg. 206 Attachment: Refuse Accounts Liens. ATTACHMENT 1 (4980 : Refuse Accounts Liens)
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Packet Pg. 207 Attachment: Refuse Accounts Liens. ATTACHMENT 1 (4980 : Refuse Accounts Liens)
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Packet Pg. 208 Attachment: Refuse Accounts Liens. ATTACHMENT 1 (4980 : Refuse Accounts Liens)
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Packet Pg. 209 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 210 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 211 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 212 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 213 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 214 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 215 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 216 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 217 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 218 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 219 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 220 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 221 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 222 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 223 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 224 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 225 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 226 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 227 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 228 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 229 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 230 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 231 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 232 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 233 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 234 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 235 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 236 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 237 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 238 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 239 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 240 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 241 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 242 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 243 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 244 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 245 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 246 Attachment: Refuse Accounts Liens - Attachment 1- Exhibit A (4980 : Refuse Accounts Liens)
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Packet Pg. 247 Attachment: Refuse Accounts Liens - Attachment 2 City of San Bernardino Hearing Notice Proof of Mailing 04-21-17 (4980 : Refuse Accounts
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Packet Pg. 248 Attachment: Refuse Accounts Liens - Attachment 3 Notice of Administrative Hearing on Special Assessment and Lien S.B.M.C. 8.24.050 (4980 :
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Packet Pg. 249 Attachment: Refuse Accounts Liens - Attachment 4 Notice of Delinquency S.B.M.C. 8.24.050 City of San Bernardino (4980 : Refuse Accounts
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Packet Pg. 250 Attachment: Refuse Accounts Liens - Attachment 5 Sample Invoice (4980 : Refuse Accounts Liens)
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Packet Pg. 251 Attachment: Refuse Accounts Liens - Attachment 6 City of San Bernardino Municipal Code Section 8.24.040 (4980 : Refuse Accounts Liens)
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Packet Pg. 252 Attachment: Refuse Accounts Liens - Attachment 6 City of San Bernardino Municipal Code Section 8.24.040 (4980 : Refuse Accounts Liens)
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Packet Pg. 253 Attachment: Refuse Accounts Liens - Attachment 6 City of San Bernardino Municipal Code Section 8.24.040 (4980 : Refuse Accounts Liens)
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Packet Pg. 254 Attachment: Refuse Accounts Liens - Attachment 6 City of San Bernardino Municipal Code Section 8.24.040 (4980 : Refuse Accounts Liens)
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Packet Pg. 255 Attachment: Refuse Accounts Liens - Attachment 7 City of San Bernardino Municipal Code Section 8.24.050 (4980 : Refuse Accounts Liens)
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Packet Pg. 256 Attachment: Refuse Accounts Liens - Attachment 7 City of San Bernardino Municipal Code Section 8.24.050 (4980 : Refuse Accounts Liens)
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Packet Pg. 257 Attachment: Refuse Accounts Liens - Attachment 7 City of San Bernardino Municipal Code Section 8.24.050 (4980 : Refuse Accounts Liens)
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Packet Pg. 258 Attachment: Refuse Accounts Liens - Attachment 7 City of San Bernardino Municipal Code Section 8.24.050 (4980 : Refuse Accounts Liens)
11.a
Packet Pg. 259 Attachment: Adoption of SB County Hazardous.REPORT (4981 : San Bernardino County Code Related to the Abatement of Fire Hazards and
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Packet Pg. 260 Attachment: Adoption of SB County Hazardous.REPORT (4981 : San Bernardino County Code Related to the Abatement of Fire Hazards and
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Packet Pg. 261 Attachment: Adoption of SB County Hazardous. ATTACHMENT 1 (4981 : San Bernardino County Code Related to the Abatement of Fire
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Packet Pg. 262 Attachment: Adoption of SB County Hazardous. ATTACHMENT 1 (4981 : San Bernardino County Code Related to the Abatement of Fire
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Packet Pg. 263 Attachment: Adoption of SB County Hazardous. ATTACHMENT 1 (4981 : San Bernardino County Code Related to the Abatement of Fire
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Packet Pg. 264 Attachment: Adoption of SB County Hazardous. ATTACHMENT 1 (4981 : San Bernardino County Code Related to the Abatement of Fire
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Packet Pg. 265 Attachment: Adoption of SB County Hazardous. ATTACHMENT 1 (4981 : San Bernardino County Code Related to the Abatement of Fire
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Packet Pg. 266 Attachment: Audited Financial Statements for 2016. REPORT (4982 : 2016 Audited Financial Statements)
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Packet Pg. 267 Attachment: Audited Financial Statements for 2016. REPORT (4982 : 2016 Audited Financial Statements)
City of San Bernardino
San Bernardino, California
Annual Financial Report
and
Independent Auditors’ Report
For the Year Ended June 30, 2016
12.b
Packet Pg. 268 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
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Packet Pg. 269 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Annual Financial Report
For the Year Ended June 30, 2016
Table of Contents
i
Page
FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements ........................................................................................... 1
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ................................................................................................................................. 10
Statement of Activities and Changes in Net Position ....................................................................................... 12
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet ............................................................................................................................................. 18
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ............................................................................... 21
Statement of Revenues, Expenditures, and Changes in Fund Balances .................................................... 22
Reconciliation of the Governmental Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Position ............................................................................. 24
Proprietary Fund Financial Statements:
Statement of Net Position .......................................................................................................................... 26
Statement of Revenues, Expenses, and Changes in Net Position .............................................................. 28
Statement of Cash Flows ........................................................................................................................... 29
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position .......................................................................................................... 33
Statement of Changes in Fiduciary Net Position ....................................................................................... 34
Notes to the Basic Financial Statements ............................................................................................................. 35
Required Supplementary Information (Unaudited):
Budgetary Information ........................................................................................................................................... 135
Budgetary Comparison Schedules:
General Fund ................................................................................................................................................... 136
Federal and State Grants Special Revenue Fund ............................................................................................. 137
Low and Moderate Income Housing Special Revenue Fund .......................................................................... 138
Sales and Road Special Revenue Fund ........................................................................................................... 139
Schedules of Funding Progress – Other Post Employment Benefits ..................................................................... 140
Schedules of Changes in Net Pension Liability and Related Ratios ...................................................................... 141
Schedule of the Successor Agency’s
Proportionate Share of the Net Pension Liability and Related Ratios ................................................... 143
Schedule of Contributions...................................................................................................................................... 144
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Packet Pg. 270 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Annual Financial Report
For the Year Ended June 30, 2016
Table of Contents (Continued)
ii
Page
FINANCIAL SECTION (Continued):
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet ............................................................................................................................ 151
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 155
Internal Service Funds:
Combining Statement of Net Position .......................................................................................................... 160
Combining Statement of Revenues, Expenses, and Changes in Net Position .............................................. 162
Combining Statement of Cash Flows ........................................................................................................... 164
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities – Agency Funds ................................................ 170
Combining Statement of Changes in Assets and Liabilities – Agency Funds ............................................. 172
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Packet Pg. 271 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of San Bernardino
San Bernardino, California
Report on Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the City of San Bernardino, California (the
“City”), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the
financial statements of the Water Enterprise Fund and the Sewer Enterprise Fund (major funds), which collectively
represent 99%, 75%, and 99%, respectively, of the assets, net position, and revenues of the business-type activities.
Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as
it relates to the amounts included for the Water Enterprise Fund and the Sewer Enterprise Fund, is based solely on
the report of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
200 East Sandpointe Avenue, Suite 600, Santa Ana, California 92707
Tel: 949-777-8800 • Fax: 949-777-8850
www.pungroup.com
3939352 Pun & McGeady_L_final.pdf 1 1/14/14 3:48 PM
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Packet Pg. 272 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
To the Honorable Mayor and Members of the City Council
of the City of San Bernardino
San Bernardino, California
Page 2
2
Summary of Opinions
Opinion Unit Type of Opinion
Governmental Activities Qualified
Business-Type Activities Unmodified
General Fund Unmodified
Federal and State Grants Special Revenue Fund Qualified
Low and Moderate Income Housing - Special Revenue Fund Qualified
Sales and Road Special Revenue Fund Unmodified
Integrated Waste Enterprise Fund Unmodified
Water Enterprise Fund Unmodified
Sewer Enterprise Fund Unmodified
Aggregate Remaining Fund Information Qualified
Basis for Qualified Opinion on Governmental Activities, Major Federal and State Grants Special Revenue
Fund, Major Low and Moderate Income Housing Special Revenue Fund, and the Aggregate Remaining Fund
Information
Management has not adopted a methodology for reviewing the completeness and collectability of notes receivable
in the Governmental Activities, major Federal and State Grants special revenue fund, major Low and Moderate
Income Housing special revenue fund, and the Aggregate Remaining Fund Information and, accordingly, has not
performed a full analysis of its valuations for allowance for uncollectible amounts. Accounting principles generally
accepted in the United States of America require that an adequate allowance be provided for uncollectible
receivables, which would decrease the assets and net position or fund balance and change the expenses or
expenditures in the Governmental Activities, major Federal and State Grants special revenue fund, major Low and
Moderate Income Housing special revenue fund, and the Aggregate Remaining Fund Information. The amount by
which the departure would affect the assets and net position or fund balance and change the expenses or
expenditures in the Governmental Activities, major Federal and State Grants special revenue fund, major Low and
Moderate Income Housing special revenue fund, and the Aggregate Remaining Fund Information has not been
determined.
Management has not adopted a methodology for reviewing the valuation of property held for resale in the
Governmental Activities, major Federal and State Grants special revenue fund, major Low and Moderate Income
Housing special revenue fund, and the Aggregate Remaining Fund Information in order to determine the net
realizable value of the property and, accordingly, property held for resale is reported at acquisition cost plus
improvement costs. Accounting principles generally accepted in the United States of America require that the
carrying amount of the property held for resale should not exceed the net realizable value, which would decrease
the assets and net position or fund balance and change the expenses or expenditures in the Governmental Activities,
major Federal and State Grants special revenue fund, major Low and Moderate Income Housing special revenue
fund, and the Aggregate Remaining Fund Information. The amount by which the departure would affect the assets
and net position or fund balance and change the expenses or expenditures in the Governmental Activities, major
Federal and State Grants special revenue fund, major Low and Moderate Income Housing special revenue fund, and
the Aggregate Remaining Fund Information has not been determined.
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Packet Pg. 273 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
To the Honorable Mayor and Members of the City Council
of the City of San Bernardino
San Bernardino, California
Page 3
3
Management has not adopted a methodology for reviewing the valuation of the compensated absences balance in
the Governmental Activities, in order to determine the total liability of the compensated absences. Accordingly,
compensated absences balance is reported at post-petition liquidation value. Accounting principles generally
accepted in the United States of America require that the compensated absences balance be recorded based on
contractually required rates during the pendency plan stage of Bankruptcy without regard to considerations of
eventual outcomes as may be determined by the final plan of adjustments. The amount by which the departure
would affect the liability and net position and change the expenses or expenditures in the Governmental Activities
has not been determined.
Management has not adopted a methodology for reviewing the classification between depreciable and non-
depreciable classifications and the related depreciation expense of the capital assets in the Redevelopment
Obligation Retirement Fund (Successor Agency) within the Aggregate Remaining Fund Information, in order to
determine the valuation of the capital assets. Accordingly, capital assets are reported at acquisition cost plus
improvement costs. The amount by which the departure would affect the liability and net position and change the
expenses or expenditures in the Governmental Activities has not been determined.
Qualified Opinions
In our opinion, except for the effects of the matters described above in the Basis for Qualified Opinions on
Governmental Activities, Major Federal and State Grants Special Revenue Fund, Major Low and Moderate Income
Housing Special Revenue Fund, and the Aggregate Remaining Fund Information paragraphs, the financial
statements referred to above present fairly, in all material respects, the respective financial position of the
Governmental Activities, the major Federal and State Grants special revenue fund, major Low and Moderate
Income Housing special revenue fund, and the aggregate remaining fund information of the City of San Bernardino,
California, as of June 30, 2016, and the respective changes in financial position thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Unmodified Opinions
In our opinion, based on our audit and the report of other auditors, the financial statements referred to previously
present fairly, in all material respects, the respective financial position of the Business-Type Activities, the General
Fund, the major Sales and Road Special Revenue Fund, the major Integrated Waste Enterprise Fund, the major
Water Enterprise Fund, and the major Sewer Enterprise Fund of the City as of June 30, 2016, and the respective
changes in financial position, and where applicable, cash flows thereof for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Emphasis of Matters
Going Concern
The accompanying financial statements have been prepared assuming the City will continue as a going concern. As
discussed in Note 2 to the basic financial statements, the City filed a case on August 1, 2012, seeking bankruptcy
protection and adjustment of its liabilities under Chapter 9 of the United States Bankruptcy Code. These conditions
raise substantial doubt about its ability to continue as going concern. Management’s plans regarding those matters
also are described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Our opinion is not modified with respect to this matter.
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Packet Pg. 274 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
To the Honorable Mayor and Members of the City Council
of the City of San Bernardino
San Bernardino, California
Page 4
4
Discontinuation of Integrated Waste Operations
Effective April 1, 2016, the City discontinued certain services provided through its Integrated Waste enterprise
fund by approving a ten-year exclusive franchise agreement with a third-party contractor as described in Note 21.
Our opinion is not modified with respect to this matter.
Annexation of San Bernardino City Fire Department
The San Bernardino County Fire Protection District (SBCFPD) annexed the City’s Fire Department operations
effective July 1, 2016 as described in Note 22. On June 30, 2016, the City transferred assets and liabilities
comprising its fire service operation to the SBCFPD for the purpose of regionalization of fire services. Our opinion
is not modified with respect to this matter.
Change in CalPERS Discount Rate
As discussed in Note 25, on December 21, 2016, the CalPERS Board of Administration approved lowering the
CalPERS discount rate assumption, the long-term rate of return, from 7.50 percent to 7.00 percent over the next
three years. Lowering the discount rate means plans will see increases in normal costs and the accrued liabilities,
which will result in higher required contributions. The actual impact cannot be determined at this time, but is
expected to be significant. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Fund Budgetary
Comparison Schedules, Schedule of Funding Progress for Other Postemployment Benefits, Schedule of Changes in
the Net Pension Liability and Related Ratios, Schedule of Proportionate Share of the Net Pension Liability and
Related Ratios, and Schedule of Contributions, as listed in the foregoing table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial statements,
is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the Required Supplementary Information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted
in the United States of America require to be presented to supplement the basic financial statements. Such missing
information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial
statements is not affected by this missing information.
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Packet Pg. 275 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
To the Honorable Mayor and Members of the City Council
of the City of San Bernardino
San Bernardino, California
Page 5
5
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City’s basic financial statements. The Combining Nonmajor Fund Financial Statements are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
The Combining Nonmajor Fund Financial Statements on pages 151 through 172 are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the Combining Nonmajor
Fund Financial Statements are fairly stated in all material respects in relation to the basic financial statements as a
whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2016, on our
consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report
is an integral part of an audit performed in accordance with Government Auditing Standards in considering the
City’s internal control over financial reporting and compliance.
Santa Ana, California
March 30, 2017
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BASIC FINANCIAL STATEMENTS
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Packet Pg. 279 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
GOVERNMENT-WIDE FINANCIAL STATEMENTS
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Packet Pg. 280 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments 94,970,953$ 43,526,199$ 138,497,152$
Cash and investments with fiscal agents 1,270,317 - 1,270,317
Internal balances (291,208) 291,208 -
Receivables:
Accounts 4,282,670 7,536,590 11,819,260
Interest 133,782 83,581 217,363
Special assessments 87,357 - 87,357
Due from other governments 17,549,125 322,875 17,872,000
Inventory 182,173 1,794,883 1,977,056
Prepaid items 560,317 729,891 1,290,208
Total current assets 118,745,486 54,285,227 173,030,713
Noncurrent assets:
Notes receivable 27,600,821 - 27,600,821
Prepaid expenses - 729,664 729,664
Restricted cash - 7,814,086 7,814,086
Restricted investments - Consent Decree - 22,223,052 22,223,052
Restricted - other assets - 28,293,883 28,293,883
Property held for resale 34,585,347 - 34,585,347
Investment in joint ventures - 21,835,577 21,835,577
Non-depreciable capital assets 123,068,437 38,149,391 161,217,828
Depreciable capital assets, net 236,826,985 218,089,344 454,916,329
Intangible assets, being amortized, net 2,725,399 - 2,725,399
Total noncurrent assets 424,806,989 337,134,997 761,941,986
Total assets 543,552,475 391,420,224 934,972,699
DEFERRED OUTFLOWS OF RESOURCES
Pension related deferred outflows of resources 20,033,390 3,607,951 23,641,341
Total deferred outflows of resources 20,033,390 3,607,951 23,641,341
Primary Government
City of San Bernardino
June 30, 2016
Statement of Net Position
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 281 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental Business-Type
Activities Activities Total
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 11,929,630$ 4,025,046$ 15,954,676$
Payroll and related liabilities 1,346,137 1,291,854 2,637,991
Interest payable 8,979,115 226,271 9,205,386
Retentions payable 223,372 - 223,372
Due to other governments 427,902 - 427,902
Unearned revenue 8,193,215 - 8,193,215
Deposits payable 514,621 488,587 1,003,208
Compensated absences - due within one year 2,379,134 985,824 3,364,958
Claims payable - due within one year 7,196,407 - 7,196,407
Long-term debt - due within one year 56,556,901 2,113,782 58,670,683
Total current liabilities 97,746,434 9,131,364 106,877,798
Noncurrent liabilities:
Deposits payable - 3,039,610 3,039,610
Unearned revenue - Consent Decree - 50,516,936 50,516,936
Due to Successor Agency 2,232,925 - 2,232,925
Aggregate net pension liability 262,889,812 44,917,863 307,807,675
Net OPEB obligation 29,753,601 1,179,090 30,932,691
Landfill closure liability - 6,929,000 6,929,000
PARS settlement - due in more one year 580,000 - 580,000
Compensated absences - due in more than one year 5,551,312 313,156 5,864,468
Claims payable - due in more than one year 37,021,055 1,544,506 38,565,561
Long-term debt - due in more than one year 18,386,240 18,454,880 36,841,120
Total noncurrent liabilities 356,414,945 126,895,041 483,309,986
Total liabilities 454,161,379 136,026,405 590,187,784
DEFERRED INFLOWS OF RESOURCES
Pension related deferred inflows of resources 24,769,639 4,100,765 28,870,404
Total deferred inflows of resources 24,769,639 4,100,765 28,870,404
NET POSITION
Net investment in capital assets 346,538,460 235,670,073 582,208,533
Restricted:
Public safety 1,978,552 - 1,978,552
Streets and capital projects 47,884,075 - 47,884,075
Culture and recreation 757,883 - 757,883
Community development 61,027,851 - 61,027,851
Community service 985,064 - 985,064
Debt service 14,083,671 - 14,083,671
Capital related fees - 58,331,021 58,331,021
Total restricted 126,717,096 58,331,021 185,048,117
Unrestricted (deficit)(388,600,709) (39,100,089) (427,700,798)
Total net position 84,654,847$ 254,901,005$ 339,555,852$
Primary Government
City of San Bernardino
Statement of Net Position (Continued)
June 30, 2016
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 282 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Operating Capital Total
Charges for Grants and Grants and Program
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities:
General government 29,434,611$ 6,877,634$ 1,517,603$ -$ 8,395,237$
Public safety 85,867,627 5,759,696 3,061,374 - 8,821,070
Streets 32,928,851 12,388,167 114,052 9,031,491 21,533,710
Culture and recreation 7,589,992 2,785,816 - - 2,785,816
Community development 4,443,029 5,404,887 5,098,429 - 10,503,316
Community service 3,261,649 614,304 2,074,084 - 2,688,388
Interest on long-term debt 3,713,051 - - - -
Total governmental activities 167,238,810 33,830,504 11,865,542 9,031,491 54,727,537
Business-type activities:
Integrated Waste 15,323,676 19,547,672 - - 19,547,672
Water 34,941,060 29,388,782 1,696,219 2,812,192 33,897,193
Sewer 20,015,296 25,030,569 - 1,459,133 26,489,702
Total business-type activities 70,280,032 73,967,023 1,696,219 4,271,325 79,934,567
Total primary government 237,518,842$ 107,797,527$ 13,561,761$ 13,302,816$ 134,662,104$
Program Revenues
Statement of Activities and Changes in Net Position
City of San Bernardino
For the Year Ended June 30, 2016
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 283 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental Business-type
Functions/Programs Activities Activities Total
Primary government:
Governmental activities:
General government (21,039,374)$ -$ (21,039,374)$
Public safety (77,046,557) - (77,046,557)
Streets (11,395,141) - (11,395,141)
Culture and recreation (4,804,176) - (4,804,176)
Community development 6,060,287 - 6,060,287
Community service (573,261) - (573,261)
Interest on long-term debt (3,713,051) - (3,713,051)
Total governmental activities (112,511,273) - (112,511,273)
Business-type activities:
Integrated Waste - 4,223,996 4,223,996
Water - (1,043,867) (1,043,867)
Sewer - 6,474,406 6,474,406
Total business-type activities - 9,654,535 9,654,535
Total primary government (112,511,273) 9,654,535 (102,856,738)
General revenues:
Taxes:
Property taxes 41,344,972 - 41,344,972
Sales taxes 36,680,419 - 36,680,419
Franchise taxes 4,925,012 - 4,925,012
Utilities user taxes 23,986,813 - 23,986,813
Transient occupancy taxes 4,327,091 - 4,327,091
Other taxes 8,184,283 - 8,184,283
Total taxes 119,448,590 - 119,448,590
Investment earnings 1,613,925 875,707 2,489,632
Loss on disposal of assets (1,130,211) - (1,130,211)
Miscellaneous 4,157,249 2,072,951 6,230,200
Subtotal 4,640,963 2,948,658 7,589,621
Transfers
Intragovernment 14,168,866 (14,168,866) -
Total transfers 14,168,866 (14,168,866) -
Total general revenues and transfers 138,258,419 (11,220,208) 127,038,211
Special items:
Annexation of City Fire Department by County (Note 22) (5,010,868) - (5,010,868)
Discontinuance of Solid Waste Operations (Note 21) (10,069,000) 20,839,506 10,770,506
Total special items (15,079,868) 20,839,506 5,759,638
Changes in net position 10,667,278 19,273,833 29,941,111
Net Position - beginning of year 73,987,569 235,627,172 309,614,741
Net Position - end of year 84,654,847$ 254,901,005$ 339,555,852$
City of San Bernardino
Statement of Activities and Changes in Net Position (Continued)
For the Year Ended June 30, 2016
Primary Government
and Changes in Net Position
Net (Expense) Revenue
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 285 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
FUND FINANCIAL STATEMENTS
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Packet Pg. 287 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
General Fund – This is the primary operating fund of the City. It is used to account for all revenues and expenditures
that are not required to be accounted for in another fund.
Federal and State Grants Fund - This fund is used to report various grants awarded to the City by Federal, State, and
local governments not otherwise accounted for in the General Fund or Capital Projects funds. A detailed report by
program is available under a separate report meeting the criteria of Title 2 U.S.Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , for all federal
grants received by the City.
Low and Moderate Income Housing Fund - This fund is used for the continued maintenance and operations of low
and moderate income housing project activities of the former redevelopment agency. This fund was established on
February 1, 2012, when the City elected to become the Housing Successor to the housing related activities of the former
redevelopment agency.
Sales and Road Fund - This fund is used to account for the local street improvements as provided for by the San
Bernardino County Measure I Sales Tax.
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Packet Pg. 288 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Low and
Moderate
Federal and Income Sales and
General State Grants Housing Road
Fund Fund Fund Fund
ASSETS
Cash and investments 33,810,787$ -$ 1,940,998$ 7,100,168$
Receivables:
Accounts 3,664,381 242,387 215 -
Interest 54,703 4,197 2,487 19,763
Notes - 3,767,977 23,832,844 -
Special assessments - - - -
Due from other governments 11,265,332 3,390,568 1,572 2,250,069
Prepaids 516,258 44,059 - -
Due from other funds 625,207 - - -
Advances to other funds - - 42,252 -
Property held for resale - 16,260,782 18,324,565 -
Restricted cash and investments held by fiscal agents 1,270,317 - - -
Total assets 51,206,985$ 23,709,970$ 44,144,933$ 9,370,000$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 5,299,576$ 1,418,760$ -$ 1,133,526$
Accrued liabilities 980,279 - - -
Payroll and related liabilities 1,297,462 30,631 - -
Retentions payable - 35,658 - 110,991
Due to other governments 427,902 - - -
Due to other funds 1,000,899 601,140 - -
Deposits payable 471,852 - - -
Unearned revenue 4,875,000 3,318,215 - -
Advances from other funds - - - -
Due to Successor Agency 2,232,925 - - -
Total liabilities 16,585,895 5,404,404 - 1,244,517
Deferred inflows of resources:
Unavailable revenues 209,411 - - -
Total deferred inflows of resources 209,411 - - -
Fund Balances:
Nonspendable 516,258 44,059 - -
Restricted 1,270,317 18,261,507 44,144,933 8,125,483
Committed 53,451 - - -
Unassigned 32,571,653 - - -
Total fund balances 34,411,679 18,305,566 44,144,933 8,125,483
Total liabilities, deferred inflows
of resources and fund balances 51,206,985$ 23,709,970$ 44,144,933$ 9,370,000$
(Continued)
Major Funds
City of San Bernardino
June 30, 2016
Governmental Funds
Balance Sheet
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 289 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Other Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments 44,544,561$ 87,396,514$
Receivables:
Accounts 33,537 3,940,520
Interest 52,632 133,782
Notes - 27,600,821
Special assessments 87,357 87,357
Due from other governments 637,084 17,544,625
Prepaids - 560,317
Due from other funds 721,511 1,346,718
Advances to other funds 52,948 95,200
Property held for resale - 34,585,347
Restricted cash and investments held by fiscal agents - 1,270,317
Total assets 46,129,630$ 174,561,518$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 2,368,461$ 10,220,323$
Accrued liabilities - 980,279
Payroll and related liabilities 13,491 1,341,584
Retentions payable 76,723 223,372
Due to other governments - 427,902
Due to other funds - 1,602,039
Deposits payable 42,769 514,621
Unearned revenue - 8,193,215
Advances from other funds 95,200 95,200
Due to Successor Agency - 2,232,925
Total liabilities 2,596,644 25,831,460
Deferred inflows of resources:
Unavailable revenues 87,357 296,768
Total deferred inflows of resources 87,357 296,768
Fund Balances:
Nonspendable - 560,317
Restricted 43,533,042 115,335,282
Committed - 53,451
Unassigned (87,413) 32,484,240
Total fund balances 43,445,629 148,433,290
Total liabilities, deferred inflows
of resources and fund balances 46,129,630$ 174,561,518$
(Concluded)
June 30, 2016
Governmental Funds
Balance Sheet (Continued)
City of San Bernardino
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 290 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
This page intentionally left blank.
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Packet Pg. 291 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Total Fund Balances - Total Governmental Funds 148,433,290$
Amounts reported for governmental activities in the Statement of Net Position were different because:
Capital assets used in governmental activities were not financial resources and therefore were not reported in governmental
funds.
Government-Wide Financial Statements 359,895,422
Less: Internal Service Funds' capital assets (3,221,017)
Total capital assets adjustment 356,674,405
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a
liability in Governmental Funds Balance Sheet.(8,979,115)
Long-term liabilities were not due and payable in the current period and therefore were not reported in the governmental funds.
Amount reported in Government-Wide Statement of Net Position:
PARS Settlement - due in more than one year (580,000)
Compensated absences - due within one year (2,379,134)
Compensated absences - due in more than one year (5,551,312)
Claims payable - due within one year (7,196,407)
Claims payable - due in more than one year (37,021,055)
Long-term debt - due within one year (56,556,901)
Long-term debt - due in more than one year (18,386,240)
Net OPEB obligation (29,753,601)
Total reported in Government-Wide Statement of Net Position (157,424,650)
Less: Amount reported in Internal Service Funds
Compensated absences - due within one year 44,696
Compensated absences - due in more than one year 104,291
Capital leases payable - due within one year 575,529
Capital leases payable - due in more than one year 1,828,319
Claims payable - due within one year 7,196,407
Claims payable - due in more than one year 37,021,055
Total reported in Internal Service Funds 46,770,297
Net long-term liabilities (110,654,353)
Pension contributions made during the year after the measurement date are reported as expenditures in governmental funds and
as deferred outflow of resources in the government-wide financial statements. This amount did not include the pension
contributions made during the year after the measurement date for Internal Service Funds in the amount of $597,753.19,435,637
Net pension liability is not due and payable in the current period and therefore is not reported in the governmental funds. This
amount did not include the aggregate net pension liability for Internal Service Funds in the amount of $7,441,840.(255,447,972)
Difference between projected and actual earnings on pension plan investments are reported in the government-wide statements.
This amount did not include the investment earnings greater than expected earnings for Internal Service Funds in the amount
of $212,559.
Projected earnings over actual earnings (6,572,980)
Differences between actual and expected experience are reported in the government-wide statements. This amount did not
include the positive differences between actual and expected experience for Internal Service Funds in the amount of $164,153.
Positive differences between actual and expected experience (5,785,172)
Changes in assumptions are reported in the government-wide statements. This amount did not include the positive change in
assumption for Internal Service Funds in the amount of $311,727.
Positive change in assumption (11,732,087)
Deferred inflows and outflows of resources are not available for current period and, therefore, are deferred in the governmental
funds or not recorded in the governmental funds:
Unavailable revenues 296,768
Internal service funds were used by management to charge the costs of certain activities to individual funds. The assets and
liabilities of the internal service funds were included in governmental activities in the Government-Wide Statement of Net
Position.(43,738,973)
Net Position of Governmental Activities 81,929,448$
City of San Bernardino
June 30, 2016
to the Government-Wide Statement of Net Position
Reconciliation of the Governmental Funds Balance Sheet
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 292 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Low and
Moderate
Federal and Income Sales and
General State Grants Housing Road
Fund Fund Fund Fund
REVENUES:
Taxes 110,387,777$ -$ -$ 3,443,540$
Licenses and permits 11,054,037 - 15,467 -
Impact fees - - - -
Fines and forfeitures 2,297,216 - - -
Use of money and property 542,211 49,286 244,743 124,818
Lease revenue 543,483 26,100 - -
Intergovernmental 1,519,503 8,628,506 - 259
Charges for services 6,109,240 - - -
Other revenues 7,502,289 2,137,508 3,721 -
Total revenues 139,955,756 10,841,400 263,931 3,568,617
EXPENDITURES:
Current:
General government 22,241,104 4,963,563 2,509,035 -
Public safety 86,804,920 2,384,441 - -
Streets 5,251,525 110,547 - 3,652,857
Culture and recreation 6,350,319 1,199,269 - -
Community development 3,915,354 389,917 196,346 -
Community service 1,576,028 1,628,969 - -
Debt service:
Principal 11,774,879 594,760 100,000 9,858
Interest and fiscal charges 593,410 350,672 - -
Total expenditures 138,507,539 11,622,138 2,805,381 3,662,715
REVENUES OVER
(UNDER) EXPENDITURES 1,448,217 (780,738) (2,541,450) (94,098)
OTHER FINANCING SOURCES (USES):
Transfers in 15,044,310 - - -
Transfers out (109,045) - - -
Total other financing sources (uses)14,935,265 - - -
CHANGES IN FUND BALANCES 16,383,482 (780,738) (2,541,450) (94,098)
FUND BALANCES:
Beginning of year 18,028,197 19,086,304 46,686,383 8,219,581
End of year 34,411,679$ 18,305,566$ 44,144,933$ 8,125,483$
(Continued)
Major Funds
City of San Bernardino
For the Year Ended June 30, 2016
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 293 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Other Total
Governmental Governmental
Funds Funds
REVENUES:
Taxes 2,642,791$ 116,474,108$
Licenses and permits 446,479 11,515,983
Impact fees 2,409,364 2,409,364
Fines and forfeitures 345,782 2,642,998
Use of money and property 567,100 1,528,158
Lease revenue - 569,583
Intergovernmental 6,524,639 16,672,907
Charges for services 7,014,828 13,124,068
Other revenues 199,843 9,843,361
Total revenues 20,150,826 174,780,530
EXPENDITURES:
Current:
General government 310,203 30,023,905
Public safety 1,805,538 90,994,899
Streets 10,994,161 20,009,090
Culture and recreation - 7,549,588
Community development - 4,501,617
Community service - 3,204,997
Debt service:
Principal 291,913 12,771,410
Interest and fiscal charges 65,132 1,009,214
Total expenditures 13,466,947 170,064,720
REVENUES OVER
(UNDER) EXPENDITURES 6,683,879 4,715,810
OTHER FINANCING SOURCES (USES):
Transfers in 109,045 15,153,355
Transfers out (914,766) (1,023,811)
Total other financing sources (uses)(805,721) 14,129,544
CHANGES IN FUND BALANCES 5,878,158 18,845,354
FUND BALANCES:
Beginning of year 37,567,471 129,587,936
End of year 43,445,629$ 148,433,290$
(Concluded)
City of San Bernardino
For the Year Ended June 30, 2016
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 294 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Net Change in Fund Balances - Total Governmental Funds 18,845,354$
Amounts reported for governmental activities in the Statement of Activities were different because:
Governmental funds reported capital asset acquisitions as expenditures. However, in the Government-Wide Statement of
Activities and Changes in Net Position, the cost of those assets was allocated over their estimated useful lives as
depreciation expense. This was the amount of capital assets recorded in the current period. This amount did not include
acquisitions for Internal Service Funds in the amount of $7,575. 3,658,379
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities and Changes in Net
Position, but they did not require the use of current financial resources.Therefore, depreciation expense was not reported as
expenditures in the Governmental Funds. This amount did not include the depreciation or amortization expense for Internal
Service Funds in the amounts of $155,764 and $594,633, respectively. (17,341,870)
The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, and donations) decreased
Net Position.(1,128,387)
Deletions of capital assets due to the annexation of the San Bernardino City Fire Department to the San Bernardino County
Fire Protection district did not provide current financial resources to the governmental funds but was recorded as a special
item on the Government-Wide Statement of Activities.(5,010,868)
The General Fund assuming the debt of the waste fund due to the discontinuance of waste operations did not require current
financial resources of the governmental funds but was recorded as a special item on the Government-Wide Statement of
Activities.(10,069,000)
The General Fund providing a capital contribution to close out the Utility Fund did not require current financial resources of
the governmental funds.(422,931)
Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term
liabilities in the Government-Wide Statement of Net Position.
Principal payment of long-term debt 12,771,410
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are
not reported as expenditures in governmental funds.
Changes in accreted interest (683,732)
Changes in compensated absences 1,695,638
Changes in net OPEB obligation 247,000
Changes in net pension liability reported in the Statement of Activities does not require the use of current financial
resources and, therefore, is not reported as an expenditure in governmental funds (Note 10). (20,350,536)
The net effect of various miscellaneous transactions involving pension plans (i.e. deferred inflow/outflow amortization,
contributions after measurement date) increased Net Position. 29,772,772
Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes in Net
Position, but it did not require the use of current financial resources. This amount represented the change in accrued interest
from prior year.(1,934,468)
Unavailable revenues were reported as deferred inflows of resources in the Governmental Funds but were reported as
revenues in the Government-Wide Statement of Statement of Activities. (570,145)
Internal service funds were used by management to charge the costs of certain activities to individual funds. The net
revenue of internal service funds was reported with governmental activities.1,188,662
Change in Net Position of Governmental Activities 10,667,278$
City of San Bernardino
For the Year Ended June 30, 2016
in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position
Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 295 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
PROPRIETARY FUND
FINANCIAL STATEMENTS
Integrated Waste Fund – This fund is used to account for the provision of refuse collection to the residential,
commercial, and industrial segments of the City. All activities necessary to provide such services are accounted for in
this fund, including, but not limited to, administration, operations, maintenance, financing and related debt service, and
billing and collection. Effective April 1, 2016, the City provides refuse services through an outside contractor.
Water Fund – This fund is used to account for the provision of water services to the residential, commercial, and
industrial segments of the City. All activities necessary to provide such services are accounted for in this fund, including,
but not limited to, administration, operations, maintenance, financing and related debt service, and billing and collection.
Sewer Fund – This fund is used to account for the provision of wastewater collection and treatment services to the
residential, commercial, and industrial segments of the City. All activities necessary to provide such services are
accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related
debt service, and billing and collection.
25
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Packet Pg. 296 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental
Activities
Integrated Internal
Waste Water Sewer Total Service Funds
ASSETS
Current assets:
Cash and cash equivalents 9,762,927$ 6,410,504$ 2,560,846$ 18,734,277$ 7,574,439$
Investments - 4,075,961 20,715,961 24,791,922 -
Accounts receivable 260,602 4,136,985 3,139,003 7,536,590 342,150
Interest receivable 12,691 11,494 59,396 83,581 -
Due from other governments - - 322,875 322,875 4,500
Due from other funds 697,709 877,521 153,307 1,728,537 -
Inventories - 1,794,883 - 1,794,883 182,173
Current portion of prepaid items - 729,891 - 729,891 -
Total current assets 10,733,929 18,037,239 26,951,388 55,722,556 8,103,262
Noncurrent assets:
Prepaid items - - 729,664 729,664 -
Restricted assets:
Cash and cash equivalents - capital-related fees - - 7,814,086 7,814,086 -
Investments - Consent Decree - 22,223,052 - 22,223,052 -
Interest receivable - Consent Decree - 87,343 - 87,343 -
Prepaid insurance - Consent Decree - 28,206,540 - 28,206,540 -
Investments in joint ventures - - 21,835,577 21,835,577 -
Capital assets:
Non-depreciable assets - 9,586,423 28,562,968 38,149,391 -
Depreciable assets, net of accumulated depreciation - 179,513,237 38,576,107 218,089,344 3,221,017
Total capital assets, net - 189,099,660 67,139,075 256,238,735 3,221,017
Total noncurrent assets - 239,616,595 97,518,402 337,134,997 3,221,017
Total assets 10,733,929 257,653,834 124,469,790 392,857,553 11,324,279
DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources - 2,056,532 1,551,419 3,607,951 597,753
Total deferred outflows of resources - 2,056,532 1,551,419 3,607,951 597,753
City of San Bernardino
June 30, 2016
Proprietary Funds
Statement of Net Position
Major Funds
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 297 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental
Activities
Integrated Internal
Waste Water Sewer Total Service Funds
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable and accrued liabilities 205,937 1,448,521 2,370,588 4,025,046 729,028
Payroll and related liabilities 5,836 760,319 525,699 1,291,854 4,553
Due to other funds - 715,818 721,511 1,437,329 35,887
Interest payable - 222,800 3,471 226,271 -
Deposits payable - 488,587 - 488,587 -
Compensated absences - due within one year - 723,569 262,255 985,824 44,696
Claims payable - due within one year - - - - 7,196,407
Long term debt - due within one year - 1,813,782 300,000 2,113,782 575,529
Total current liabilities 211,773 6,173,396 4,183,524 10,568,693 8,586,100
Noncurrent liabilities:
Deposits payable - 3,039,610 - 3,039,610 -
Unearned revenue - Consent Decree - 50,516,936 - 50,516,936 -
Aggregate net pension liability - 25,603,182 19,314,681 44,917,863 7,441,840
Net OPEB obligation - due in more than one year - 932,476 246,614 1,179,090 -
Landfill closure liability - due in more than one year 6,929,000 - - 6,929,000 -
Compensated absences - due in more than one year 66,700 180,892 65,564 313,156 104,291
Claims payable - due in more than one year - 1,298,326 246,180 1,544,506 37,021,055
Long term debt - due in more than one year - 17,554,880 900,000 18,454,880 1,828,319
Total noncurrent liabilities 6,995,700 99,126,302 20,773,039 126,895,041 46,395,505
Total liabilities 7,207,473 105,299,698 24,956,563 137,463,734 54,981,605
DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources - 2,337,436 1,763,329 4,100,765 679,400
Total deferred inflows of resources - 2,337,436 1,763,329 4,100,765 679,400
Net Position (Deficit):
Net investment in capital assets - 169,730,998 65,939,075 235,670,073 817,169
Restricted - 50,516,935 7,814,086 58,331,021 -
Unrestricted (deficit) 3,526,456 (68,174,701) 25,548,156 (39,100,089) (44,556,142)
Total net position (deficit)3,526,456$ 152,073,232$ 99,301,317$ 254,901,005$ (43,738,973)$
Major Funds
City of San Bernardino
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2016
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 298 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental
Activities
Integrated Internal
Waste Water Sewer Total Service Funds
OPERATING REVENUES:
Charges for services 19,547,672$ 29,388,782$ 25,030,569$ 73,967,023$ 19,354,154$
Other operating revenues - 613,089 380,171 993,260 -
Total operating revenues 19,547,672 30,001,871 25,410,740 74,960,283 19,354,154
OPERATING EXPENSES:
Cost of sales and services 10,233,851 - - 10,233,851 10,850,125
Administration and customer service 3,987,953 6,815,967 2,434,748 13,238,668 -
Utility administration - 600,025 706,430 1,306,455 -
Engineering, operations, and distribution administration - 5,897,093 1,158,630 7,055,723 -
Plant operations - 6,907,732 9,163,720 16,071,452 -
Maintenance - 1,978,534 2,874,352 4,852,886 -
Environmental control - - 636,563 636,563 -
Distribution - 4,499,129 - 4,499,129 -
Engineering - 2,326,551 464,554 2,791,105 -
Claims expense - - - - 7,441,607
Amortization - - - - 594,633
Depreciation 1,033,023 5,809,331 1,292,426 8,134,780 155,764
Total operating expenses 15,254,827 34,834,362 18,731,423 68,820,612 19,042,129
OPERATING INCOME (LOSS)4,292,845 (4,832,491) 6,679,317 6,139,671 312,025
NONOPERATING REVENUES (EXPENSES):
Interest income 153,685 63,566 658,456 875,707 -
Rental income - 134,845 41,498 176,343 -
Noncapital grants - 1,696,219 - 1,696,219 -
Interest expense and fiscal charges (68,849) (106,698) (167,795) (343,342) (85,637)
Gain (loss) on joint venture - RIX - - (1,116,078) (1,116,078) -
Miscellaneous income 48,250 - - 48,250 500,021
Other - 495,298 359,800 855,098 -
Total nonoperating revenues (expenses)133,086 2,283,230 (224,119) 2,192,197 414,384
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 4,425,931 (2,549,261) 6,455,198 8,331,868 726,409
CAPITAL CONTRIBUTIONS AND TRANSFERS:
Capital contributions - 2,812,192 1,459,133 4,271,325 422,931
Transfers in - - - - 267,503
Transfers out (14,168,866) - - (14,168,866) (228,181)
Total contributions and transfers (14,168,866) 2,812,192 1,459,133 (9,897,541) 462,253
SPECIAL ITEMS:
Discontinuance of Solid Waste Operations (Note 21) 20,839,506 - - 20,839,506 -
Total special items 20,839,506 - - 20,839,506 -
CHANGES IN NET POSITION 11,096,571 262,931 7,914,331 19,273,833 1,188,662
NET POSITION:
Beginning of year (7,570,115) 151,810,301 91,386,986 235,627,172 (44,927,635)
End of year 3,526,456$ 152,073,232$ 99,301,317$ 254,901,005$ (43,738,973)$
City of San Bernardino
For the Year Ended June 30, 2016
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Net Position
Major Funds
See accompanying Notes to the Basic Financial Statements.
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Packet Pg. 299 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental
Activities
Integrated Internal
Waste Water Sewer Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers 19,521,999$ 26,021,310$ 24,422,914$ 69,966,223$ -$
Cash received from user departments - - - - 18,425,142
Cash received from (payments to) other funds 1,825,649 - - 1,825,649 -
Rental income - 134,845 41,498 176,343 -
Cash payments to suppliers for goods and services (22,552,168) (18,728,717) (9,950,885) (51,231,770) (10,872,484)
Cash payments to employees for services (3,987,953) (10,081,714) (6,329,020) (20,398,687) -
Cash payments for claims and insurance - - - - (7,333,320)
Cash paid to RIX joint venture for operations - - (2,368,133) (2,368,133) -
Cash received from (paid for) other activities 48,250 515,764 359,800 923,814 495,521
Net cash provided by (used in) operating activities (5,144,223) (2,138,512) 6,176,174 (1,106,561) 714,859
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition of capital assets - (6,849,742) (4,285,452) (11,135,194) (275,079)
Proceeds from disposal of assets 1,670,662 - - 1,670,662 -
Drawdown of CIEDB loan - - 1,200,000 1,200,000 -
Principal paid on capital-related debt (2,652,586) (1,747,865) (8,084,710) (12,485,161) (559,364)
Interest paid on capital-related debt (86,339) (125,267) (213,714) (425,320) (85,637)
Capital grant proceeds - 10,000 - 10,000 -
Charges to property owners for capital projects - 2,802,192 1,459,133 4,261,325 -
Net cash (used in) capital and related
financing activities (1,068,263) (5,910,682) (9,924,743) (16,903,688) (920,080)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Cash paid to RIX joint venture - - (641,578) (641,578) -
Consent Decree insurance drawdowns - 1,696,219 - 1,696,219 -
Transfers in - - - - 267,503
Transfers (out) (14,168,866) - - (14,168,866) (228,181)
Net cash provided by (used in) noncapital financing activities (14,168,866) 1,696,219 (641,578) (13,114,225) 39,322
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and maturities of investments - 17,677,660 20,350,561 38,028,221 -
Purchase of investments - (18,234,142) (13,953,642) (32,187,784) -
Investment income 157,529 41,907 735,111 934,547 -
Net cash provided (used) by investing activities 157,529 (514,575) 7,132,030 6,774,984 -
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Discontinuance of Solid Waste Operations (Note 21) 20,839,506 - - 20,839,506 -
Net cash provided by discontinued operations 20,839,506 - - 20,839,506 -
Net change in cash and cash equivalents 615,683 (6,867,550) 2,741,883 (3,509,984) (165,899)
CASH AND CASH EQUIVALENTS:
Beginning of year 9,147,244 13,278,054 7,633,049 30,058,347 7,740,338
End of year 9,762,927$ 6,410,504$ 10,374,932$ 26,548,363$ 7,574,439$
RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and cash equivalents 9,762,927$ 6,410,504$ 2,560,846$ 18,734,277$ 7,574,439$
Restricted cash and cash equivalents - - 7,814,086 7,814,086 -
Total cash and cash equivalents 9,762,927$ 6,410,504$ 10,374,932$ 26,548,363$ 7,574,439$
City of San Bernardino
For the Year Ended June 30, 2016
Proprietary Funds
Statement of Cash Flows
Major Funds
See accompanying Notes to the Basic Financial Statements.
29
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Packet Pg. 300 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Governmental
Activities
Integrated Internal
Waste Water Sewer Total Service Funds
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) 4,292,845$ (4,832,491)$ 6,679,317$ 6,139,671$ 312,025$
Adjustments to reconcile operating income (loss) to net cash
provided by (used in) operating activities:
Depreciation 1,033,023 5,809,331 1,292,426 8,134,780 155,764
Amortization - - - - 594,633
Rental income - 134,845 41,498 176,343 -
Other non-operating revenues (expenses) 48,250 515,814 359,800 923,864 500,021
Changes in operating assets and liabilities:
Accounts receivable (25,673) 1,258,900 (724,177) 509,050 (340,745)
Due from other governments - 433,335 (158,207) 275,128 (4,500)
Inventory - 196,430 - 196,430 84,994
Prepaids - (431,980) 91,576 (340,404) -
Due from other funds 1,825,649 1,271,567 (105,442) 2,991,774 -
Deferred pension contributions 520,958 (358,411) (270,380) (107,833) (211,178)
Accounts payable and accrued liabilities (1,838,278) (71,715) 148,601 (1,761,392) (1,080,576)
Accrued payroll and related liabilities (18,103) (100,237) 54,913 (63,427) 4,265
Due to other governments - - - - -
Due to other funds - (5,093,551) (691,178) (5,784,729) (128,313)
Deposits payable - (329,245) - (329,245) -
Unearned revenue - - - - (459,954)
Aggregate net pension liability (7,209,934) 2,271,715 1,713,750 (3,224,469) 2,091,745
Compensated absences (392,936) (37,428) 43,577 (386,787) (329,541)
Claims and judgments payable - 84,787 6,507 91,294 108,287
OPEB obligation (1,680,034) 303,581 80,288 (1,296,165) -
Investment earnings greater than
expected earnings (1,699,990) (3,163,759) (2,386,695) (7,250,444) (582,068)
Total adjustments (9,437,068) 2,693,979 (503,143) (7,246,232) 402,834
Net cash provided by (used in) operating activities (5,144,223)$ (2,138,512)$ 6,176,174$ (1,106,561)$ 714,859$
Major Funds
Statement of Cash Flows
Proprietary Funds (Continued)
For the Year Ended June 30, 2016
City of San Bernardino
See accompanying Notes to the Basic Financial Statements.
30
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Packet Pg. 301 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
FIDUCIARY FUND
FINANCIAL STATEMENTS
Agency Funds – These funds are used to account for money and property held by the City as trustee or custodian. Such
funds include Special Deposits, Cemetery Perpetual Care, San Bernardino Regional Water Resource Authority, and
Successor Agency to the San Bernardino Economic Development Agency Private Purpose Trust Fund – This fund
is used to account for monies received from the San Bernardino County Auditor-Controller for the repayment of the
enforceable obligations of the former San Bernardino Economic Development Agency. These funds are restricted for
the sole purpose of payment of items on an approved Recognized Payment Obligation Schedule (ROPS).
31
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Packet Pg. 303 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Successor Agency
To the Economic
Development
Agency
of San Bernardino
Agency Private-purpose
Funds Trust Fund
ASSETS
Cash and investments 4,418,860$ 15,945,851$
Cash and investments with fiscal agents - 25,681,024
Receivables:
Accounts 24 236,189
Interest - 13,810
Notes - 1,157,937
Due from other governments 86,481 -
Due from City - 2,232,925
Prepaids - 659,968
Property held for resale - 48,907,836
Capital assets:
Non-depreciable - 11,620,311
Depreciable, net - 6,985,662
Total assets 4,505,365$ 113,441,513
DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 281,700
Deferred loss on refunding of bonds 1,881,079
Total deferred outflows of resources 2,162,779
LIABILITIES
Accounts payable 142,511$ 544,856
Accrued liabilities - 4,536
Retentions payable - 144,032
Deposits payable 4,215,221 4,532
Interest payable - 1,382,749
Due to bondholders 147,633 -
Compensated absences - 94,562
Aggregate net pension liability - 4,483,755
Long-term debt - 113,077,909
Net OPEB obligation - 1,583,335
Total liabilities 4,505,365$ 121,320,266
DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 1,154,218
Total deferred inflows of resources 1,154,218
NET POSITION (DEFICIT)
Held in trust (6,870,192)
Total net position (deficit)(6,870,192)$
City of San Bernardino
June 30, 2016
Fiduciary Funds
Statement of Fiduciary Net Position
See accompanying Notes to the Basic Financial Statements.
33
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Packet Pg. 304 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Successor Agency
to the Economic
Development
Agency
of San Bernardino
Private-purpose
Trust Fund
ADDITIONS:
Property taxes 29,450,085$
Investment income 178,564
Lease revenue 748,820
Other revenues 271,509
Total additions 30,648,978
DEDUCTIONS:
Redevelopment 10,474,113
Debt service - interest 7,002,737
Depreciation and amortization 377,377
Total deductions 17,854,227
Changes in Net Position 12,794,751
NET POSITION:
Beginning of period (19,664,943)
End of period (6,870,192)$
City of San Bernardino
For the Year Ended June 30, 2016
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
See accompanying Notes to the Basic Financial Statements.
34
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35
NOTES TO THE BASIC FINANCIAL STATEMENTS
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Packet Pg. 307 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Index of Notes to the Basic Financial Statements
For the Year Ended June 30, 2016
37
NOTE DESCRIPTION PAGE
1 Summary of Significant Accounting Policies 39
2 Bankruptcy 55
3 Cash and Investments 61
4 Notes Receivables 67
5 Interfund Receivables, Payables, and Transfers 67
6 Property Held for Resale 67
7 Capital Assets 69
8 Long-Term Liabilities 72
9 Operating Leases 96
10 Compensated Absences 96
11 Claims and Judgments Payable 97
12 Fund Balance Classification 99
13 Net Position and Fund Balance Deficits 100
14 Net Investment in Capital Assets 100
15 Pension Plans 101
16 Settlement with PARS Employees 119
17 Other Post-Employment Benefits 119
18 Jointly Governed Organizations and Joint Ventures 125
19 Consent Decree 127
20 Landfill Closure Liability 127
21 Discontinuance of Solid Waste Operations 128
22 Annexation of San Bernardino City Fire Department to
San Bernardino County Fire Protection District
128
23 Commitments and Contingencies 129
24 Successor Agency Trust for Assets of Former Redevelopment Agency 129
25 Subsequent Events 131
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Packet Pg. 309 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements
For the Year Ended June 30, 2016
39
Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the City of San Bernardino, California (City) have been prepared in conformity
with Generally Accepted Accounting Principles of the United States of America (U.S. GAAP) as applied to
governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting
body for establishing governmental accounting and financial reporting standards in the United States. The more
significant of the City’s accounting policies are described below.
A. Financial Reporting Entity
The City was incorporated on April 13, 1854, as a Charter City. The City operates under a Mayor/Council/City
Manager form of government and provides the following services: public safety (police and fire), highways and
streets, health and social services, culture-recreation, public improvements, community development (planning,
building and zoning), public utilities (water, sewage and solid waste), and general administrative services.
The financial reporting entity consists of the primary government, the City, and its component units.
Component units are legally separate entities for which the elected officials of the primary government are
financially accountable. The City is considered to be financially accountable for an organization if the City
appoints a voting majority of that organization’s governing body and either the City is able to impose its will on
that organization or there is a potential for that organization to provide financial benefits to or impose specific
financial burdens on the City. The City is also considered to be financially accountable for an organization if
that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or
issue bonded debt without approval from the City). In certain cases, other organizations are included as
component units if the nature and significance of their relationship with the City are such that their exclusion
would cause the City’s financial statements to be misleading or incomplete.
Blended Component Units
Blended component units, although legally separate entities, are, in substance part of the City’s operation and
so data from these units are combined with data of the City. Discretely presents component units, on the other
hand, are reported in a separate column in the combined financial statements to emphasize that they are legally
separate from the government.
The City Council acts as the governing body and City’s management has operation responsibility of the
following organizations. As a result, these organizations are considered component units of the City and are
included within the financial statements of the City using the blended method. All component units have a June
30 year-end.
Affordable Housing Solutions of San Bernardino, Inc. (AHS)
On December 16, 2009, the Economic Development Agency (EDA) acquired the Global Mobile Home
Park Corporation, a not-for-profit corporation (501(c)(3)), from the Redevelopment Agency of the City of
Pomona for the redevelopment purposes of the EDA as authorized by Resolution 2009-16 of the
Community Development Commission of the City of San Bernardino on May 4, 2009, and approved on
May 5, 2009. The mayor and common council of the City of San Bernardino serve ex officio as the
chairperson and members of the Community Development Commission of the City of San Bernardino,
respectively. On September 23, 2009, the Corporation amended its Articles of Incorporation to rename the
Corporation the “Affordable Housing Solutions of San Bernardino Inc.” (AHS), which was endorsed and
filed in the office of the Secretary of State of the State of California on October 9, 2009. AHS is not
currently active and has no assets.
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Packet Pg. 310 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2016
40
Note 1 – Summary of Significant Accounting Policies (Continued)
A. Financial Reporting Entity (Continued)
Blended Component Units (Continued)
San Bernardino Joint Powers Financing Authority (Authority)
The San Bernardino Joint Powers Financing Authority (Authority) was established pursuant to a Joint
Exercise of Powers Agreement dated August 21, 1989, by and between the City and the EDA. The EDA
was dissolved during fiscal year 2012 and the Successor Agency to the San Bernardino EDA is now a
member of the JPFA along with the City. Please see the next paragraph for further details. The Authority
was created for the purpose of providing financing for redevelopment activities for the City, the EDA, or
other local agencies in the State of California, the acquisition, construction or installation by the Authority
of public capital improvements and/or the purchase by the Authority of public obligations within the
meaning of the Marks-Roos Act. The Authority is authorized pursuant to the Marks-Roos Act to borrow
money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the
purpose of making loans to, the City, the EDA, or such other local agencies to provide financing for
redevelopment activities of the City or the EDA. The Authority is governed by a board composed of the
City's elected officials. There are no separate financial statements issued for the Authority.
Discretely Presented Component Units
The City has no discretely presented component units.
B. Basis of Presentation, Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting
entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts
that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Fund
accounting segregates funds according to their intended purpose and is used to aid management in
demonstrating compliance with finance-related legal and contractual provisions. The minimum number of
funds is maintained in accordance with legal and managerial requirements.
Government-Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of
Activities and Changes in Net Position. These statements present summaries of governmental and business-
type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in
these statements.
These financial statements are presented on an “economic resources” measurement focus and the accrual basis
of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as
infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position.
The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues
are recognized in the period in which they are earned while expenses are recognized in the period in which the
liability is incurred. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred
outflows of resources, liabilities and deferred inflows of resources resulting from exchange and exchange-
like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets,
deferred outflows of resources, liabilities and deferred inflows of resources resulting from nonexchange
transactions are recognized in accordance with the requirements of GASB Statement No. 33.
12.b
Packet Pg. 311 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
41
Note 1 – Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation, Accounting and Measurement Focus (Continued)
Government-Wide Financial Statements (Continued)
Program revenues include charges for services, special assessments, and payments made by parties outside of
the reporting government's citizenry if that money is restricted to a particular program. Program revenues are
netted with program expenses in the statement of activities to present the net cost of each program. Program
revenues for the City are classified in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal
balances in the Statement of Net Position have been eliminated except those representing balances between the
governmental activities and the business-type activities, which are presented as internal balances and
eliminated in the total primary government column. In the Statement of Activities and Changes in Net
Position, internal service fund transactions have been eliminated; however, those transactions between
governmental and business-type activities have not been eliminated. The following interfund activities have
been eliminated:
Due to/from other funds
Advances to/from other funds
Transfers in/out
Government Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures
and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An
accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in
these statements to the Net Position presented in the Government-Wide Financial Statements. The City has
presented all major funds that met the applicable criteria.
All governmental funds are accounted for on a spending or "current financial resources" measurement focus
and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are
included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances
presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses)
in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting
period in which they become both measurable and available to finance expenditures of the current period.
Measurable means that the amounts can be estimated, or otherwise determined. Available means that the
amounts were collected during the reporting period or soon enough thereafter to be available to finance the
expenditures accrued for the reporting period. The City uses an availability period of 60 days for all revenues
except reimbursable grants, which use a six month availability period.
Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle in-lieu, transient occupancy taxes,
grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and
so have been recognized as revenues of the current fiscal period to the extent normally collected within the
availability period. Other revenue items are considered to be measurable and available when cash is received
by the government.
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City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
42
Note 1 – Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation, Accounting and Measurement Focus (Continued)
Government Fund Financial Statements (Continued)
Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund
financial statements. Exchange transactions are recognized as revenues in the period in which they are earned
(i.e., the related goods or services are provided). Locally imp osed derived tax revenues are recognized as
revenues in the period in which the underlying exchange transaction upon which they are based takes place.
Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If
the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the
revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary
non-exchange transactions have been recognized as revenues when all applicable eligibility requirements
have been met.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided
to explain the differences created by the integrated approach of GASB Statement No. 34.
The City reports the following major Governmental Funds:
General Fund – This is the primary operating fund of the City. It accounts for all activities of the
general government, except those required to be accounted for in another fund.
Federal and State Grants Fund – This fund is used to report various grants awarded to the City by
Federal, State, and local governments not otherwise accounted for in the General Fund or Capital
Projects funds. A detailed report by program is available under a separate report meeting the criteria of
Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards, for all federal grants received by the City.
Low and Moderate Income Housing Fund – This fund is used for resources that are restricted for the
continued maintenance and operations of low and moderate income housing project activities of the
former redevelopment agency. This fund was established on February 1, 2012, when the City elected to
become the Housing Successor to the housing related activities of the former redevelopment agency.
Sales and Road Fund – This fund is used to resources that are restricted for local street improvements
projects as provided for by San Bernardino County Measure I Sales Tax.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses
and Changes in Fund Net Position, and a Statement of Cash Flows for each major Proprietary Fund.
A separate column representing internal service funds is also presented in these statements. However, internal
service balances and activities have been combined with the governmental activities in the Government-Wide
Financial Statements. The City’s internal service funds include funds which provide services directly to other
City funds. These areas of service include unemployment insurance, workers' compensation, liability
insurance, motorpool, telephone support, information systems, utility, and central services.
12.b
Packet Pg. 313 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
43
Note 1 – Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation, Accounting and Measurement Focus (Continued)
Proprietary Fund Financial Statements (Continued)
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of
accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement
of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases
(revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are
recognized in the period in which they are earned while expenses are recognized in the period in which the
liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made
for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations
of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses
that are essential to the primary operations of the fund. All other expenses are reported as non-operating
expenses.
The City reports the following major proprietary funds:
Integrated Waste Fund – This fund is used to account for the provision of refuse collection to the
residential, commercial and industrial segments of the City. All activities necessary to provide such
services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, financing and related debt service, and billing and collection.
Water Fund – This fund is used to account for the provision of water services to the residential,
commercial and industrial segments of the City. All activities necessary to provide such services are
accounted for in this fund, including, but not limited to, administration, operations, maintenance,
financing and related debt service, and billing and collection.
Sewer Fund – This fund is used to account for the provision of wastewater collection and treatment to
residential, commercial and industrial segments of the City. All activities necessary to provide such
services are accounted for in this fund, including, but not limited to, administration, operations,
maintenance, financing and related debt service, and billing and collection.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in
Fiduciary Net Position. The City’s fiduciary funds represent agency funds and private purpose trust funds.
Both agency funds and the private purpose trust funds are accounted for on the full accrual basis of accounting.
Fiduciary fund types are accounted for according to the nature of the fund. The City’s agency funds are purely
custodial in nature (assets equal liabilities) and thus do not involve measurement of results of operations. These
funds are used to account for money and property held by the City as trustee or custodian. The City established
Agency Funds and used to account for money and property held by the City as trustee or custodian. Such
funds include Special Deposits, Cemetery Perpetual Care, and San Bernardino Regional Water Resource
Authority. They are also used to account for various assessment districts for which the City acts as an agent
for debt service activity, as the City is prohibited from levying additional taxes for these districts. Such funds
include Assessment District’s #961, #977A, #977B, and #1003.
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Packet Pg. 314 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
44
Note 1 – Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation, Accounting and Measurement Focus (Continued)
Fiduciary Fund Financial Statements (Continued)
The City’s private purpose trust fund is a fiduciary fund type used by the City to report assets, liabilities and
activities of the Successor Agency to the Redevelopment Agency for the City of San Bernardino. Its results of
operations are presented on the Statement of Changes of Fiduciary Net Position.
Successor Agency of the Redevelopment Agency for the City of San Bernardino
The Redevelopment Obligation Retirement Fund (Successor Agency) was created to serve as a custodian
for the assets and to wind down the affairs of the RDA on February 1, 2012, pursuant to Assembly Bill
x1 26. Its purpose is to expeditiously wind down the affairs of the dissolved RDA. The Successor Agency
is a separate public entity from the City, subject to the direction of an oversight board. The City Council
serves as the governing board of the Successor Agency. In general, the Successor Agency’s assets can
only be used to pay enforceable obligations in existence at the date of dissolution (including the
completion of any unfinished projects that were subject to legally enforceable contractual commitments).
In future fiscal years, the Successor Agency will only be allocated revenue in the amount that is
necessary to pay the estimated annual installment payments on enforceable obligations of the former
RDA until all enforceable obligations of the former RDA have been paid in full and all assets have been
liquidated. Based upon the nature of the Successor Agency’s custodial role, the Successor Agency has
been included in the accompanying basic financial statements as a private purpose trust fund.
C. Deferred Outflows and Inflows of Resources
In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position, the Statement of Net Position reports separate sections for
Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.
Deferred Outflows of Resources represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then.
The City only has one item that qualifies for reporting in this category. It is the unamortized loss on
refunding of debt reported in the government-wide statement of net position. An unamortized loss on
refunding of debt results from the difference in the carrying value of refunded debt and its
reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded
or refunding debt.
Deferred Inflows of Resources represents an acquisition of net position that applies to a future
period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has
only one type of item, which arises only under a modified accrual basis of accounting that qualifies for
reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from notes and
loans receivable. These amounts are deferred and recognized as an inflow of resources in the period
that the amounts become available.
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Packet Pg. 315 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
45
Note 1 – Summary of Significant Accounting Policies (Continued)
D. Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure
of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an
extension of budgetary controls.
E. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City considers pooled cash and investment
amounts, with original maturities of three months or less, to be cash equivalents.
Investments are reported in the accompanying financial statements at fair value, except for certain investment
contracts that are reported at cost because they are not transferable and they have terms that are not affected by
changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as
investment income reported for that fiscal year, and may result in negative investment income in the
accompanying financial statements. Investment income includes interest earnings, changes in fair value, and
any gains or losses realized upon the liquidation, maturity, or sale of investments.
Investment income earned by the pooled investments is allocated to the various funds based on each fund's
average cash and investment balance, except for investment income associated with funds not legally
required to receive pooled investment income which has been assigned to and recorded as revenue of the
general fund, as provided by California Government Code Section 53647.
For purposes of the statement of cash flows, amounts reported as cash and cash equivalents, include amounts
on deposit in the City pool and any short-term, highly liquid investments that are both readily convertible to
known amounts of cash or so near their maturity that they present insignificant risk of changes in value
because of changes in interest rates.
Certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas:
Interest Rate Risk
Credit Risk
- Overall
- Custodial Credit Risk
- Concentration of Credit Risk
Foreign Currency Risk
In addition, other disclosures are specified including use of certain methods to present deposits and
investments, highly sensitive investments, credit quality at year-end and other disclosures.
F. Restricted Assets
Amounts reported as restricted assets in the enterprise funds have been restricted by bond indentures or are to
be used for specified purposes based on contract provisions, such as bonded debt service.
12.b
Packet Pg. 316 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
46
Note 1 – Summary of Significant Accounting Policies (Continued)
G. Fair Value Measurement
GASB Statement No. 72, Fair Value Measurement and Application, defines fair value, establishes a framework
for measuring fair value, and establishes disclosures about fair value measurement. Investments, unless
otherwise specified, recorded at fair value in the Statements of Net Position, are categorized based upon
the level of judgment associated with the inputs used to measure their fair value. Levels of inputs are as
follows:
Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the
measurement date.
Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the assets or
liabilities through corroboration with market data at the measurement date.
Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would
use in pricing the assets or liabilities at the measurement date.
H. Receivables
Customer or trade receivables are reported as “accounts receivable” and are shown net of an allowance for
uncollectible accounts based on historical and management estimates.
Noncurrent portions of long-term receivables (e.g. “notes receivable”) due to governmental fund types are
reported in their respective balance sheets despite their spending measurement focus. Recognition of
governmental fund type revenues represented by noncurrent receivables are deferred until they become current
receivables. Noncurrent portions of long-term notes receivable are offset by nonspendable fund balance in the
general fund, and by restricted, committed or assigned fund balance in other funds.
I. Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as either “due to/from other funds” or “advances to/from other funds” (i.e., the current
portion of interfund loans). Any residual balances outstanding between the governmental activities and
business-type activities are reported in the Governmental-Wide Financial Statements as “internal balances.”
J. Inventory
Inventories are valued on the average cost method. Inventory balances represent expendable supplies held for
consumption. Inventory is reported under the consumption method whereby expenditures are reported at the
time inventory is used. Inventory reported in governmental funds is offset with nonspendable fund balance to
show that inventories do not constitute available spendable resources, even though they are a component of
fund balance.
K. Prepaid Items
Prepaid items are reported in the governmental funds under the consumption method and are reported as a
nonspendable component of fund balance to indicate that they are not spendable for appropriation and are not
expendable financial resources.
12.b
Packet Pg. 317 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
47
Note 1 – Summary of Significant Accounting Policies (Continued)
L. Property Held for Resale
Property held for resale represents land, structures, and related improvements that were acquired for resale as
part of the City’s redevelopment and grant activities. Property held for resale is accounted for is recorded at
acquisition cost plus improvement costs, in non-accordance with accounting principles generally accepted in
the United States of America. Property held for resale, which is not available for current expenditure, is
reported in the governmental funds balance sheet as restricted fund balance when proceeds from the sale must
be used for restricted purposes or as nonspendable fund balance when such proceeds are not restricted.
M. Capital Assets
Capital assets, which include land, buildings and improvements, machinery, vehicles, equipment (including
furniture) and infrastructure assets, are reported in the applicable activity columns in the accompanying
government-wide statement of net position and the proprietary funds statement of net position. Capital assets
are defined using guidelines established by the City. Such guidelines provide that assets with an initial
individual cost of more than $5,000 ($200,000 for infrastructure) and an estimated useful life of at least two
years are considered to be capital assets. Such capital assets are recorded at cost where historical records are
available and at an estimated original cost where no historical records exist. Contributed capital assets are
valued at their estimated fair value at the date of the contribution. The cost of normal maintenance and repairs
that do not add to the value of the assets or materially extend asset lives are not capitalized. Major outlays for
capital assets and improvements are capitalized as projects are constructed.
Capital assets include public domain (infrastructure) consisting of certain improvements other than buildings,
including pavement, curbs and gutters, streets and sidewalks, drainage systems, traffic control devices,
streetlights, and right-of-way corridors within the City.
Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method
in the government-wide financial statements and in the financial statements of the proprietary funds.
Depreciation is charged as an expense against operations and accumulated depreciation is reported on the
respective statement of net position.
The ranges of lives used for depreciation purposes for each capital asset class are:
Years
Buildings and improvements 10 - 40
Infrastructure 20 - 50
Wells, pumping plants, reservoirs, and distribution system 8 - 50
Interceptor lines 50
Disposal plant 35 - 50
Leasehold improvements 5 - 25
Shops, office, stores and yards 10 - 20
Tools and equipment 4 - 20
Office equipment 5 - 20
Communication equipment 7 - 10
Computer equipment 5 - 10
Automotive equipment 3 - 8
Each major infrastructure system can be divided into subsystems. For example, the street system can be
subdivided into pavement, curbs and gutters, sidewalks, medians, streetlights, landscaping and land. These
subsystems were not delineated in the basic financial statements. The appropriate operating department
maintains information regarding the subsystems.
12.b
Packet Pg. 318 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
48
Note 1 – Summary of Significant Accounting Policies (Continued)
M. Capital Assets (Continued)
Interest accrued during capital assets construction, if any, is capitalized for the business-type funds as part of
the asset cost.
For all infrastructure systems, the City elected to use the Basic Approach for infrastructure reporting.
N. Capital Contribution
Contributions in aid of construction represent cash and utility plant additions contributed to the City by
property owners or developers desiring services that require capital expenditures or capacity commitment.
O. Long-Term Debt
In the Government-wide and proprietary fund financial statements, long-term debt and other long-term
financial obligations are reported as liabilities.
Prior to July 1, 2013, bond premiums and discounts, as well as issuance costs, are amortized over the life of the
bonds using the straight-line method, which approximates effective interest method. Bonds payable are
reported net of the applicable premium or discount except for insurance prepaid bond insurance premiums. The
City implemented GASB Statement No. 65 effective July 1, 2013, which changed how governments account
for bond issuance costs. Issuance costs, except for prepaid bond insurance premium, are now expensed when
incurred.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, in the year of issuance. The face amount of the debt issued is reported as other financing
sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt
issuances are reported as other financing uses. The differences between the government-wide and fund
financial statements are shown in the Reconciliation of the Governmental Funds Balance Sheet to the
Government-Wide Statement of Net Position.
P. Refunding of Debt
The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt
(deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life
of the refunded debt. Unamortized portions of the loss on refunding debt are reported as deferred outflows of
resources. When an asset is recorded in the governmental fund financial statements but the revenue is not
available, a deferred inflow of resources is reported until such time as the revenue becomes available.
Q. Compensated Absences
In accordance with negotiated labor agreements, employees accumulate earned but unused vacation, other
compensated leave, and sick leave pay benefits. Depending upon bargaining unit and date of hire, employees
were allowed to apply 100% of accrued sick leave hours for additional California Public Employees’
Retirement System (CalPERS) service credit upon retirement.
For employees separating from service after February 17, 2012 and before June 30, 2015 vacation payouts are
now paid in annual installments on the separation date equal to the greater of $10,000 or 1/3 of the employees
accrued balance until paid in full and sick leave accruals are no longer paid out. For those employees separating
from service after July 1, 2013, they receive their full vacation payout.
12.b
Packet Pg. 319 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
49
Note 1 – Summary of Significant Accounting Policies (Continued)
Q. Compensated Absences (Continued)
After subtracting the sick leave balance equivalent of one full year of service credit (2080 hours), which may be
applied to CalPERS service credit, any sick leave balance remaining upon separation shall be paid at a specific
percentage of the cash value to employees who have remained in City service until the dates specified in the
labor agreements.
Government-Wide Financial Statements
For governmental and business-type activities, compensated absences are recorded as expenses when earned.
Fund Financial Statements
For governmental funds, compensated absences are recorded as expenditures in the year paid. The General
Fund is typically used to liquidate compensated absences. In proprietary funds, compensated absences are
expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is
recorded as a long-term liability of the fund.
R. Pension Plans
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of
resources related to pensions, and pension expense, information about the fiduciary net position of the plans
and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as
they are reported by the plans (Note 15). For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported
at fair value. The following timeframes are used for pension reporting:
CalPERS:
Valuation Date June 30, 2014
Measurement Date June 30, 2015
Measurement Period July 1, 2014 to June 30, 2015
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in
pension expense systematically over time. The first amortized amounts are recognized in pension expense for
the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred
inflows of resources related to pensions and are to be recognized in future pension expense. The amortization
period differs depending on the source of the gain or loss. The difference between projected and actual earnings
is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected
remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the
beginning of the measurement period.
S. Fund Balances
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based
primarily on the extent to which the City is bound to honor constraints on the specific purposes for which
amounts in the funds can be spent. As of June 30, 2016, fund balances for governmental funds are made up of
the following:
Nonspendable Fund Balance – includes amounts that are (a) not in a spendable form, or (b) legally or
contractually required to be maintained intact. The “not in spendable form” criterion includes items
that are not expected to be converted to cash, for example: deposits and prepaid items.
12.b
Packet Pg. 320 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
50
Note 1 – Summary of Significant Accounting Policies (Continued)
S. Fund Balances (Continued)
Restricted Fund Balance – includes amounts that are restricted for specific purposes stipulated by
external resources providers, constitutionally or through enabling legislation. Restrictions may
effectively be changed or lifted with the consent of resource providers.
Committed Fund Balance – includes amounts that have been limited to specific purposes or through
adoption of a resolution or an ordinance by the City council, the highest level of decision making
authority of the City, and resources that have been specifically committed for use in satisfying
contractual obligations, as in agreements with third-parties. The City has determined that both a
resolution and an ordinance are equally binding. These commitments may be changed or lifted, but
only by the same formal action that was used to impose the constraint originally. City Council action
to commit fund balance must occur within the fiscal reporting period while the amount committed may
be subsequently determined.
Assigned Fund Balance – includes amounts that are intended to be used by the City for specific
purposes. Intent is expressed by (a) the City Council or (b) a body or official to which the City Council
has delegated the authority to assign amounts to be used for a specific purpose.
Unassigned Fund Balance – includes amounts within the General Fund, the residual resources, either
positive or negative in excess of what can be properly classified in one of the other four fund balance
categories. Unassigned amounts are technically available for any purpose. Other governmental funds
may only report a negative unassigned balance that was created after classification of fund balance in
the nonspendable, restricted or committed categories.
In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund
balance classifications, fund balance is depleted in order of restricted, committed assigned and unassigned.
T. Net Position
The financial statements utilize a net position presentation. Net position is classified as follows:
Net Investment in Capital Assets – This category of net position consists of capital assets, net of
accumulated depreciation and reduced by any debt outstanding and any deferred outflows of resources
related to such borrowings that are attributable to the acquisition, construction or improvement of those
assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt
attributable to the unspent proceeds is not included in the calculation of net investment in capital assets.
Rather, that portion of the debt is offset by unspent proceeds.
Restricted Net Position – This category presents restricted assets reduced by liabilities and deferred
inflows of resources related to those assets. Those assets are restricted due to external restrictions
imposed by creditors (such as through bond covenants), grantors or laws and regulations of other
governments and restrictions imposed through constitutional provisions or enabling legislation.
Unrestricted – This category represents net position of the City that is not restricted for any project or
other purpose.
When both restricted and unrestricted resources are available for use, the City’s policy is to use restricted
resources first, then unrestricted resources that are needed.
12.b
Packet Pg. 321 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
51
Note 1 – Summary of Significant Accounting Policies (Continued)
U. Property Taxes
Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they
become available. Available means due, or past due and receivable within the current period and collected
within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used
to pay liabilities in the current period.
Under California law, property taxes are assessed and collected by the counties at up to 1% of assessed value,
plus other increases approved by the voters. The County of San Bernardino, bills and collects the property taxes
and remits them to the City at various times throughout the year. Property taxes are attached as an enforceable
lien on property as of January 1. Taxes are levied on July 1 and are due in two installments. The first
installment is due on November 1, and is payable through December 10 without penalty. The second
installment is due February 1, and is payable through April 10 without penalty.
V. Use of Accounting Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions, in some cases when applicable, that affect the
amounts in the financial statements and the accompanying notes. Actual results could differ from the estimates.
W. Implementation of New GASB Pronouncements for the Year Ended June 30, 2016
The requirements of the following accounting standards are effective for the purpose of implementation, if
applicable to the City, for the year ended June 30, 2016. The financial statements included herein apply the
requirements and provisions of these statements, including necessary retroactive adjustments to financial
statement classifications and presentations.
GASB Statement No. 72
In February 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 72, Fair
Value Measurement and Application. This pronouncement provides guidance for determining fair value
measurement for financial reporting purposes and provides guidance for applying fair value to certain
investments and disclosures related to all fair value measurements. Governments are required to use valuation
techniques that are appropriate under the circumstances and for which sufficient data is available to measure
fair value. Required disclosures include the level of fair value hierarchy and valuation techniques and should be
organized by type of asset or liability. This pronouncement is effective for financial statements for periods
beginning after June 15, 2015. Earlier application is encouraged. This pronouncement did not have a material
effect on the financial statements of the City.
GASB Statement No. 76
In June 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for
State and Local Governments. This statement reduces the generally accepted accounting principles (GAAP)
hierarchy to two categories of authoritative GAAP from the four categories under GASB Statement No. 55, The
Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The first category of
authoritative GAAP consists of GASB Statements of Governmental Accounting Standards. The second
category comprises GASB Technical Bulletins and Implementation Guides, as well as guidance from the
American Institute of Certified Public Accountants that is cleared by the GASB. Application of this statement
is effective for the City’s fiscal year ending June 30, 2016. This pronouncement did not have a material effect
on the financial statements of the City.
12.b
Packet Pg. 322 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
52
Note 1 – Summary of Significant Accounting Policies (Continued)
W. Implementation of New GASB Pronouncements for the Year Ended June 30, 2015 (Continued)
GASB Statement No. 79
In December 2015, GASB issued Statement No. 79, Certain External Investment Pools and Pool Participants.
This statement establishes standards relating to accounting and financial reporting for certain investment pools
and pool participants. This statement became effective for periods beginning after June 15, 2015, except for
certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective
for reporting periods beginning after December 15, 2015. This statement did not have a significant impact on
the City’s financial statements for the year ended June 30, 2016.
X. Upcoming Government Accounting Standards Implementation
The City is currently analyzing its accounting practices to determine the potential impact on the financial
statements for the following GASB statements:
GASB Statement No. 73
In June 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pension and Related
Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB
Statements 67 and 68. This statement establishes requirements for those pensions and pension plans that are not
administered through a trust meeting specified criteria (those not covered by GASB Statements 67 and 68).
Application of this statement is effective for the City’s fiscal year ending June 30, 2016, except those
provisions that address employers and governmental nonemployer contributing entities that are not within the
scope of GASB Statement 68, which are effective for financial statements for fiscal year ending June 30, 2017.
GASB Statement No. 74
In June 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other
Than Pension Plans, which addresses reporting by postemployment benefits other than pensions (OPEB) plans
that administer benefits on behalf of governments. This statement basically parallels GASB Statement 67 and
replaces GASB Statement 43. Application of this statement is effective for the City’s fiscal year ending June
30, 2017.
GASB Statement No. 75
In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions. This statement applies to government employers who provide OPEB to their
employees and for governments that finance OPEB for employees of other governments. This statement
basically parallels GASB Statement 68 and replaces GASB Statement 45. Application of this statement is
effective for the City’s fiscal year ending June 30, 2018.
GASB Statement No. 77
In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This statement establishes
financial reporting standards for tax abatement agreements entered into by state and local governments.
Application of this statement is effective for the City’s fiscal year ending June 30, 2017.
12.b
Packet Pg. 323 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
53
Note 1 – Summary of Significant Accounting Policies (Continued)
X. Upcoming Government Accounting Standards Implementation (Continued)
GASB Statement No. 78
In December 2015, GASB issued Statement No. 78, Pensions Provided Through Certain Multiple-Employer
Defined Benefit Pension Plans. This Statement amends the scope and applicability of Statement 68 to exclude
pensions provided to employees of state or local governmental employers through a cost-sharing multiple-
employer defined benefit pension plan that (1) is not a state or local governmental pension plan, (2) is used to
provide defined benefit pensions both to employees of state or local governmental employers and to employees
of employers that are not state or local governmental employers, and (3) has no predominant state or local
governmental employer (either individually or collectively with other state or local governmental employers
that provide pensions through the pension plan). This Statement establishes requirements for recognition and
measurement of pension expense, expenditures, and liabilities; note disclosures; and required supplementary
information for pensions that have the characteristics described above. Application of this statement is effective
for the City’s fiscal year ending June 30, 2017.
GASB Statement No. 80
In December 2015, GASB issued Statement No. 80, Blending Requirements for Certain Component Units – An
Amendment of GASB Statement No. 14. This Statement amends the blending requirements for the financial
statement presentation of component units of all state and local governments. The additional criterion requires
blending of a component unit incorporated as a not-for-profit corporation in which the primary government is
the sole corporate member. The additional criterion does not apply to component units included in the financial
reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations
Are Component Units. Application of this statement is effective for the City’s fiscal year ending June 30, 2017.
GASB Statement No. 81
In December 2015, GASB issued Statement No. 81, Irrevocable Split-Interest Agreements. This Statement
requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize
assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this
Statement requires that a government recognize assets representing its beneficial interests in irrevocable split-
interest agreements that are administered by a third party, if the government controls the present service
capacity of the beneficial interests. This Statement requires that a government recognize revenue when the
resources become applicable to the reporting period. Application of this statement is effective for the City’s
fiscal year ending June 30, 2018.
GASB Statement No. 82
In December 2015, GASB issued Statement No. 82, Pension Issues – An Amendment of GASB Statements No.
67, No. 68, and No. 73. This Statement clarifies that payments that are made by an employer to satisfy
contribution requirements that are identified by the pension plan terms as plan member contribution
requirements should be classified as plan member contributions for purposes of Statement 67 and as employee
contributions for purposes of Statement 68. It also requires that an employer’s expense and expenditures for
those amounts be recognized in the period for which the contribution is assessed and classified in the same
manner as the employer classifies similar compensation other than pensions (for example, as salaries and wages
or as fringe benefits). Application of this statement is effective for the City’s fiscal year ending June 30, 2018.
12.b
Packet Pg. 324 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
54
Note 1 – Summary of Significant Accounting Policies (Continued)
X. Upcoming Government Accounting Standards Implementation (Continued)
GASB Statement No. 83
In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations. This statement
addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a
legally enforceable liability associated with the retirement of a tangible capital asset. A government that has
legal obligations to perform certain future asset retirement activities related to its tangible capital assets should
recognize a liability based on guidance in the Statement. This Statement establishes criteria for determining the
timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs.
This Statement requires that recognition occur when the liability is both incurred and reasonably estimable.
Application of this statement is effective for the City’s fiscal year ending June 30, 2019.
GASB Statement No. 84
In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The objective of this Statement is to
improve guidance regarding the identification of fiduciary activities for accounting and financial reporting
purposes and how those activities should be reported. This Statement establishes criteria for identifying
fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a
government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary
relationship exists. Separate criteria are included to identify fiduciary component units and postemployment
benefit arrangements that are fiduciary activities. This Statement also provides for recognition of a liability to
the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse
fiduciary resources. Events that compel a government to disburse fiduciary resources occur when a demand for
the resources has been made or when no further action, approval, or condition is required to be taken or met by
the beneficiary to release the assets. Application of this statement is effective for the City’s fiscal year ending
June 30, 2019.
GASB Statement No. 85
In March 2017, GASB issued Statement No. 85, Omnibus 2017. The objective of this Statement is to address
practice issues that have been identified during implementation and application of certain GASB Statements.
This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair
value measurement and application, and postemployment benefits (pensions and other postemployment
benefits(OPEB)). Application of this statement is effective for the City’s fiscal year ending June 30, 2019.
12.b
Packet Pg. 325 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
55
Note 2 – Bankruptcy
A. Factors Precipitating the City’s Chapter 9 Bankruptcy Filing On August 1, 2012
Beginning or around May 2012, the City’s Finance Department (led by a newly hired Finance Director) began
the process of preparing a proposed budget for the City’s 2012-13 fiscal year. In late June 2012, the City’s
Finance Department completed a report entitled, “San Bernardino Budgetary Analysis and Recommendations
for Budget Stabilization” (the “Budget Report”) which determined that: (i) the City faced a projected budget
deficit of over $45.8 million in the 2012-13 fiscal year and the budget deficit was projected to grow even larger
for each of the following five years due to, among other things, continued stagnation in General Fund revenues,
the poor housing market and economy, increasing pension and other post-retirement benefit costs, and
unfunded liabilities in the City’s retiree health, worker’s compensation and general liability accounts, (ii) the
City had depleted all of its General Fund reserves to cover substantial budget deficits for four consecutive fiscal
years beginning with the 2008-2009 fiscal year and had an estimated $18.2 million negative cash balance in its
General Fund, (iii) immediate and substantial action had to be taken to reduce spending and preserve cash for
the City to continue to provide essential services to its residents, (iv) an analysis of the City’s General Fund
revealed that the fund balances at the start of fiscal years 2010-2011 and 2011-2012 had been erroneously
reported by City staff and that fund balances had actually totaled at least $4.5 million (estimated) less than
reported, and (v) the City did not have sufficient unrestricted cash available to pay its financial obligations as
and when they were due or to become due and owing.
Several factors led to the late discovery of the scope and extent of the City’s financial problems. Beginning in
late 2011 and continuing through early May of 2012, key City management personnel retired or resigned, and
the City’s Finance Department fell behind in performing various financial tasks which was exacerbated by the
implementation of a new financial software system. As late as April 2012, and in connection with the City’s
mid-year budget review, the City Manager at that time believed that the City’s estimated budget shortfall for
fiscal year 2011-12 would be just over $3.1 million and could be remedied by cuts to department budgets,
continuing a hiring freeze on filling vacant positions and making revenue adjustments.
The Budget Report found that the City had been hit hard by the major recession that began in late 2007. In
addition, the housing market collapse in the Inland Empire region, the loss of redevelopment funds and declines
in revenue to the General Fund from sales tax, property tax, franchise fees, utility users tax and licenses and
permits all had significant detrimental impact on the City. The Budget Report also found that the City’s
operational costs continued to exceed revenues despite the City’s efforts to cut costs by negotiated reductions in
employee costs, job cuts, service cuts, sales of assets, implementation of revenue measures, increased transfers
from other funds, and use and then exhaustion of its General Fund reserves. As of June 2012, the City’s
unemployment rate was 16.9% (more than double the national unemployment rate), and the City had one of the
highest home foreclosure rates in the nation.
The City also prepared a Staff Report (the “Staff Report”) dated July 18, 2012, which determined that (i) it was
unlikely that, at that time, the City could meet its payroll and other financial obligations in the next thirty (30)
to sixty (60) days (including debt obligations and lease payments for critical City assets), (ii) an unusually large
number of employees were retiring and leaving the City triggering immediate cash-outs of vacation and sick
leave accruals, (iii) the City’s credit line had been terminated, (iv) vendors were demanding cash up front
before providing essential materials, goods and services to the City, (v) the City had no ability to access short
term credit markets to solve its cash flow problems and no General Fund reserves, and (vi) cash flow
projections showed that the City had projected monthly General Fund deficits ranging between $2 million and
$5.6 million from July through September.
12.b
Packet Pg. 326 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
56
Note 2 – Bankruptcy (Continued)
A. Factors Precipitating the City’s Chapter 9 Bankruptcy Filing On August 1, 2012 (Continued)
On July 18, 2012, the Mayor and Common Council of the City enacted Resolution No. 2012-205 declaring a
fiscal emergency (the “Fiscal Emergency Resolution”) based on information presented in the Budget Report,
Staff Report and at public meetings of the Mayor and Common Council held on July 10, July 16 and July 18,
2012. Pursuant to the Fiscal Emergency Resolution, the Common Council found that the City was unable to
pay its obligations within the next sixty (60) days and that the financial state of the City jeopardized the health,
safety or well-being of the City’s residents absent the protections of Chapter 9 of the Bankruptcy Code and
given the City’s dire financial condition it was in the best interest of the City to declare a fiscal emergency. On
July 18, 2012, the Mayor and Common Council of the City also enacted Resolution No. 2012-206 which
determined that the City was insolvent in its current fiscal year and unable to meet its payroll without the
protections afforded by Chapter 9 of the Bankruptcy Code which would endanger the health, safety and welfare
of its residents, and authorized and directed certain City officials and employees to execute and file all
petitions, schedules, lists and other papers and to take any and all actions necessary and proper to file a petition
under Chapter 9 of the Bankruptcy Code.
As an initial step in a multi-phase and multi-step process of developing a budget for operating in bankruptcy
called a Pendency Plan, on July 24, 2012 the City approved a “Fiscal Emergency Operating Plan – July 2012 to
September 2012” (the “Fiscal Emergency Plan”). Pursuant to the Fiscal Emergency Plan, the City did not
make payments for (i) debt payments due, including a payment for pension bond obligations due on July 20,
2012 in the amount of over $3.3 million, (ii) bi-monthly payments to fund retiree health obligations due in the
first quarter in the amount of over $2.2 million, (iii) deferred equipment purchases and capital projects, (iv)
payment on a note for its financial accounting software system, and (v) other trade payables due and owing in
an amount over $6 million. In addition, the City did not make over $1.4 million in payments under certain
settlement agreements in three lawsuits. Pursuant to the Fiscal Emergency Plan, City staff also determined that
the City would not be able to borrow money from the private credit markets to meet its obligations because it
could not demonstrate the ability to pay such debts back with revenues generated in the current fiscal year.
B. The City’s Chapter 9 Bankruptcy Filing
Given the City’s financial crisis described above, on August 1, 2012 (“Petition Date”) the City commenced a
bankruptcy case under Chapter 9 of the Bankruptcy Code (the “Bankruptcy Case”) by filing a voluntary
petition for relief in the United States Bankruptcy Court for the Central District of California (Riverside
Division) (the “Bankruptcy Court”) on an emergency basis. On August 3, 2012, Judge Meredith A. Jury was
designated as the bankruptcy judge overseeing the City’s Chapter 9 Bankruptcy Case.
C. Approval and Implementation of the City’s Pendency Plan and Budgets
The City promptly took the next step in the multi-step and multi-phase process of formulating its Pendency
Plan by preparing its Pre-Pendency Plan. On August 30, 2012, a budget for fiscal year 2012-2013 was
presented to the City’s Common Council to remain effective until a Pendency Plan was finalized and approved.
On September 17, 2012 and October 1, 2012, the Common Council approved certain cuts and budget offsets set
forth in the Pre-Pendency Plan and a 9 Point Adjustment Plan, which the City estimated would eliminate
approximately $29.78 million of the City’s overall $45.8 million budget deficit. During this time, the City
deferred payment of certain obligations in order to curtail the increasing deficit in the General Fund and the
City’s dire liquidity crisis. These deferred payments include employer pension contribution payments to the
California Public Employees’ Retirement System (“CalPERS”), bond debt and certain trade debt.
12.b
Packet Pg. 327 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
57
Note 2 – Bankruptcy (Continued)
C. Approval and Implementation of the City’s Pendency Plan and Budgets (Continued)
On November 26, 2012, the Common Council adopted a Pendency Plan which incorporated the Pre-Pendency
Plan. The Pendency Plan served to balance the City’s budget during the Bankruptcy Case using tools available
under Chapter 9 of the Bankruptcy Code. The City implemented its Pendency Plan through, among other
things, the process of: (a) meeting, conferring and negotiating with all seven of its unions, including
participating in mediation with two of its unions; (b) implementing changes to collective bargaining agreements
with the three unions for which the City was unable to reach consensual resolutions through resolutions adopted
by the City’s Common Council; and (c) rejecting the collective bargaining agreements with the three dissenting
unions as described below.
On February 19, 2013, the City Manager issued and made available the Budget Message and the Fiscal Year
2012-13 and Fiscal Year 2013-14 Proposed Budget for the General Fund. On April 22, 2013, the City adopted
its budget for the General Fund and other funds for fiscal years 2012-13 and 2013-14. On June 30, 2014, the
City adopted its budget for fiscal year 2014-15 which continued certain of the expenditure reductions in the
Pendency Plan and implemented other measures to align expenditures with revenues. On June 30, 2015, the
City adopted its budget for fiscal year 2015-16 which again continued certain of the expenditure reductions in
the Pendency Plan and implemented other measures to align expenditures with revenues. These efforts have
enabled the City to survive financially, manage its ongoing fiscal emergency, and provide essential
governmental services to its residents until a plan of adjustment is approved.
On June 27, 2016, the City adopted its General Fund operating budget for fiscal year 2016-17 (Resolution No.
2016-128) which projects a modest surplus and is consistent with the City’s Pendency Plan and the City’s
confirmed Chapter 9 plan of adjustment (the “Plan of Adjustment”). The City’s Pendency Plan and budgets
have enabled the City to survive financially, manage its ongoing fiscal emergency, and provide essential
governmental services to its residents during the pendency of the City’s Bankruptcy Case until confirmation of
its plan of adjustment.
D. The Bankruptcy Court’s Determination of City Eligibility for Chapter 9 Relief
In the first few weeks of the Bankruptcy Case, the City filed a motion requesting that the Court set a deadline to
file objections to the City’s eligibility for Chapter 9 relief. On August 24, 2012, the Court entered its “Order
Directing And Approving Form Of Notice And Setting Deadline For Filing Objections To The City Of San
Bernardino, California’s Petition” which established the deadline to file and serve all objections to eligibility
as October 24, 2012. Prior to October 12, 2012, the City provided over 15,000 pages of documents pursuant to
stipulations with various creditors respecting its financial condition and eligibility for Chapter 9 relief.
Although the City has numerous creditors – U.S. and German financial institutions holding the City’s bonds,
Wall Street bond insurers, hundreds of trade creditors, thousands of retirees receiving pensions and retiree
health care benefits, and seven unions representing the City’s current employees – only one creditor, CalPERS,
objected to the City’s eligibility to be a chapter 9 debtor. With respect to CalPERS, the City dedicated
substantial resources in its Finance Department to providing information, running numbers, attending meetings
and responding to CalPERS’ requests. The City provided additional documents totaling over 40,000 pages of
documents in the hope that CalPERS would withdraw its objection to the City’s eligibility.
12.b
Packet Pg. 328 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
58
Note 2 – Bankruptcy (Continued)
D. The Bankruptcy Court’s Determination of City Eligibility for Chapter 9 Relief (Continued)
At a status conference in June 2013, the Bankruptcy Court set a briefing schedule for a motion for summary
judgment on the City’s eligibility for Chapter 9 relief. CalPERS objected and asserted that it was entitled to
additional discovery on the City’s eligibility. On August 28, 2013, after extensive briefing by the City and
CalPERS, the Bankruptcy Court determined based upon uncontroverted facts that the City had satisfied the
requirements for eligibility in Bankruptcy Code section 109(c) and that it had filed its petition in good faith
pursuant to Bankruptcy Code section 921(c), and subsequently issued orders to that effect (the “Eligibility
Orders”). The Bankruptcy Court found that the City was authorized under California law to be a chapter 9
debtor, the City was insolvent, the City had filed its bankruptcy case in good faith and with the desire to effect a
plan of adjustment of debts, and, under the circumstances, it was impracticable for the City to have conducted
pre-bankruptcy negotiations with its creditors.
E. CalPERS’ Appeal of the Bankruptcy Court’s Eligibility Orders
CalPERS appealed from the Eligibility Orders, and the U.S. District Court for the Central District of California
certified the appeal for review by this U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit granted
CalPERS’ petition for leave to appeal the Eligibility Orders, established a briefing schedule and set oral
argument on CalPERS’ appeal on its August 2014 calendar. By its appeal, CalPERS is challenging the
Bankruptcy Court’s Eligibility Orders and seeks dismissal of the City’s chapter 9 case. The City believes that
dismissal of its chapter 9 case would be a catastrophic blow to the City and its citizens as they struggle to
recover from the effects of the economic downturn and housing bubble burst. Such a dismissal would deny the
City the tools and breathing room afforded municipalities under bankruptcy law to reorganize and adjust its
debts, and establish a plan of adjustment for a sound financial future. The CalPERS appeal remains pending,
but CalPERS is not pursuing the appeal as long as the City complies with the CalPERS Interim Agreement.
F. The City’s Debt Obligations and Creditor Claims
The Bankruptcy Court established February 7, 2014 as the deadline for all creditors, other than governmental
units of the City, to file proofs of claims, and March 21, 2014 as the deadline for governmental units to file
proofs of claims. The City’s proposed plan of adjustment will address claims timely filed against the City and
the City’s outstanding obligations including, but not limited to, the following which were in existence as of
August 31, 2012 (unless otherwise noted):
Unsecured Pension Costs and Unfunded Pension Liabilities – The City has outstanding unfunded
liability owed to CalPERS.
Other Post-Employment Benefits – The City’s retirement plans provide for other post-employment
benefits (“OPEBs”), consisting primarily of retiree medical care. The City’s unfunded liability for
OPEBs was set forth in the City’s last audit.
Pension Obligation Bond Indebtedness – To address growing public safety pension obligations, the
City issued pension obligation bonds (“POBs”) in 2005 which reduced unfunded pension liabilities.
The City has not made payments under the POB’s since prior to the Petition Date.
Lease And Other Financial Obligations – The City has outstanding lease obligations for critical City
assets such as City Hall and police, library and fire facilities. The City also leases equipment critical to
the health, safety and welfare of its residents such as fire engines, police vehicles, fire station alerting
system, refuse trucks and other critical equipment.
12.b
Packet Pg. 329 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
59
Note 2 – Bankruptcy (Continued)
F. The City’s Debt Obligations and Creditor Claims (Continued)
Capital Improvement Loans – In addition to its bonded indebtedness, loans, and capital leases, the
City has infrastructure loans for capital improvements.
Debt service obligations paid from dedicated special use restricted resources and/or funds that are not within
the General Fund, such as sewer improvement bonds and infrastructure bank loans secured by restricted
“special revenues,” and/or obligations paid from dedicated special/restricted funds, are currently unimpaired
and remain unimpaired under the City’s proposed plan of adjustment.
G. Component Units and Restricted Funds
The Bankruptcy Case seeks the adjustment of the obligations of the City and does not extend to the City’s
component units that are separate legal entities. In addition, the City’s restricted resources and/or special use
funds are funds of the City and, as such, are accounted for in the City’s Bankruptcy Case. As noted above,
obligations of the restricted/special funds are currently unimpaired and remain unimpaired under the City’s
proposed plan of adjustment.
H. Impact of the Bankruptcy Case on the City’s Ability to Provide Services
The City continues to provide essential services to its residents and is committed to continuing to provide such
services throughout the Bankruptcy Case. The goal for the Chapter 9 process is to allow the City the time it
needs to correct its structural budget imbalance and cash flow problems and set it on a sound financial course
moving forward.
I. The City’s Plan of Adjustment and Disclosure Statement
On May 18, 2015, the City Council approved a Recovery Plan in support of the Plan of Adjustment. The City
continues to work towards a consensual plan of adjustment with its creditors and, if a consensual plan cannot be
achieved, then confirmation of a plan of adjustment over potential objections from creditors.
The bankruptcy court established May 30, 2015 as the deadline for the City to file a plan of adjustment. The
City filed its plan of adjustment and disclosure statement on May 29, 2015. Some creditors filed objections to
the adequacy of the disclosure statement, and the City filed a response to those objections on October 1, 2015.
On October 8, 2015, the bankruptcy court held a hearing on the adequacy of the disclosure statement. The
bankruptcy court held a hearing on the disclosure statement and status conference on December 23, 2015, at
which it set deadlines for a second amended plan and disclosure statement and further briefing, and at a status
conference held on February 4, 2016, the Court revised those dates and provided that the City is to file a second
amended disclosure statement and motion on solicitation procedures on March 30, 2016. On March 30, 2015,
the City filed its second amended disclosure statement and appendix of exhibits in support thereof, its second
amended plan for the adjustment of debts of the City, and a solicitation motion. Certain objections to the
second amended disclosure statement or such motion were filed by the deadline of April 13, 2016, the City’s
response to filed objections to the second amended disclosure statement or such motion was filed on April 20,
2016, and the hearings on the amended disclosure statement and such motion were held on April 27, 2016. On
May 27, 2016, the City filed its third amended disclosure statement and appendix of exhibits in support thereof,
its third amended plan for the adjustment of debts of the City, reflecting the changes agreed to by the City and
various parties to settlements that were not fully reflected in the second amended disclosure statement and
changes to clarify the treatment of holders of personal injury claims that may be able to obtain payment from
the City’s participation in the Big Independent Cities Excess Pool Joint Powers Authority (“BICEP”).
12.b
Packet Pg. 330 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
60
Note 2 – Bankruptcy (Continued)
I. The City’s Plan of Adjustment and Disclosure Statement (Continued)
Responses to the third amended disclosure statement were due by June 3, 2016, provided however that
responses are limited to matters that changed between the second and third amended disclosure statements,
except that BICEP, San Bernardino Associated Governments, and the Retiree Committee will be allowed to file
objections on any matter in the third amended disclosure statement; the City’s reply to response to the third
amended disclosure statement is due on June 10, 2016, and the hearings on the disclosure statement and motion
on solicitation procedures (to which no objection was filed) were continued to June 16, 2016.
On June 16, 2016, the Bankruptcy Court approved the City’s third amended disclosure statement and overruled
all objections with certain modifications related to language addressing BICEP. The Bankruptcy Court ordered
that solicitation materials and ballots be mailed to the City’s creditors by no later than July 29, 2016 and the
City complied. The Bankruptcy Court also ordered that ballots be received and any objections to the City’s
Plan of Adjustment be filed by no later than September 2, 2016, and scheduled the first confirmation hearing on
the City’s Third Plan of Adjustment for October 14, 2016. On July 29, 2016, the solicitation materials and
ballots were mailed to the City’s creditors entitled to vote on the Plan of Adjustment. On July 29, 2016, the
City also filed the following documents with the Bankruptcy Court: (a) the Plan of Adjustment; (b) the
Disclosure Statement and exhibits in support thereof; (c) the Notice Of: (1) October 14, 2016 Hearing To
Consider Confirmation Of “Third Amended Plan For The Adjustment Of Debts Of The City Of San
Bernardino, California (July 29, 2016)”; (2) September 2, 2016 Deadline For Filing Objections To
Confirmation Of The Third Amended Plan; (3) Other Deadlines; And (4) Effect Of Confirmation Of The Plan;
and (d) a Notice Of Materials Distributed To Creditors In Connection With The Hearing On Confirmation Of
The City’s Chapter 9 Plan Of Adjustment Of Debts.
In September 2016, several creditors and interested parties filed objections or reservations of rights to
confirmation of the City’s proposed Plan of Adjustment. On September 30, 2016, the City filed its
memorandum of points and authorities and numerous declarations in support of its Plan of Adjustment and in
response to the objections filed by creditors and interested parties. The City also filed and served notice of
certain amendments to the Plan of Adjustment. In addition, in September 2016, BICEP filed a motion to
compel the City to assume or reject agreements with BICEP and the City filed pleadings opposing that motion.
BICEP and the City ultimately resolved their disputes through mediation.
After hearings held on October 14, November 15, 2016 and December 6, 2016, the Court confirmed (on
December 6, 2016) the City’s Plan of Adjustment. On January 3, 2017, the City lodged the proposed “Order
Confirming Third Amended Plan for the Adjustment of Debts of the City of San Bernardino, California (July
29, 2016), as Modified” (“Proposed Confirmation Order”) and gave notice to creditors and interested parties of
the lodging of that order. One creditor filed an objection to the Proposed Confirmation Order and the City
responded to that objection. On January 27, 2017, the Court held a hearing on the Proposed Confirmation
Order and overruled the objection. On February 1, 2017, the City lodged its revised proposed confirmation
order and gave notice of the lodging of such order. On February 7, 2017, the Court entered its “Order
Confirming Third Amended Plan for the Adjustment of Debts of the City of San Bernardino, California (July
29, 2016), as Modified; Findings of Fact and Conclusions of Law in Respect Thereof” (the “Confirmation
Order.” On March 7, 2017, the Court entered its “Memorandum of Decision re Issuance of Third Party
Injunction in Conjunction with Confirmation of Chapter 9 Plan.”
12.b
Packet Pg. 331 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
61
Note 2 – Bankruptcy (Continued)
I. The City’s Plan of Adjustment and Disclosure Statement (Continued)
In February 2017, creditors with claims based on lawsuits against the City and certain City employees (the
“Appellants”) filed four separate appeals from the Confirmation Order to the United States District Court for
the Central District of California (“District Court”). All of those appeals are currently pending before the
Honorable Otis D. Wright, III, District Court Judge. As of this date, no briefing schedule has been set in any of
the appeals and none of the Appellants have sought a stay of the implementation of the Confirmation Order
pending their appeals.
The Effective Date of the Plan of Adjustment has not yet occurred, and the exact date for the Effective Date has
not been determined. The City is targeting an Effective Date in March or April, although the Effective Date
may occur at a later date in order to accommodate the implementation of the terms of the Plan of Adjustment.
The City expects to file additional disclosure notices and reports that will update information concerning its
General Fund financial condition and Chapter 9 process with EMMA from time to time. The full Plan of
Adjustment and related bankruptcy filings can be found on the City’s website at: http://www.ci.san-
bernardino.ca.us/home_nav/chapter_9_bankruptcy/default.asp
Note 3 – Cash and Investments
Cash and investments are presented in the accompanying financial statements at June 30, 2016 as follows:
Fiduciary Funds
Governmental Business-Type Statement of
Activities Activities Total Net Position Total
Cash and investments 94,970,953$ 43,526,199$ 138,497,152$ 20,364,711$ 158,861,863$
Cash and investments with fiscal agent 1,270,317 - 1,270,317 25,681,024 26,951,341
Restricted cash - 7,814,086 7,814,086 - 7,814,086
Restricted investment - Consent Decree - 22,223,052 22,223,052 - 22,223,052
Total cash and investments 96,241,270$ 73,563,337$ 169,804,607$ 46,045,735$ 215,850,342$
Government-Wide Statement of Net Position
Cash and investments at June 30, 2016, consisted of the following:
Cash:
Cash on hand 14,675$
Deposits with financial institution 37,061,543
Total cash 37,076,218
Investments:
Investments 151,822,783
Investments held by bond trustee 26,951,341
Total investments 178,774,124
Total cash and investments 215,850,342$
As part of the City's investment guidelines, the City continually seeks ways to increase investment income while
not risking investment principal. One way the City accomplishes this is by “sweeping”, on a nightly basis, any
excess cash held in its non-interest bearing checking account to an interest bearing money market account with
the same bank.
12.b
Packet Pg. 332 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
62
Note 3 – Cash and Investments (Continued)
A. Demand Deposits
The carrying amounts of the City’s demand deposits were $37,061,543 at June 30, 2016. Bank balances were
$38,220,200 at that date, the total amount of which was collateralized or insured with securities held by the
pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the
City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this
manner shall have the effect of perfecting a security interest in such collateral superior to those of a general
creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California law
also allows institutions to secure City’s deposits by pledging first trust deed mortgage notes having a value of
150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which
are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City,
however, has not waived the collateralization requirements.
B. Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government
Code and the City's investment policy. The table also identifies certain provisions of the California
Government Code (or the City's investment policy, if more restrictive) that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees
that are governed by the provisions of debt agreements of the City, rather than the general provisions of the
California Government Code or the City's investment policy.
Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Types Maturity of Portfolio One Issuer*
United States Treasury Obligations 5 years None None
United States Federal Agency securities 5 years None None
Bonds, Notes or Registered Warrants Issue
by the State of California or Local
Agencies within the State of California 5 years None None
Bankers' Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 30% None
Time Cerificates of Deposit N/A 25% None
Medium-term Corporates Notes 5 years 30% 15%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass - through Securities 5 years 20% None
Local Agency Investment (LAIF) N/A None $50 million
* Based on state law requirements or City investment policy requirements, whichever is more restrictive.
12.b
Packet Pg. 333 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
63
Note 3 – Cash and Investments (Continued)
C. Investments Authorized by Debt Agreements
Investment of debt proceeds held by fiscal agent’s are governed by provisions of the debt agreements, rather
than the general provisions of the California Government Code or the City’s investment policy. The table
below identifies the investment types that are authorized for investments held by fiscal agents. The table also
identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit
risk.
Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Types Maturity Allowed One Issuer
United States Treasury Obligations None None N/A
United States Federal Agency Securities None None None
Bonds, Notes or Registered Warrants
Issued by the State of California or Local
Agencies within the State of California 5 yrs None None
Bankers' Acceptances 180-360 days None None
Commercial Paper 90-180 days None None
Medium-term Corporate Notes None None None
Money Market Mutual Funds N/A None None
Investment Contracts None None None
D. Fair Value Measurement
As of June 30, 2016, the City’s investments had the following recurring fair value measurements:
Investment Type Level 1 Level 2 Level 3 N/A Total
LAIF -$ 4,127,178$ -$ -$ 4,127,178$
Commercial paper - 1,215,476 - - 1,215,476
Money market mutual funds - - - 55,861,855 55,861,855
Certificates of deposit - 5,671,906 - - 5,671,906
Negotiable certificates of deposit - 2,240,945 - - 2,240,945
Federal agency securities - 57,283,683 - - 57,283,683
U.S. Treasury obligations 14,529,685 - - - 14,529,685
Medium-term corporate notes - 7,712,036 - - 7,712,036
Asset backed securities - 2,179,859 - - 2,179,859
Investment contracts - - - 1,000,160 1,000,160
Held by bond trustee:
Money market mutual funds - - - 25,521,633 25,521,633
Treasury Securities - 351,180 - - 351,180
Investment contracts - - - 1,078,528 1,078,528
Total Investments 14,529,685$ 80,782,263$ -$ 83,462,176$ 178,774,124$
12.b
Packet Pg. 334 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
64
Note 3 – Cash and Investments (Continued)
E. Risk Disclosure
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in
market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a
combination of shorter term and longer term investments and by timing cash flows from maturities so that a
portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the
cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City’s investments (including investments held by
bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution
of the City’s investments by maturity. For purposes of the schedule shown below, any callable securities are
assumed to be held to maturity.
Investment Type Total 1 year or fewer 1 to 2 years Over 2 years
LAIF 4,127,178$ 4,127,178$ -$ -$
Commercial paper 1,215,476 1,215,476 - -
Money market mutual funds 55,861,855 55,861,855 - -
Certificates of deposit 5,671,906 1,244,121 2,402,991 2,024,794
Negotiable certificates of deposit 2,240,945 1,988,072 - 252,873
Federal agency securities 57,283,683 2,508,888 10,855,476 43,919,319
U.S. Treasury obligations 14,529,685 - 526,479 14,003,206
Medium-term corporate notes 7,712,036 1,816,045 2,704,249 3,191,742
Asset backed securities 2,179,859 - 663,311 1,516,548
Investment contracts 1,000,160 1,000,160 - -
Held by bond trustee:
Money market mutual funds 25,521,633 25,521,633 - -
Treasury Securities 351,180 351,180 - -
Investment contracts 1,078,528 - 1,078,528 -
Total Investments 178,774,124$ 95,634,608$ 18,231,034$ 64,908,482$
Investment Maturities
12.b
Packet Pg. 335 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
65
Note 3 – Cash and Investments (Continued)
E. Risk Disclosures (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. However, some issuers do not seek a credit rating. For instance, the California Local Agency
Investment Fund (LAIF) has not sought or received a credit rating. In these cases, the purchaser is solely
responsible for performing their own due diligence before purchasing an investment or participating in an
external investment pool. Certificates of deposit of $250,000 or less are fully insured by the Federal Deposit
Insurance Corporation (FDIC), and therefore, do not seek a credit rating.
Presented below is the minimum rating required by (where applicable) the California Government Code, the
City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.
Investment Type Level 1 Level 2 Level 3 N/A
LAIF -$ 4,127,178$ -$ -$
Commercial paper - 1,215,476 - -
Money market mutual funds - - - 55,861,855
Certificates of deposit - 5,671,906 - -
Negotiable certificates of deposit - 2,240,945 - -
Federal agency securities - 57,283,683 - -
U.S. Treasury obligations 14,529,685 - - -
Medium-term corporate notes - 7,712,036 - -
Asset backed securities - 2,179,859 - -
Investment contracts - - - 1,000,160
Held by bond trustee:
Money market mutual funds - - - 25,521,633
Treasury Securities - 351,180 - -
Investment contracts - - - 1,078,528
Total Investments 14,529,685$ 80,782,263$ -$ 83,462,176$
Disclosure Relating to Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer
beyond that stipulated in the Gov't Code. GASB Statement No. 40 requires disclosure by amount and issuer, of
investments in any one issuer that represent 5% or more of total investments. Investments in any one issuer
(other than U.S. Treasury securities, mutual funds, and external investment pools) that represents 5% or more
of the City's total investments are as follows:
Reported Percentage
Issuer Amount of Portfolio
Federal National Mortgage Association 18,837,927$ 10.54%
Federal Home Loan Banks 10,164,620 5.69%
Federal Home Loan Mortgage Corporation 8,938,926 5.00%
Investment Type
Federal Agency Securities
Federal Agency Securities
Federal Agency Securities
12.b
Packet Pg. 336 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
66
Note 3 – Cash and Investments (Continued)
E. Risk Disclosures (Continued)
Disclosures Relating to Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution,
a government will not be able to recover its deposits or will not be able to recover collateral securities that
are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the
event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to
recover the value of its investment or collateral securities that are in the possession of another party. The
California Government Code and the City’s investment policy do not contain legal or policy requirements that
would limit the exposure to custodial credit risk for deposits or investments, other than the following
provision for deposits: The California Government Code requires that a financial institution secure deposits
made by state or local governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The market value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public
agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed
mortgage notes having a value of 150% of the secured public deposits. At June 30, 2016, the City’s deposits
(bank balances) were collateralized under California Law.
F. Investment in State Investment Pool
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the
oversight of the Treasurer of the State of California. The City’s investments in LAIF at June 30, 2016 included
a portion of pool funds invested in Structure Notes and Asset-Backed Securities:
Structured Notes are debt securities (other than asset-backed securities) whose cash-flow characteristics
(coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have
embedded forwards or options.
Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to
receive a share of the cash flows from pool of assets such as principal and interest repayments from a pool
of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.
As of June 30, 2016, the City had $4,127,178 invested in LAIF, which had invested 2.81% of the pool
investment funds in Structured Notes and Asset-Back Securities. LAIF determines fair value on its investment
portfolio based on market quotations for those securities where market quotations are readily available and
based on amortized cost or best estimate for those securities where market value is not readily available. The
City valued its investments in LAIF as of June 30, 2016, by multiplying its account balance with LAIF times a
fair value factor determined by LAIF. This fair value factor was determined by dividing all LAIF participants’
total aggregate amortized cost by total aggregate fair value. The fair value of the City’s position in the pool is
the same as the value of the pool shares. The credit quality rating of LAIF is unrated as of June 30, 2016.
12.b
Packet Pg. 337 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
67
Note 4 – Notes Receivables
Notes receivable represent loan agreements entered into between the City or the former EDA and unrelated
nongovernmental entities as part of the City’s redevelopment activities, including single-family home buyer
assistance, and real estate development and construction loans. At June 30, 2016, approximately $3.77 million of
notes receivable, net of $2.09 million allowance for doubtful accounts, were reported in the Federal and State
Grants Fund major special revenue fund. At June 30, 2016, the Low and Moderate Income Housing major special
revenue fund reported approximately $23.83 million of notes receivable, net of $10.65 million allowance for
doubtful accounts, are reported. The Successor Agency has seven notes outstanding ranging in amount from
approximately $11,000 to $498,000 totaling $1.16 million, net of $0.44 million allowance for doubtful accounts.
Collection of these notes receivable is subject to the terms of each individual loan agreement.
Note 5 - Interfund Receivables, Payables, and Transfers
A. Due To / From Other Funds
Amounts due to and due from other funds at June 30, 2016, were as follows:
Federal and Water Sewer Internal
General State Grants Enterprise Enterprise
Service
Due From Other Funds Fund Fund Fund Fund
Funds Total
General Fund -$ 601,140$ 18,109$ -$ 5,958$ 625,207$
Nonmajor Governmental Funds - - - 721,511 - 721,511
Integrated Waste Enterprise Fund - - 697,709 - - 697,709$
Water Enterprise Fund 847,592 - - - 29,929 877,521
Sewer Enterprise Fund 153,307 - - - - 153,307
Total 1,000,899$ 601,140$ 715,818$ 721,511$ 35,887$ 3,075,255$
Due To Other Funds
Amounts due to and due from other funds reflect (a) Monies owed to the Integrated Waste Enterprise (IWE)
fund from Water Enterprise and Sewer Enterprise funds for monies for services collected by the Water
Department on behalf of the IWE fund; and (b) inter-fund borrowings to cover short-term operating deficits and
cash overdrafts.
12.b
Packet Pg. 338 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
68
Note 5 - Interfund Receivables, Payables, and Transfers (Continued)
B. Advances To / From Other Funds
Advance to and advances from other funds at June 30, 2016, were as follows:
Nonmajor
Governmental
Advances To Other Funds Funds Total
Low & Moderate Income Housing Fund 42,252$ 42,252$
Nonmajor Governmental Funds 52,948 52,948
Total 95,200$ 95,200$
Advances From Other Funds
The interfund advances above resulted from loans to fund infrastructure and other capital improvements in the
Arden-Guthrie and New Pine Assessment Districts and are expected to be repaid through special assessments
on property owners in those districts.
C. Transfers
Interfund transfers during the year ended June 30, 2016, consisted of the following:
Integrated Internal Non-major
General Waste Service Governmental
Transfers In Fund Enterprise Fund Funds Funds Total
General Fund -$ 13,901,363$ 228,181$ 914,766$ 15,044,310$
Internal Services Fund - 267,503 - - 267,503
Non-major Governmental Funds 109,045 - - - 109,045
Total 109,045$ 14,168,866$ 228,181$ 914,766$ 15,420,858$
Transfers Out
Interfund transfers were principally used to (a) fund operating deficits in non-major funds, (b) reimburse costs
of the General Fund for City-provided services and (c) eliminate deficit fund balances.
12.b
Packet Pg. 339 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
69
Note 6 – Property Held for Resale
Property held for resale represents single-family, multi-family, commercial, and retail real estate acquired by the
City under its Low and Moderate Income Housing Fund and the Federal and State Grant Fund. Approximately 60
properties are reported in the Federal and State Grants Fund major special revenue fund ranging in amount from
under $1,000 to $640,000, and totaling $16.3 million. The Low and Moderate Income Housing major special
revenue fund includes approximately 57 properties ranging in amount from approximately $5,000 to $1.8 million,
and totaling $18.3 million. Property held for resale is recorded at acquisition cost plus improvement costs in non-
accordance with accounting principles generally accepted in the United States of America. These costs will be
charged to current year project expenditures when the related properties are sold or disposed.
Property held for resale in the Successor Agency represents vacant land and commercial and retail real estate
acquired by the EDA as part of its redevelopment activities. Over 52 properties, reported at acquisition cost plus
improvement costs in non-accordance with accounting principles generally accepted in the United States, ranging
from under $1,000 to $16.8 million, and totaling $48.9 million, were transferred to the Successor Agency upon
dissolution of the redevelopment agency. These properties are being held for disposition in accordance with
applicable laws and regulations.
Note 7 – Capital Assets
A. Governmental Activities
The summary of changes in governmental activities capital assets for the year ended June 30, 2016, is as
follows:
Balance Balance
July 1, 2015 Additions Deletions Transfers June 30, 2016
Capital assets, not being depreciated:
Land 113,844,359$ -$ (1,976,166)$ -$ 111,868,193$
Construction in progress 13,755,057 1,759,535 (1,080,364) (3,233,984) 11,200,244
Total capital assets, not being depreciated 127,599,416 1,759,535 (3,056,530) (3,233,984) 123,068,437
Capital assets, being depreciated:
Infrastructure 554,213,766 - (186,156) 3,233,984 557,261,594
Buildings and improvements 74,207,966 544,744 (6,466,836) 407,107 68,692,981
Machinery, vehicles, and equipment 57,212,967 1,361,675 (9,060,702) 2,639,064 52,153,004
Subtotal 685,634,699 1,906,419 (15,713,694) 6,280,155 678,107,579
Less accumulated depreciation
Infrastructure (320,567,041) (14,634,515) 145,830 - (335,055,726)
Buildings and improvements (60,514,805) (1,144,542) 3,428,324 (286,509) (58,517,532)
Machinery, vehicles, and equipment (52,553,416) (1,718,577) 9,054,992 (2,490,335) (47,707,336)
Subtotal (433,635,262) (17,497,634) 12,629,146 (2,776,844) (441,280,594)
Intangible assets, being amortized:
Purchased software 5,946,327 - - - 5,946,327
Accumulated amortization (2,626,295) (594,633) - - (3,220,928)
Subtotal 3,320,032 (594,633) - - 2,725,399
Total capital assets, being depreciated/amortized 255,319,469 (16,185,848) (3,084,548) 3,503,311 239,552,384
Total governmental activities capital assets, net 386,238,917$ (15,020,946)$ (6,141,078)$ 269,327$ 365,346,220$
12.b
Packet Pg. 340 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
70
Note 7 – Capital Assets (Continued)
A. Governmental Activities (Continued)
Depreciation and amortization expense was charged to the functions/programs of the governmental activities as
follows:
General government 1,501,977$
Public safety 776,337
Streets 14,848,013
Culture and recreation 97,757
Community development 2,817
Community services 114,969
Internal service funds 750,397
Total depreciation/amortization expense 18,092,267$
B. Business-Type Activities
The summary of changes in business-type activities capital assets for the year ended June 30, 2016, is as
follows:
Balance Reclassifications Balance
July 1, 2015 Additions Deletions /Transfers June 30, 2016
Capital assets, not being depreciated:
Land and easements 17,822,443$ -$ -$ (412,881)$ 17,409,562$
Construction in progress 17,457,050 8,802,437 (5,519,658) - 20,739,829
Total capital assets, not being depreciated 35,279,493 8,802,437 (5,519,658) (412,881) 38,149,391
Capital assets, being depreciated:
Water rights, wells, and pumping 101,364,865 1,788,590 - (87,485) 103,065,970
Distribution systems 146,680,635 4,423,474 - - 151,104,109
Building, plant, and store yards 133,494,248 986,013 (128,799) 328,835 134,680,297
Other capital assets 46,290,267 654,337 (22,512,900) (2,874,640) 21,557,064
Subtotal 427,830,015 7,852,414 (22,641,699) (2,633,290) 410,407,440
Less accumulated depreciation
Water rights, wells, and pumping (36,269,812) (1,957,582) - - (38,227,394)
Distribution systems (37,493,486) (2,964,361) - - (40,457,847)
Building, plant, and store yards (94,916,175) (1,260,521) 128,799 286,510 (95,761,387)
Other capital assets (39,500,536) (1,952,316) 21,091,049 2,490,335 (17,871,468)
Subtotal (208,180,009) (8,134,780) 21,219,848 2,776,845 (192,318,096)
Total capital assets, being depreciated 219,650,006 (282,366) (1,421,851) 143,555 218,089,344
Total capital assets, net 254,929,499$ 8,520,071$ (6,941,509)$ (269,326)$ 256,238,735$
Depreciation expense was charged to the functions/programs of the business-type activities as follows:
Integrated Waste Enterprise Fund 1,033,023$
Water Enterprise Fund 5,809,331
Sewer Enterprise Fund 1,292,426
Total depreciation expense 8,134,780$
12.b
Packet Pg. 341 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
71
Note 7 – Capital Assets (Continued)
C. Fiduciary Fund Financial Statements
The summary of changes in fiduciary activities capital assets for the year ended June 30, 2016, is as follows:
Balance Balance
July 1, 2015 Additions Deletions June 30, 2016
Capital assets, not being depreciated:
Land 11,620,311$ -$ -$ 11,620,311$
Total capital assets, not being depreciated 11,620,311 - - 11,620,311
Capital assets, being depreciated:
Buildings and improvements 16,519,926 - - 16,519,926
Machinery, vehicles, and equipment 1,282,198 128,306 - 1,410,504
Subtotal 17,802,124 128,306 - 17,930,430
Less accumulated depreciation
Buildings and improvements (9,274,159) (373,429) - (9,647,588)
Machinery, vehicles, and equipment (1,276,858) (20,322) - (1,297,180)
Subtotal (10,551,017) (393,751) - (10,944,768)
Total capital assets, being depreciated 7,251,107 (265,445) - 6,985,662
Total capital assets, net 18,871,418$ (265,445)$ -$ 18,605,973$
12.b
Packet Pg. 342 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
72
Note 8 – Long-Term Liabilities
A. Governmental Activities
A summary of changes in the long-term liabilities of the governmental activities for the year ended June 30,
2016, is as follows:
Balance Debt Debt Balance Due within Due in More
July 1, 2015 Issued Retired June 30, 2016 One Year Than One Year
Governmental Activities:
Capital leases 669,173$ -$ (244,321)$ 424,852$ 257,724$ 167,128$
HUD CDBG liability 1,895,482 - (500,000) 1,395,482 500,000 895,482
California Department of Finance 1,231,423 - (100,000) 1,131,423 100,000 1,031,423
Notes payable:
HUD Section 108 - Arden Guthrie 6,468,000 - (384,000) 6,084,000 404,000 5,680,000
Fire maintenance facility note 1,100,000 - (1,100,000) - - -
New World Software Agreement 2,963,212 - (559,364) 2,403,848 575,529 1,828,319
Total notes payable 10,531,212 - (2,043,364) 8,487,848 979,529 7,508,319
Lease revenue bonds:
City Hall Lease (Refunding Bonds, Series 1996) 6,315,000 - (645,000) 5,670,000 685,000 4,985,000
Total lease revenue bonds 6,315,000 - (645,000) 5,670,000 685,000 4,985,000
California Infrastructure and Economic
Development Bank (CIEDB)
Fire Station Lease 1,792,407 - (1,792,407) - - -
Street Construction 1,218,023 - (1,218,023) - - -
Harriman Place Street Exention Lease 897,920 - (117,860) 780,060 121,172 658,888
Total CIEDB 3,908,350 - (3,128,290) 780,060 121,172 658,888
Certificates of participation:
1999 Certificates of Participation 3,735,000 - (290,000) 3,445,000 305,000 3,140,000
Total certificates of participation 3,735,000 - (290,000) 3,445,000 305,000 3,140,000
Pension obligation bonds:
Taxable Pension Obligation Bonds, 2005 Series A 46,140,860 - - 46,140,860 46,140,860 -
Add: interest accretion 6,783,884 683,732 - 7,467,616 7,467,616 -
Total pension obligation bonds 52,924,744 683,732 - 53,608,476 53,608,476 -
Total 81,210,384$ 683,732$ (6,950,975)$ 74,943,141$ 56,556,901$ 18,386,240$
Classification
12.b
Packet Pg. 343 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
73
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Capital Leases Payable
The City has entered into several lease agreements for the financing of fire vehicles and equipment, air
conditioners, and police vehicles. These lease agreements qualify as capital leases for accounting purposes and,
therefore, have been recorded at the present value of future minimum lease payments as of the date of
inception. All lease agreements have been paid in full except for the air conditioner lease which the City
stopped paying on due to the bankruptcy. The air conditioner has been disposed of; there is no value to the
assets acquired through capital leases. The lease is expected to be settled through the confirmation process of
the bankruptcy.
The annual debt service requirements for the capital leases payable outstanding at June 30, 2016 are as
follows:
Year Ending
June 30, Principal Interest Total
2017 257,724$ 11,542$ 269,266$
2018 81,632 6,877 88,509
2019 85,496 3,013 88,509
Total 424,852$ 21,432$ 446,284$
HUD CDBG Liability
The City was subject to an audit of its Community Development Block Grant Program (CDBG), administered
by the United States Department of Housing and Urban Development (HUD). The audit was conducted by the
Office of the Inspector General of HUD. The City and HUD agreed on actions to resolve monetary findings
related to ineligible or unsupported expenditures and unreported program income. The City has accrued the
total of $1,895,482 owed to its CDBG line of credit as a liability of the governmental activities opinion unit.
The City has acknowledged that if it does not honor the payment schedule below, it will result in funds being
reduced from the City’s CDBG line of credit.
The annual debt service requirements for the HUD CDBG liability outstanding at June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 500,000$ -$ 500,000$
2018 895,482 - 895,482
Total 1,395,482$ -$ 1,395,482$
12.b
Packet Pg. 344 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
74
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
California Department of Finance Liability
As a result of the California Department of Finance’s (DOF) original Due Diligence Review of the Low and
Moderate Income Housing Fund’s uncommitted tax increment to be returned to DOF, the DOF determined
City-contested amounts ranging from $14,041,882 to $1,231,423 were due to DOF. At June 30, 2013, the Low
and Moderate Income Housing Fund reported a liability to DOF in the amount $3,415,155 for this liability.
Subsequent to June 30, 2013, the DOF and the City agreed, via an installment payment agreement as
determined according to Health and Safety Code Section 34179.5, that the City will pay DOF $1,231,423
through December 15, 2027. The adjusted liability has been removed from the Low and Moderate Income
Housing fund and added to the governmental activities long-term debt as of July 1, 2013.
The annual debt service requirements for the California Department of Finance liability outstanding at June 30,
2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 100,000$ -$ 100,000$
2018 100,000 - 100,000
2019 100,000 - 100,000
2020 100,000 - 100,000
2021 100,000 - 100,000
2022-2026 500,000 - 500,000
2027-2028 131,423 - 131,423
Total 1,131,423$ -$ 1,131,423$
HUD Section 108 – Arden Guthrie Focused Neighborhood Revitalization Project Note Payable
The City of San Bernardino entered into a Contract for Loan Guarantee Assistance, a Master Fiscal Agency
Agreement, and executed a promissory note with the United States Department of Housing and Urban
Development pursuant to Section 108 of the Housing and Community Development Act of 1974, as amended
(Section 108 Loan). The proceeds of the loan were then loaned to the EDA to be used for the Arden-Guthrie
Focused Neighborhood Revitalization Project, which affects approximately 20 acres of land located at the
northwest corner of Arden Avenue and 20th Street (Arden-Guthrie Site). Once the Arden-Guthrie Site is sold to
a third-party, the proceeds of the sale are required to be paid to the City. All of the debt service payments on the
Section 108 Loan are the responsibility of the City. The source of funds available for the repayment of the Loan
is the CDBG Program Revenue of the City.
During the initial phase interest is payable from the date of each advance to the “Public Offering Date” and
shall accrue on the unpaid principal balance of the Note and shall be paid in quarterly installments on the first
day of February, May, August and November, “Interim Payment Date”. The amount of interest payable on each
Interim Payment Date will represent interest accrued on the unpaid balance during the three month period
ending before the Interim Payment Date, in the case of the first Interim Payment Date, the period from the date
of this Note to the day before the first Interim Payment Date. The initial interest rate will be set on the date of
such advance at a rate per annum equal to 20 basis points (.2%) above the Applicable LIBOR Rate on such
Reset Date.
12.b
Packet Pg. 345 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
75
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
HUD Section 108 – Arden Guthrie Focused Neighborhood Revitalization Project Note Payable
(Continued)
Interest payments are due semiannually on February 1 and August 1 and continue through August 1, 2026.
Principal payments are due annually on August 1, and continue through August 1, 2026.
The annual debt service requirements for the HUD Section 108 – Arden Guthrie note payable outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 404,000$ 327,874$ 731,874$
2018 424,000 306,316 730,316
2019 454,000 282,867 736,867
2020 494,000 257,193 751,193
2021 534,000 229,020 763,020
2022-2026 3,140,000 638,274 3,778,274
2027 634,000 18,291 652,291
Total 6,084,000$ 2,059,835$ 8,143,835$
Fire Maintenance Facility Note Payable
On August 1, 2009, the City entered into a note agreement with a property owner for the purchase of land to be
used for the City’s Fire Department Maintenance Facility. The note is for the amount of $1,200,000 with a
maturity date of July 1, 2019 and bears interest at 5.0% per annum. Principal payment is due on July 1, 2019,
but the City has an option to prepay the principal. The City made a principal payment of $100,000 in December
2014. Interest payments are due semiannually on January 1 and July 1, commencing on January 1, 2010
through July 1, 2019. Due to the annexation of the San Bernardino City Fire Department to the San Bernardino
County Fire Protection District the City prepaid the Fire Maintenance Facility note payable during 2016. The
balance of the Fire Maintenance Facility note payable at June 30, 2016 was $0.
New World Note Payable
In 2011, the City entered into a subscription agreement for the acquisition of computer software. The agreement
has the substance of a note payable for accounting purposes and has been recorded at the present value of the
annual payments of $645,000, calculated using a discount rate of 2.89%. The final payment is due July 1, 2019.
The annual debt service requirements for the New World note payable outstanding at June 30, 2016 are as
follows:
Year Ending
June 30, Principal Interest Total
2017 575,529$ 69,471$ 645,000$
2018 592,162 52,838 645,000
2019 609,275 35,725 645,000
2020 626,882 18,118 645,000
Total 2,403,848$ 176,152$ 2,580,000$
12.b
Packet Pg. 346 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
76
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Lease Revenue Refunding Bonds (City Hall Project), Series 1996
$16,320,000 of Lease Revenue Refunding Bonds (City Hall Project), Series 1996, were issued to refund the
Central City Project, $12,000,000 Certificates of Participation (Series 1992) and to finance the acquisition of
certain equipment and other capital improvements by the City. These bonds consisted of: $4,235,000 of serial
bonds with interest rates varying from 4.15% to 5.00%, and $1,690,000 of term bonds bearing interest at
5.10%, $865,000 of term bonds, bearing interest of 5.30%, and $3,215,000 of term bonds, bearing interest at
5.60% and $6,315,000 of term bonds, bearing interest at 5.70%. Interest is payable semiannually on January 1
and July 1. Remaining term bonds are due January 1, 2015, and January 1, 2023, and shall be called and
redeemed before maturity from money deposited into the term bond sinking fund.
The bonds are subject to optional redemption as a whole or in part at the times and prices (expressed as a
percentage of the principal amount so redeemed) as set forth in the bond documents. A reserve account is
required to be maintained in accordance with the bond documents. As of June 30, 2016, the reserve requirement
was $1,497,030 and the amount actually held in the reserve account was $1,107,853.
The bonds and the interest thereon were previously payable from, and secured by a pledge of, lease payments to
be paid by the City of San Bernardino pursuant to a lease purchase agreement between the EDA as lessor and
the City as lessee. In order for the City to secure its obligations pursuant to the lease agreement, the City will
grant to the former EDA, which will be assigned to First Trust of California National Association, as trustee, its
interest in the lease agreement, which includes its rights to acquire the leased premises, upon payment of
principal of and interest on the bonds. Upon dissolution of the EDA, the bonds became a liability of the City.
The annual debt service requirements for the Lease Revenue Refunding Bonds (City Hall Project), Series 1996,
outstanding at June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 685,000$ 323,190$ 1,008,190$
2018 720,000 284,145 1,004,145
2019 760,000 243,105 1,003,105
2020 805,000 199,785 1,004,785
2021 850,000 153,900 1,003,900
2022-2023 1,850,000 159,600 2,009,600
Total 5,670,000$ 1,363,725$ 7,033,725$
California Infrastructure and Economic Development Bank – Fire Station Lease
On August 2, 2004, the California Infrastructure and Economic Development Bank (CIEDB) and the City
entered into a lease agreement in regard to the purchase of a Fire Station for an amount of $2,550,000. Subject
to the provisions of the lease, the City agrees to pay to the CIEDB as rental for use and occupancy of the Fire
Station lease payments upon a term of 25 years from the effective day at an interest rate of 2.92% per annum.
The base rental payments are due on February 1 and August 1 of each year, commencing on February 1, 2005,
through August 1, 2029. Due to the annexation of the San Bernardino City Fire Department to the San
Bernardino County Protection District the City prepaid the California Infrastructure and Economic
Development Bank – Fire Station Lease during 2016. The balance of the Fire Maintenance Facility note
payable at June 30, 2016 was $0.
12.b
Packet Pg. 347 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
77
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
California Infrastructure and Economic Development Bank – Street Construction Lease
On September 27, 2005, the California Infrastructure and Economic Development Bank (CIEDB) and the City
entered into a financing agreement for pavement reconstruction and 25.5 miles of pavement rehabilitation
projects on public streets throughout the City for an amount of $10,000,000. Interest rate is 2.37% per annum.
The City agreed to pay the CIEDB on August 1 and February 1, commencing on August 1, 2006, through
August 1, 2015. The California Infrastructure and Economic Development Bank – Street Construction Lease
was paid in full as of June 30, 2016.
California Infrastructure and Economic Development Bank – Harriman Place Extension Lease
On August 28, 2001, the California Infrastructure and Economic Development Bank (CIEDB) and the City
entered into a lease agreement in regard to the Harriman Place Street Extension Project (Project) for an amount
of $2,000,000. Interest rate is 2.81% per annum. The Project is located on real property owned by the City.
Subject to the provisions of the lease, the City agreed to pay to the CIEDB as rental for use and occupancy of
the Harriman Street Extension lease payments on February 1 and August 1 of each year, commencing on
August 1, 2004, through August 1, 2021.
The annual debt service requirements for the Harriman Place Extension Lease outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 121,172$ 20,217$ 141,389$
2018 124,577 16,764 141,341
2019 128,077 13,215 141,292
2020 131,676 9,565 141,241
2021 135,377 5,813 141,190
2022 139,181 1,956 141,137
Total 780,060$ 67,530$ 847,590$
1999 Certificates of Participation
On September 23, 1999, the San Bernardino Joint Powers Financing Authority issued $15,480,000 of
Refunding Certificates of Participation (Certificates). The Certificates were issued to retire $2,325,000
outstanding of Refunding Certificates of Participation (South Valle Public Improvement Project) dated
April 1, 1987, and $5,910,000 outstanding of Certificates of Participation (1995 Police Station Financing
Project) dated April 1, 1995, and to provide funds for capital improvements (201 Building Projects).
The Certificates mature on September 1 of each year through September 1, 2024, in amounts ranging from
$330,000 to $1,080,000. The interest represented by the Certificates is calculated on the basis of a 360-day
year of twelve 30-day months, from September 1, 1999, at the rates per annum set forth in the bond
documents and will represent the sum of the portions of the lease payments designated as interest coming due
during the six months preceding each interest payment date. The interest rates will range approximately from
3.70% to 5.50% per annum.
12.b
Packet Pg. 348 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
78
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
1999 Certificates of Participation (Continued)
The Certificates maturing on September 1, 2020, are subject to mandatory sinking fund redemption in part on
September 1 in each year on or after September 1, 2010, from the principal components of the lease payments
required to be paid by the City pursuant to the Lease Agreements with respect to each such redemption date, at
a redemption price equal to the principal amount thereof to be redeemed, together with interest accrued thereon
to the date fixed for redemption, without premium, in accordance with the terms identified in the bond
documents. The Certificates maturing on September 1, 2024, are subject to mandatory sinking fund redemption
in part on September 1, 2021, from the principal components of the lease payments required to be paid by the
City pursuant to the Lease Agreements with respect to each such redemption date, at a redemption price equal
to the principal amount thereof to be redeemed, together with interest accrued thereon to the date fixed for
redemption, without premium, in accordance with the terms identified in the bond documents.
The Certificates represent direct, undivided fractional interest in lease payments to be made by the City under
the lease agreements. A reserve fund is required to be maintained in an amount equal to the maximum annual
debt service. At June 30, 2016, the reserve requirement was $1,181,613 and the amount actually held in the
reserve account was $1,114,061. The total outstanding balance of the Certificates at June 30, 2016 was
$7,920,000 of which $3,445,000 is reported as a long-term liability of the City, which is the portion of the
Certificates that represent the Police Station portion. Repayment of this portion of the Certificates is funded
from the City’s general revenues under the terms of the lease agreement. The remaining $4,475,000
outstanding balance of the Certificates at June 30, 2016, is reported as a long-term liability of the Successor
Agency, which is the portion of the Certificates that represents the South Valle Refunding and 201 Building
Projects portions.
The annual debt service requirements for the 1999 Certificates of Participation outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 305,000$ 181,088$ 486,088$
2018 325,000 163,763 488,763
2019 340,000 145,475 485,475
2020 360,000 126,225 486,225
2021 380,000 105,875 485,875
2022-2025 1,735,000 197,313 1,932,313
Total 3,445,000$ 919,739$ 4,364,739$
Taxable Pension Obligation Bonds, 2005 Series A
In October 2005, the City issued City of San Bernardino Taxable Pension Obligation Bonds, 2005 Series A,
consisting of $36,050,000 principal amount of Taxable Pension Obligation Bonds, Series A-1 (standard bonds)
and $14,351,583 principal amount of Taxable Pension Obligation Bonds, 2005 Series A-2 (capital appreciation
bonds). The City issued the bonds in order to prepay its unfunded accrued actuarial liability related to the City’s
safety retirement plan.
12.b
Packet Pg. 349 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
79
Note 8 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Taxable Pension Obligation Bonds, 2005 Series A (Continued)
The standard bonds are dated October 1, 2005, with an interest rate of 5.628% per annum, maturing annually
commencing October 1, 2024, through October 1, 2035. Interest is due semiannually on April 1 and October 1,
commencing on October 1, 2006 through October 1, 2035. The capital appreciation bonds are dated October 1,
2005, with interest rates varying from 4.993% to 5.877% per annum, maturing annually commencing
October 1, 2007, through October 1, 2024. Interest is due semiannually on April 1 and October 1, 2006 through
October 1, 2035.
The City is in default on these bonds since the City did not pay interest or principal on these bonds beginning in
fiscal year 2013 and has recorded the full amount of the outstanding principal as a current portion of their long-
term debt as of June 30, 2015. Please see Note 2 Bankruptcy. Subsequent to June 30, 2015, the City reached a
settlement agreement with the bond creditors which is contingent upon the Bankruptcy Court’s confirmation of
the City’s Plan of Adjustment. Pursuant to the settlement agreement, bond creditors’ claims against the City
will be reduced to $50.7 million payable in installments over a 30 year term.
On March 21, 2016, the Mayor and Common Council approved a settlement in the City’s Chapter 9 bankruptcy
case between the City and the holders of the City-issued 2005 Pension Obligation Bonds that have been in
default since 2012. In the settlement agreement dated March 29, 2016, the settlement reduces the City’s
payments to the bondholders by approximately $45 million. The payments are scheduled to be made over a 30
year period starting one year after the City’s Chapter 9 plan is confirmed by the bankruptcy courts. Under the
settlement, the bondholders will receive payment equal to approximately 40 percent of their debt on a present
value basis, discounted using the existing coupon rate.
The annual debt service requirements for the Taxable Pension Obligation Bonds, 2005 Series A, outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 7,043,871$ 2,028,894$ 9,072,765$
2018 1,464,104 2,028,894 3,492,998
2019 1,431,739 2,028,894 3,460,633
2020 1,396,685 2,028,894 3,425,579
2021 1,363,238 2,028,894 3,392,132
2022-2026 7,368,839 10,051,608 17,420,447
2027-2031 13,605,000 7,646,060 21,251,060
2032-2036 19,935,000 2,969,474 22,904,474
Total 53,608,476$ 30,811,612$ 84,420,088$
12.b
Packet Pg. 350 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
80
Note 8 – Long-Term Liabilities (Continued)
B. Business-type Activities
A summary of changes in the long-term liabilities of the business-type activities for the year ended June 30,
2016, is as follows:
Balance Debt Debt Balance Due within Due in More
July 1, 2015 Issued Retired June 30, 2016 One Year Than One Year
Business-Type Activities:
Integrated Waste equipment capital leases 2,652,586$ -$ (2,652,586)$ -$ -$ -$
Notes payable:
2002 California Infrastructure and
Economic Development Bank - Water Note 4,602,020 - (594,440) 4,007,580 614,294 3,393,286
2007 California Infrastructure and
Economic Development Bank - Water Note 6,879,391 - (492,777) 6,386,614 506,131 5,880,483
2012 California Infrastructure and
Economic Development Bank - Water Note 9,162,694 - (435,113) 8,727,581 446,470 8,281,111
2012 San Bernardino Valley Municipal
Water District Note 472,422 - (225,535) 246,887 246,887 -
2016 San Bernardino Valley Municipal
Water District Note - 1,200,000 - 1,200,000 300,000 900,000
State Revolving Fund 1,709,710 - (1,709,710) - - -
Total notes payable 22,826,237 1,200,000 (3,457,575) 20,568,662 2,113,782 18,454,880
Certificates of participation:
1998 Sewer Revenue Certificates of Participation 6,375,000 - (6,375,000) - - -
Less: unamortized discount (28,692) - 28,692 - - -
Total certificates of participation 6,346,308 - (6,346,308) - - -
Total 31,825,131$ 1,200,000$ (12,456,469)$ 20,568,662$ 2,113,782$ 18,454,880$
Classification
Integrated Waste Equipment Capital Leases Payable
The City entered into several lease purchase agreements for the financing of the acquisition of refuse trucks and
street sweepers. The terms of leases are 84 months each, with individual semi-annual payments ranging from
$165,999 to $945,575. Interest rate ranges from 2.89% to 3.78%. These lease agreements qualify as capital
leases for accounting purposes and, therefore, have been recorded at the present value of future minimum lease
payments as of the date of inception. These lease agreements qualify as capital leases for accounting purposes,
and therefore, have been recorded at the present value of the future minimum lease payments as of the date of
inception. Due to the outsourcing of Integrated Waster Fund operations to Burrtec Waste Industries, Inc. the
City prepaid the remaining capital lease payable and sold the capital assets to Burrtec Waste Industries, Inc.
prior to June 30, 2016.
2002 California Infrastructure and Economic Development Bank (CIEDB) – Water Note
In April 2002, CIEDB issued a $10,000,000 note to the City Water Department to provide funding for
transmission mains, booster stations and a reservoir identified in the Water System Reliability Schedule of
Improvements. The note was issued with an interest rate of 3.34% per annum with interest payable
semiannually on February 1 and August 1. Principal payments are due annually on February 1.
12.b
Packet Pg. 351 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
81
Note 8 – Long-Term Liabilities (Continued)
B. Business-type Activities (Continued)
2002 California Infrastructure and Economic Development Bank (CIEDB) – Water Note (Continued)
The annual debt service requirements for the 2002 CIEDB Water note payable outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 614,294$ 133,854$ 748,148$
2018 634,812 113,336 748,148
2019 656,014 92,133 748,147
2020 677,925 70,222 748,147
2021 700,568 47,579 748,147
2022 723,967 24,181 748,148
Total 4,007,580$ 481,305$ 4,488,885$
2007 California Infrastructure and Economic Development Bank (CIEDB) – Water Note
In July 2007, CIEDB issued a $10,000,000 note to the City Water Department (Department) to provide funding
for booster stations and transmission mains in the Verdemont area. The note was issued with an interest rate of
2.71% per annum with interest payable semiannually on February 1 and August 1. Principal payments are due
annually on August 1.
The annual debt service requirements for the 2007 CIEDB Water note payable outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 506,131$ 166,219$ 672,350$
2018 519,847 152,317 672,164
2019 533,935 138,038 671,973
2020 548,405 123,373 671,778
2021 563,266 108,310 671,576
2022-2026 3,053,743 300,920 3,354,663
2027 661,287 8,960 670,247
Total 6,386,614$ 998,137$ 7,384,751$
2012 California Infrastructure and Economic Development Bank (CIEDB) – Water Note
In May 2012, CIEDB issued a $10,000,000 note to the City Water Department to provide funding for the
construction of the 12 million gallon Ogden Reservoir and certain pipeline improvements. The note was issued
with an interest rate of 2.61% per annum with interest payable semiannually on February 1 and August 1.
Principal payments are due annually on August 1.
12.b
Packet Pg. 352 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
82
Note 8 – Long-Term Liabilities (Continued)
B. Business-type Activities (Continued)
2012 California Infrastructure and Economic Development Bank (CIEDB) – Water Note (Continued)
The annual debt service requirements for the 2012 CIEDB Water note payable outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 446,470$ 221,963$ 668,433$
2018 458,123 210,158 668,281
2019 470,080 198,045 668,125
2020 482,349 185,616 667,965
2021 494,938 172,863 667,801
2022-2026 2,675,336 661,050 3,336,386
2027-2031 3,043,174 288,412 3,331,586
2032 657,111 8,575 665,686
Total 8,727,581$ 1,946,682$ 10,674,263$
2012 San Bernardino Valley Municipal Water District Note
In July 2012, the Department closed escrow on the purchase of real property from the San Bernardino Valley
Municipal Water District (SBVMWD), which included a down payment of $1,000,000 and a promissory note
of $1,117,500 to be paid in sixty (60) monthly installments due on or before the 1st of each month.
The annual debt service requirements for the 2012 San Bernardino Valley Municipal Water District note
payable outstanding at June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 246,887$ 1,443$ 248,330$
Total 246,887$ 1,443$ 248,330$
2015 San Bernardino Valley Municipal Water District Note
In December 2015, the Department entered into an agreement loan of $1,200,000 with the San Bernardino
Valley Municipal Water District (SBVMWD) for UV System Rehabilitation project improvements to the Rapid
Infiltration and Extraction (RIX) facility owned by the City of Colton and the Department. The note is to be
paid in four (4) yearly installments of $300,000 plus interest at the LAIF interest rate of return.
State Revolving Fund
The State Water Resources Control Board issued a note to Santa Ana Watershed Authority to provide funding
the San Bernardino/Colton Rapid Infiltration Extraction (RIX) project in the amount of $25,978,599. In April
2001, the agreement was amended to transfer the note obligation to the successors in interest being the City of
San Bernardino Board of Water Commissioners, and the City of Colton. The note was paid off during the fiscal
year ended June 30, 2016.
12.b
Packet Pg. 353 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
83
Note 8 – Long-Term Liabilities (Continued)
B. Business-type Activities (Continued)
1998 Refunding Sewer Revenue Certificates of Participation
In 1998, the sewer treatment utility issued $36,230,000 in Certificates of Participation to advance refund the
1992 Sewer Certificates of Participation and fund additional capital improvements. The 1992 Certificates
originally provided for the construction of certain capital improvements. The proceeds of the 1998 Certificates
were invested and used to pay interest on the 1998 issue until February 1, 2001, when the 1992 Certificates
were called at a prepayment premium of two percent. The City Water Department now pays the installment
payments on the 1998 Certificates from the net revenues of the sewer treatment system. The Certificates of
Participation were paid off during fiscal year ended June 30, 2016.
C. Fiduciary Fund Financial Statements
A summary of changes in the long-term liabilities of the fiduciary fund financial statements for the year ended
June 30, 2016, is as follows:
Balance Debt Debt Balance Due within Due in More
July 1, 2015 Issued Retired June 30, 2016 One Year Than One Year
Fiduciary Activities:
Notes payable:
HUD Section 108 - Cinema Project 2,065,000$ -$ (530,000)$ 1,535,000$ 560,000$ 975,000$
CMB Infrastructure Investment Group 20,500,000 - (20,500,000) - - -
Total notes payable 22,565,000 - (21,030,000) 1,535,000 560,000 975,000
Tax allocation bonds:
Series 1998A, Refunding 7,205,000 - (1,040,000) 6,165,000 1,100,000 5,065,000
Series 1998B, Refunding 3,775,000 - (3,775,000) - - -
Series 2002A 2,780,000 - (2,780,000) - - -
Series 2002, Refunding 17,420,000 - (17,420,000) - - -
Series 2005A, Refunding 34,220,000 - (3,125,000) 31,095,000 3,305,000 27,790,000
Series 2005B, Refunding 12,775,000 - (1,205,000) 11,570,000 1,275,000 10,295,000
Series 2006, Taxable 17,305,000 - (17,305,000) - - -
Series 2010A 5,765,000 - (210,000) 5,555,000 225,000 5,330,000
Series 2010B 2,440,000 - (145,000) 2,295,000 135,000 2,160,000
Series 2016A, Refunding - 27,850,000 - 27,850,000 980,000 26,870,000
Series 2016B, Refunding - 16,030,000 - 16,030,000 - 16,030,000
Unamortized discount (508,499) (53,600) 509,265 (52,834) - (52,834)
Unamortized premium 805,671 3,925,070 (114,998) 4,615,743 - 4,615,743
Total tax allocation bonds 103,982,172 47,751,470 (46,610,733) 105,122,909 7,020,000 98,102,909
Mortgage revenue bonds:
Highland Senior Housing 1995 1,100,000 - (65,000) 1,035,000 70,000 965,000
Casa Ramona Senior Housing 1995 970,000 - (60,000) 910,000 65,000 845,000
Total mortgate revenue bonds 2,070,000 - (125,000) 1,945,000 135,000 1,810,000
Certificates of participation:
1999 Certificates of Participation 4,855,000 - (380,000) 4,475,000 400,000 4,075,000
Total certificates of participation 4,855,000 - (380,000) 4,475,000 400,000 4,075,000
Total 133,472,172$ 47,751,470$ (68,145,733)$ 113,077,909$ 8,115,000$ 104,962,909$
Classification
12.b
Packet Pg. 354 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
84
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
HUD Section 108 – Cinema Project Note Payable
The City of San Bernardino EDA and MDA-San Bernardino Associates, LLC (MDA) entered into a HUD
Section 108 Loan Agreement in December of 1998. The proceeds of the EDA Loan, together with other
sources of funds, were used and applied by MDA for the payment of the costs of the development,
construction, improvement and financing of a multi-screen cinema complex and related common area
improvements. In order for the EDA to be able to make the loan, the EDA entered into a Contract for Loan
Guarantee Assistance, a Master Fiscal Agency Agreement, and executed promissory notes with the United
States of America through its Department of Housing and Urban Development pursuant to Section 108 of the
Housing and Community Development Act of 1974, as amended.
Interest payments are due semiannually on February 1 and August 1 through August 1, 2018. Principal
payments are to be made annually on August 1, and continue through August 1, 2018.
The annual debt service requirements for the HUD Section 108 – Cinema Project note payable outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 560,000$ 36,598$ 596,598$
2018 605,000 20,347 625,347
2019 370,000 5,772 375,772
Total 1,535,000$ 62,717$ 1,597,717$
CMB Infrastructure Investment Group Notes Payable
On October 5, 2009, the former EDA entered into a Loan Agreement (Loan) for borrowing funds from CMB
Infrastructure Investment Group III, in the amount of $15,000,000, in accordance with the Employment-Based
Immigration Fifth Preference (EB-5) Immigrant Investor Visa Program. Interest only payments are due on the
first day of each quarter at the rate of 5.25%. The Note was paid of in full before its maturity on September 30,
2015.
On September 1, 2010, the former EDA entered into a Loan Agreement (Loan) for borrowing funds from CMB
Infrastructure Investment Group V, in the amount of $8,000,000, in accordance with the EB-5 Immigrant
Investor Visa Program. Interest only payments are due on the first day of each quarter at the rate of 5.25% per
annum. The Note matures on October 1, 2016.
On March 1, 2011, the former EDA entered into a Loan Agreement (Loan) for borrowing funds from CMB
Infrastructure Investment Group VI-C, in the amount of $10,000,000, in accordance with the EB-5 Immigrant
Investor Visa Program. Interest only payments are due on the first day of each quarter at the rate of 5.25% per
annum. The Note matures on January 1, 2018.
The CMB Infrastructure Investment Group V and VI-C Notes Payable were refinanced in fiscal year 2016 via
the issuance of the Tax Allocation Refunding Bonds, Series 2016A. The outstanding balance on these notes at
June 30, 2016 is $0.
12.b
Packet Pg. 355 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
85
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Refunding Bonds, Series 1998A
The $19,000,000 of tax allocation refunding bonds, issue of 1998, Series A, consist of serial bonds with varying
interest rates from 3.600% to 5.750% per annum. Interest is payable semiannually on January 1 and July 1.
Serial bonds mature annually on July 1 through July 1, 2020.
The proceeds of the 1998 Series A Tax Allocation Refunding Bonds along with the proceeds of the 1998 Series
B Subordinated Tax Allocation Refunding Bonds were used to advance refund $20,990,000 of outstanding
Central City Project Tax Allocation Refunding Bonds, 1991 Series A and $4,005,000 of outstanding Central
City Project Subordinated Tax Allocation Bonds 1991 Series B.
The Series A bonds are not subject to optional redemption. The bonds are secured by a pledge of property tax
apportionments from the Central City Project Area. A reserve account is required to be maintained in
accordance with the bond documents. A reserve account is required to be maintained in the amount of
$1,456,515. The balance held in the reserve account as of June 30, 2016 was $1,456,874. At June 30, 2016,
$6,165,000 of the bonds were outstanding.
The annual debt service requirements for the Tax Allocation Refunding Bonds, Series 1998A outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 1,100,000$ 322,863$ 1,422,863$
2018 1,160,000 257,888 1,417,888
2019 1,230,000 189,175 1,419,175
2020 1,300,000 116,438 1,416,438
2021 1,375,000 39,531 1,414,531
Total 6,165,000$ 925,895$ 7,090,895$
Tax Allocation Refunding Bonds, Series 1998B
The $8,590,000 of subordinated tax allocation refunding bonds, issue of 1998 Series B, consists of $4,815,000
of serial bonds with varying interest rates from 4.500% to 5.875% per annum and $3,775,000 of term bonds,
bearing interest at 6.000% per annum. Interest is payable semiannually on January 1 and July 1. Serial bonds
mature annually on July 1 through July 1, 2014. Term bonds are due July 1, 2020, and shall be called and
redeemed before maturity from money deposited into the Term Bond Sinking Fund on July 1, 2015, to July 1,
2020, without premium.
The proceeds of the 1998 Series B subordinated Tax Allocation Refunding Bonds along with the 1998 Series A
Tax Allocation Refunding Bonds were used to advance refund $20,990,000 of outstanding Central City Project
Tax Allocation Refunding Bonds, 1991 Series A and $4,005,000 of outstanding Central City Project
Subordinated Tax Allocation Bonds, 1991 Series B.
12.b
Packet Pg. 356 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
86
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Refunding Bonds, Series 1998B (Continued)
Bonds maturing on or after July 1, 2009, are subject to redemption before maturity, at the option of the former
EDA, from available funds, on any date after July 1, 2008. Such bonds will be redeemed at the times and prices
(expressed as a percentage of the principal amount so redeemed) as set forth in the bond documents. The bonds
are secured by a pledge of property tax apportionments from the Central City Project Area. A reserve account is
required to be maintained in accordance with the bond documents.
The Tax Allocation Refunding Bonds, Series 1998B Bonds were refunded in fiscal year 2016 via the issuance
of the Tax Allocation Refunding Bonds, Series 2016B. The outstanding balance at June 30, 2016 is $0.
Tax Allocation Bonds, Series 2002A
In January 2002, the San Bernardino Joint Powers Financing Authority issued $3,635,000 in tax allocation
bonds to fund certain capital improvement projects in the Mount Vernon Project Area, to fund a reserve fund,
and to pay costs of issuance of the bonds. Interest on the bonds is payable June 1, 2002, and semi-annually
thereafter on June 1 and December 1 of each year at rates ranging from 4.7% to 6.2% per annum. The bonds
consist of term bonds ranging in amounts from $285,000 to $2,025,000 maturing from 2006 to 2031. Principal
installments are payable annually on December 1 ranging in amount from $50,000 to $445,000 through
December 1, 2031.
Term bonds maturing on December 1, 2012, are subject to mandatory prepayment, on each December 1,
commencing on December 1, 2007, through December 1, 2012. Term bonds maturing on December 1, 2021,
are subject to mandatory prepayment on each December 1, commencing on December 1, 2013, through
December 1, 2021. Term bonds maturing on December 1, 2031, are subject to mandatory prepayment, on each
December 1, commencing on December 1, 2022.
The Tax Allocation Bonds Series 2002A were refunded in fiscal year 2016 via the issuance of the Tax
Allocation Refunding Bonds, Series 2016A. The outstanding balance at June 30, 2016 is $0.
Tax Allocation Refunding Bonds, Series 2002
In April 2002, the San Bernardino Joint Powers Financing Authority issued $30,330,000 in tax allocation
refunding bonds to refund the 1995B Tax Allocation Bonds, to finance certain redevelopment activities in the
former EDA’s project areas, to fund a reserve fund for the bonds, fund the interest account, and pay costs of
issuance of the bonds. As a result, the refunded bonds are considered defeased and the liability has been
removed from the financial statements.
The bonds consist of term bonds of $7,100,000 maturing from 2013 to 2018 in annual installments ranging
from $1,190,000 to $1,500,000, term bonds of $3,475,000 maturing from 2019 to 2020 in annual installments
ranging from $1,685,000 to $1,790,000, and term bonds of $9,440,000 maturing from 2021 to 2026 in annual
installments ranging from $1,120,000 to $2,770,000. Interest is payable semi-annually on October 1 and April 1
at rates ranging from 3.25% to 5.625% per annum.
The term bonds maturing on April 1, 2018, are subject to mandatory prepayment, on each April 1, commencing
on April 1, 2013, through April 1, 2018. Term bonds maturing on April 1, 2020, are subject to mandatory
prepayment, on April 1, 2019, and April 1, 2020. Term bonds maturing on April 1, 2026, are subject to
mandatory prepayment on each April 1, commencing on April 1, 2021, through April 1, 2026.
12.b
Packet Pg. 357 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
87
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Refunding Bonds, Series 2002 (Continued)
The former EDA agreed to pay the Authority principal and interest payments solely from the EDA’s surplus tax
revenues from the Central City North, State College No. 4, Southeast Industrial Park, Northwest, South Valle,
Uptown and Tri-City Redevelopment Project Areas.
The Tax Allocation Refunding Bonds Series 2002 were refunded in fiscal year 2016 via the issuance of the Tax
Allocation Refunding Bonds, Series 2016A. The outstanding balance at June 30, 2016 is $0.
Tax Allocation Refunding Bonds, Series 2005A
In September 2005, the San Bernardino Joint Powers Financing Authority issued $55,800,000 in tax allocation
refunding bonds to current refund $55,800,000 of the outstanding 1995A Tax Allocation Refunding Bonds. The
remaining portion of the 1995A Bonds was refunded with the proceeds of the Authority’s Tax Allocation
Refunding Bonds, Series 2005B (see following section). As a result, the 1995A Tax Allocation Refunding
Bonds are considered to be defeased and the liability has been removed from the financial statements.
The Series 2005A bonds consist of serial bonds with varying interest rates from 5.15% to 5.75% per annum.
Interest is payable semi-annually on April 1 and October 1. Serial bonds mature annually on October 1 through
October 1, 2025.
The Series 2005A bonds are not subject to optional redemption. The former EDA agreed to pay the Authority
principal and interest payments solely from the EDA's tax revenues from the Central City North, State College
Project No. 4, Southeast Industrial Park, Northwest, South Valle, Uptown, and Tri-City Redevelopment Project
Areas.
A reserve account is required to be maintained in the amount of $5,101,721. The balance held in the reserve
account as of June 30, 2016 was $2,086,442. At June 30, 2016, $34,220,000 of the bonds were outstanding.
The reacquisition price exceeded the net carrying amount of the old debt by $1,116,000. This amount is being
netted against the new debt and being amortized over the life of the new debt. The advance refunding resulted
in an increase in debt service payments over the next 20 years of $18,089 and resulted in an economic gain of
$1,940,000.
The annual debt service requirements for the Tax Allocation Refunding Bonds, Series 2005A outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 3,305,000$ 1,692,944$ 4,997,944$
2018 3,495,000 1,497,444 4,992,444
2019 3,695,000 1,290,731 4,985,731
2020 3,905,000 1,072,231 4,977,231
2021 4,135,000 841,081 4,976,081
2022-2026 12,560,000 1,818,438 14,378,438
Total 31,095,000$ 8,212,869$ 39,307,869$
12.b
Packet Pg. 358 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
88
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Revenue Refunding Bonds, Series 2005B
In September 2005, the San Bernardino Joint Powers Financing Authority issued $21,105,000 in tax allocation
refunding bonds to current refund $21,105,000 of the outstanding 1995A Tax Allocation Refunding Bonds. The
remaining portion of the 1995A Bonds was refunded with the proceeds of the Authority’s Tax Allocation
Refunding Bonds, Series 2005A (see preceding section). As a result, the 1995A Tax Allocation Refunding
Bonds are considered to be defeased and the liability has been removed from the financial statements.
The Series 2005B bonds consist of serial bonds with varying interest rates from 5.15% to 5.75% per annum.
Interest is payable semi-annually on April 1 and October 1. Serial bonds mature annually on October 1 through
October 1, 2025.
The Series 2005B bonds are not subject to optional redemption. The former EDA agreed to pay the Authority
principal and interest payments solely from the EDA's tax revenues from the Central City North, State College
Project No. 4, Southeast Industrial Park, Northwest, South Valle, Uptown and Tri-City Redevelopment Project
Areas.
A reserve account is required to be maintained in the amount of $1,946,566. The balance held in the reserve
account as of June 30, 2016 was $819,204. At June 30, 2016, $13,915,000 of the bonds were outstanding.
The reacquisition price exceeded the net carrying amount of the old debt by $422,100. This amount is being
netted against the new debt and being amortized over the life of the new debt.
The annual debt service requirements for the Tax Allocation Refunding Bonds, Series 2005B outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 1,275,000$ 628,619$ 1,903,619$
2018 1,350,000 553,150 1,903,150
2019 1,425,000 473,369 1,898,369
2020 1,510,000 388,988 1,898,988
2021 1,595,000 299,719 1,894,719
2022-2026 4,415,000 647,594 5,062,594
Total 11,570,000$ 2,991,438$ 14,561,438$
Tax Allocation Bonds, Taxable Series 2006
In April 2006, the San Bernardino Joint Powers Financing Authority issued $28,665,000 in tax allocation bonds
to fund the acquisition, demolition and relocation of certain occupants of the Central City North Project Area
and provide for other redevelopment activities within the City of San Bernardino, as provided in the
Redevelopment Plan, fund the reserve fund, and pay costs of issuance associated with the bonds.
12.b
Packet Pg. 359 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
89
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Bonds, Taxable Series 2006 (Continued)
The 2006 bonds consist of term bonds of $4,665,000 maturing from 2012 to 2016 in annual installments
ranging from $1,315,000 to $1,640,000, and term bonds of $15,665,000 maturing from 2017 to 2027 in annual
installments ranging from $1,015,000 to $1,850,000. Interest is payable semi-annually on May 1 and
November 1 at interest rates ranging from 5.20% to 6.15% per annum.
The bonds maturing on or prior to May 1, 2016, shall not be subject to call and redemption prior to maturity.
The bonds maturing on or after May 1, 2017, shall be subject to redemption on or after May 1, 2016, and any
date thereafter as a whole or in part by lot, at the option of the former EDA, at par, plus accrued interest,
without premium.
The former EDA agreed to pay the Authority principal and interest payments solely from the EDA's Housing
Revenues from the Central City North, Central City Merged, Central City West, Mount Vernon, State College
Project No. 4, Southeast Industrial Park, Northwest, South Valle, Uptown, 40th Street and Tri-City
Redevelopment Project Areas.
The Tax Allocation Bonds Series 2006 were refunded in fiscal year 2016 via the issuance of the Tax Allocation
Refunding Bonds, Series 2016B. The outstanding balance at June 30, 2016 is $0.
Tax Allocation Bonds, Series 2010A
In December 2010, the San Bernardino Joint Powers Financing Authority issued $7,065,000 in tax allocation
bonds to finance certain redevelopment activities of the 4th Street Corridor project, to fund a reserve fund for
the bonds, fund the interest account, and pay all costs of issuance related to the bonds.
The outstanding Series 2010A bonds consist of term bonds of $6,155,000 maturing from April 1, 2015, to April
1, 2030 in annual installments ranging from $190,000 to $655,000. Term bonds of $390,000 are due on April 1,
2015, term bonds of $1,515,000 are due on April 1, 2021, and term bonds of $4,250,000 are due on April 1,
2030. Interest is payable semi-annually on April 1 and October 1 at rates ranging from 3.5% to 9.3% per
annum.
The term bonds maturing on April 2015 are subject to mandatory prepayment, on each April 1, commencing on
April 1, 2012, through April 1, 2015. Term bonds maturing on April 1, 2021, are subject to mandatory
prepayment, on each April 1, commencing on April 1, 2016, through April 1, 2021. Term bonds maturing on
April 1, 2030, are subject to mandatory prepayment on each April 1, commencing on April 1, 2022, through
April 1, 2030.
The former EDA agreed to pay the Authority principal and interest payments solely from the Tax Revenues
from the Northwest Redevelopment Project Area.
A reserve account is required to be maintained in the amount of $685,294. The balance held in the reserve
account as of June 30, 2016, was $685,150. At June 30, 2015, $5,765,000 of the bonds were outstanding.
12.b
Packet Pg. 360 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
90
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Bonds, Series 2010A (Continued)
The annual debt service requirements for the Tax Allocation Bonds, Series 2010A outstanding at June 30, 2016
are as follows:
Year Ending
June 30, Principal Interest Total
2017 225,000$ 491,000$ 716,000$
2018 240,000 474,125 714,125
2019 260,000 456,125 716,125
2020 280,000 436,625 716,625
2021 300,000 415,625 715,625
2022-2026 1,945,000 1,636,788 3,581,788
2027-2030 2,305,000 556,850 2,861,850
Total 5,555,000$ 4,467,138$ 10,022,138$
Tax Allocation Bonds, Series 2010B
In January 2011, the San Bernardino Joint Powers Financing Authority issued $3,220,000 in tax allocation
bonds to finance certain redevelopment activities of the Northwest project area, to fund a reserve fund for the
bonds, fund the interest account, and pay all costs of issuance of the bonds.
The outstanding Series 2010B bonds consist of term bonds of $2,745,000 maturing from April 1, 2020, to April
1, 2028 in annual installments ranging from $25,000 to $690,000. Term bonds of $925,000 are due on April 1,
2020 and term bonds of $1,820,000 are due on April 1, 2028. Interest is payable annually on April 1 at rates
ranging from 3.0% to 7.0% per annum.
The term bonds maturing in April 2020 are subject to mandatory prepayment, on each April 1, commencing on
April 1, 2013, through April 1, 2020. Term bonds maturing on April 1, 2028, are subject to mandatory
prepayment, on each April 1, commencing on April 1, 2021, through April 1, 2028.
The former EDA agreed to pay the Authority principal and interest payments solely from the EDA's tax
revenues from the Northwest Redevelopment Project Area.
A reserve account is required to be maintained in the amount of $309,567. The balance held in the reserve
account as of June 30, 2016, was $306,284. At June 30, 2016, $2,440,000 of the bonds were outstanding.
12.b
Packet Pg. 361 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
91
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Bonds, Series 2010B (Continued)
The annual debt service requirements for the Tax Allocation Bonds, Series 2010B outstanding at June 30, 2016
are as follows:
Year Ending
June 30, Principal Interest Total
2017 135,000$ 155,900$ 290,900$
2018 125,000 147,800 272,800
2019 115,000 140,300 255,300
2020 100,000 133,400 233,400
2021 65,000 127,400 192,400
2022-2026 385,000 571,550 956,550
2027-2028 1,370,000 143,500 1,513,500
Total 2,295,000$ 1,419,850$ 3,714,850$
Tax Allocation Refunding Bonds, Series 2016A
In March 2016, the Agency issued $27,850,000 in tax-exempt tax allocation refunding bonds in order to refund
the outstanding balances, as of April 1, 2016, of the CMB Infrastructure Investment Group Notes Payable, the
Tax Allocation Bonds, Series 2002A, and the Tax Allocation Refunding Bonds, Series 2002, to purchase a
bond insurance policy and a Municipal Bond Debt Service Reserve Insurance Policy for deposit in the reserve
account, and to pay certain costs of issuance.
The Series 2016A bonds consist of $25,905,000 in serial bonds, which mature on December 1 each year from
2016 through 2025 in amounts ranging from $980,000 to $3,900,000, and $1,945,000 of term bonds maturing
on December 1, 2031. Interest is paid semi-annually on June 1 and December 1 at interest rates ranging from
2% to 5%.
The Series 2016A bonds are payable from, and secured by, the tax revenues deposited in the Redevelopment
Property Tax Trust Fund. The aggregate debt service payments of the new debt are $9,381,967 less than the old
debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the difference
between the net present value of the old debt and new debt service payments) of approximately $10,028,205.
12.b
Packet Pg. 362 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
92
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Refunding Bonds, Series 2016A (Continued)
The annual debt service requirements for the Tax Allocation Refunding Bonds, Series 2016A outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 980,000$ 1,350,427$ 2,330,427$
2018 2,675,000 1,153,850 3,828,850
2019 2,725,000 1,086,225 3,811,225
2020 2,815,000 989,050 3,804,050
2021 2,915,000 859,875 3,774,875
2022-2026 13,795,000 2,090,625 15,885,625
2027-2031 1,570,000 206,500 1,776,500
2032 375,000 9,375 384,375
Total 27,850,000$ 7,745,927$ 35,595,927$
Tax Allocation Refunding Bonds, Series 2016B
In March 2016, the Agency issued $16,030,000 in federally taxable tax allocation refunding bonds in order to
refund the outstanding balances, as of April 1, 2016, of the Tax Allocation Bonds, Series 1998B and Tax
Allocation Bonds, Taxable Series 2006, to purchase a bond insurance policy and a Municipal Bond Debt
Service Reserve Insurance Policy for deposit in the reserve account, and to pay certain costs of issuance.
The Series 2016B bonds consist of $12,015,000 in serial bonds, which mature on December 1 each year from
2017 through 2022 in amounts ranging from $815,000 to $2,780,000, and $1,700,000 and $2,315,000 of term
bonds maturing on December 1, 2024 and December 1, 2027, respectively. Interest is paid semi-annually on
June 1 and December 1 at interest rates ranging from 1.75% to 4.05%.
The Series 2016B bonds are payable from, and secured by, the tax revenues deposited in the Redevelopment
Property Tax Trust Fund. The aggregate debt service payments of the new debt are $5,514,666 less than the old
debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the difference
between the net present value of the old debt and new debt service payments) of approximately $5,072,654.
12.b
Packet Pg. 363 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
93
Note 8 – Long-Term Liabilities (Continued)
C. Fiduciary Fund Financial Statements (Continued)
Tax Allocation Refunding Bonds, Series 2016B (Continued)
The annual debt service requirements for the Tax Allocation Bonds, Series 2016B outstanding at June 30, 2016
are as follows:
Year Ending
June 30, Principal Interest Total
2017 -$ 499,440$ 499,440$
2018 2,245,000 421,039 2,666,039
2019 2,280,000 378,025 2,658,025
2020 2,225,000 327,955 2,552,955
2021 2,780,000 264,768 3,044,768
2022-2026 4,975,000 690,395 5,665,395
2027-2028 1,525,000 59,300 1,584,300
Total 16,030,000$ 2,640,921$ 18,670,921$
Highland Senior Housing 1995 Mortgage Revenue Bonds
The Multifamily Housing Revenue Bonds 1995 Series (Highland Lutheran Senior Housing Project) were issued
on June 29, 1995 for $1,220,000. The mortgage revenue bonds are special obligations payable solely from
payments made on and secured by a pledge of the acquired mortgage loans and certain reserve funds and other
monies in connection therewith, all pledged under the resolution authorizing the issuance of the bonds. The
Bonds shall mature on July 1, 2015 and shall bear interest at the rate of 7.625% per annum. Interest is payable
annually on July 1. The bonds are payable from revenues or assets of the EDA. Multifamily Housing Revenue
Bonds (Highland Lutheran Senior Housing Project) 1995 Series mortgage revenue bonds outstanding as of June
30, 2015 are $1,100,000.
The annual debt service requirements for the Highland Senior Housing Mortgage Revenue bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 70,000$ 76,250$ 146,250$
2018 80,000 70,531 150,531
2019 85,000 64,241 149,241
2020 90,000 57,569 147,569
2021 95,000 50,516 145,516
2022-2026 615,000 124,478 739,478
Total 1,035,000$ 443,584$ 1,478,584$
12.b
Packet Pg. 364 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
94
Note 8 – Long-Term Liabilities (Continued)
D. Fiduciary Activities
Casa Ramona Senior Housing 1995 Mortgage Revenue Bonds
The Multifamily Housing Revenue Bonds 1995 Series (Casa Ramona Senior Housing Complex Project) were
issued on June 29, 1995 for $1,075,000. The mortgage revenue bonds are special obligations payable solely
from payments made on and secured by a pledge of the acquired mortgage loans and certain reserve funds and
other monies in connection therewith, all pledged under the resolution authorizing the issuance of the bonds.
The Bonds shall mature on July 1, 2015 and shall bear interest at the rate of 7.875% per annum. Interest is
payable annually on July 1. The bonds are payable from revenues or assets of the EDA. Multifamily Housing
Revenue Bonds (Casa Ramona Senior Housing Project) 1995 Series mortgage revenue bonds outstanding as of
June 30, 2015 are $970,000.
The annual debt service requirements for the Casa Ramona Senior Housing 1995 Mortgage Revenue bonds
outstanding at June 30, 2016 are as follows:
Year Ending
June 30, Principal Interest Total
2017 65,000$ 69,103$ 134,103$
2018 70,000 63,788 133,788
2019 75,000 58,078 133,078
2020 80,000 51,975 131,975
2021 85,000 45,478 130,478
2022-2026 535,000 112,022 647,022
Total 910,000$ 400,444$ 1,310,444$
1999 Certificates of Participation
On September 23, 1999, the San Bernardino Joint Powers Financing Authority issued $15,480,000 of
Refunding Certificates of Participation (Certificates). The Certificates were issued to retire $2,325,000
outstanding of Refunding Certificates of Participation (South Valle Public Improvement Project) dated
April 1, 1987, and $5,910,000 outstanding of Certificates of Participation (1995 Police Station Financing
Project) dated April 1, 1995, and to provide funds for capital improvements (201 Building Projects).
The Certificates mature on September 1 of each year through September 1, 2024, in amounts ranging from
$330,000 to $1,080,000. The interest represented by the Certificates is calculated on the basis of a 360-day
year of twelve 30-day months, from September 1, 1999, at the rates per annum set forth in the bond
documents and will represent the sum of the portions of the lease payments designated as interest coming due
during the six months preceding each interest payment date. The interest rates will range approximately from
3.70% to 5.50% per annum.
12.b
Packet Pg. 365 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
95
Note 8 – Long-Term Liabilities (Continued)
D. Fiduciary Activities (Continued)
1999 Certificates of Participation (Continued)
The Certificates maturing on September 1, 2020, are subject to mandatory sinking fund redemption in part on
September 1 in each year on or after September 1, 2010, from the principal components of the lease
payments required to be paid by the City pursuant to the Lease Agreements with respect to each such
redemption date, at a redemption price equal to the principal amount thereof to be redeemed, together with
interest accrued thereon to the date fixed for redemption, without premium, in accordance with the terms
identified in the bond documents. The Certificates maturing on September 1, 2024, are subject to mandatory
sinking fund redemption in part on September 1, 2021, from the principal components of the lease payments
required to be paid by the City pursuant to the Lease Agreements with respect to each such redemption date, at
a redemption price equal to the principal amount thereof to be redeemed, together with interest accrued thereon
to the date fixed for redemption, without premium, in accordance with the terms identified in the bond
documents.
The Certificates represent direct, undivided fractional interest in lease payments to be made by the City
under the lease agreements. A reserve fund is required to be maintained in an amount equal to the maximum
annual debt service. At June 30, 2016, the reserve requirement was $1,147,000 and the amount actually held
in the reserve account was $1,114,061. The total outstanding balance of the Certificates at June 30, 2016,
was $9,2258,590,000 of which $4,475,000 is reported as a long-term liability of the Successor Agency,
which is the portion of the Certificates that represent the South Valle Refunding and 201 Building Projects
portions. Repayments of these portions of the Certificates are funded from the Redevelopment Property Tax
Trust Fund, as a result of the dissolution of the redevelopment agency. The remaining $3,735,000
outstanding balance of the Certificates at June 30, 2015 is reported as a long-term liability of the City, which
is the portion of the Certificates that represents the Police Station portion.
The annual debt service requirements for the 1999 Certificates of Participation outstanding at June 30, 2016 are
as follows:
Year Ending
June 30, Principal Interest Total
2017 400,000$ 235,125$ 1,121,213$
2018 420,000 212,575 1,121,338
2019 440,000 188,925 1,114,400
2020 470,000 163,900 1,120,125
2021 490,000 137,500 1,113,375
2022-2025 2,255,000 256,438 4,443,750
Total 4,475,000$ 1,194,463$ 10,034,200$
12.b
Packet Pg. 366 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
96
Note 9 – Operating Leases
Effective December 15, 2008, the City’s Water Department took possession of leased space from Superior Homes
LLC for administrative office and warehouse space for a term of ten years. The Water Department has options to
extend the lease for 3 additional terms of 5 years apiece for up to a total of 15 years. The following is a schedule of
minimum lease payments as of June 30, 2016.
Year Ending Water Sewer
June 30, Utility Utility Total
2017 228,408$ 31,152$ 259,560$
2018 228,408 31,152 259,560
Total 456,816$ 62,304$ 519,120$
Note 10 – Compensated Absences
City employees receive between 10 and 25 vacation days each year depending upon length of service. An employee
may accumulate earned vacation time to a maximum not to exceed 60 days. Upon termination, employees are paid
the full value of their unused vacation time determined at their present salary rate. City employees receive 12
personal necessity/sick leave days each year. Upon separation from the City, employees having six or more years of
service can convert unused sick leave to a post-employment health care plan or a 401(a) retirement plan as follows:
288 hours or fewer accrued = 0; 289-479 hours accrued = 20% of accrued sick leave; 480-959 hours = 25%; 960
hour or more = 35%. Prior to the Mayor and Common Council adoption of the Side Letter Agreements to the City’s
bargaining groups’ Memoranda of Understanding, all bargaining groups were paid 50% of their accrued sick leave
balances at the time of separation. During fiscal year 2013, the City suspended leave accrual payments for separated
employees. The unpaid leave is included in the total compensated absences balance outstanding as of June 30,
2016.
A. Governmental Activities
A summary of changes in the compensated absences balances for the governmental activities for the year ended
June 30, 2016 is as follows:
Balance Balance Due within Due in More
July 1, 2015 Additions Deletions June 30, 2016 One Year Than One Year
Compensated absences 9,955,625$ 34,709$ (2,059,888)$ 7,930,446$ 2,379,134$ 5,551,312$
Total 9,955,625$ 34,709$ (2,059,888)$ 7,930,446$ 2,379,134$ 5,551,312$
Classification
Compensated absences in the governmental activities are obligations of the following funds:
Governmental Funds 7,781,459$
Workers Compensation 32,256
Liability Insurance 25,384
Motorpool 27,920
Telephone Support 6,078
Information Systems 55,879
Central Services 1,470
Total 7,930,446$
12.b
Packet Pg. 367 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
97
Note 10 – Compensated Absences (Continued)
B. Business-type Activities
A summary of changes in the compensated absences balances for the business-type activities for the year ended
June 30, 2016 is as follows:
Balance Balance Due within Due in More
July 1, 2015 Additions Deletions June 30, 2016 One Year Than One Year
Compensated absences 1,685,767$ 1,510,699$ (1,897,486)$ 1,298,980$ 985,824$ 313,156$
Total 1,685,767$ 1,510,699$ (1,897,486)$ 1,298,980$ 985,824$ 313,156$
Classification
Compensated absences in the business-type activities are obligations of the following funds:
Integrated Waste Fund 66,700$
Water Fund 904,461
Sewer Fund 327,819
Total 1,298,980$
C. Fiduciary Fund Financial Statements
A summary of changes in the compensated absences balances for the fiduciary fund financial statements for the
year ended June 30, 2016 is as follows:
Balance Balance Due within Due in More
July 1, 2015 Additions Deletions June 30, 2016 One Year Than One Year
Compensated absences 94,834$ -$ (272)$ 94,562$ 94,562$ -$
Total 94,834$ -$ (272)$ 94,562$ 94,562$ -$
Classification
All compensated absences liabilities in the fiduciary fund financial statements belong to the Redevelopment
Obligation Retirement Fund (Successor Agency).
Note 11 – Claims and Judgments Payable
The City of San Bernardino is self-insured for its liability, unemployment and long-term disability programs. The
accrued liability for estimated claims represents an estimate of the eventual loss on claims arising prior to year-end
including claims incurred but not yet reported and estimates of loss adjustment expense.
Currently, the City is a member of the Big Independent Cities Excess Pool (BICEP), which covers general liability
claims. BICEP pools catastrophic general liability, automobile liability, and public officials’ errors and omissions
losses. BICEP intends to pool covered catastrophic losses incurred by its members, thereby eliminating the need for
excess commercial insurance protection. As a result, each member's share of pooled costs will depend on the
catastrophic losses of all the members. In addition, the cost of a member city will also depend on that member's
own loss experience. Entities with a consistent record of costly claims will pay more than entities with a consistent
record of limited serious claims activity. The following public entities are members of BICEP: Huntington Beach,
Oxnard, West Covina, San Bernardino and Santa Ana.
12.b
Packet Pg. 368 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
98
Note 11 – Claims and Judgments Payable (Continued)
For liability claims, the City is self-insured for the first $1 million. The first million in excess of the self-insured
limit is divided up proportionately among the BICEP members. In addition, the City has obtained excess liability
coverage using a tiered system with three carriers totaling $25 million per occurrence.
The City is a member of the CSAC Excess Insurance Authority (the Authority) for its workers’ compensation
claims. For these claims, the City is self-insured for the first $1 million. The first $4 million in excess of the self-
insured limit is insured through the Authority. In addition, for amounts in excess of the $5 million self-insurance
and Authority coverage, the City has obtained an additional $45 million in liability coverage from ACE American
Insurance Company.
Settled claims for general liability and workers’ compensation have not exceeded insurance coverage during the
past three years.
A. Governmental Activities
Changes in the general liability claims liability for the governmental activities for the years ended June 30,
2016, 2015, and 2014, are as follows:
Beginning of Prior Claims and Balance at
Fiscal Year Period Changes in Claims Fiscal Year
Liability Adjustment Estimates Payments End
2013-2014 8,121,417$ 3,978,808$ 3,704,890$ (1,852,445)$ 13,952,670$
2014-2015 13,952,670 - 924,913 (425,426) 14,452,157
2015-2016 14,452,157 - 91,648 (182,822) 14,360,983
Changes in the workers’ compensation claims liability for the governmental activities for the years ended June
30, 2016, 2015, and 2014, are as follows:
Beginning of Prior Claims and Balance at
Fiscal Year Period Changes in Claims Fiscal Year
Liability Adjustment Estimates Payments End
2013-2014 22,613,625$ (5,044,419)$ 8,142,403$ (4,791,785)$ 20,919,824$
2014-2015 20,919,824 - 13,956,479 (5,219,285) 29,657,018
2015-2016 29,657,018 - 5,756,943 (5,557,482) 29,856,479
B. Business-type Activities
Changes in the workers’ compensation claims liability for the business-type activities for the years ended June
30, 2016, 2015, and 2014, are as follows:
Beginning of Claims and Balance at
Fiscal Year Changes in Claims Fiscal Year
Liability Estimates Payments End
2013-2014 837,074$ 545,631$ (383,102)$ 999,603$
2014-2015 999,603 1,012,935 (559,326) 1,453,212
2015-2016 1,453,212 201,034 (359,740) 1,294,506
The City maintains third party insurance coverage for general liability claims in business-type activities. The
City accrued a liability for a claim for the fiscal year ending June 30, 2016, in the amount of $250,000.
12.b
Packet Pg. 369 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
99
Note 12 – Fund Balance Classification
The City classifies fund balances, as shown on the Balance Sheet – Governmental Funds, as follows as of June 30,
2016:
Low and
Federal Moderate
and State Income Sales and Other
General Grants Housing Road Governmental
Fund Fund Fund Fund Funds Total
Nonspendable
Prepaids 516,258$ 44,059$ -$ -$ -$ 560,317$
Total nonspendable 516,258 44,059 - - - 560,317
Restricted
Housing - 17,528,421 44,144,933 - - 61,673,354
Grants - 733,086 - - - 733,086
Street improvements - - - 8,125,483 3,524,370 11,649,853
Cable TV - - - - 757,882 757,882
Law enforcement - - - - 1,978,551 1,978,551
Transportation - - - - 2,169,777 2,169,777
Sewer - - - - 6,670,167 6,670,167
Debt service 1,270,317 - - - - 1,270,317
Capital projects - - - - 28,432,295 28,432,295
Total restricted 1,270,317 18,261,507 44,144,933 8,125,483 43,533,042 115,335,282
Committed
Animal control 53,451 - - - - 53,451
Total committed 53,451 - - - - 53,451
Unassigned (deficit)32,571,653 - - - (87,413) 32,484,240
Total fund balances 34,411,679$ 18,305,566$ 44,144,933$ 8,125,483$ 43,445,629$ 148,433,290$
Major Funds
12.b
Packet Pg. 370 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
100
Note 13 – Net Position and Fund Balance Deficits
At June 30, 2016, the Governmental Activities and Business-Type Activities Statement of Net Position had an
unrestricted net position deficit of $(385,875,310) and $(39,100,089), respectively.
At June 30, 2016, the following proprietary funds, governmental funds, fiduciary funds have deficits that are
anticipated to be funded from future grants, other revenues and operating transfers:
Fund Type Funds Deficit
Debt Service Assessment District #1015 Fund (87,413)$
Internal Service Workers' Compensation Fund (29,141,975)
Internal Service Liability Insurance Fund (10,032,626)
Internal Service Motorpool Fund (1,520,697)
Internal Service Information Systems Fund (3,041,850)
Internal Service Central Services Fund (154,444)
Fiduciary Successor Agency to the Economic Development (6,870,192)
Agency of San Bernardino Private-purpose
Trust Fund
As of June 30, 2016, the General Fund does not have the financial capacity to fund such accumulated deficits.
Therefore, management expects that funding for the accumulated deficits will be accomplished over a period of years.
The accumulated deficits of the Workers’ Compensation Internal Service Fund and the Liability Insurance Internal
Service Fund are due to higher claims experienced over a period of years, versus amounts charged to the various
departments. Both these funds operate on a pay-as-you-go basis; as such the deficits in these funds are expected to
change as claims are made. Management has paid and expects to pay for all accepted claims as and when they become
due.
Note 14 – Net Investment in Capital Assets
The Government-wide Statement of Net Position reports net investment in capital assets as follows:
Governmental Business-type
Activities Activities Total
Total capital assets, net 365,346,220$ 256,238,735$ 621,584,955$
Less related debt:
Capital leases payable (424,852) - (424,852)
Notes payable (8,487,848) (20,568,662) (29,056,510)
Lease revenue bonds (5,670,000) - (5,670,000)
California Infrastructure (780,060) - (780,060)
Certificates of participation (3,445,000) - (3,445,000)
Net investment in capital assets 346,538,460$ 235,670,073$ 582,208,533$
12.b
Packet Pg. 371 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
101
Note 15 – Pension Plans
A. Summary
Net Pension Liability
Net Pension Liability is reported in the accompanying statements of net position as follows:
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)72,412,138$ 183,035,834$ -$ 255,447,972$
Internal Servive Funds:
Workers' Compensation 329,510 - - 329,510
Liability Insurance 219,197 - - 219,197
Motorpool 2,635,012 - - 2,635,012
Telephone Support 467,439 - - 467,439
Information Systems 3,646,601 - - 3,646,601
Central Services 144,081 - - 144,081
Total Internal Service Funds 7,441,840 - - 7,441,840
Total Governmental Activities 79,853,978 183,035,834 - 262,889,812
Business-Type funds:
Water Utility 25,603,182 - - 25,603,182
Sewer Utility 19,314,681 - - 19,314,681
Total Business-Type funds 44,917,863 - - 44,917,863
Successor Agency Trust Fund - - 4,483,755 4,483,755
Total 124,771,841$ 183,035,834$ 4,483,755$ 312,291,430$
Deferred Outflows of Resources
Deferred Outflows of Resources are reported in the accompanying statements of net position as follows:
Pension Contributions Made after the Measurement Date
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)5,816,382$ 13,619,255$ -$ 19,435,637$
Internal Servive Funds:
Workers' Compensation 26,467 - - 26,467
Liability Insurance 17,607 - - 17,607
Motorpool 211,653 - - 211,653
Telephone Support 37,546 - - 37,546
Information Systems 292,907 - - 292,907
Central Services 11,573 - - 11,573
Total Internal Service Funds 597,753 - - 597,753
Total Governmental Activities 6,414,135 13,619,255 - 20,033,390
Business-Type funds:
Water Utility 2,056,532 - - 2,056,532
Sewer Utility 1,551,419 - - 1,551,419
Total Business-Type funds 3,607,951 - - 3,607,951
Successor Agency Trust Fund - - 280,440 280,440
Total 10,022,086$ 13,619,255$ 280,440$ 23,921,781$
12.b
Packet Pg. 372 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
102
Note 15 – Pension Plans (Continued)
A. Summary (Continued)
Deferred Outflows of Resources (Continued)
Difference between Expected and Actual Experience
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)-$ -$ -$ -$
Internal Servive Funds:
Workers' Compensation - - - -
Liability Insurance - - - -
Motorpool - - - -
Telephone Support - - - -
Information Systems - - - -
Central Services - - - -
Total Internal Service Funds - - - -
Total Governmental Activities - - - -
Business-Type funds:
Water Utility - - - -
Sewer Utility - - - -
Total Business-Type funds - - - -
Successor Agency Trust Fund - - 1,260 1,260
Total -$ -$ 1,260$ 1,260$
Total Pension-Related Deferred Outflows
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)5,816,382$ 13,619,255$ -$ 19,435,637$
Internal Servive Funds:
Workers' Compensation 26,467 - - 26,467
Liability Insurance 17,607 - - 17,607
Motorpool 211,653 - - 211,653
Telephone Support 37,546 - - 37,546
Information Systems 292,907 - - 292,907
Central Services 11,573 - - 11,573
Total Internal Service Funds 597,753 - - 597,753
Total Governmental Activities 6,414,135 13,619,255 - 20,033,390
Business-Type funds:
Water Utility 2,056,532 - - 2,056,532
Sewer Utility 1,551,419 - - 1,551,419
Total Business-Type funds 3,607,951 - - 3,607,951
Successor Agency Trust Fund - - 281,700 281,700
Total 10,022,086$ 13,619,255$ 281,700$ 23,923,041$
12.b
Packet Pg. 373 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
103
Note 15 – Pension Plans (Continued)
A. Summary (Continued)
Deferred Inflows of Resources
Deferred Inflows of Resources are reported in the accompanying statements of net position as follows:
Difference between Projected and Actual Earnings on Pension Plan Investments
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)2,068,289$ 4,504,691$ -$ 6,572,980$
Internal Servive Funds:
Workers' Compensation 9,412 - - 9,412
Liability Insurance 6,261 - - 6,261
Motorpool 75,263 - - 75,263
Telephone Support 13,351 - - 13,351
Information Systems 104,157 - - 104,157
Central Services 4,115 - - 4,115
Total Internal Service Funds 212,559 - - 212,559
Total Governmental Activities 2,280,848 4,504,691 - 6,785,539
Business-Type funds:
Water Utility 731,297 - - 731,297
Sewer Utility 551,680 - - 551,680
Total Business-Type funds 1,282,977 - - 1,282,977
Successor Agency Trust Fund - - 5,974 5,974
Total 3,563,825$ 4,504,691$ 5,974$ 8,074,490$
Difference between Expected and Actual Experience
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)1,566,940$ 4,218,232$ -$ 5,785,172$
Internal Servive Funds:
Workers' Compensation 7,130 - - 7,130
Liability Insurance 4,743 - - 4,743
Motorpool 57,020 - - 57,020
Telephone Support 10,115 - - 10,115
Information Systems 78,909 - - 78,909
Central Services 3,118 - - 3,118
Total Internal Service Funds 161,035 - - 161,035
Total Governmental Activities 1,727,975 4,218,232 - 5,946,207
Business-Type funds:
Water Utility 554,032 - - 554,032
Sewer Utility 417,954 - - 417,954
Total Business-Type funds 971,986 - - 971,986
Successor Agency Trust Fund - - - -
Total 2,699,961$ 4,218,232$ -$ 6,918,193$
12.b
Packet Pg. 374 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
104
Note 15 – Pension Plans (Continued)
A. Summary (Continued)
Deferred Inflows of Resources (Continued)
Changes in Assumptions
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)2,975,621$ 8,756,466$ -$ 11,732,087$
Internal Servive Funds:
Workers' Compensation 13,541 - - 13,541
Liability Insurance 9,007 - - 9,007
Motorpool 108,280 - - 108,280
Telephone Support 19,208 - - 19,208
Information Systems 149,849 - - 149,849
Central Services 5,921 - - 5,921
Total Internal Service Funds 305,806 - - 305,806
Total Governmental Activities 3,281,427 8,756,466 - 12,037,893
Business-Type funds:
Water Utility 1,052,107 - - 1,052,107
Sewer Utility 793,695 - - 793,695
Total Business-Type funds 1,845,802 - - 1,845,802
Successor Agency Trust Fund -$ -$ 11,918$ 11,918$
Total 5,127,229$ 8,756,466$ 11,918$ 13,895,613$
Difference between Actual and Proportionate Share of Employers Contributions
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)-$ -$ -$ -$
Internal Servive Funds:
Workers' Compensation - - - -
Liability Insurance - - - -
Motorpool - - - -
Telephone Support - - - -
Information Systems - - - -
Central Services - - - -
Total Internal Service Funds - - - -
Total Governmental Activities - - - -
Business-Type funds:
Water Utility - - - -
Sewer Utility - - - -
Total Business-Type funds - - - -
Successor Agency Trust Fund - - 583,192 583,192
Total -$ -$ 583,192$ 583,192$
12.b
Packet Pg. 375 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
105
Note 15 – Pension Plans (Continued)
A. Summary (Continued)
Deferred Inflows of Resources (Continued)
Differences in Proportions
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)-$ -$ -$ -$
Internal Servive Funds:
Workers' Compensation - - - -
Liability Insurance - - - -
Motorpool - - - -
Telephone Support - - - -
Information Systems - - - -
Central Services - - - -
Total Internal Service Funds - - - -
Total Governmental Activities - - - -
Business-Type funds:
Water Utility - - - -
Sewer Utility - - - -
Total Business-Type funds - - - -
Successor Agency Trust Fund -$ -$ 553,133$ 553,133$
Total -$ -$ 553,133$ 553,133$
Total Pension-Related Deferred Inflows
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)6,610,850$ 17,479,389$ -$ 24,090,239$
Internal Servive Funds:
Workers' Compensation 30,083 - - 30,083
Liability Insurance 20,011 - - 20,011
Motorpool 240,563 - - 240,563
Telephone Support 42,674 - - 42,674
Information Systems 332,915 - - 332,915
Central Services 13,154 - - 13,154
Total Internal Service Funds 679,400 - - 679,400
Total Governmental Activities 7,290,250 17,479,389 - 24,769,639
Business-Type funds:
Water Utility 2,337,436 - - 2,337,436
Sewer Utility 1,763,329 - - 1,763,329
Total Business-Type funds 4,100,765 - - 4,100,765
Successor Agency Trust Fund - - 1,154,217 1,154,217
Total 11,391,015$ 17,479,389$ 1,154,217$ 30,024,621$
12.b
Packet Pg. 376 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
106
Note 15 – Pension Plans (Continued)
A. Summary (Continued)
Pension Expense
Pension expenses are included in the accompanying statements of revenues, expenses, and change in net position
as follows:
Miscellaneous Safety Miscellaneous
Plan -53 Plan - 54 Plan - 1414 Total
Governmental Activities (minus
Internal Service Funds)3,571,364$ 4,185,341$ -$ 7,756,705$
Internal Servive Funds:
Workers' Compensation 16,251 - - 16,251
Liability Insurance 10,811 - - 10,811
Motorpool 129,959 - - 129,959
Telephone Support 23,054 - - 23,054
Information Systems 179,850 - - 179,850
Central Services 7,106 - - 7,106
Total Internal Service Funds 367,031 - - 367,031
Total Governmental Activities 3,938,395 4,185,341 - 8,123,736
Business-Type funds:
Water Utility 1,262,748 - - 1,262,748
Sewer Utility 952,599 - - 952,599
Total Business-Type funds 2,215,347 - - 2,215,347
Successor Agency Trust Fund - - 508,915 508,915
Total 6,153,742$ 4,185,341$ 508,915$ 10,847,998$
B. City Plans
Plan Description
Substantially all City employees working the equivalent of 1,000 hours per fiscal year are eligible to participate in
the Safety Plan and Miscellaneous Plan Agent multiple-employer defined benefit plans administered by California
Public Employees Retirement System (CalPERS), which acts as a common investment and administrative agent
for its participating member employers. Benefit Provisions under the Plans are established by State statutes within
the Public Employee’s Retirement Law. CalPERS issues publicly available reports that include a full description
of the pension plans regarding benefit provisions, assumptions and membership information that can be found on
the CalPERS website. Copies of the CalPERS annual financial report may be obtained from the CalPERS
Executive Office – 400 P Street, Sacramento, CA 95814.
Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan
members and beneficiaries. A classic CalPERS member or PEPRA Safety member becomes eligible for service
retirement upon attainment of age 55 with at least 5 years of credited service.
12.b
Packet Pg. 377 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
107
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Benefits Provided (Continued)
PEPRA miscellaneous members become eligible for service retirement upon attainment of age 62 with at least 5
years of service. The service retirement benefit is a monthly allowance equal to the product of the benefit factor,
years of service, and final compensation. The final compensation is the monthly average of the member's highest
36 or 12 consecutive months' fulltime equivalent monthly pay. Retirement benefits for classic miscellaneous
employees are calculated as 2% to 2.7% of the average final 12 months compensation. Retirement benefits for
PEPRA miscellaneous employees are calculated as 2% of the average final 36 months compensation. Retirement
benefits for classic safety employees are calculated as 3% of the average final 12 months compensation. Retirement
benefits for PEPRA safety employees are calculated as 2.7% of the average final 36 months compensation.
Participant is eligible for nonindustrial disability retirement if becomes disabled and has at least 5 years of credited
service. There is no special age requirement. The standard nonindustrial disability retirement benefit is a monthly
allowance equal to 1.8 percent of final compensation, multiplied by service.
Industrial disability benefits are not offered to miscellaneous employees. The City provides industrial disability
retirement benefit to safety employees. The industrial disability retirement benefit is a monthly allowance equal to
50 percent of final compensation.
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The
employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is
eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic
death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions,
where interest is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for
each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one
month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months
preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated
survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning
the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted
on a compound basis by 2 percent.
12.b
Packet Pg. 378 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
108
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Employees Covered
At June 30, 2015, the measurement date, the following employees were covered by the benefit terms for each Plan:
Miscellaneous Safety
Active employees 768 322
Transferred and terminated employees 876 140
Retired employees and benificiaries 1336 672
Total 2980 1134
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective
on the July 1 following notice of a change in the rate. The total plan contributions are determined through
CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to
finance the costs of benefits earned by employees during the year, with an additional amount to finance any
unfunded accrued liability. The employer is required to contribute the difference between the actuarially
determined rate and the contribution rate of employees. For the year ended June 30, 2016, the average active
miscellaneous and safety employee contribution rates were 8.000% and 9.000% of annual pay, respectively, and
the employer’s contribution rates were 26.044% and 44.804% of miscellaneous and safety employee annual
payroll, respectively.
For the year ended June 30, 2016, the plan’s contributions made for each Plan was as follows:
Miscellaneous Safety Aggregate Total
Contributions - employer 9,535,385$ 13,619,255$ 23,154,640$
Net Pension Liability
The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net
position. The net pension liability of the Plan is measured as of June 30, 2015, using an annual actuarial valuation
as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. A summary of principal
assumptions and methods used to determine the net pension liability is shown on the following page.
12.b
Packet Pg. 379 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
109
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Actuarial Assumptions
The total pension liabilities in the June 30, 2014 actuarial valuations were determined using the following actuarial
assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase
7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Derived using CalPERS’ Membership Data for all Funds.
Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing
Entry Age Normal in accordance with the requirement of GASB Statement No. 68
7.65%
2.75%
Varies by Entry Age and Service
There were no changes in assumptions, benefit terms or other inputs that affected the measurement of the net
pension liability. There were no changes between the measurement date of the net pension liability and the
reporting date. The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2014
valuations were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011.
Further details of the Experience Study can be found on the CalPERS website.
Discount Rate
The discount rate used to measure the total pension liability was 7.50 percent. To determine whether the municipal
bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would
most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on
the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent discount rate is adequate
and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50
percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a
detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the
GASB 68 section.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction
for pension plan administrative expense. The 7.50 percent investment return assumption used in this accounting
valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An
investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount rate
has resulted in a slightly higher total pension liability and net pension liability. This difference was deemed
immaterial to the agent multiple-employer plan.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management review
cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Council
action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net
of administrative expenses for GASB 67 and 68 calculations through at least fiscal year 2018. CalPERS will
continue to check the materiality of the difference in calculation until such time as we have changed our
methodology.
The long-term expected rate of return on pension plan investments was determined using a building-block method
in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan
investment expense and inflation) are developed for each major asset class.
12.b
Packet Pg. 380 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
110
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Discount Rate (Continued)
In determining the long-term expected rate of return, staff took into account both short-term and long-term market
return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming
that both members and employers will make their required contributions on time and as scheduled in all future
years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were
calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.
Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated
for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived
at the same present value of benefits for cash flows as the one calculated using both short-term and long-term
returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and
rounded down to the nearest one quarter of one percent.
The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated
using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric
rates of return are net of administrative expenses.
New Strategic Real Return Real Return
Asset Class Allocation
Years 1-101 Years 11+2
Global Equity 50.00% 5.25% 5.71%
Global Fixed Income 17.00% 0.99% 2.43%
Inflation Sensitive 4.00% 0.45% 3.36%
Private Equity 14.00% 6.83% 6.95%
Real Estate 11.00% 4.50% 5.13%
Infrastructure and Forestland 0.00% 4.50% 5.09%
Liquidity 4.00% -0.55% -1.05%
100%
1An expected inflation of 2.5% used for this period
2An expected inflatin of 3.0% used for this period.
Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement period:
Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability
Balance at June 30, 2014 (Valuation Date) 505,706,114$ 392,005,008$ 113,701,106$
Changes in the year:
Service cost 7,442,643 - 7,442,643
Interest on the total pension liabilities 36,972,628 - 36,972,628
Changes in assumptions (8,789,538) - (8,789,538)
Differences between expected and actual experience (4,628,505) - (4,628,505)
Benefit payments, including refunds of members contributions (25,414,126) (25,414,126) -
Plan to plan resource movement - (436) 436
Contributions - employer - 8,328,349 (8,328,349)
Contributions - employee - 3,362,371 (3,362,371)
Net investment income - 8,671,204 (8,671,204)
Administrative expenses - (434,995) 434,995
Net changes 5,583,102 (5,487,633) 11,070,735
Balance at June 30, 2015 (Measurement Date) 511,289,216$ 386,517,375$ 124,771,841$
Miscellaneous Plan
12.b
Packet Pg. 381 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
111
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Changes in the Net Pension Liability (Continued)
Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability
Balance at June 30, 2014 (Valuation Date) 690,255,521$ 522,576,698$ 167,678,823$
Changes in the year:
Service cost 9,902,473 - 9,902,473
Interest on the total pension liabilities 50,392,288 - 50,392,288
Changes in assumptions (12,404,993) - (12,404,993)
Differences between expected and actual experience (5,975,828) - (5,975,828)
Benefit payments, including refunds of members contributions (36,206,443) (36,206,443) -
Plan to plan resource movement - 1,367 (1,367)
Contributions - employer - 12,378,212 (12,378,212)
Contributions - employee - 3,351,555 (3,351,555)
Net investment income - 11,406,991 (11,406,991)
Administrative expenses - (581,196) 581,196
Net changes 5,707,497 (9,649,514) 15,357,011
Balance at June 30, 2015 (Measurement Date) 695,963,018$ 512,927,184$ 183,035,834$
Safety Plan
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s net pension liability, calculated using the discount rate, as well as what the
City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower
or one percentage point higher than the current rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.65%) Rate (7.65%) (8.65%)
Miscellaneous Plan - 53 190,961,222$ 124,771,841$ 70,063,059$
Safety Plan - 54 276,622,200$ 183,035,834$ 106,409,391$
Aggregate Total 467,583,422$ 307,807,675$ 176,472,450$
Plan's Aggregate Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is
available in the separately issued CalPERS financial reports.
12.b
Packet Pg. 382 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
112
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2015, the City recognized pension expense in the amounts of $6,153,742 and
$4,185,341, for the miscellaneous and safety plans, respectively.
The amortization period differs depending on the source of the gain or loss. The difference between projected and
actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the
average expected remaining service lives of all members that are provided with benefits (active, inactive and
retired) as of the beginning of the measurement period.
The Expected Average Remaining Service Lifetime (“EARSL”) is calculated by dividing the total future service
years by the total number of plan participants (active, inactive, and retired) in the risk pool. The EARSL for risk
pool for the 2013-14 measurement period is 3.8 years, which was obtained by dividing the total service years of
460,700 (the sum of remaining service lifetimes of the active employees) by 122,789 (the total number of
participants: active, inactive, and retired).
At June 30, 2016 the City reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual
earning on pension plan investments -$ (5,127,230)$
Changes in assumptions - (2,699,961)
Differences between actual and expected experience - (3,563,825)
Total -$ (11,391,016)$
Miscellaneous Plan
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual
earning on pension plan investments -$ (8,756,466)$
Changes in assumptions - (4,218,232)
Differences between actual and expected experience - (4,504,691)
Total -$ (17,479,389)$
Safety Plan
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual
earning on pension plan investments -$ (13,883,696)$
Changes in assumptions - (6,918,193)
Differences between actual and expected experience - (8,068,516)
Total -$ (28,870,405)$
Aggregate Totals
12.b
Packet Pg. 383 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
113
Note 15 – Pension Plans (Continued)
B. City Plans (Continued)
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
For the Miscellaneous plan and Safety Plan, $8,237,102 and $12,137,270, respectively, was reported as deferred
outflows of resources related to pensions resulting from City’s contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts
reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized
in pension expense as follows:
Year Ended June 30, Miscellaneous Plam Safety Plan
2016 (8,157,366)$ (8,753,531)$
2017 (4,802,853) (8,753,531)$
2018 (2,566,516) (5,509,860)
2019 4,135,719 5,537,533
2020 - -
Thereafter - -
(11,391,016)$ (17,479,389)$
Deferred Outflows/(Inflows) of Resources
C. Successor Agency Plan
Plan Description – The Successor Agency Plan of the City of San Bernardino is available to full time employees
employed by the Successor Agency to the San Bernardino Economic Development Agency. Part-time employees
must meet specific criteria for participation. The Classic Plans are closed to new entrants only eligible for
employees hired prior to January 1, 2013. Employees hired after January 1, 2013 are eligible to enroll in the
PEPRA plans. Benefit Provisions under the Plans are established by State statutes within the Public Employee’s
Retirement Law. CalPERS issues publicly available reports that include a full description of the pension plans
regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office – 400 P
Street, Sacramento, CA 95814.
Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan
members and beneficiaries. A classic safety and miscellaneous CalPERS member becomes eligible for Service
Retirement upon attainment of age 50 and 55, respectively, with at least 5 years of credited service. Public
Employee Pension Reform Act (PEPRA) safety and miscellaneous members become eligible for service retirement
upon attainment of age 57 and 62, respectively, with at least 5 years of service. The service retirement benefit is a
monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The final
compensation is the monthly average of the member's highest 12 full-time equivalent monthly pay. Retirement
benefits for classic safety miscellaneous employees are calculated as 3% and 2.7%, respectively, of the average
final 12 months compensation. Retirement benefits for PEPRA safety and miscellaneous employees are calculated
as 2.7% and 2%, respectively, of the average final 36 months compensation.
Participant is eligible for non-industrial disability retirement if becomes disabled and has at least 5 years of
credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a
monthly allowance equal to 1.8% of final compensation, multiplied by service. Industrial disability benefits are
not offered to miscellaneous employees.
12.b
Packet Pg. 384 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
114
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Benefits Provided (Continued)
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The
employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is
eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic
death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions,
where interest is currently credited at 7.5% per year, plus a lump sum in the amount of one month's salary for each
completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one
month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months
preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated
survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning
the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted
on a compound basis by 2%.
Employees Covered
At June 30, 2015 the following employees were covered by the benefit terms the Plan:
Successor Agency
Active employees 1
Transferred and terminated employees 43
Retired employees and benificiaries 64
Total 108
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective
on the July 1 following notice of a change in the rate. The total plan contributions are determined through the
CalPERS’ annual actuarial valuation process. For public agency cost-sharing plans covered by the Miscellaneous
risk pools, the Plan’s actuarially determined rate is based on the estimated amount necessary to pay the Plan’s
allocated share of the risk pool’s costs of benefits earned by employees during the year, and any unfunded accrued
liability. The employer is required to contribute the difference between the actuarially determined rate and the
contribution rate of employees. For the measurement period ended June 30, 2015 (the measurement date), the
active contribution rate was 8% of annual payroll for the Miscellaneous Classic Plan which was paid for by the
employer. The average employer’s contribution rate was 13.504% of annual payroll for the Miscellaneous Classic
Plan.
For the year ended June 30, 2015, employer contributions made for the Successor Agency Miscellaneous Cost-
sharing Plan was as follows:
Contributions - employer 280,440$
12.b
Packet Pg. 385 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
115
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability.
The net pension liability of the Plans is measured as of June 30, 2015, and the total pension liability for each Plan
used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013 rolled
forward to June 30, 2015 using standard update procedures. The City’s proportion of the net pension liability was
based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected
contributions of all participating employers, actuarially determined.
As of June 30, 2015, the City reported net pension liability for its proportionate shares of the net pension liability
of the Successor Agency Miscellaneous Plan as follows:
Plan Total Pension Plan Fiduciary Net Plan Net Pension
Liability Position Liability/(Asset)
Balance at: 6/30/14 (Valuation date) 21,095,092$ 17,279,507$ 3,815,585$
Balance at: 6/30/15 (Measurement date) 20,379,873 15,896,118 4,483,755
Net Changes during 2014-2015 (715,219) (1,383,389) 668,170
Increase (Decrease)
The following is the approach established by the plan actuary to allocate the net pension liability and pension
expense to the individual employers within the risk pool.
(1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first
calculated for the risk pool as a whole on the valuation date (June 30, 2014). The risk pool’s fiduciary net
position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability
(“NPL”) at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date
(June 30, 2015). Risk pool FNP at the measurement date is then subtracted from this number to compute the
NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference
thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2015
less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the
measurement period (2014-15).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by
the amounts in step (1), the risk pool’s total TPL and FNP, respectively.
(5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the
TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2)
multiplied by the FNP ratio generated in (4) plus any additional side fund (or unfunded liability) contributions
made by the employer on behalf of the plan during the measurement period.
(6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).
12.b
Packet Pg. 386 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
116
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
(Continued)
The City’s proportionate share of the net pension liability for the Successor Agency Miscellaneous Plan as of June
30, 2013 and 2014 was as follows:
Proportion June 30, 2013 0.15438%
Proportion June 30, 2014 0.18142%
Change - Increase (Decrease) 0.02704%
For the year ended June 30, 2015, the City recognized pension expense in the amount of $508,915 for the
Successor Agency Miscellaneous Plan.
The amortization period differs depending on the source of the gain or loss. The difference between projected and
actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the
average expected remaining service lives of all members that are provided with benefits (active, inactive and
retired) as of the beginning of the measurement period.
The Expected Average Remaining Service Lifetime (“EARSL”) is calculated by dividing the total future service
years by the total number of plan participants (active, inactive, and retired) in the risk pool. The EARSL for risk
pool for the 2013-14 measurement period is 3.8 years, which was obtained by dividing the total service years of
460,700 (the sum of remaining service lifetimes of the active employees) by 122,789 (the total number of
participants: active, inactive, and retired).
At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments -$ (5,974)$
Adjustment due to differences in proportions - (553,133)
Changes in assumptions - (11,918)
Difference between actual and expected experience 1,260 -
Difference between employer's actual contributions
and proportionate share of contributions - (583,192)
Total 1,260$ (1,154,217)$
12.b
Packet Pg. 387 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
117
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
(Continued)
For the Successor Agency Miscellaneous Plan, $19,656 was reported as deferred outflows of resources related
to pensions resulting from City’s contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year Ended June 30,
Deferred Outflows/
(Inflows) of Resources
2016 (432,666)$
2017 (422,311)
2018 (305,618)
2019 7,638
2020 -
Thereafter -
(1,152,957)$
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2015 (the measurement date), the total pension liability was
determined by rolling forward the June 30, 2013 total pension liability. Both the June 30, 2013 and the June 30,
2015 total pension liabilities were based on the following actuarial methods and assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing
Entry Age Normal in accordance with the requirement of GASB Statement No. 68
7.65%
2.75%
Varies by Entry Age and Service
7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Derived using CalPERS’ Membership Data for all Funds.
All other actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial
experience study for the period from 1997 to 2011, including updates to salary increase, mortality and
retirement rates. The Experience Study report can be obtained at CalPERS’ website under Forms and
Publications.
Discount Rate
The discount rate used to measure the total pension liability was 7.50%. To determine whether the municipal
bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that
would most likely result in a discount rate that would be different from the actuarially assumed discount rate.
Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50% discount rate is
adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount
rate of 7.50% is applied to all plans in the Public Employees Retirement Fund. The stress test results are
presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’
website under the GASB 68 section.
12.b
Packet Pg. 388 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
118
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Discount Rate (Continued)
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 7.50% investment return assumption used in this
accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis
points. An investment return excluding administrative expenses would have been 7.65%. Using this lower
discount rate has resulted in a slightly higher total pension liability and net pension liability. This difference
was deemed immaterial to the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management
review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require
Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount
rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year.
CalPERS will continue to check the materiality of the difference in calculation until such time as we have
changed our methodology.
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension
plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, staff took into account both short-term and long-term
market return expectations as well as the expected pension fund cash flows. Such cash flows were developed
assuming that both members and employers will make their required contributions on time and as scheduled in
all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns
were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building block
approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits
was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected
return that arrived at the same present value of benefits for cash flows as the one calculated using both short-
term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate
calculated above and rounded down to the nearest one quarter of one percent. The table below reflects long-
term expected real rate of return by asset class. The rate of return was calculated using the capital market
assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net
of administrative expenses.
New Strategic Real Return Real Return
Asset Class Allocation
Years 1-101 Years 11+2
Global Equity 50.00% 5.25% 5.71%
Global Fixed Income 17.00% 0.99% 2.43%
Inflation Sensitive 4.00% 0.45% 3.36%
Private Equity 14.00% 6.83% 6.95%
Real Estate 11.00% 4.50% 5.13%
Infrastructure and Forestland 0.00% 4.50% 5.09%
Liquidity 4.00% -0.55% -1.05%
100%
1An expected inflation of 2.5% used for this period
2An expected inflatin of 3.0% used for this period.
12.b
Packet Pg. 389 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
119
Note 15 – Pension Plans (Continued)
C. Successor Agency Plan (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability for the Successor Agency
Miscellaneous Plan, calculated using the discount rate for the Successor Agency Miscellaneous Plan, as well as
what the City’s proportionate share of the net pension liability would be if it were calculated using a discount
rate that is one percentage point lower or one percentage point higher than the current rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.65%) Rate (7.65%) (8.65%)
7,519,570$ 4,483,755$ 1,977,337$
Plan's Aggregate Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued
CalPERS financial reports.
Payable to the Pension Plan
At June 30, 2016, the Successor Agency reported a payable of $0 for the outstanding amount of contributions to
the pension plan required for the year ended June 30, 2015.
Note 16 – Settlement with PARS Employees
The City has entered into a settlement with the holders of the PARS Claims. Pursuant to the settlement: (i) the
PARS Plans will be rejected, and the City will waive any and all claims to the funds held within the PARS Trust
and the 415 Trust as of the date of termination of the PARS Plans, (ii) the amounts remaining in the PARS Trust
and the 415 Trust (approximately $1.92 million) will be distributed to the PARS Participants pursuant to agreed-
upon allocations, and the City will endeavor to make each such distributions in a manner that will minimize adverse
tax consequences for each PARS Participant, (iii) the City will make a distribution of $290,000 on the later of the
Effective Date or July 5, 2017, and a distribution $290,000 on the later of the Effective Date or July 5, 2018, in
each case to the PARS Participants pursuant to agreed-upon allocations, and (iv) the City will be discharged from
any and all obligations to further fund any PARS Plan or to make any other distributions on account of the PARS
Claims.
Note 17 – Other Post-Employment Benefits
A. City – Excluding Water Department (Water Enterprise Fund and Sewer Enterprise Fund)
Plan Description
The City administers a single employer defined benefit healthcare plan (the Plan). The Plan currently provides
healthcare and life insurance for eligible retirees and their surviving spouses through the City’s group health
insurance plan, which is administered by Mercer. Life insurance premiums are paid 100% by retirees. The Plan
covers both active and retired members. Benefits provisions are established through negotiations between the City
and various union bargaining groups. The Plan does not issue a publicly available financial report.
12.b
Packet Pg. 390 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
120
Note 17 – Other Post-Employment Benefits (Continued)
A. City – Excluding Water Department (Water Enterprise Fund and Sewer Enterprise Fund) (Continued)
Funding Policy
Contribution requirements of the Plan are established through negotiations between the City and union
representatives. The required contribution is based on pay-as-you-go financing requirements. For fiscal year
2016, the City contributed $62,986 to the Plan. The City currently contributes $115 per month of the required
premium costs of active employees. Retired employees are permitted to participate with active employees in the
health-care plan, but retirees must pay all premiums as calculated by Mercer, less the City’s payment of $115
per month, assigned to them, except for sworn police employees. The City’s monthly contribution for sworn
police employees is in accordance with the following schedule:
Years of service Monthly Contribution
20 $ 200
25 350
30 450
Annual OPEB Cost and Net OPEB Obligation
The City’s annual other OPEB cost (expense) is calculated based on the annual required contribution (ARC) of
the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45.
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each
year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The following table shows the components of the City’s annual OPEB cost for the year, the amount actually
contributed to the Plan, and changes in the City’s net OPEB obligation:
2016 2015 2014
Annual required contribution 548,000$ 542,000$ 4,803,000$
Interest on net OPEB obligation 1,197,000 1,215,000 1,153,000
Adjustment to the annual required contribution (1,842,000) (1,795,000) (1,588,000)
Net OPEB cost (97,000) (38,000) 4,368,000
Contributions made:
Benefit payments (cash subsidy) (62,986) (235,174) (557,952)
Benefit payments (implied subsidy) (87,014) (481,826) (891,048)
Changes in net OPEB obligation (247,000) (755,000) 2,919,000
Net OPEB obligation, beginning of the year 30,000,601 30,755,601 27,836,601
Net OPEB obligation, end of year 29,753,601$ 30,000,601$ 30,755,601$
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB
obligation for 2016 and the two preceding years were as follows:
Percentage of Net
Annual Actual Annual OPEB OPEB
Fiscal Year OPEB Cost Contributions Cost Contributed Obligation
2014 4,368,000$ 557,952$ 23% 30,755,601$
2015 (38,000) 235,174 -619% 30,000,601
2016 (97,000) 62,986 -65% 29,753,601
12.b
Packet Pg. 391 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
121
Note 17 – Other Post-Employment Benefits (Continued)
A. City – Excluding Water Department (Water Enterprise Fund and Sewer Enterprise Fund) (Continued)
Funded Status and Funding Progress
As of June 30, 2015, the Plan was 0.0% funded. The actuarial accrued liability for benefits was $7,822,000 and
the actuarial value of assets was $0 resulting in unfunded actuarial accrued liabilities (UAAL) of $7,822,000.
The covered payroll (annual payroll of active employees covered by the plan) was $62,980,000 and the
percentage of the UAAL to covered payroll was 12.42%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
Plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for the benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that
point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of
short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent with long-term
perspective of the calculations.
In the June 30, 2012 actuarial valuation, which was used to determine the ARC for fiscal year 2013, the
actuarial cost method used for determining the benefit obligations is the entry age normal cost method. The
actuarial assumptions included a 4.25% discount rate, which is the assumed rate of the expected long-term
investment returns on plan assets calculated based on the funded level of the plan at the valuation date, and an
annual healthcare cost trend rate of 8.5% initially, reduced by increments of 0.5% per year to an ultimate rate of
5.0%. The unfunded actuarial accrued liability (UAAL) at June 30, 2012 is being amortized as a level percent
of payroll over a 21-year fixed (closed) period. Future assumption changes, plan changes, and gain/losses are
amortized over a 15-year fixed (closed) period. The maximum combined period amortization is 30-years. It is
assumed the City’s payroll will increase 3.25% per year.
B. Water Department
Plan Description
The City Water Department (Department) provides health benefits to all qualifying retirees and their spouses in
accordance with Memorandums of Understanding under various labor agreements. The Department maintains
the financial activity of the plan as a trust fund, and no separate financial report is publically available.
Employees are eligible for retiree health benefits if they retire from the Department on or after age 50 with at
least 10, 12, or 15 years of service, depending on bargaining unit, and are eligible for a PERS pension.
12.b
Packet Pg. 392 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
122
Note 17 – Other Post-Employment Benefits (Continued)
B. Water Department (Continued)
Funding Policy
The contribution requirements of plan members and the Department are established and may be amended by
the Board of Water Commissioners. The required contribution is based on projected pay-as-you-go financing
requirements, with an additional amount to prefund benefits as determined annually by the Board of Water
Commissioners. For fiscal year 2016, the Department has funded $2,401,131 for the current year. The
Department pays up to the entire cost of health benefits for eligible retirees and their spouses, subject to the
City’s vesting schedule.
Annual OPEB Cost and Net OPEB Obligation
The Department’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the
annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the
parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed thirty years. The following table shows the components of the Department’s
annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Department’s
net OPEB obligation:
2016 2015 2014
Annual required contribution 2,794,000$ 2,707,000$ 2,438,000$
Interest on net OPEB obligation 22,000 22,032 111,711
Adjustment to the annual required contribution (31,000) (30,000) (111,711)
Net OPEB cost 2,785,000 2,699,032 2,438,000
Contributions made: (2,401,131) (2,256,321) (3,872,869)
Changes in net OPEB obligation 383,869 442,711 (1,434,869)
Net OPEB obligation, beginning of the year 795,221 352,510 1,787,379
Net OPEB obligation, end of year 1,179,090$ 795,221$ 352,510$
The Department’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net
OPEB obligation for 2016 and the two preceding years were as follows:
Percentage of Net
Annual Actual Annual OPEB OPEB
Fiscal Year OPEB Cost Contributions Cost Contributed Obligation
2014 2,438,000$ 3,872,869$ 24% 1,434,869$
2015 2,699,032 2,256,321 84% 1,237,932
2016 2,785,000 2,401,131 86% 1,179,090
12.b
Packet Pg. 393 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
123
Note 17 – Other Post-Employment Benefits (Continued)
B. Water Department (Continued)
Funded Status and Funding Progress
As of June 30, 2014, the Plan was 38,22% funded. The actuarial accrued liability for benefits was $35,012,000
and the actuarial value of assets was $13,380,000 resulting in unfunded actuarial accrued liabilities (UAAL) of
$21,632,000. The covered payroll (annual payroll of active employees covered by the plan) was $15,531,000
and the percentage of the UAAL to covered payroll was 139.28%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
Plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for the benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that
point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of
short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent with long-term
perspective of the calculations.
In the June 30, 2014 actuarial valuation, the entry age actuarial cost method was used. The actuarial
assumptions included a rate of return of 6.25% and annual healthcare costs trend rates of 7.5% initially, reduced
by increments to an ultimate rate of 5% in 2012. Both rates included a 3% inflation assumption. The actuarial
value of assets was determined using techniques that spread the effects of short-term volatility in the market
value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected
payroll on an open basis. The remaining amortization period at June 30, 2015 was 19 years.
C. Successor Agency
Plan Description
The Successor Agency (Agency) administers a single employer defined benefit healthcare plan (the Plan). The
Agency provides medical and dental plan coverage for retirees and their eligible surviving dependents. This
coverage is available for employees who satisfy the requirements for retirement under the California Public
Employees’ Retirement System (PERS), which is age 50 or older with at least eight years of Agency service.
The Plan does not issue a publicly available financial report.
12.b
Packet Pg. 394 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
124
Note 17 – Other Post-Employment Benefits (Continued)
C. Successor Agency (Continued)
Funding Policy
The contribution requirements of the Agency are established and may be amended by the Agency’s Board. The
required contribution is based on pay-as-you-go financing requirements. For fiscal year 2016, the Agency
contributed $24,684 to the plan, which was 100% of the total current premiums.
Annual OPEB Cost and Net OPEB Obligation
The Agency’s annual other OPEB cost (expense) is calculated based on the annual required contribution (ARC)
of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC
represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and
amortize any unfunded actuarial liabilities (or funding excess) not to exceed thirty years. The following table
shows the components of the Agency’s annual OPEB cost for the year, the amount actually contributed to the
plan, and changes in the Agency’s net OPEB obligation:
2016 2015 2014
Annual required contribution 211,490$ 211,490$ 211,490$
Interest on net OPEB obligation 65,018 58,224 50,905
Adjustment to the annual required contribution (113,329) (94,241) (76,905)
Net OPEB cost 163,179 175,473 185,490
Contributions made: (24,684) (24,499) (22,848)
Increase in net OPEB obligation 138,495 150,974 162,642
Net OPEB obligation, beginning of the year 1,444,840 1,293,866 1,131,224
Net OPEB obligation, end of year 1,583,335$ 1,444,840$ 1,293,866$
The Agency’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net
OPEB obligation for 2016 and the two preceding years were as follows:
Percentage of Net
Annual Actual Annual OPEB OPEB
Fiscal Year OPEB Cost Contributions Cost Contributed Obligation
2014 185,490$ 22,848$ 24% 1,293,866$
2015 175,473 24,499 24% 1,444,840
2016 163,179 24,684 15% 1,583,335
Funded Status and Funding Progress
As of June 30, 2008, the Plan was 0.0% funded. The actuarial accrued liability for benefits was $749,208 and
the actuarial value of assets was $0 resulting in unfunded actuarial accrued liabilities (UAAL) of $749,208.
The covered payroll (annual payroll of active employees covered by the plan) was $1,764,100 and the
percentage of the UAAL to covered payroll was 42.47%.
12.b
Packet Pg. 395 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
125
Note 17 – Other Post-Employment Benefits (Continued)
C. Successor Agency (Continued)
Funded Status and Funding Progress (Continued)
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
Plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for the benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that
point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of
short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent with long-term
perspective of the calculations.
The actuarial cost method used for determining the benefit obligations is the entry age normal cost method. The
actuarial assumptions included a 4.5% discount rate, which is the assumed rate of the expected long-term
investment returns on plan assets calculated based on the funded level of the Plan at the valuation date, and an
annual healthcare cost trend rate of zero percent initially, which increases to 5.0% in the fourteenth year. The
UAAL is being amortized as level percentage of projected payroll over 20 years.
Note 18 – Jointly Governed Organizations and Joint Ventures
Inland Valley Development Agency
In January 1990, the City entered into a joint powers agreement with the Cities of Colton and Loma Linda and the
County of San Bernardino to form the Inland Valley Development Agency (IVDA). The IVDA adopted a
redevelopment plan, and its primary purpose is to promote the redevelopment of the former Norton Air Force Base
and other areas within its project area. The IVDA board is comprised of three members from the City and two each
from the other members. The primary sources of funding are tax increment and lease income. Additional financial
information can be obtained by contacting the IVDA at 1601 E. Third Street, San Bernardino, CA 92408.
San Bernardino International Airport Authority
In May 1992, the City entered into a joint powers agreement with the Cities of Colton, Loma Linda, Highland and
Redlands and the County of San Bernardino to form the San Bernardino International Airport Authority (SBIAA).
SBIAA was created primarily for the purpose of acquiring, operating, repairing, maintaining and administering the
aviation related portions of the former Norton Air Force Base property located in San Bernardino. Effective
April 19, 1996, the City of Redlands withdrew from its membership in SBIAA. The board is comprised of two
members from the City and one each from the other members. The primary sources of funding are loans, federal
grants and lease income. Additional financial information can be obtained by contacting SBIAA at 1601 E. Third
Street, San Bernardino, CA 92408.
12.b
Packet Pg. 396 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
126
Note 18 – Jointly Governed Organizations and Joint Ventures (Continued)
San Bernardino Regional Water Resource Authority
In August 1998, the City entered into a joint powers agreement with the Inland Valley Development Agency
(IVDA) and the San Bernardino Valley Municipal Water District (the District) to form the San Bernardino
Regional Water Resources Authority (the Authority). The Authority was created primarily for the purpose of
conducting a water resource and storage project. The Authority board is comprised of three members from the
City, one member from IVDA and two from the District. The primary sources of funding are loans and grants.
Additional financial information can be obtained by contacting the Authority at 201 North “E” Street, Third
Floor, San Bernardino, CA 92401.
Colton / San Bernardino Regional Tertiary Treatment and Water Reclamation Authority
On August 2, 1994, the City of San Bernardino, through the Water Department formed a joint powers authority
with the City of Colton to construct, operate, use and maintain tertiary wastewater treatment, disposal and water
reclamations systems, including the Regional Rapid Infiltration and Extraction Facility (RIX). This authority is
governed by a separate board consisting of four members; two appointed by the City through the Water
Department's Board of Water Commissioners and two appointed by the City Council of the City of Colton.
Construction of RIX was administered by the Santa Ana Watershed Project Authority and was substantially
completed during 1996. Administration and operation was turned over at that time. The cities of San Bernardino
and Colton each have an undivided interest in the real property and any related debt of the RIX projects based on
an 80% / 20% split, respectively. Substantially all of the assets of RIX are in the form of capital assets. RIX has
no liabilities. Annual revenues (in the form of contributions from the two member cities) are equal to annual
expenses. The Water Department's equity interest in this joint venture has been reported as an investment in
joint venture in the accompanying statement of net position.
San Bernardino Public Safety Authority
On April 1, 1968, the City of San Bernardino and the County of San Bernardino formed the San Bernardino Public
Safety Authority (PSA), a joint powers authority, as a financing vehicle to construct public safety buildings and
improvements to the wastewater treatment plant. In accordance with the terms of an installment purchase
agreement, title to the capital assets financed through the PSA were recognized as capital assets of the City at the
inception of the installment purchase agreement between the City and the PSA. The City’s remaining interest in the
joint venture is in the form of cash and investments held by the PSA for debt service related activity. The Water
Department’s equity interest in these assets has been recognized in the accompanying statement of net position as
an investment in joint venture.
West End Water Development, Treatment and Conservation Joint Powers Authority
On August 15, 1990, the City of San Bernardino joined the West End Water Development, Treatment and
Conservation Joint Powers Authority (WEJPA) as a financing vehicle for construction of water facilities. A three-
member board consisting of one representative from each agency’s governing body governs the WEJPA. This joint
venture was formed to provide a financing vehicle for the three member agencies. This joint venture is currently
inactive.
12.b
Packet Pg. 397 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
127
Note 19 – Consent Decree
In 1996, the City of San Bernardino filed a complaint against the United States of America, Department of the
Army to recover damages, response costs and other available remedies relating to contamination alleged to have
originated at a World War II army installation known as Camp Ono. In March 2005, the United States District
Court, Central Division entered judgment, in the form of a Consent Decree, in the matter of City of San Bernardino
v. United States of America. The Consent Decree settles the City’s and the State’s claims arising from the
groundwater contamination allegedly caused by the Army. The Consent Decree contains a number of provisions
obligating the City (through the City’s Water Department) to operate and maintain the Newmark Groundwater
Superfund site (Site). The Site consists of two operable units, the Newmark Operable Unit and the Muscoy
Operable Unit. The Newmark Operable Unit was declared operational and functional in 1998. The Muscoy
Operable unit was declared operational and functional in 2007.
The Consent Decree provided for a payment of $69 million from the Army to the City for performance of the work
outlined in the Consent Decree. Upon acceptance of the Consent Decree, the Department received title to all
facilities constructed by the United States Environmental Protection Agency (EPA) of the Site and agreed to
operate and maintain the groundwater extraction and treatment system for a period of 50 years. The $69 million
payment consisted of $59 million for operations and maintenance and $10 million for the construction of certain
capital facilities that would be required in the future; the funds are subject to strict limitations, contained in the
Consent Decree, as to how the money may be spent.
Pursuant to the Consent Decree, $10 million, including interest earned, has been set aside to be used only for (i)
funding construction of treatment and directly related transmission systems that expand the Water Department’s
capacity to deliver potable water and (ii) funding work performed by the Water Department to complete
construction of the Muscoy Operable Unit extraction system. These capital facility funds may not be used for costs
incurred to operate, maintain, repair or retrofit components of the site extraction of treatment systems constructed
by EPA.
In March 2006, the Water Department entered into a Guaranteed Investment Contract with AIG Match Funding
Corporation. The Department invested $16,482,039 of excess Consent Decree funds into an interest bearing Escrow
Fund investment with an interest rate of 4.95% per annum. These funds were invested to pay costs associated with
the water facilities defined in the Consent Decree for years 2035-2056. An additional $50 million was used to
purchase a blended insurance policy to provide a financial vehicle that provides cost cap coverage for the first 30
years of expenses.
The terms of the Guaranteed Investment Contract only provided the Department with the position of a secured
creditor with respect to an AIG bankruptcy. As concerns rose regarding AIG’s financial credibility, in October
2009, the Department negotiated and accepted a “payout” in the amount of $18,661,876, which represented the
principal and accrued interest as of that date. These funds are currently invested in a diversified portfolio managed
by PFM Asset Management. The balance of restricted investments held at June 30, 2016 is $22,223,052.
Note 20 – Landfill Closure Liability
The City operated a municipal non-hazardous solid waste facility, identified as the “Waterman Landfill”, from
1950 to 1960. The City is the primary responsible party for pollution remediation obligations related to the
Waterman Landfill. During the 1990s, groundwater monitoring wells were installed and placed into service as
part of the overall remediation plan. In 2004, it was determined that additional work was required to comply with
state regulations. State regulatory agencies approved a plan for final closure of the Waterman Landfill in 2012.
The City is currently in the design phase of the remediation project, and anticipates the construction phase to
begin in 2016. Pollution remediation costs for the closure of the Waterman Landfill are estimated at $6,929,000
at June 30, 2016, measured using the expected cash flow technique.
12.b
Packet Pg. 398 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
128
Note 20 – Landfill Closure Liability (Continued)
This estimate is subject to change in future periods due to various factors including changes in the remediation
plan or operating conditions, the type of equipment and services that will be used, price increases or reductions
for specific outlay elements such as ongoing monitoring requirements, changes in technology, or changes in legal
or regulatory requirements. The liability is reported in the Integrated Waste Fund in the accompanying financial
statements.
Note 21 – Discontinuance of Solid Waste Operations
On January 25, 2016, the Mayor and Common Council unanimously approved a ten year exclusive franchise
agreement with Burrtec Waste Industries, Inc. to provide solid waste, street sweeping and right-of-way cleanup
services to the residents of the City. Effective April 1, 2016, the City no longer provides services through its
Integrated Waste enterprise fund. The fund’s operations will be shut down, with any residual balances being
transferred to the General Fund.
Note 22 – Annexation of San Bernardino City Fire Department to San Bernardino County Fire Protection
District
On May 18, 2015, the Mayor and Common Council approved the City Recovery Plan which included numerous
measures to increase revenues and reduce expenditures, including regionalization or contracting of fire services.
On August 24, 2015, the Mayor and Common Council authorized a filing of application for the City’s fire
department operations to be annexed to the San Bernardino County Fire Protection District (SBCFPD). The City
reached agreement with the San Bernardino City Professional Firefighters Union, Local 891 on the annexation in
January of 2016. The employment transition for all 140 impacted City fire employees began in March 2016 and
was completed in May 2016. The full transition to SBCFPD is effective July 1, 2016.
On or before July 1, 2016, the City transferred to the County Fire District the cash value of up to 96 hours of sick
leave and up to 96 hours of vacation leave for each SBCPF member's accrued vacation and sick leave balances to
the extent owing, of each of the hired employees. In addition the City will make several transfers to Trust Accounts
on behalf of firefighters in full settlement of cost-sharing and other pension related claims, all claims arising in or
related to the Post-Petition Litigation (other than arising in connection with cost-sharing), and all claims relating to
“salary comparability” arising from implementation of Annexation. The total of these transfers will be
approximately $5.7 million.
On June 30, 2016, the City transferred assets and liabilities comprising its fire service operations to the SBCFPD
for the purpose of regionalization of fire services. As a result of the transfer, the City recognized loss of $5.0
million on the disposal of its fire service operations as a special item. The City’s 2016 expense related to the fire
service operations, program revenues totaled approximately $2.64 million. Expenditures and revenues of the fire
services operations reported in the program fund were $31.20 million and $2.64 million, respectively. In fiscal
year 2016-17, the amount of general revenues (City property taxes) that the County Assessor will transfer from
the City to SBCFPD will be approximately $21.6 million.
12.b
Packet Pg. 399 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
129
Note 23 – Commitments and Contingencies
A. Litigation
The City is a defendant in numerous lawsuits and is also subject to other claims, including claims for workers’
compensation payments. The City uses in-house and, where necessary, outside counsel to adjudicate lawsuits.
Each case is initially rated by the City Supervising or Senior attorney handling or overseeing the case with
respect to its viability for success against the City. Only cases rated 'probable' for recovery from the City are
reported for financial statement purposes. The dollar value reserved for any eventual payout on any said case is
based upon the facts of the case, industry standards relative to the type of injury or damage involved, and the
experience of the Supervising or Senior attorney. The legal reserve as of June 30, 2016, is a product of this
analysis. The City used a third-party actuary to perform a workers’ compensation reserve analysis (estimated
loss reserve) as of June 30, 2016. The actuary used a general approach that relied upon actual loss development
patterns for the City of San Bernardino to the extent they are available, and is augmented with industry
benchmark loss development patterns based on insurance industry sources and patterns to project ultimate
losses. While it is not possible to project the final outcome of these lawsuits and claims, the City and its legal
department have estimated that the liability for all such litigation and claims totaled approximately $44.11
million for the primary government as of June 30, 2016. These lawsuits and claims may be compromised
and/or discharged pursuant to a plan of adjustment confirmed in the Bankruptcy Case and are therefore
considered an estimated contingency amount and are not reflected in the financial statements.
B. Federal and State Grants
Amounts received or receivable from grantor agencies are subject to audits or adjustments by grantor agencies,
principally the federal and state governments. Such audits could lead to disallowed claims under the terms of
the grants, including amounts already collected, which may constitute a liability of the City.
C. Gas Tax Revenues
The City is subject to periodic audits of its use of gas tax revenues by the State Controller’s Office. The City
used a portion of gas tax revenues to make certain debt service payments on a note payable related to pavement
rehabilitation (street-related) projects. State guidelines relating to gas tax expenditures limit the amount of
revenue available for debt service expenditures, as well as the type of debt that may be paid. State regulatory
authorities have not issued an opinion on the matter and the potential exposure to the City’s General Fund is
uncertain, and therefore, no contingent liability related to this matter has been accrued in the accompanying
financial statements.
Note 24 – Successor Agency Trust for Assets of Former Redevelopment Agency
On December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26 (the “Bill”) that provides for
the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of
the City since the City had previously reported its redevelopment agency (commonly referred to as the “Economic
Development Agency” or “EDA”) as a blended component unit on the City’s financial statements.
The Bill provides that upon dissolution of the redevelopment agency, either the city or another unit of local
government may serve as the “successor agency” to hold the assets of the dissolved redevelopment agency until
they are disposed of in accordance with applicable laws and regulations. On January 9, 2012, the City Council
adopted resolution 2012-12, electing to serve as the Successor Agency to the former redevelopment agency of the
City of San Bernardino in accordance with the Bill. On January 23, 2012, the City Council adopted resolution
2012-19 to have the City of San Bernardino serve as the Successor Housing Agency to the former redevelopment
agency of the City of San Bernardino.
12.b
Packet Pg. 400 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
130
Note 24 – Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California
were prohibited from entering into new projects, obligations or commitments. Subject to the control of a newly
established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the
date of dissolution, including the completion of any unfinished projects that were subject to legally enforceable
contractual commitments.
In future fiscal years, successor agencies will only be allocated tax increment revenue (to the extent available in the
Redevelopment Property Tax Trust Fund, or “RPTTF”, as maintained by the County Auditor/Controller) in the
amount that is necessary to pay the estimated annual payments on enforceable obligations of the former
redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full
and all assets have been redistributed or liquidated.
The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets
between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that
received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those
assets, the State Controller is required to order the available assets to be transferred to the public body designated as
the successor agency by the Bill.
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29,
2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as
of February 1, 2012. After the date of dissolution, the assets, liabilities, and activities of the dissolved
redevelopment agency are reported in the Low and Moderate Income Housing Fund, a City special revenue fund
(for housing assets, liabilities, and activities), and a private-purpose trust fund, a type of fiduciary fund (for non-
housing assets, liabilities, and activities), in the financial statements of the City.
The EDA and the Successor Agency to the EDA conducted some of their activities through three affiliated entities:
San Bernardino Economic Development Corporation (SBEDC), Affordable Housing Solutions (AHS), and
Sustainable Communities Reinvestment Partnership (SCRIP). The financial activities of these affiliated entities are
reported in the fiduciary funds of the accompanying financial statements, as components of the Successor Agency.
San Bernardino Economic Development Corporation – SBEDC was incorporated in 1973 as a nonprofit public
benefit corporation. SBEDC’s purpose is to assist the EDA in promoting development and redevelopment of
properties within the City of San Bernardino (City). SBEDC currently holds title to approximately 300 parcels of
real property in the City pursuant to a March 2011 Funding Agreement with the EDA, under which the EDA
transferred properties to SBEDC, and SBEDC committed to develop the properties using funding provided by the
EDA. These parcels include 128 parcels for the Bice Property project, 74 parcels for the Arden-Guthrie Property
project, and 5 parcels for the Carousel Mall (an approximately 650,000 square foot indoor mall), which is owned
and operated through the Carousel Mall LLC (a single-member limited liability company with SBEDC as the single
member). The funding agreement and the transfer of the properties were validated in a judgment entered on July 27,
2011 by the Superior Court of the State of California, County of San Bernardino, in an action brought by the EDA
as Case No. CIVDS1103893 (Validation Judgment). Subsequently, however, the State Controller’s Office (SCO),
as authorized by the June 2011 and June 2012 legislation providing for the dissolution of redevelopment agencies,
conducted a review of the transfers and issued a report dated March 6, 2013 (SCO’s “City of San Bernardino
Economic Development Agency – Asset Transfer Review Report.”). The SCO contended in the report that the
transfers were unallowable and that the Validation Judgment was not effective. The Successor Agency contested
these contentions but the matter remains unresolved and the ultimate disposition of the properties is undetermined.
These properties were reported in the Successor Agency as of June 30, 2016.
12.b
Packet Pg. 401 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
131
Note 24 – Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)
Affordable Housing Solutions (AHS) was incorporated in 2005 as a nonprofit public benefit corporation and was
acquired by the EDA in 2009 to assist it in promoting economic development and increasing the availability of low
and moderate income housing in the City. AHS has developed several successful affordable housing projects,
including Phoenix Square and the Magnolia Square Project. AHS is also the City’s contracted Neighborhood
Stabilization Program administrator as well as its property holding entity for the Home Investment Partnership
Program (HOME) and the Low and Moderate Income Housing Fund (LMHIF). AHS, like SBEDC, entered into an
agreement with the EDA in March 2011 for the receipt of properties and funding from the EDA. This agreement,
and property transfers made pursuant to it, was validated in the Validation Judgment. As with SBEDC, the SCO
disputed the validity of the EDA-AHS transactions. These properties were reported in the Successor Agency as of
June 30, 2015.
Sustainable Communities Reinvestment Partnership (SCRIP) was organized as a limited liability company in 2009
to pursue renewable energy and sustainability projects in the City to help improve energy efficiency and reduce
greenhouse gas emissions in the region. SCRIP’s priorities include the development of solar power systems and
coordination with the City-owned geothermal energy operation that serves governmental and private users in the
City. In 2010, SCRIP facilitated the construction of a 250kW photovoltaic solar power system on the roof of a city-
occupied building at 201 North “E” Street, San Bernardino. SCRIP also facilitated construction of a 448kW solar
power system at the San Bernardino International Airport in conjunction with the Inland Valley Development
Agency.
On September 22, 2015, Senate Bill 107, which amends various sections of the California Health and Safety Code
related to the dissolution of redevelopment agencies, was signed into law. SB 107 contains various provisions
which may impact, among other things, (i) the repayment of prior City/Redevelopment loans, (ii) treatment of City
loans to the Successor Agency to pay enforceable obligations, including bonded debt, and administrative costs, and
(iii) the treatment of special levies.
Note 25 – Subsequent Events
A. 2016 Water Revenue Bonds
On November 16, 2016, the Department issued Series 2016 Water Revenue Bond in the amount of
$48,225,000. The proceeds of the 2016 Bonds will be used to (i) finance the acquisition and construction of
certain water system capital improvements (the “Project”) of the Department; (ii) refund outstanding
obligations of the City of San Bernardino, California (the “City”) relating to the Department; (iii) purchase a
Municipal Bond Debt Service Reserve Insurance Policy in satisfaction of the Reserve Requirement (each as
defined herein) for the 2016 Bonds; and (iv) pay the costs of issuance of the 2016 Bonds.
B. Approval of Plan of Adjustment
On January 3, 2017, the City lodged the proposed “Order Confirming Third Amended Plan for the Adjustment
of Debts of the City of San Bernardino, California (July 29, 2016), as Modified” (“Proposed Confirmation
Order”) and gave notice to creditors and interested parties of the lodging of that order. One creditor filed an
objection to the Proposed Confirmation Order and the City responded to that objection. On January 27, 2017,
the Court held a hearing on the Proposed Confirmation Order and overruled the objection. On February 1,
2017, the City lodged its revised proposed confirmation order and gave notice of the lodging of such order. On
February 7, 2017, the Court entered its “Order Confirming Third Amended Plan for the Adjustment of Debts of
the City of San Bernardino, California (July 29, 2016), as Modified; Findings of Fact and Conclusions of Law
in Respect Thereof” (the “Confirmation Order”). On March 7, 2017, the Court entered its “Memorandum of
Decision re Issuance of Third Party Injunction in Conjunction with Confirmation of Chapter 9 Plan.”
12.b
Packet Pg. 402 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Notes to the Basic Financial Statements (Continued)
For the Fiscal Year Ended June 30, 2016
132
Note 25 – Subsequent Events (Continued)
C. CalPERS Discount Rate
On December 21, 2016, the CalPERS Board of Administration (the “Board”) approved lowering the CalPERS
discount rate assumption, the long-term rate of return, from 7.50 percent to 7.00 percent over the next three years.
This will increase the City’s employer contribution costs beginning in fiscal year 2018-19. The phase-in of the
discount rate change approved by the board for the next three fiscal years is as follows:
Valuation Date
Fiscal Year for
Required Contribution Rate Discount Rate
June 30, 2016 2018-19 7.375%
June 30, 2017 2019-20 7.250%
June 30, 2018 2020-21 7.000%
Lowering the discount rate means plans will see increases to normal costs, the cost of pension benefits accruing in
one year for active members and the accrued liabilities. These increases will result in higher required employer
contribution. The actual impact cannot be determined but the required employer contribution is expected to be
significantly higher as well as the net pension liability.
12.b
Packet Pg. 403 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
133
REQUIRED SUPPLEMENTARY INFORMATION
12.b
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134
This page intentionally left blank.
12.b
Packet Pg. 405 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2016
135
Budgetary Information
The annual budget adopted by the Common Council provides for the City’s general operations, and includes
proposed expenditures and estimated revenues. The City Manager and Common Council are authorized to make the
necessary changes to the budget to ensure adequate and proper standards of services.
Following approval of the final budget by the Mayor and Common Council, budget transfers within a department
budget, in an amount not to exceed $25,000 per transfer, shall be approved or disapproved according to established
Finance Department policies and procedures and on forms approved by the Finance Department, with notice to the
Director of Finance, and written notice to the Mayor and Common Council, as long as the total department budget
allocation is not increased, and as long as no transfers into or out of the budget allocation for personnel salaries and
benefits are approved. The legal level of budgetary control is personnel salaries and benefits versus other
expenditures in each department.
The budget is formally integrated into the accounting system and employed as a managed control device during the
year for the General Fund.
Budgets are not legally adopted for the other City funds.
The General Fund budget is adopted on a basis consistent with generally accepted accounting principles.
The City does not adopt a budget for the Low and Moderate Income Housing Special Revenue Fund.
At fiscal year end, operating budget appropriations lapse; however, appropriations for incomplete capital
improvements, equipment purchases, and contractual obligations can be carried over to the following fiscal year.
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted
as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed
appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised
tax rates or revised fee schedules, or an excess in one year may be offset against a deficit in the following year.
Further, Section 5 of Article XIIIB allows the City to designate a portion of fund balance for general contingencies
to be used in future years without limitation.
12.b
Packet Pg. 406 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
136
Budgetary Comparison Schedules – General Fund
Actual Variance with
Original Final Amounts Final Budget
REVENUES:
Taxes 102,099,245 102,099,245 110,387,777$ 8,288,532$
Licenses and permits 9,991,060 9,991,060 11,054,037 1,062,977
Fines and forfeitures 2,145,770 2,145,770 2,297,216 151,446
Use of money and property 41,000 41,000 542,211 501,211
Lease revenue 428,700 428,700 543,483 114,783
Intergovernmental 1,954,844 1,954,844 1,519,503 (435,341)
Charges for services 6,739,568 6,938,563 6,109,240 (829,323)
Other revenues 3,810,588 3,848,358 7,502,289 3,653,931
Total revenues 127,210,775 127,447,540 139,955,756 12,508,216
EXPENDITURES:
Current:
General government 21,194,037 22,577,123 22,241,104 336,019
Public safety 87,234,273 89,671,190 86,804,920 2,866,270
Streets 4,538,733 4,634,462 5,251,525 (617,063)
Culture and recreation 7,295,751 7,575,383 6,350,319 1,225,064
Community development 4,603,828 4,744,188 3,915,354 828,834
Community service 1,696,372 1,710,876 1,576,028 134,848
Debt service:
Principal 2,498,125 4,210,548 11,774,879 (7,564,331)
Interest and fiscal charges 606,546 669,389 593,410 75,979
Total expenditures 129,667,665 135,793,159 138,507,539 (2,714,380)
REVENUES OVER
(UNDER) EXPENDITURES (2,456,890) (8,345,619) 1,448,217 9,793,836
OTHER FINANCING SOURCES (USES)
Transfers in 2,900,000 2,900,000 15,044,310 12,144,310
Transfers out - - (109,045) (109,045)
Total other financing sources (uses)2,900,000 2,900,000 14,935,265 12,035,265
Net change in fund balance 443,110$ (5,445,619)$ 16,383,482 21,829,101$
Fund Balance:
Beginning of year 18,028,197
End of year 34,411,679$
Budgeted Amounts
12.b
Packet Pg. 407 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
137
Budgetary Comparison Schedules – Federal and State Grants Special Revenue Fund
Actual Variance with
Original Final Amounts Final Budget
REVENUES:
Use of money and property -$ -$ 49,286$ 49,286$
Lease revenue - - 26,100 26,100
Intergovernmental 12,479,755 14,351,903 8,628,506 (5,723,397)
Other revenues - - 2,137,508 2,137,508
Total revenues 12,479,755 14,351,903 10,841,400 (3,510,503)
EXPENDITURES:
Current:
General government 7,586,622 9,021,831 4,963,563 4,058,268
Public safety 1,873,928 2,601,883 2,384,441 217,442
Streets 130,324 189,209 110,547 78,662
Culture and recreation 678,478 1,547,399 1,199,269 348,130
Community development 534,615 750,000 389,917 360,083
Community service 195,807 845,807 1,628,969 (783,162)
Debt Service:
Principal 879,908 535,532 594,760 (59,228)
Interest and fiscal charges 734,672 350,673 350,672 1
Total expenditures 12,614,354 15,842,334 11,622,138 4,220,196
REVENUES OVER
(UNDER) EXPENDITURES (134,599) (1,490,431) (780,738) 709,693
CHANGE IN FUND BALANCE (134,599)$ (1,490,431)$ (780,738) 709,693$
FUND BALANCE:
Beginning of year 19,086,304
End of year 18,305,566$
Budgeted Amounts
12.b
Packet Pg. 408 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
138
Budgetary Comparison Schedules – Low and Moderate Income Housing Special Revenue Fund
Actual Variance with
Original Final Amounts Final Budget
REVENUES:
Licenses and permits -$ -$ 15,467$ 15,467$
Use of money and property - - 244,743 244,743
Other revenues - - 3,721 3,721
Total revenues - - 263,931 263,931
EXPENDITURES:
Current:
General government -$ -$ 2,509,035$ 2,509,035$
Community development - - 196,346 196,346
Debt Service:
Principal - - 100,000 100,000
Total expenditures - - 2,805,381 2,805,381
REVENUES OVER
(UNDER) EXPENDITURES - - (2,541,450) (2,541,450)
CHANGE IN FUND BALANCE -$ -$ (2,541,450) (2,541,450)$
FUND BALANCE:
Beginning of year 46,686,383
End of year 44,144,933$
Budgeted Amounts
12.b
Packet Pg. 409 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
139
Budgetary Comparison Schedules – Sales and Road Special Revenue Fund
Actual Variance with
Original Final Amounts Final Budget
REVENUES:
Taxes 3,200,000 3,200,000 3,443,540$ 243,540$
Use of money and property - - 124,818 124,818
Intergovernmental - - 259 259
Total revenues 3,200,000 3,200,000 3,568,617 368,617
EXPENDITURES:
Current:
Streets 3,200,000 7,804,269 3,652,857 4,151,412
Debt Service:
Principal - - 9,858 (9,858)
Total expenditures 3,200,000 7,804,269 3,662,715 4,141,554
REVENUES OVER
(UNDER) EXPENDITURES - (4,604,269) (94,098) 4,510,171
CHANGE IN FUND BALANCE -$ (4,604,269)$ (94,098) 4,510,171$
FUND BALANCE:
Beginning of year 8,219,581
End of year 8,125,483$
Budgeted Amounts
12.b
Packet Pg. 410 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
140
Schedules of Funding Progress – Other Postemployment Benefit Plans
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
City
6/30/2009 -$ 61,371,000$ 61,371,000$ 0.00% 78,951,000$ 77.73%
6/30/2012 - 48,819,000 48,819,000 0.00% 84,166,000 58.00%
6/30/2014*- 7,822,000 7,822,000 0.00% 62,980,000 12.42%
Water Department
6/30/2010 -$ 28,676,000$ 28,676,000$ 0.00% 12,619,000$ 227.24%
6/30/2012 8,556,000 28,831,000 20,275,000 29.68% 14,765,000 137.32%
6/30/2014*13,380,000 35,012,000 21,632,000 38.22% 15,531,000 139.28%
Successor Agency
6/30/2008*-$ 749,208$ 749,208$ 0.00% 1,764,100$ 42.47%
* Most recent actuarial valuation available
12.b
Packet Pg. 411 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
141
Schedules of Changes in the Net Position Liability and Related Ratios – Last Ten Years*
Total Pension Liability 2014-15 2013-14
Service cost 7,442,643$ 7,664,862$
Interest on total pension liability 36,972,628 35,857,877
Differences between expected and actual experience (4,628,505) -
Changes in assumptions (8,789,538) -
Changes in benefit terms - -
Benefit payments, including refunds of employee contributions (25,414,126) (24,178,446)
Net change in total pension liability 5,583,102 19,344,293
Total pension liability - beginning 505,706,114 486,361,821
Total pension liability - ending (a)511,289,216$ 505,706,114$
Plan fiduciary net position
Contributions - employer 8,328,349$ 10,201,167$
Contributions - employee 3,362,371 4,422,413
Investment income (net of administrative expenses) 8,671,204 58,763,840
Benefit payments (25,414,126) (24,178,446)
Other (435,431) -
Net change in plan fiduciary net position (5,487,633) 49,208,974
Plan fiduciary net position - beginning 392,005,008 342,796,034
Plan fiduciary net position - ending (b)386,517,375$ 392,005,008$
Net pension liability - ending (a)-(b)124,771,841$ 113,701,106$
Plan fiduciary net position as a percentage of the
total pension liability 75.60% 77.52%
Covered-employee payroll 42,408,723$ 41,173,517$
Net pension liability as a percentage of covered-
employee payroll 294.21% 276.15%
Notes to Schedule:
* - Fiscal year 2015 was the first year of implementation, therefore only one year is shown.
As of June 30, 2016
Benefit changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30,
2014. This applies for voluntary benefit changes as well as any offers of Two Years of Additional Service Credit (a.k.a. Golden Handshakes).
Changes in assumptions: This discount rate was changed from 7.5 percent (net of administrative expense) to 7.65 percent.
City Miscellaneous Plan - 53
12.b
Packet Pg. 412 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
142
Schedules of Changes in the Net Position Liability and Related Ratios – Last Ten Years* (Continued)
Total Pension Liability 2014-15 2013-14
Service cost 9,902,473$ 11,208,178$
Interest on total pension liability 50,392,288 48,966,477
Differences between expected and actual experience (5,975,828) -
Changes in assumptions (12,404,993) -
Changes in benefit terms - -
Benefit payments, including refunds of employee contributions (36,206,443) (34,402,815)
Net change in total pension liability 5,707,497 25,771,840
Total pension liability - beginning 690,255,521 664,483,681
Total pension liability - ending (a)695,963,018$ 690,255,521$
Plan fiduciary net position
Contributions - employer 12,378,212$ 18,245,106$
Contributions - employee 3,351,555 5,184,692
Investment income (net of administrative expenses) 11,406,991 78,093,954
Benefit payments (36,206,443) (34,402,815)
Other (579,829) -
Net change in plan fiduciary net position (9,649,514) 67,120,937
Plan fiduciary net position - beginning 522,576,698 455,455,761
Plan fiduciary net position - ending (b)512,927,184$ 522,576,698$
Net pension liability - ending (a)-(b)183,035,834$ 167,678,823$
Plan fiduciary net position as a percentage of the
total pension liability 73.70% 75.71%
Covered-employee payroll 40,910,109$ 39,718,552$
Net pension liability as a percentage of covered-
employee payroll 447.41% 422.17%
Notes to Schedule:
* - Fiscal year 2015 was the first year of implementation, therefore only one year is shown.
As of June 30, 2016
Benefit changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30,
2014. This applies for voluntary benefit changes as well as any offers of Two Years of Additional Service Credit (a.k.a. Golden Handshakes).
Changes in assumptions: This discount rate was changed from 7.5 percent (net of administrative expense) to 7.65 percent.
City Safety Plan - 54
12.b
Packet Pg. 413 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
143
Schedule of the Successor Agency’s Proportionate Share of the Net Pension Liability and Related Ratios –
Last Ten Years*
Measurement Period June 30, 20151 June 30, 20141
Successor Agency's Proportion of the Net Pension Liability 0.16343% 0.06132%
Successor Agency's Proportionate Share of the net Pension Liability 4,483,755$ 3,815,585$
Successor Agency's Covered-Employee Payroll 464,530$ 451,000$
Successor Agency's Proportionate Share of the Net Pension Liability
as a Percentage of Its Covered-Employee Payroll 129.85% 69.16%
Plan's Proportionate Share of the Fiduciary Net Position
as a Percentage of the Total Pension Liability 78.00% 83.77%
1 Historical information is required only for measurement periods for which GASB 68 is applicale.
For the Year Ended June 30, 2016
Successor Agency Plan-1414
12.b
Packet Pg. 414 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
144
Schedule of Contributions – Last Ten Years*
2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 9,535,385$ 8,237,102$ 10,201,167$
Contributions in relation to the actuarially determined contributions 2 (9,535,385) (8,237,102) (10,201,167)
Contribution deficiency (excess)-$ -$ -$
Covered-employee payroll 3, 4 43,680,984$ 42,408,723$ 41,173,517$
Contributions as a percentage of covered-
employee payroll 3 21.83% 19.42% 24.78%
Notes to Schedule
Valuation date:6/30/2014
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only one year is shown.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers
may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the
actuarially determined contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68
defines covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan.
Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer should display in the
disclosure footnotes the payroll based on total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year ($39,374,288) was assumed to increase by the 3.00% payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the June 30,
2012 public agency valuations.
For details, see June 30, 2012 Funding Valuation Report
Actuarial Value of Assets. For details, see June 30, 2012
Funding Valuation Report.
7.50%, net of pension plan investment and administrative
expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
As of June 30, 2016
City Miscellaneous Plan - 53
12.b
Packet Pg. 415 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
145
Schedule of Contributions – Last Ten Years* (Continued)
2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 13,619,255$ 12,137,270$ 18,245,106$
Contributions in relation to the actuarially determined contributions 2 (13,619,255) (12,137,270) (18,245,106)
Contribution deficiency (excess)-$ -$ -$
Covered-employee payroll 3, 4 42,137,412$ 40,910,109$ 39,718,552$
Contributions as a percentage of covered-
employee payroll 3 32.32% 29.67% 45.94%
Notes to Schedule
Valuation date:6/30/2014
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only one year is shown.
Actuarial Value of Assets. For details, see June 30, 2012
Funding Valuation Report.
7.50%, net of pension plan investment and administrative
expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers
may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the
actuarially determined contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68
defines covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan.
Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer should display in the
disclosure footnotes the payroll based on total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year ($38,561,701) was assumed to increase by the 3.00% payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the June 30,
2012 public agency valuations.
For details, see June 30, 2012 Funding Valuation Report
As of June 30, 2016
City Safety Plan - 54
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Packet Pg. 416 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
City of San Bernardino
Required Supplementary Information (Unaudited) (Continued)
For the Year Ended June 30, 2016
146
Schedule of Contributions – Last Ten Years* (Continued)
2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 280,440$ 19,656$ 60,842$
Contributions in relation to the actuarially determined contributions 2 (280,440) (19,656) (60,842)
Contribution deficiency (excess)-$ -$ -$
Covered-employee payroll 3, 4 478,466$ 464,530$ 451,000$
Contributions as a percentage of covered-
employee payroll 3 58.61% 4.23% 13.49%
Notes to Schedule
Valuation date:6/30/2014
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth 3.00%
Investment rate of return
Retirement age
Mortality
* - Fiscal year 2015 was the first year of implementation, therefore only one year is shown.
For details, see June 30, 2012 Funding Valuation Report
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers
may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the
actuarially determined contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68
defines covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan.
Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer should display in the
disclosure footnotes the payroll based on total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year ($437,864) was assumed to increase by the 3.00% payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2014-15 were from the June 30,
2012 public agency valuations.
Successor Agency Plan - 1414
As of June 30, 2016
Actuarial Value of Assets. For details, see June 30, 2012
Funding Valuation Report.
7.50%, net of pension plan investment and administrative
expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
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Packet Pg. 417 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
SUPPLEMENTARY INFORMATION
147
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Packet Pg. 418 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
This page intentionally left blank.
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Packet Pg. 419 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
NON-MAJOR
GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS:
Cable TV Fund -This fund is used to account for the regulatory oversight of the City's cable companies for franchise
compliance, consumer protection, and franchise renewal negotiations, as well as operating two access channels.
Asset Seizure Fund -This fund is used for the investigation, detection, and prosecution of criminal activities. Funding
is provided by criminal assets seized under existing state and federal statutes.
Alternative Transportation Fund -This fund is used to account for the receipt and disbursement of funds received per
Transportation Development Act Article 3 (SB 821) of the Bikeway & Pedestrian Program and the State and Local
Fiscal Assistance Act of 1972.
Special Gas Tax Fund -This fund is used to account for the receipt of gasoline tax revenue paid to the City as a
subvention from the State of California. These funds are transferred to the General Fund to partially support
maintenance activities and to finance street construction projects as provided by State law.
Traffic Safety Fund -This fund is used for the recording of the City's share of California Vehicle Code fines collected
by San Bernardino County.
Sewerline Maintenance Fund -This fund is used to account for the cost of maintaining sewer lines as paid for from a
portion of sewer revenues.
Fire Station Fund - This fund is used to account for the operation and maintenance of the Verdemont Fire Station.
DEBT SERVICE FUNDS:
Assessment District #1015 Fund -This fund is used to account for the collection of assessments from property owners
and for the remittance of such assessments to the Successor Agency of the former redevelopment agency (Economic
Development Agency) and other City funds as required by the Improvement Bond Act of 1915 and related California
State statutes for this district.
149
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Packet Pg. 420 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
NON-MAJOR
GOVERNMENTAL FUNDS
CAPITAL PROJECTS FUNDS:
Verdemont Fund -This fund is used to account for development fees collected for improvements in the Verdemont
area.
Fire Equipment Acquisition Fund - This fund is used for the acquisition of fire equipment from lease proceeds.
Park Construction Fee Fund -This fund is used for park land acquisition and development. Principal revenue sources
are parks acquisition and development fees collected from developers and state revenues for park development.
Sewerline Construction Fund -This fund is used for construction of sewer collection systems from development
revenues.
Storm Drain Construction Fund -This fund is used for construction of storm drain facilities through the City from
development revenues.
Special Assessments Fund -This fund is used to account for assessment districts related to improvement, construction,
and maintenance, including landscape maintenance, sewerline maintenance, and security paid by assessments on
properties.
Cultural Development Construction Fee Fund -This fund is used for collection of development fees used to pay for
cultural improvements and activities.
Impact Fees Fund -This fund is used to account for the specific revenue sources that are legally restricted to fund
expenditures of developer impact fees.
Street Construction Fund -This fund is used to account for right-of-way acquisition, construction,and improvements
related to the City's street system. These projects are funded by various state and federal programs and matching City
funds.
Public Improvements Fund -This fund is used to for maintenance and construction of improvements around the Indian
Bingo Casino located on the reservation.
Prop 1B Local Street Fund -This fund was established to account for monies received from the State through Prop 1B.
This proposition provided $19 billion in bond funds for a variety of transportation projects, including $2 billion for cities
and counties for maintenance and improvements of local transportation facilities.
150
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Packet Pg. 421 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Asset Alternative Special Traffic
Cable TV Seizure Transportation Gas Tax Safety
ASSETS
Cash and investments 729,954$ 1,998,345$ 912,927$ 4,236,723$ 1,414,790$
Receivables:
Accounts 33,537 - - - -
Interest 903 2,425 1,138 5,252 -
Special assessments - - - - -
Due from other governments - 111 73,196 - 118,148
Due from other funds - - - - -
Advances to other funds - - - - -
Total assets 764,394$ 2,000,881$ 987,261$ 4,241,975$ 1,532,938$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 4,178$ 2,330$ 2,197$ 713,340$ 348,225$
Accrued payroll and related liabilities 2,334 - - 4,265 -
Deposits payable - 20,000 - - -
Retentions payable - - - - -
Advances from other funds - - - - -
Total liabilities 6,512 22,330 2,197 717,605 348,225
Deferred inflows of resources:
Unavailable revenues - - - - -
Total deferred inflows of resources - - - - -
Fund Balances:
Restricted 757,882 1,978,551 985,064 3,524,370 1,184,713
Unassigned (deficit) - - - - -
Total fund balances 757,882 1,978,551 985,064 3,524,370 1,184,713
Total liabilities, deferred inflows of
resources and fund balances 764,394$ 2,000,881$ 987,261$ 4,241,975$ 1,532,938$
(Continued)
City of San Bernardino
Combining Balance Sheet
Special Revenue
Non-Major Governmental Funds
June 30, 2016
151
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Packet Pg. 422 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Debt Service
Assessment Fire
Sewerline Fire District Equipment
Maintenance Station #1015 Verdemont Acquisition
ASSETS
Cash and investments 6,012,454$ -$ 7,758$ 232,289$ -$
Receivables:
Accounts - - - - -
Interest 7,535 - 85 287 -
Special assessments - - 87,357 - -
Due from other governments - - - - -
Due from other funds 721,511 - - - -
Advances to other funds 26,474 - - - -
Total assets 6,767,974$ -$ 95,200$ 232,576$ -$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 90,915$ -$ 56$ -$ -$
Accrued payroll and related liabilities 6,892 - - - -
Deposits payable - - - - -
Retentions payable - - - - -
Advances from other funds - - 95,200 - -
Total liabilities 97,807 - 95,256 - -
Deferred inflows of resources:
Unavailable revenues - - 87,357 - -
Total deferred inflows of resources - - 87,357 - -
Fund Balances:
Restricted 6,670,167 - - 232,576 -
Unassigned (deficit) - - (87,413) - -
Total fund balances 6,670,167 - (87,413) 232,576 -
Total liabilities, deferred inflows of
resources and fund balances 6,767,974$ -$ 95,200$ 232,576$ -$
(Continued)
Special Revenue
City of San Bernardino
Non-Major Governmental Funds
June 30, 2016
Combining Balance Sheet (Continued)
Capital Projects
152
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Packet Pg. 423 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Cultural
Park Storm Development
Construction Sewerline Drain Special Construction
Fee Construction Construction Assessments Fee
ASSETS
Cash and investments 240,048$ 3,614,081$ 4,776,561$ 304,110$ 2,919,553$
Receivables:
Accounts - - - - -
Interest 297 4,455 5,922 - 3,613
Special assessments - - - - -
Due from other governments - - - 21,674 -
Due from other funds - - - - -
Advances to other funds - 26,474 - - -
Total assets 240,345$ 3,645,010$ 4,782,483$ 325,784$ 2,923,166$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 99,370$ 14,704$ 62,095$ 198,257$ 4,136$
Accrued payroll and related liabilities - - - - -
Deposits payable - - - 22,769 -
Retentions payable 47,900 - 12,804 - -
Advances from other funds - - - - -
Total liabilities 147,270 14,704 74,899 221,026 4,136
Deferred inflows of resources:
Unavailable revenues - - - - -
Total deferred inflows of resources - - - - -
Fund Balances:
Restricted 93,075 3,630,306 4,707,584 104,758 2,919,030
Unassigned (deficit) - - - - -
Total fund balances 93,075 3,630,306 4,707,584 104,758 2,919,030
Total liabilities, deferred inflows of
resources and fund balances 240,345$ 3,645,010$ 4,782,483$ 325,784$ 2,923,166$
(Continued)
Combining Balance Sheet (Continued)
Non-Major Governmental Funds
Capital Projects
June 30, 2016
City of San Bernardino
153
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Packet Pg. 424 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Total
Prop 1B Other
Impact Street Public Local Governmental
Fees Construction Improvements Street Funds
ASSETS
Cash and investments 15,549,090$ 414,358$ 1,119,843$ 61,677$ 44,544,561$
Receivables:
Accounts - - - - 33,537
Interest 19,251 - 1,386 83 52,632
Special assessments - - - - 87,357
Due from other governments - 423,955 - - 637,084
Due from other funds - - - - 721,511
Advances to other funds - - - - 52,948
Total assets 15,568,341$ 838,313$ 1,121,229$ 61,760$ 46,129,630$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable 712,152$ 114,139$ -$ 2,367$ 2,368,461$
Accrued payroll and related liabilities - - - - 13,491
Deposits payable - - - - 42,769
Retentions payable - - - 16,019 76,723
Advances from other funds - - - - 95,200
Total liabilities 712,152 114,139 - 18,386 2,596,644
Deferred inflows of resources:
Unavailable revenues - - - - 87,357
Total deferred inflows of resources - - - - 87,357
Fund Balances:
Restricted 14,856,189 724,174 1,121,229 43,374 43,533,042
Unassigned (deficit) - - - - (87,413)
Total fund balances 14,856,189 724,174 1,121,229 43,374 43,445,629
Total liabilities, deferred inflows of
resources and fund balances 15,568,341$ 838,313$ 1,121,229$ 61,760$ 46,129,630$
(Concluded)
City of San Bernardino
Combining Balance Sheet (Continued)
Non-Major Governmental Funds
June 30, 2016
Capital Projects
154
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Packet Pg. 425 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Asset Alternative Special Traffic
Cable TV Seizure Transportation Gas Tax Safety
REVENUES:
Taxes 231,006$ -$ -$ -$ -$
Licenses and Permits - - - - -
Impact fees - - - - -
Fines and forfeitures - 111 - - 345,671
Use of money and property 10,364 26,291 13,039 60,366 -
Intergovernmental - 808,634 271,863 4,607,880 37,182
Charges for Services - - - - -
Other revenues 19,111 - - - -
Total revenues 260,481 835,036 284,902 4,668,246 382,853
EXPENDITURES:
Current:
General government 249,995 - 60,208 - -
Public safety - 223,596 - - 426,936
Streets - - - 5,755,167 -
Debt service:
Principal - - 6,572 5,477 -
Interest and fiscal charges - - - - -
Total expenditures 249,995 223,596 66,780 5,760,644 426,936
REVENUES OVER
(UNDER) EXPENDITURES 10,486 611,440 218,122 (1,092,398) (44,083)
OTHER FINANCING SOURCES (USES):
Transfers in - - - - -
Transfers out - - - - -
Total other financing sources (uses)- - - - -
CHANGE IN FUND BALANCE 10,486 611,440 218,122 (1,092,398) (44,083)
FUND BALANCE:
Beginning of year 747,396 1,367,111 766,942 4,616,768 1,228,796
End of year 757,882$ 1,978,551$ 985,064$ 3,524,370$ 1,184,713$
(Continued)
City of San Bernardino
Special Revenue
For the Year Ended June 30, 2016
Non-Major Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
155
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Packet Pg. 426 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Debt Service
Assessment Fire
Sewerline Fire District Equipment
Maintenance Station #1015 Verdemont Acquisition
REVENUES:
Taxes -$ 1,150,038$ 62,387$ -$ -$
Licenses and Permits - - - - -
Impact fees - - - - -
Fines and forfeitures - - - - -
Use of money and property 90,448 (3,596) 1,080 (29,684) -
Intergovernmental - - - - -
Charges for Services 5,409,628 - - - -
Other revenues - - - - -
Total revenues 5,500,076 1,146,442 63,467 (29,684) -
EXPENDITURES:
Current:
General government - - - - -
Public safety - 1,059,007 - - -
Streets 2,084,532 - 1,979 1,749 -
Debt service:
Principal 93,106 - - - -
Interest and fiscal charges - - 8,832 - -
Total expenditures 2,177,638 1,059,007 10,811 1,749 -
REVENUES OVER
(UNDER) EXPENDITURES 3,322,438 87,435 52,656 (31,433) -
OTHER FINANCING SOURCES (USES):
Transfers in - - - - -
Transfers out (700,000) (165,859) - - (48,907)
Total other financing sources (uses)(700,000) (165,859) - - (48,907)
CHANGES IN FUND BALANCES 2,622,438 (78,424) 52,656 (31,433) (48,907)
FUND BALANCES:
Beginning of year 4,047,729 78,424 (140,069) 264,009 48,907
End of year 6,670,167$ -$ (87,413)$ 232,576$ -$
(Continued)
Capital Projects
City of San Bernardino
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Non-Major Governmental Funds
Special Revenue
For the Year Ended June 30, 2016
156
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Packet Pg. 427 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Cultural
Park Storm Development
Construction Sewerline Drain Special Construction
Fee Construction Construction Assessments Fee
REVENUES:
Taxes -$ -$ -$ 1,199,360$ -$
Licenses and Permits - - - - 446,479
Impact fees - - - - -
Fines and forfeitures - - - - -
Use of money and property 3,706 54,469 65,252 4 41,722
Intergovernmental - - - - -
Charges for Services - 334,703 1,270,497 - -
Other revenues - - - - -
Total revenues 3,706 389,172 1,335,749 1,199,364 488,201
EXPENDITURES:
Current:
General government - - - - -
Public safety - - - - -
Streets 259,665 - 147,904 1,114,399 361,946
Debt service:
Principal - 2,191 6,572 71,199 -
Interest and fiscal charges - - - - -
Total expenditures 259,665 2,191 154,476 1,185,598 361,946
REVENUES OVER
(UNDER) EXPENDITURES (255,959) 386,981 1,181,273 13,766 126,255
OTHER FINANCING SOURCES (USES):
Transfers in - - - - -
Transfers out - - - - -
Total other financing sources (uses)- - - - -
CHANGES IN FUND BALANCES (255,959) 386,981 1,181,273 13,766 126,255
FUND BALANCES:
Beginning of year 349,034 3,243,325 3,526,311 90,992 2,792,775
End of year 93,075$ 3,630,306$ 4,707,584$ 104,758$ 2,919,030$
(Continued)
Capital Projects
For the Year Ended June 30, 2016
City of San Bernardino
Non-Major Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
157
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Packet Pg. 428 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Total
Prop 1B Other
Impact Street Public Local Governmental
Fees Construction Improvements Street Funds
REVENUES:
Taxes -$ -$ -$ -$ 2,642,791$
Licenses and Permits - - - - 446,479
Impact fees 2,409,364 - - - 2,409,364
Fines and forfeitures - - - - 345,782
Use of money and property 216,511 - 16,159 969 567,100
Intergovernmental 252,875 546,205 - - 6,524,639
Charges for Services - - - - 7,014,828
Other revenues - 180,732 - - 199,843
Total revenues 2,878,750 726,937 16,159 969 20,150,826
EXPENDITURES:
Current:
General government - - - - 310,203
Public safety 95,999 - - - 1,805,538
Streets 1,236,600 30,220 - - 10,994,161
Debt service:
Principal 100,224 1,095 - 5,477 291,913
Interest and fiscal charges 56,300 - - - 65,132
Total expenditures 1,489,123 31,315 - 5,477 13,466,947
REVENUES OVER
(UNDER) EXPENDITURES 1,389,627 695,622 16,159 (4,508) 6,683,879
OTHER FINANCING SOURCES (USES):
Transfers in 109,045 - - - 109,045
Transfers out - - - - (914,766)
Total other financing sources (uses)109,045 - - - (805,721)
CHANGES IN FUND BALANCES 1,498,672 695,622 16,159 (4,508) 5,878,158
FUND BALANCES:
Beginning of year 13,357,517 28,552 1,105,070 47,882 37,567,471
End of year 14,856,189$ 724,174$ 1,121,229$ 43,374$ 43,445,629$
(Continued)
Capital Projects
City of San Bernardino
For the Year Ended June 30, 2016
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Non-Major Governmental Funds
158
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Packet Pg. 429 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services performed by a designated
City department for other departments on a cost reimbursement basis. The City maintains the following Internal Service
Funds for the purposes indicated:
Unemployment Insurance Fund -This fund is used for administration of unemployment insurance claims paidto
the Employment Development Department of the State of California.
Workers' Compensation Fund -This fund is for administration of the City's self-insurance for workers'
compensation.
Central Services Fund -This fund is used to account for the provision of printing, duplication, and postal services
and operations of City Stores for supply costs.
Utility Fund - This fund is used to account for the control and allocation of the City's utility costs.
Information Systems Fund -This fund is used to account for the acquisition and maintenance of the City's
computer and emergency communications systems.
Telephone Support Fund -This fund is used to account for the operating cost and acquisition of the City's
telephone communications systems.
Motorpool Fund -This fund is used to account for the maintenance and operating costs for the City's fleet of
vehicles.
Liability Insurance Fund -This fund is for the administration of the City's liability claims, combined self-
insurance and umbrella coverage for liability.
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Packet Pg. 430 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Unemployment Workers' Liability Telephone
Insurance Compensation Insurance Motorpool Support
ASSETS
Current assets:
Cash and investments -$ 740,044$ 4,611,951$ 1,181,917$ 665,908$
Accounts receivable - 342,150 - - -
Due from other governments - 4,500 - - -
Inventories - - - 182,173 -
Total current assets - 1,086,694 4,611,951 1,364,090 665,908
Noncurrent assets:
Capital assets, net - - - 249,338 -
Total noncurrent assets - - - 249,338 -
Total assets - 1,086,694 4,611,951 1,613,428 665,908
DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources - 26,467 17,607 211,653 37,546
Total deferred outflows of resources - 26,467 17,607 211,653 37,546
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities - 6,656 36,457 439,661 33,597
Payroll and related liabilities - 152 152 2,622 1,047
Due to other funds - - - - -
Long-term debt - due within one year - - - - -
Compensated absences - due within one year - 9,677 7,615 8,376 1,823
Claims payable - due within one year - 7,196,407 - - -
Long-term debt - due within one year - - - - -
Total current liabilities - 7,212,892 44,224 450,659 36,467
Noncurrent liabilities:
Aggregate net pension liability - 329,510 219,197 2,635,012 467,439
Compensated absences - due in more than one year - 22,579 17,769 19,544 4,255
Claims payable - due in more than one year - 22,660,072 14,360,983 - -
Long-term debt - due in more than one year - - - - -
Total noncurrent liabilities - 23,012,161 14,597,949 2,654,556 471,694
Total liabilities - 30,225,053 14,642,173 3,105,215 508,161
DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources - 30,083 20,011 240,563 42,674
Total deferred inflows of resources - 30,083 20,011 240,563 42,674
NET POSITION
Net investment in capital assets - - - 249,338 -
Restricted - - - - -
Unrestricted (deficit) - (29,141,975) (10,032,626) (1,770,035) 152,619
Total net position -$ (29,141,975)$ (10,032,626)$ (1,520,697)$ 152,619$
(Continued)
June 30, 2016
All Internal Service Funds
Combining Statement of Net Position
City of San Bernardino
160
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Packet Pg. 431 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Information Central
Systems Utility Services Total
ASSETS
Current assets:
Cash and investments 374,619$ -$ -$ 7,574,439$
Accounts receivable - - - 342,150
Due from other governments - - - 4,500
Inventories - - - 182,173
Total current assets 374,619 - - 8,103,262
Noncurrent assets:
Capital assets, net 2,971,679 - - 3,221,017
Total noncurrent assets 2,971,679 - - 3,221,017
Total assets 3,346,298 - - 11,324,279
DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 292,907 - 11,573 597,753
Total deferred outflows of resources 292,907 - 11,573 597,753
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 211,883 - 774 729,028
Payroll and related liabilities - - 580 4,553
Due to other funds 29,929 - 5,958 35,887
Long-term debt - due within one year 575,529 - - 575,529
Compensated absences - due within one year 16,764 - 441 44,696
Claims payable - due within one year - - - 7,196,407
Long-term debt - due within one year - - - -
Total current liabilities 834,105 - 7,753 8,586,100
Noncurrent liabilities:
Aggregate net pension liability 3,646,601 - 144,081 7,441,840
Compensated absences - due in more than one year 39,115 - 1,029 104,291
Claims payable - due in more than one year - - - 37,021,055
Long-term debt - due in more than one year 1,828,319 - - 1,828,319
Total noncurrent liabilities 5,514,035 - 145,110 46,395,505
Total liabilities 6,348,140 - 152,863 54,981,605
DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 332,915 - 13,154 679,400
Total deferred inflows of resources 332,915 - 13,154 679,400
NET POSITION
Net investment in capital assets 567,831 - - 817,169
Restricted - - - -
Unrestricted (deficit) (3,609,681) - (154,444) (44,556,142)
Total net position (3,041,850)$ -$ (154,444)$ (43,738,973)$
(Concluded)
City of San Bernardino
Combining Statement of Net Position (Continued)
All Internal Service Funds
June 30, 2016
161
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Packet Pg. 432 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Unemployment Workers' Liability Telephone
Insurance Compensation Insurance Motorpool Support
OPERATING REVENUES:
Charges for services -$ 8,380,081$ 1,965,927$ 4,516,953$ 674,376$
Total operating revenues - 8,380,081 1,965,927 4,516,953 674,376
OPERATING EXPENSES:
Cost of sales and services - 1,505,595 239,339 4,358,259 705,895
Claims expense - 5,756,943 1,684,664 - -
Amortization - - - - -
Depreciation - - - 63,929 -
Total operating expenses - 7,262,538 1,924,003 4,422,188 705,895
Operating income (loss)- 1,117,543 41,924 94,765 (31,519)
NONOPERATING REVENUES (EXPENSES):
Interest expense and fiscal charges - - - - -
Miscellaneous income - - - 499,981 -
Total nonoperating revenues (expenses)- - - 499,981 -
Income (loss) before capital
contributions and transfers - 1,117,543 41,924 594,746 (31,519)
CAPITAL CONTRIBUTIONS AND TRANSFERS:
Capital Contributions - - - - -
Transfers in - - - 267,503 -
Transfers out (7,893) (14,674) (7,656) (81,661) (12,122)
Total contributions and transfers (7,893) (14,674) (7,656) 185,842 (12,122)
Changes in net position (7,893) 1,102,869 34,268 780,588 (43,641)
NET POSITION:
Beginning of year 7,893 (30,244,844) (10,066,894) (2,301,285) 196,260
End of year -$ (29,141,975)$ (10,032,626)$ (1,520,697)$ 152,619$
(Continued)
For the Year Ended June 30, 2016
All Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position
City of San Bernardino
162
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Packet Pg. 433 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Information Central
Systems Utility Services Total
OPERATING REVENUES:
Charges for services 3,732,786$ -$ 84,031$ 19,354,154$
Total operating revenues 3,732,786 - 84,031 19,354,154
OPERATING EXPENSES:
Cost of sales and services 3,908,950 - 132,087 10,850,125
Claims expense - - - 7,441,607
Amortization 594,633 - - 594,633
Depreciation 91,835 - - 155,764
Total operating expenses 4,595,418 - 132,087 19,042,129
Operating income (loss)(862,632) - (48,056) 312,025
NONOPERATING REVENUES (EXPENSES):
Interest expense and fiscal charges (85,637) - - (85,637)
Miscellaneous income 40 - - 500,021
Total nonoperating revenues (expenses)(85,597) - - 414,384
Income (loss) before capital
contributions and transfers (948,229) - (48,056) 726,409
CAPITAL CONTRIBUTIONS AND TRANSFERS:
Capital Contributions - 422,931 - 422,931
Transfers in - - - 267,503
Transfers out (79,110) (25,065) - (228,181)
Total contributions and transfers (79,110) 397,866 - 462,253
Changes in net position (1,027,339) 397,866 (48,056) 1,188,662
NET POSITION:
Beginning of year (2,014,511) (397,866) (106,388) (44,927,635)
End of year (3,041,850)$ -$ (154,444)$ (43,738,973)$
(Concluded)
City of San Bernardino
Combining Statement of Revenues, Expenses, and Changes in Net Position (Continued)
All Internal Service Funds
For the Year Ended June 30, 2016
163
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Packet Pg. 434 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Unemployment Workers' Liability Telephone
Insurance Compensation Insurance Motorpool Support
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from user departments -$ 7,577,977$ 1,965,927$ 4,516,953$ 587,401$
Cash payments to suppliers and employees
for goods and services (38,912) (1,369,239) (197,368) (4,298,501) (710,988)
Cash payments for claims and insurance - (5,557,482) (1,775,838) - -
Cash received from (paid for) other activities - (4,500) - 499,981 -
Net cash provided by (used in)
operating activities (38,912) 646,756 (7,279) 718,433 (123,587)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - - - (267,503) -
Principal payments on long term debt - - - - -
Interest paid - - - - -
Net cash (used in) capital and
related financing activities - - - (267,503) -
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Transfers in - - - 267,503 -
Transfers (out) (7,893) (14,674) (7,656) (81,661) (12,122)
Net cash provided by (used in) noncapital
financing activities (7,893) (14,674) (7,656) 185,842 (12,122)
Net change in cash and cash equivalents (46,805) 632,082 (14,935) 636,772 (135,709)
CASH AND CASH EQUIVALENTS:
Beginning of year 46,805 107,962 4,626,886 545,145 801,617
End of year -$ 740,044$ 4,611,951$ 1,181,917$ 665,908$
(Continued)
For the Year Ended June 30, 2016
All Internal Service Funds
Combining Statement of Cash Flows
City of San Bernardino
164
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Packet Pg. 435 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Information Central
Systems Utility Services Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from user departments 3,686,515$ -$ 90,369$ 18,425,142$
Cash payments to suppliers and employees
for goods and services (3,120,772) (1,040,420) (96,284) (10,872,484)
Cash payments for claims and insurance - - - (7,333,320)
Cash received from (paid for) other activities 40 - - 495,521
Net cash provided by (used in)
operating activities 565,783 (1,040,420) (5,915) 714,859
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (7,576) - - (275,079)
Principal payments on long term debt (559,364) - - (559,364)
Interest paid (85,637) - - (85,637)
Net cash (used in) capital and
related financing activities (652,577) - - (920,080)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Transfers in - - - 267,503
Transfers (out) (79,110) (25,065) - (228,181)
Net cash provided by (used in) noncapital
financing activities (79,110) (25,065) - 39,322
Net change in cash and cash equivalents (165,904) (1,065,485) (5,915) (165,899)
CASH AND CASH EQUIVALENTS:
Beginning of year 540,523 1,065,485 5,915 7,740,338
End of year 374,619$ -$ -$ 7,574,439$
(Concluded)
City of San Bernardino
Combining Statement of Cash Flows (Continued)
All Internal Service Funds
For the Year Ended June 30, 2016
165
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Packet Pg. 436 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Unemployment Workers' Liability Telephone
Insurance Compensation Insurance Motorpool Support
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Operating income (loss) -$ 1,117,543$ 41,924$ 94,765$ (31,519)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation - - - 63,929 -
Amortization - - - - -
Other non-operating revenues - - - 499,981 -
Changes in operating assets and liabilities:
Accounts receivable - (342,150) - - 1,025
Due from other governments - (4,500) - - -
Inventories - - - 84,994 -
Deferred pension contributions - (14,319) (6,463) (45,664) (12,438)
Accounts payable (38,912) (3,342) (1,501) 82,705 (69,676)
Payroll and related liabilities - 152 (136) 2,622 1,047
Due to other funds - - - - (88,000)
Unearned revenue - (459,954) - - -
Aggregate net pension liability - 161,388 64,971 337,760 119,951
Compensated absences - 2,035 1,453 (101,567) (4,719)
Claims and judgments payable - 199,461 (91,174) - -
Investment earnings greater than
expected earnings - (9,558) (16,353) (301,092) (39,258)
Total adjustments (38,912) (470,787) (49,203) 623,668 (92,068)
Net cash provided by (used in)
operating activities (38,912)$ 646,756$ (7,279)$ 718,433$ (123,587)$
(Continued)
For the Year Ended June 30, 2016
City of San Bernardino
Combining Statement of Cash Flows (Continued)
All Internal Service Funds
166
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Packet Pg. 437 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Information Central
Systems Utility Services Total
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Operating income (loss) (862,632)$ -$ (48,056)$ 312,025$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 91,835 - - 155,764
Amortization 594,633 - - 594,633
Other non-operating revenues 40 - - 500,021
Changes in operating assets and liabilities:
Accounts receivable - - 380 (340,745)
Due from other governments - - - (4,500)
Inventories - - - 84,994
Deferred pension contributions (127,258) - (5,036) (211,178)
Accounts payable (12,392) (1,035,044) (2,414) (1,080,576)
Payroll and related liabilities - - 580 4,265
Due to other funds (46,271) - 5,958 (128,313)
Unearned revenue - - - (459,954)
Aggregate net pension liability 1,354,060 - 53,615 2,091,745
Compensated absences (218,602) (5,376) (2,765) (329,541)
Claims and judgments payable - - - 108,287
Investment earnings greater than
expected earnings (207,630) - (8,177) (582,068)
Total adjustments 1,428,415 (1,040,420) 42,141 402,834
Net cash provided by (used in)
operating activities 565,783$ (1,040,420)$ (5,915)$ 714,859$
(Concluded)
For the Year Ended June 30, 2016
City of San Bernardino
Combining Statement of Cash Flows (Continued)
All Internal Service Funds
167
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Packet Pg. 438 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
This page intentionally left blank.
168
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Packet Pg. 439 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
AGENCY FUNDS
Assessment District #961 - This fund is used to account for the collection of assessments from property owners
and for the remittance of such assessments to bondholders as required by the Improvement Bond Act of 1915 and
related California State statutes for this district.
Assessment District #977A - This fund is used to account for the collection of assessments from property owners
and for the remittance of such assessments to bondholders as required by the Improvement Bond Act of 1915 and
related California State statutes for this district.
Assessment District #977B - This fund is used to account for the collection of assessments from property owners
and for the remittance of such assessments to bondholders as required by the Improvement Bond Act of 1915 and
related California State statutes for this district.
Assessment District #1003 - This fund is used to account for the collection of assessments from property owners
and for the remittance of such assessments to bondholders as required by the Improvement Bond Act of 1915 and
related California State statutes for this district.
Special Deposits - This fund accounts for all deposits made by developers, other government agencies or others for
disposition under the terms for which the deposits were made.
Cemetery Perpetual Care - This fund accounts for all money collected for the perpetual maintenance of the City
owned and operated Cemetery.
San Bernardino Water Resource Authority - This fund accounts for the collection and disposition of funds
received for the San Bernardino Regional Water Resource Authority.
FIDUCIARY FUNDS
The Agency Funds are used to account for assets held by the City in a trustee capacity for individuals, private
organizations, other governments, and/or other funds. The City maintains the following Agency Funds for the purposes
indicated:
169
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Packet Pg. 440 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Assessment Assessment Assessment Assessment
District District District District Special
#961 #977A #977B #1003 Deposits
ASSETS
Cash and investments -$ 63,124$ 26,751$ 57,758$ 3,538,740$
Accounts receivable - - - - 24
Due from other governments - - - - 86,481
Total assets -$ 63,124$ 26,751$ 57,758$ 3,625,245$
LIABILITIES
Accounts payable -$ -$ -$ -$ 142,511$
Deposits payable - - - - 3,482,734
Due to bondholders - 63,124 26,751 57,758 -
Total liabilities -$ 63,124$ 26,751$ 57,758$ 3,625,245$
(Continued)
June 30, 2016
City of San Bernardino
Combining Statement of Fiduciary Assets and Liabilities
Agency Funds
170
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Packet Pg. 441 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
San Bernardino
Regional
Cemetery Water
Perpetual Resource
Care Authority Total
ASSETS
Cash and investments 659,796$ 72,691$ 4,418,860$
Accounts receivable - - 24
Due from other governments - - 86,481
Total assets 659,796$ 72,691$ 4,505,365$
LIABILITIES
Accounts payable -$ -$ 142,511$
Deposits payable 659,796 72,691 4,215,221
Due to bondholders - - 147,633
Total liabilities 659,796$ 72,691$ 4,505,365$
(Concluded)
June 30, 2016
City of San Bernardino
Combining Statement of Fiduciary Assets and Liabilities (Continued)
Agency Funds
171
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Packet Pg. 442 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Balance Balance
July 1, 2015 Additions Deletions June 30, 2016
Assessment District #961
Assets:
Cash and investments 370,055$ -$ (370,055)$ -$
Total assets 370,055$ -$ (370,055)$ -$
Liabilities:
Due to bondholders 370,055$ -$ (370,055)$ -$
Total liabilities 370,055$ -$ (370,055)$ -$
Assessment District #977A
Assets:
Cash and investments 63,124$ -$ -$ 63,124$
Total assets 63,124$ -$ -$ 63,124$
Liabilities:
Due to bondholders 63,124$ -$ -$ 63,124$
Total liabilities 63,124$ -$ -$ 63,124$
Assessment District #977B
Assets:
Cash and investments 26,751$ -$ -$ 26,751$
Total assets 26,751$ -$ -$ 26,751$
Liabilities:
Due to bondholders 26,751$ -$ -$ 26,751$
Total liabilities 26,751$ -$ -$ 26,751$
Assessment District #1003
Assets:
Cash and investments 57,758$ -$ -$ 57,758$
Total assets 57,758$ -$ -$ 57,758$
Liabilities:
Due to bondholders 57,758$ -$ -$ 57,758$
Total liabilities 57,758$ -$ -$ 57,758$
For Year Ended June 30, 2016
Agency Funds
Combining Statement of Changes in Fiduciary Assets and Liabilities
City of San Bernardino
172
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Packet Pg. 443 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Balance Balance
July 1, 2015 Additions Deletions June 30, 2016
Special Deposits
Assets:
Cash and investments 4,616,727$ -$ (1,077,987)$ 3,538,740$
Accounts receivable 1,989 - (1,965) 24
Due from other governments 16,050 70,431 - 86,481
Total assets 4,634,766$ 70,431$ (1,079,952)$ 3,625,245$
Liabilities:
Accounts payable 183,103$ -$ (40,592)$ 142,511$
Accrued liabilities - - - -
Due to other governments 276,397 - (276,397) -
Deposits payable 4,175,266 211,449 (903,981) 3,482,734
Total liabilities 4,634,766$ 211,449$ (1,220,970)$ 3,625,245$
Cemetery Perpetual Care
Assets:
Cash and investments 659,796$ -$ -$ 659,796$
Total assets 659,796$ -$ -$ 659,796$
Liabilities:
Deposits payable 659,796$ -$ -$ 659,796$
Total liabilities 659,796$ -$ -$ 659,796$
San Bernardino Regional Water Resource Authority
Assets:
Cash and investments 73,021$ -$ (330)$ 72,691$
Total assets 73,021$ -$ (330)$ 72,691$
Liabilities:
Deposits payable 73,021$ -$ (330)$ 72,691$
Total liabilities 73,021$ -$ (330)$ 72,691$
Combining Statement of Changes in Fiduciary Assets and Liabilities (Continued)
Agency Funds
For Year Ended June 30, 2016
City of San Bernardino
173
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Packet Pg. 444 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Balance Balance
July 1, 2015 Additions Deletions June 30, 2016
Total All Agency Funds
Assets:
Cash and investments 5,867,232$ -$ (1,448,372)$ 4,418,860$
Accounts receivable 1,989 - (1,965) 24
Due from other governments 16,050 70,431 - 86,481
Total assets 5,885,271$ 70,431$ (1,450,337)$ 4,505,365$
Liabilities:
Accounts payable 183,103$ -$ (40,592)$ 142,511$
Retention payable - - - -
Due to other governments 276,397 - (276,397) -
Deposits payable 4,908,083 211,449 (904,311) 4,215,221
Due to bondholders 517,688 - (370,055) 147,633
Total liabilities 5,885,271$ 211,449$ (1,591,355)$ 4,505,365$
City of San Bernardino
Combining Statement of Changes in Fiduciary Assets and Liabilities (Continued)
Agency Funds
For Year Ended June 30, 2016
174
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Packet Pg. 445 Attachment: Audited Financial Statements for 2016. ATTACHMENT 1. (4982 : 2016 Audited Financial Statements)
Audit Presentation –
Fiscal Year 2016 Report
Finance Department
Brent Mason
Director of Finance
12.c
Packet Pg. 446 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Background
•City required to complete an annual audit of all
its various accounts
•Required to be completed by March 31 of the
year following the close of the fiscal year
•Federal Grant funding requirement
•First time since 2010 that the audit reports have
been completed and filed timely!!
12.c
Packet Pg. 447 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Background
•Pun Group, LLP – under contract to perform the
2015/16 through 2019/20 fiscal years’ audits
•Pun Group has completed the 2015/16 financial report
audit
•Completion is a very positive result and signals being
“caught up” with the City’s audits
•Pun’s audit is very efficient at this point, having done 3
over 14 months
12.c
Packet Pg. 448 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Auditor’s Opinion Review
•Auditor’s Opinion is typically an “Unmodified
Opinion” – indicates the auditor could perform all
their test work to verify that the financial
statements reflect the City’s financial position
•San Bernardino’s opinion is a “Modified Opinion” –
indicates that there was some limitation on the
auditor’s ability to perform all their test work -
can’t opine on some portion of the accounts
•City’s modification relates to Federal/State Grants
fund, Low/Moderate Income Housing Fund and the
“Aggregate Remaining Funds (smaller funds not
reported individually)
12.c
Packet Pg. 449 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Auditor’s Opinion Review
•Specific Opinion Modifications –
•Collectability of Successor Agency Notes Receivable
•Proper valuation of Successor Agency Property Held for
Resale
•Proper classification of Successor Agency Capital Assets
into depreciable and non-depreciable portions
•Proper valuation of the City’s Compensated Absences
due to uncertainty of payments to be made based on BK
terms (will be resolved with exit of BK)
•Modifications are Correctable
•Staff already working on these issues
•Alternative audit procedures can be used to remove the
modification
12.c
Packet Pg. 450 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Auditor’s Opinion Review
•Important to note what is NOT part of the Opinion
Modification
•The General Fund!!!
•Other Large City Funds (Integrated Waste, Gas Tax,
Measure I)
•Fully audited - numbers are accurate and reliable
•General Fund’s net position grew by $16M to $34M
•$12M from Burrtec for asset purchase
•$4M from operations – primarily vacancy savings
•BK settlement resources included - $13M
•General Fund reserve balance equates to approx. $21M
(in excess of 15% reserve target)
•Portion will be required for BK – unknown at this time
12.c
Packet Pg. 451 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
Recommendation/Action
•That the Mayor and Common Council receive
and file the Financial Audit Report for fiscal
year ending June 30, 2016.
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Packet Pg. 452 Attachment: Audited Financial Statements for 2016. ATTACHMENT 2. Presentation (4982 :
This Page Is Left Intentionally Blank
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Packet Pg. 453 Attachment: Charter Implementation. REPORT (4983 : Charter Implementation Update)
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Packet Pg. 454 Attachment: Charter Implementation. REPORT (4983 : Charter Implementation Update)
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Packet Pg. 455 Attachment: Charter Implementation. REPORT (4983 : Charter Implementation Update)
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Packet Pg. 456 Attachment: Charter Implementation. REPORT (4983 : Charter Implementation Update)
13.a
Packet Pg. 457 Attachment: Charter Implementation. REPORT (4983 : Charter Implementation Update)
This Page Is Left Intentionally Blank
City of San Bernardino
Charter
Adopted by Voters November 8, 2016
Filed with the California Secretary of State January 31, 2017
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Packet Pg. 458 Attachment: Charter Implementation. ATTACHMENT 1. CCharter (4983 : Charter Implementation Update)
Table of Contents
PREAMBLE 1
ARTICLE I: NAME, BOUNDARIES, POWERS, RIGHTS AND SUCCESSION,
INTERGOVERNMENTAL RELATIONS 1
Section 100. Name and Boundaries ....................................................................................... 1
Section 101. Powers of the City ............................................................................................. 1
Section 102. Interpretation of Powers .................................................................................... 1
Section 103. Rights and Succession ...................................................................................... 1
Section 104. Intergovernmental Relations .............................................................................. 2
ARTICLE II: FORM OF GOVERNMENT 2
Section 200. Form of Government ......................................................................................... 2
ARTICLE III: CITY COUNCIL AND MAYOR 2
Section 300. General Powers and Duties ............................................................................... 2
Section 301. Composition, Eligibility, and Terms .................................................................... 2
Section 302. Powers and Duties of the Council ...................................................................... 3
Section 303. Powers and Duties of the Mayor ........................................................................ 3
Section 304. Manners of Action ............................................................................................. 4
Section 305. Compensation; Expenses .................................................................................. 4
Section 306. Prohibitions ....................................................................................................... 4
Section 307. Vacancies; Filling of Vacancies ......................................................................... 5
Section 308. Judge of Qualifications ...................................................................................... 5
Section 309. Council Organization, Meetings and Rules of Order ........................................... 5
ARTICLE IV: CITY MANAGER 5
Section 400. City Manager Appointment, Qualifications and Compensation ............................. 5
Section 401. Powers and Duties ............................................................................................ 6
ARTICLE V: DEPARTMENTS, SERVICES, OFFICERS AND EMPLOYEES 7
Section 501. General Provisions ............................................................................................ 7
Section 502. Direction by City Manager ................................................................................. 7
Section 503. Continuation of Departments ............................................................................. 7
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Packet Pg. 459 Attachment: Charter Implementation. ATTACHMENT 1. CCharter (4983 : Charter Implementation Update)
San Bernardino Charter Page 2
Section 504. City Attorney ...................................................................................................... 7
Section 505. City Clerk .......................................................................................................... 7
Section 506. Departmental Administrators; Appointive Powers .............................................. 8
Section 507. Services ............................................................................................................ 8
Section 508. Personnel System ............................................................................................. 8
Section 509. Official Bonds. ................................................................................................... 8
ARTICLE VI: BOARDS, COMMISSIONS AND COMMITTEES 8
Section 600. General Provisions ............................................................................................ 8
Section 601. Appointment, Removal, Terms of Office and Procedural Rules .......................... 9
Section 602. Library ............................................................................................................... 9
Section 603. Water and Wastewater ...................................................................................... 9
Section 604. Personnel Commission .....................................................................................10
ARTICLE VII: FINANCIAL MANAGEMENT 10
Section 700. Fiscal Year .......................................................................................................10
Section 701. Submission of Budget and Budget Message .....................................................10
Section 702. Budget and Capital Improvement Program .......................................................10
Section 703. Council Action on the Budget and Capital Improvement Plan ...........................11
Section 704. Independent Audit ............................................................................................11
Article VIII: ELECTIONS 11
Section 800. City Elections ...................................................................................................11
Section 801. Elective Officers; Terms....................................................................................11
Section 802. Number of Wards .............................................................................................12
ARTICLE IX: INITIATIVE, CITIZEN REFERENDUM AND RECALL 12
Section 900. Initiative, Citizen Referendum and Recall .........................................................12
ARTICLE X: CHARTER AMENDMENTS 12
Section 1000. Charter Amendments .....................................................................................12
Section 1001. Periodic Review of Charter .............................................................................12
ARTICLE XI: SEVERABILITY 12
Section 1100. Severability .....................................................................................................12
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Packet Pg. 460 Attachment: Charter Implementation. ATTACHMENT 1. CCharter (4983 : Charter Implementation Update)
CHARTER
of the
CITY OF SAN BERNARDINO
STATE OF CALIFORNIA
PREAMBLE
We, the people of the City of San Bernardino, in order to secure the benefits of home rule and a
council-manager form of government, hereby adopt this Charter.
ARTICLE I: NAME, BOUNDARIES, POWERS, RIGHTS AND SUCCESSION,
INTERGOVERNMENTAL RELATIONS
Section 100. Name and Boundaries
The City of San Bernardino, hereinafter termed the City, shall continue to be a municipal
corporation under its present name of “City of San Bernardino.” The boundaries of the City
shall be as now established until changed in the manner authorized by law.
Section 101. Powers of the City
The City shall have all powers possible for a city to have under the constitution and laws of the
State of California as fully and completely as though they were specifically enumerated in this
Charter.
Section 102. Interpretation of Powers
The powers of the City under this Charter shall be construed in favor of the City, and the
specific mention of particular powers in the Charter shall not be interpreted as limiting in any
way the general power granted in this article.
Section 103. Rights and Succession
The City shall continue to own, possess and control all rights and property of every kind and
nature, owned, possessed or controlled by it at the time this Charter takes effect and shall be
subject to all of its debts, obligations and liabilities.
All ordinances, codes, resolutions, rules, regulations, and portions thereof, in force at the time
this Charter takes effect, and not in conflict or inconsistent with this Charter, shall continue in
force until they shall have been duly repealed, amended, changed, or superseded by proper
authority as provided by this Charter.
Subject to the provisions of this Charter, the present officers and employees of the City shall
continue to perform the duties of their respective offices and employments under the same
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Packet Pg. 461 Attachment: Charter Implementation. ATTACHMENT 1. CCharter (4983 : Charter Implementation Update)
San Bernardino Charter Page 2
conditions as those of the existing offices and positions until the election or appointment and
qualification of their successors, subject to such removal and control as provided in this Charter.
No action or proceeding, civil or criminal, pending at the time this Charter takes effect, brought
by or against the City or any officer, office, department or agency thereof, shall be affected or
abated by the adoption of this Charter or anything herein contained.
Section 104. Intergovernmental Relations
The City may participate by contract or otherwise with any governmental entity of this state or
any other state or states in the United States in the performance of any activity, which one or
more of such entities has the authority to undertake, to the maximum extent permitted by
applicable law.
ARTICLE II: FORM OF GOVERNMENT
Section 200. Form of Government
The municipal government established by this Charter is the council-manager form of
government.
ARTICLE III: CITY COUNCIL AND MAYOR
Section 300. General Powers and Duties
All powers of the City shall be vested in the City Council (“Council”), and to the extent
provided in this Charter, the Mayor. The Council shall provide for the exercise and
performance of all duties and obligations imposed on the City by State and Federal laws.
Except as otherwise required by law, the role of the Council is legislative, which includes the
power to set policy, approve contracts and agreements, and undertake other obligations
consistent with this Charter and the City’s Municipal Code, while deferring to the discretion of
management to choose the appropriate means to achieve the Council’s goals.
Section 301. Composition, Eligibility, and Terms
(a) Composition. The Council shall be composed of seven (7) Council members. The term
“Council,” “legislative body,” or other similar terms as used in this Charter or any other
provisions of law shall be deemed to refer to the collective body composed of the Council
members.
(b) Eligibility. Only registered voters of the City shall be eligible to hold the office of Council
member or Mayor. Those elected shall have been qualified electors and residents of their
respective wards for a period of at least thirty (30) consecutive days immediately preceding
the date of filing their nomination papers for the office.
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Section 302. Powers and Duties of the Council
The Council, in collaboration with the Mayor, shall ensure fundamental municipal services are
provided to protect and promote public health, safety, and welfare. The Council and Mayor
shall operate together to serve the best interests of the City.
The Council, in collaboration with the Mayor, will develop and implement a Code of Conduct to
guide and direct their interactions and duties, including measures to hold one another
accountable for deviations from the goals and principles set forth in this Charter and the City
Code of Conduct.
The Council, in collaboration with the Mayor, shall create and implement a plan to maintain the
City’s fiscal integrity.
Each Council member shall be entitled to vote on all matters coming before the Council. The
Council shall have the power to override any veto of the Mayor by a vote of five (5) or more
Council members.
The Council shall select a Mayor Pro Tempore from one of its own members. In the event of a
temporary absence from the City, illness, or any other cause that makes the Mayor temporarily
unable to perform the duties of his or her office, the Mayor Pro Tempore shall have all powers
and authority that the Mayor would have possessed if present to perform his or her duties.
However, the Mayor Pro Tempore may not cast an additional vote in the event of a tie or
exercise veto powers over Council action, but may continue to exercise his or her vote as a
Council member.
Section 303. Powers and Duties of the Mayor
The Mayor shall have the following powers and perform the following duties, in addition to
others as specified in this Charter:
(a) Attend and preside at meetings of the Council and may participate fully in all
discussions, but shall not be entitled to vote except in the event of a tie, to veto a matter,
and as otherwise provided in this Charter;
(b) Have the authority to veto any Council action approved by fewer than five (5) members
of the Council;
(c) Shall participate in the vote (1) to appoint or remove the City Manager, City Attorney
and City Clerk and fix their compensation and (2) to appoint or remove members of
boards, commissions or committees, except committees made up wholly of less than
a majority of City Council members;
(d) Appoint the members and officers of Council committees (committees made up wholly
of less than a majority of City Council members), and perform other duties as specified
by the Council;
(e) Be recognized as the head of the City government for all ceremonial purposes and by
the governor for purposes of military law;
(f) Be the chief spokesperson for the City; and
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(g) Represent the City in intergovernmental relations and establish and maintain
partnerships and regional leadership roles to advance the City’s interest; and may
delegate such roles to other members of the Council; and
(h) Execute all ordinances, resolutions and contracts approved by the City Council except as
otherwise authorized by the City Council.
The Mayor shall have no administrative, appointment or removal powers except as otherwise
provided in this Charter.
The office of Mayor shall be a full-time position and the incumbent shall not engage in any
business, professional or occupational activities that interfere with the discharge of the duties of
the office.
Section 304. Manners of Action
Actions of the Council require a simple majority vote of the quorum present for approval
unless:
(a) Otherwise required for charter cities under State or Federal law; or
(b) Required by this Charter to be approved by at least five affirmative votes of the Mayor
and members of the Council.
Section 305. Compensation; Expenses
Compensation for the Mayor and Council members shall be established by ordinance following
a public hearing, giving due consideration to the recommendations of an advisory commission
charged with the periodic review of compensation for City-elected officials. Compensation for
the Mayor shall be commensurate with that for a full-time position.
No ordinance increasing such salaries shall become effective until the date of commencement
of the terms of Council members elected at the next regular election. The Mayor and Council
members shall receive reimbursement for actual and necessary expenses incurred in the
performance of their duties of office.
Section 306. Prohibitions
(a) Holding Other Office. No Mayor or Council member shall hold any other City office or City
employment during the term for which he or she was elected. No former Mayor or Council
member shall hold any compensated appointive office or employment with the City until one
(1) year after the expiration of the term for which he or she was elected.
(b) Conflict of Interest. Elected and appointed officials shall adhere to conflict of interest
codes as established by State law and/or City ordinance.
(c) Appointments and Removals. Neither the Mayor nor any Council member shall, in any
manner, control or demand the appointment or removal of any City administrative officer or
employee whom the City Manager is empowered to appoint. This does not preclude the
Mayor or members of the Council from expressing their views and fully and freely
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discussing with the City Manager anything pertaining to the appointment and removal of
such officers and employees.
(d) Interference with Administration. Neither the Mayor nor any Council member shall
interfere with the discretion of the City Manager in the exercise or performance of his or her
powers or duties. The Mayor and Council members shall deal with City officers and
employees who are subject to the direction and supervision of the City Manager solely
through the City Manager, and shall not give orders to or attempt to direct the work of such
officers and employees either publicly or privately. Inquiries may be made directly to officers
and employees under the supervision of the City Manager with the knowledge and consent
of the City Manager.
Section 307. Vacancies; Filling of Vacancies
(a) Vacancies. If the Council determines any of the events enumerated in provisions of the
Government Code or California Constitution pertaining to vacancies in public offices have
occurred, the Council shall declare a vacancy for the office of Council member or for the
office of Mayor.
(b) Filling of Vacancies. The method of filling vacancies shall be as prescribed by ordinance.
Section 308. Judge of Qualifications
The Council shall be the judge of the election and qualifications of its members and whether
grounds exist for forfeiture of their office.
Section 309. Council Organization, Meetings and Rules of Order
The Council shall establish by ordinance the time, place and the method of calling meetings, the
rules of order for the conduct of proceedings by the Council, and the order of succession in the
event of a vacancy in the office of Mayor.
ARTICLE IV: CITY MANAGER
Section 400. City Manager Appointment, Qualifications and Compensation
The Mayor and Council, by a vote of the Mayor and entire Council, shall appoint a City Manager
and fix the City Manager’s compensation, as provided in section 304(b) of this Charter. The City
Manager may be removed by the Mayor and entire Council in the same manner. The City
Manager shall be appointed on the basis of education and experience in the accepted
competencies and practices of local government management. The Mayor and Council shall
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establish and communicate clear expectations for the City Manager. An evaluation of the City
Manager’s performance shall be conducted at least annually.
Section 401. Powers and Duties
The City Manager shall be the chief executive officer of the City, responsible to the Council for
the management of all City affairs placed in the City Manager’s charge by or under this Charter.
The City Manager will be the sole authority for managing City operations and appointing and
directing City staff, except as otherwise provided in this Charter.
The City Manager shall:
(a) Appoint and suspend or remove all City employees and appoint administrative officers,
except as otherwise provided by law, this Charter, or established personnel rules. The
City Manager may authorize any administrative officer subject to the City Manager’s
direction and supervision to exercise these powers with respect to subordinates in that
officer’s department, office or agency;
(b) Direct and supervise the administration of all departments, offices and agencies of the
City, except as otherwise provided by this Charter or by law;
(c) Attend all Council meetings. The City Manager shall have the right to take part in the
discussion but shall not vote;
(d) Ensure the Mayor and Council are informed on all aspects of important emerging issues,
including the City’s financial condition and future needs, and as part of that
responsibility, brief the Mayor and Council at their meetings on the business matters
before them;
(e) See that all laws, provisions of this Charter, and acts of the Council are faithfully
executed;
(f) Prepare and submit the annual budget and capital improvement program to the Mayor
and Council and implement the final budget approved by the Council to achieve the
goals of the City;
(g) Submit to the Mayor and Council and make available to the public a complete report on
the finances and administrative activities of the City as of the end of each fiscal year;
(h) Make such other reports as the Mayor or Council may request regarding operations;
(i) Make recommendations to the Mayor and Council concerning the affairs of the City and
facilitate the work of the Council in developing policy;
(j) Provide staff support services for the Mayor and Council members;
(k) Assist the Mayor and Council in developing long-term goals for the City and strategies
to implement these goals;
(l) Be accountable for the implementation of Council goals and policies and the overall
performance of the City;
(m) Encourage and provide staff support for regional and intergovernmental cooperation;
(n) Promote partnerships among the Mayor, Council, staff, and citizens in developing
public policy and building a sense of community;
(o) Make business and policy recommendations based solely on his or her independent
professional judgment and best practices in the interests of the City; and
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(p) Perform other such duties as are specified in this Charter, by ordinance, or as may
be requested by the Council.
ARTICLE V: DEPARTMENTS, SERVICES, OFFICERS AND EMPLOYEES
Section 501. General Provisions
The City Manager may establish City departments, offices, or agencies in addition to those
created by this Charter, subject to approval of the City Council, and may prescribe the functions
of all departments, offices and agencies to meet the needs of the community in the most
effective and efficient manner.
Section 502. Direction by City Manager
Each City department, office and agency shall be administered by an executive appointed by
and subject to the direction and supervision of the City Manager, except the Offices of the
Council, Mayor, City Attorney and City Clerk, the Library Board of Trustees, and the Water
Board, which shall be administered by their respective executive officers as provided for
elsewhere in this Charter but which shall in all other respects be governed by the policies
applicable to all other departments, offices and agencies.
With the consent of the Council, the City Manager may serve as the executive of one or more
such departments, offices or agencies.
The City Manager may appoint one person to serve as the executive of two or more
departments.
Section 503. Continuation of Departments
All departments, agencies, offices, and services in existence at the time this Charter is adopted
shall continue in the same manner as before the adoption of this Charter, unless and until
changed by ordinance or other action approved by the City Council.
Section 504. City Attorney
A duly qualified City Attorney shall be hired by a vote of the Mayor and entire Council, as
provided in section 304(b) of this Charter. The City Attorney may be removed by the Mayor and
entire Council in the same manner. The City Attorney shall serve as chief legal advisor to the
Council, the City Manager and all City departments, offices and agencies; shall represent the
City in all legal proceedings; and shall perform any other duties prescribed by State law, this
Charter or by ordinance.
Section 505. City Clerk
A duly qualified City Clerk shall be hired by a vote of the Mayor and entire Council, as provided
in section 304(b) of this Charter. The City Clerk may be removed by the Mayor and entire
Council in the same manner. The City Clerk shall give notice of Council meetings to its
members and the public, keep the journal of its proceedings, and shall perform any other duties
prescribed by State law, this Charter or by ordinance.
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Section 506. Departmental Administrators; Appointive Powers
Each departmental executive shall have the power to appoint, supervise, suspend, or remove
such assistants, deputies, subordinates and employees as are provided for the department,
subject to the approval of the City Manager and subject to the provisions of the personnel rules
and regulations adopted by the Council.
Section 507. Services
The City shall provide for a municipal police department. The City also shall provide for
community development, finance, fire and emergency medical services, information
technology, library, parks and recreation, personnel, public works, water and wastewater, and
such other services as the Council deems appropriate for the public’s health, safety and
welfare.
Section 508. Personnel System
All appointments and promotions of City officers and employees shall be made solely on the
basis of merit and fitness demonstrated by a valid and reliable examination or other evidence of
competence. The administration of employee matters shall be delegated to a personnel or
human resources department.
Consistent with all applicable Federal and State laws, the Council shall provide for the
establishment, regulation and maintenance of a merit system and governing personnel rules
and regulations necessary for the effective administration of the employees of the City’s
departments, offices and agencies. Such personnel rules and regulations may include but are
not limited to classification and pay plans, examinations, force reduction, removals, working
conditions, provisional and exempt appointments, in-service training, grievances and
relationships with employee organizations.
Section 509. Official Bonds.
The Council shall fix by resolution the amounts and terms of the official bonds of all officers or
employees who are required by the Council to acquire such bonds. All bonds shall be executed
by a responsible corporate surety, shall be approved as to form by the City Attorney, and shall
be filed with the City Clerk. Premiums on official bonds shall be paid by the City.
There shall be no personal liability upon, or any right to recover against, a superior officer, or his
or her bond, for any wrongful act or omission of his or her subordinate, unless such superior
officer was a party to, or conspired in, such wrongful act or omission.
ARTICLE VI: BOARDS, COMMISSIONS AND COMMITTEES
Section 600. General Provisions
Each board, commission and committee established prior to the adoption of this Charter shall
continue to exist, exercise the powers and perform the duties assigned to it upon adoption of
this Charter. However, the Council may alter the structure, membership, powers and duties of
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boards, commissions and committees. The Council also may abolish or create particular
boards, commissions and committees, provided that the Council may not abolish the
Commissions or Boards specifically provided for in this Charter. The Council may grant powers
and duties to boards, commissions and committees that are consistent with the provisions of
this Charter.
Section 601. Appointment, Removal, Terms of Office and Procedural Rules
Except as provided elsewhere in this Charter, the appointment, removal, and terms of office of
boards, commissions, committees and their members and the rules and regulations pertaining
to the conduct of board, commission or committee business shall be as prescribed by a vote of
the Mayor and entire Council, as provided in section 304(b) of this Charter. Members of boards,
commissions and committees shall be residents of the City, unless exempted by ordinance or
State law.
Section 602. Library
A Library Board of Trustees consisting of five (5) members shall be appointed by a vote of the
Mayor and entire Council, as provided in section 304(b) to serve without compensation. The
Mayor and entire Council may remove Trustees in the same manner. The Board shall:
(a) Be responsible for providing adequate library services;
(b) Appoint a Library Director;
(c) Administer the Library budget allocated by the Council;
(d) Make and enforce all rules and regulations applicable to library services; and
(e) Administer such additional matters as may be determined by ordinance.
Section 603. Water and Wastewater
A Water Board of five (5) Commissioners shall be appointed by a vote of the Mayor and entire
Council, as provided in section 304(b). Commissioners shall serve terms of six (6) years each,
staggered in the same manner as at the time of the adoption of this Charter. Any one or more of
these Commissioners may be removed by a vote of the Mayor and entire Council. The Board
shall have the following powers and responsibilities:
(a) Be responsible to oversee and manage the City’s water supply, recycled water,
wastewater collection and treatment (“Water and Wastewater Systems”) functions in
accordance with State law.
(b) Employ such persons, including a general manager, as may be needed for proper
administration of the City’s Water and Wastewater Systems.
(c) Set and collect all rates, fees and charges for operation of the Water and
Wastewater Systems.
(d) Allocate all receipts and expenditures to separate, independent, Water and Sewer Funds
in accordance with State law.
(e) Provide for an annual, independent audit of all water and wastewater accounts, and
may provide for more frequent audits as it deems necessary. Copies of all auditors’
reports shall be filed with the City Clerk and Council.
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(f) Compensate members of the Water Board in accordance with actions of the Water
Board following public hearing.
(g) Collaborate with the Council, Mayor and City Manager concerning the City’s Water and
Wastewater Systems. In this regard, the Council shall take such actions as may be
appropriate to enforce rules and regulations of the Board.
(h) Establish and periodically review and revise such rules and regulations as may be
appropriate for managing the City’s Water and Wastewater Systems.
Section 604. Personnel Commission
A Personnel Commission consisting of five (5) members shall be appointed by a vote of the
Mayor and entire Council, as provided for in section 304(b) of this Charter, to serve without
compensation. The Mayor and entire Council may remove Commissioners in the same manner.
The Commission’s sole responsibility shall be to hear appeals of disciplinary action by City
employees, subject to the provisions of adopted labor agreements. Decisions of the Commission
shall be final without further review within the City.
ARTICLE VII: FINANCIAL MANAGEMENT
Section 700. Fiscal Year
The fiscal year of the City shall begin on the first day of July of each year and end on the last
day of June of the following year. The Council may change the fiscal year by ordinance.
Section 701. Submission of Budget and Budget Message
At least sixty (60) days prior to the beginning of each fiscal year, the City Manager shall prepare
and submit to the Mayor and Council the proposed budget and an accompanying message.
The City Manager’s budget message shall explain the budget both in fiscal terms and in terms
of the work programs, linking those programs to organizational goals and community priorities.
It shall outline the proposed financial policies of the City for the ensuing fiscal year and the
impact of those policies on future years. It shall describe the important features of the budget
and indicate any major changes from the current year in financial policies, expenditures, and
revenues, together with the reasons for such changes. It shall summarize the City’s debt
position, including factors affecting the ability to raise resources through debt issues, and
include other such material as the City Manager deems desirable.
Section 702. Budget and Capital Improvement Program
The budget shall provide a complete financial plan of all City funds and activities for the
ensuing fiscal year and, except as required by law or this Charter, shall be in such form as the
City Manager deems desirable or the Council or Mayor may request for effective management
and understanding of the relationship between the budget and the City’s strategic goals. In
addition, the City Manager shall prepare and submit a multi-year capital improvement plan
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(CIP). The CIP shall be revised and extended each year with regard to capital improvements
still pending or in the process of construction or acquisition.
The City’s budget and CIP should strive to achieve the best practice standards set by the
Government Finance Officers Association (GFOA) for distinguished budget presentation.
Section 703. Council Action on the Budget and Capital Improvement Plan
The Council shall publish a general summary of the budget and CIP and hold one (1) or more
public hearings. After the public hearing(s), the Budget and CIP shall be adopted, as they may
be amended, by the Council before the beginning of each fiscal year.
Section 704. Independent Audit
The Council shall provide for an annual independent audit of all City accounts and may provide
for more frequent audits as it deems necessary. An independent certified public accountant or
firm of such accountants shall make such audits, which should be performed in accordance
with General Accepted Auditing Standards (GAAS) and Generally Accepted Governmental
Auditing Standards (GAGAS). Using competitive bidding, the Council shall designate such
accountant or firm for a period not to exceed five (5) years.
As soon as practicable after the end of the fiscal year, a final certified audit and report shall be
submitted by such accountant to the Mayor, each member of the Council, the City Manager,
Finance Director and City Attorney. Three (3) additional copies shall be placed on file in the
office of the City Clerk, where they shall be available for inspection by the general public, and
the audit and report shall be published on the City’s website.
Section 800. City
Elections
Article VIII: ELECTIONS
Beginning in 2018, primary and general election shall be held in said City in consolidation
with the State Primary Election and the State General Election and every two (2) years
thereafter. City elections shall follow the provisions and procedures of the State Elections Code
as applicable to general law cities. The Mayor and Council members shall be sworn in and
begin their term of service upon certification of the election results, and shall serve until their
successors qualify.
To facilitate the transition of elections from odd to even numbered years, consistent with the
timing of elections for state and federal offices, the terms of the Mayor and each Council
member in office at the time of the adoption of this Charter shall be extended for one (1) year.
Section 801. Elective Officers; Terms
The elective officers of the City shall consist of a Mayor and seven Council members. Council
members shall continue to be elected for terms of four (4) years, with such terms staggered
between the wards as established by ordinance. Each Council member shall be elected by ward
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by the voters within that ward. The Mayor shall continue to be elected at large for a term of
four (4) years.
Section 802. Number of Wards
There shall be seven (7) wards.
Section 803. Adjustment of Ward Boundaries
Periodic adjustments to ward boundaries shall be made to maintain each in compact form and
as nearly equal in population as possible, consistent with applicable State and Federal laws.
ARTICLE IX: INITIATIVE, CITIZEN REFERENDUM AND RECALL
Section 900. Initiative, Citizen Referendum and Recall
Initiatives, citizen referenda, and recalls shall follow the procedures of the State Elections Code,
as applicable to general law cities.
ARTICLE X: CHARTER AMENDMENTS
Section 1000. Charter Amendments
Amendments to this Charter shall be made in accordance with the procedures of the State
Elections Code, as applicable to charter cities.
Section 1001. Periodic Review of Charter
By December 2017, the Council shall establish a process to ensure the periodic review of this
Charter to identify potential amendments that enhance clarity, efficiency, and the principles of
the council-manager form of government.
Section 1100.
Severability
ARTICLE XI: SEVERABILITY
If any provision of this Charter is held invalid, the other provisions of the Charter shall not be
affected. If the application of the Charter or any of its provisions to any persons or circumstance
is held invalid, the application of the Charter and its provisions to other persons or
circumstances shall not be affected.
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ORDINANCE NO. _______
ORDINANCE OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA, REPEALING AND REPLACING CHAPTER 2.50 OF
THE SAN BERNARDINO MUNICIPAL CODE RELATED TO THE
ESTABLISHMENT OF THE PERSONNEL COMMISSION BY THE NEW
CHARTER
WHEREAS, the voters of the City of San Bernardino adopted a new Charter at the
November 8, 2016, municipal election; and
WHEREAS, the new Charter was filed with the California Secretary of State on
January 31, 2017, and became effective on that date; and
WHEREAS, pursuant to the previous Charter, the City established a Civil Service
Board, which had rights and duties established therein; and
WHEREAS, the new Charter at Section 604 establishes a Personnel Commission to
replace the Civil Service Board; and
WHEREAS, consistent with the provisions of the new Charter, the Civil Service
Board shall heretofore be known as the Personnel Commission and its sole responsibility will
be to hear appeals of disciplinary actions by City employees, subject to the provisions of
adopted labor agreements; and
WHEREAS, existing provisions of the Chapter 2.50 of the San Bernardino Municipal
Code are inconsistent with the new Charter and require revision.
NOW, THEREFORE, THE MAYOR AND CITY COUNCIL OF THE CITY OF
SAN BERNARDINO DO ORDAIN AS FOLLOWS:
SECTION 1. The existing Chapter 2.50 of the San Bernardino Municipal Code is
hereby repealed.
SECTION 2. A new Chapter 2.50 of the San Bernardino Municipal Code is hereby
enacted to read as follows:
Chapter 2.50 PERSONNEL COMMISSION
2.50.010 Establishment
The Personnel Commission as established in Charter Section 604 shall replace the Civil
Service Board, which is hereby dissolved.
2.50.020 Appeals from Disciplinary Action
Pursuant to Charter Section 604, the Personnel Commission shall hear appeals from
disciplinary actions filed by City employees in the classified service, subject to the provisions
of the applicable labor agreement, if any, and the Personnel Rules and Regulations, formerly
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known as the Civil Service Rules and Regulations, as adopted by Resolution of the Mayor and
City Council and as they may be amended from time to time. The determination of the
Personnel Commission on such appeals shall be final.
2.50.030 Secretary to the Personnel Commission
The Administrative Services Officer, or such other person as may be designated by the City
Manager shall serve as Secretary to the Personnel Commission, and shall be responsible for
posting and mailing any necessary hearing notices, issuing subpoenas for hearings before the
Personnel Commission, and keeping a record of the proceedings. The Personnel
Commission’s power of subpoena over persons and records shall be enforceable by the courts.
The City Manager shall ensure that the Personnel Commission is provided with such support
as may be necessary to conduct appeal hearings as required, including a legal advisor as may
be necessary.
2.50.040 Election of Officers
The Commission shall annually elect one of its members chair and one as vice-chair.
2.50.050 Time and Place of Meetings
The Commission shall hold regularly noticed meetings as required to hear disciplinary
appeals, and may hold special meetings at the call of the Chair or a majority of the members
of the Commission.
SECTION 3. INCONSISTENCIES. Any provision of the San Bernardino Municipal
Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of
such inconsistencies, is hereby repealed or modified to the extent necessary to affect the
provisions of this Ordinance.
SECTION 4. SEVERABILITY. If any section, subsection, subdivision, sentence,
clause, phrase, or word in this Ordinance or any part thereof is for any reason held to be
unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision
shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any
part thereof. The Mayor and City Council hereby declares that it would have adopted each
section irrespective of the fact that any one or more subsections, subdivisions, sentences,
clauses, phrases, or words be declared unconstitutional, invalid, or ineffective.
SECTION 5. PUBLICATION. This Ordinance shall take effect and be in full force
thirty (30) days from and after the passage thereof, and prior to the expiration of fifteen (15) days
from its passage shall be published once in a newspaper of general circulation, printed and
published in the City of San Bernardino or, in the alternative, the City Clerk may cause to be
published a summary of this Ordinance and a certified copy of the text of this Ordinance shall be
posted in the office of the City Clerk five (5) days prior to the date of adoption of this Ordinance,
and within fifteen (15) days after adoption, the City Clerk shall cause to be published the
aforementioned summary and shall post in the office of the City Clerk a certified copy of this
Ordinance together with the names of the members of the City Council voting for and against
the same.
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ORDINANCE OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA, REPEALING AND REPLACING CHAPTER 2.50 OF
THE SAN BERNARDINO MUNICIPAL CODE RELATED TO THE
ESTABLISHMENT OF THE PERSONNEL COMMISSION BY THE NEW
CHARTER
I HEREBY CERTIFY that the foregoing Ordinance was duly adopted by the Mayor
and City Council of the City of San Bernardino at a _______________________ meeting
thereof, held on the _____ day of ______________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, CMC, City Clerk
The foregoing Ordinance is hereby approved this _____ day of __________________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By:____________________
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2-70
Chapter 2.50
CIVIL SERVICE RULES AND REGULATIONS14
Sections:
2.50.010 Approval
2.50.020 Disciplinary action taken when
2.50.010 Approval
Civil Service Rules and Regulations of the Civil Service Board of the City were
adopted by said Board on the 20th day of November, 1959. All subsequent
amendments to those Rules and Regulations are on file in the office of the City Clerk. All
future amendments to the Civil Service Rules and Regulations shall be adopted by
resolution of the Mayor and Common Council.
(Ord. MC-631, 7-06-88; Ord. MC-324, 12-06-83; Ord. MC-230, 12-21-82; Ord. 3676, 10-04-77;
Ord. 3551, 2-04-76; Ord. 3526, 9-10-75; Ord. 3363, 8-09-73; Ord. 3313, 12-07-72;
Ord. 3226, 1-04-72; Ord. 3150, 3-02-71; Ord. 3074, 6-02-70; Ord. 2449, 7-24-62)
2.50.020 Disciplinary action taken when
Any officer or employee of the City who willfully does any of the acts prohibited by,
or who fails to do any of the acts required by, or who in any other way violates, any
provision of Sections 246 through 261 of the Charter, of these Civil Service Rules and
Regulations, or of any order relating to personnel duly made by the Civil Service Board,
the appointing power, or the Mayor and Council, shall be subject to disciplinary action
appropriate to his status or as may be determined by the Civil Service Board.
(Ord. 2449, 7-24-62)
14For charter provisions on the City's civil service system, see Charter §§246-261;
for statutory provisions authorizing cities to establish a personnel system, see Gov. Code
§45000 et seq.
[Return to Municipal Code Contents]
[Rev. January 2017] [Return to Title 2 Contents]
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CIVIL SERVICE BOARD OF COMMISSIONERS
1. Dennis M. Reichardt, Chairman
2. Curtis Stout, Vice Chairman
3. Dan Carlone
4. Jeanette Avila
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Consent Calendar
City of San Bernardino
Request for Council Action
Date: May 15, 2017
To: Honorable Mayor and City Council Members
From: Mark Scott, City Manager
By: Brent Mason, Director of Finance
Subject: Documents Effecting the Negotiated Debt Restructuring of the
2005 Pension Obligation Bonds, the 1996 Lease Revenue
Refunding Bonds, and the 1999 Refunding Certificates of
Participation
Recommendation
Adopt the attached resolutions giving the City Manager and other authorized officers, on
behalf of the City, and the Mayor and other authorized officers, on behalf of the San
Bernardino Joint Powers Financing Authority (JPFA), authority to execute the
documents that effect the results of settlement negotiations approved by the Federal
Bankruptcy Court relative to (i) the 2005 Pension Obligation Bonds (2005 POBs), (ii) the
1996 Lease Revenue Refunding Bonds (1996 Bonds), and (iii) the 1999 Refunding
Certificates of Participation (1999 COPs).
Background
The City of San Bernardino filed for bankruptcy protection under Chapter 9 of the United
States Bankruptcy Code on August 1, 2012. Since that time, negotiations have
occurred with the various impacted City creditors, which includes the parties relative to
the three above-named debt transactions. The negotiated settlements have been
discussed previously with the Mayor and City Council, which have voted on the
negotiated terms in order to present them to the Bankruptcy C ourt as part of the City’s
bankruptcy plan. The City’s bankruptcy plan was given final approval by the Bankruptcy
Court on February 7, 2017. The actions requested today are to authorize the City
Manager and other authorized officers, on behalf of the City , and the Mayor and other
authorized officers, on behalf of the JPFA, to execute the required agreements that will
place into effect the negotiated terms of the various agreements for the noted debt
transactions.
Discussion
Each debt transaction presented unique opportunities to improve the fiscal position of
the City’s General Fund. For the 2005 POBs, the bankruptcy team negotiated a
reduced claim, generating approximately $45.1 million in total savings and ending
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related litigation and an appeal. Additionally, under the terms of the settlement with the
2005 POBs, repayment will not begin until one year after the City emerges from
bankruptcy proceedings, allowing it a grace period as it stabilizes its financial position.
The City’s payment obligations under the settlement will be evidenced by two
promissory notes to be issued by the City in favor of the holder and insurer of the 2005
POBs. During the City’s bankruptcy case, the holder and insurer of the 2005 POBs
asserted a claim against the City collectively of approximately $95.8 million. Under the
settlement reached with the 2005 POBs, the City will issue notes with total payments of
approximately $50.6 million or with a collective principal amount estimated at $21.3
million.
Both the 1996 Bonds and the 1999 COPs were issued by the JPFA, a joint powers
authority consisting of the City and the former Redevelopment Authority (or RDA), now
the City as Successor Agency to the former RDA. The 1996 Bonds and the 1999 COPs
were secured by lease payments made by the City pursuant to certain lease -leaseback
transactions between the City, the JPFA and/or the former RDA. For the 1996 Bonds,
the RDA leased the city hall complex to the JPFA, which leased it back to the City. For
the 1999 COPs, the City, the JPFA, and/or the RDA engaged in lease-leaseback
transactions involving the police station, the 201 North E Street Building, and certain
South Valle Improvements. The 1996 Bonds and 1999 COPs were both issued with a
cash funded reserve equal to one year of debt service, and annual bond payments were
paid in full during the bankruptcy. As of today, approximately $5 million in principal
remains outstanding on the 1996 Bonds, from an original principal amount of
approximately $16.3 million, and approximately $7.2 million in principal remains
outstanding on the 1999 COPs, from an original principal of approximately $15.5 million.
For the 1996 Bonds, the restructuring provides the City with the opportunity to use a
portion of the Reserve Fund proceeds to purc hase an insurance policy (Surety Policy)
to serve in place of the cash funded reserve to be released to the City for use on
qualifying capital needs. Associated with this transaction, there is an outstanding
property tax issue with the County of San Bernardino. While the City is in the process
of successfully resolving the issue, the Trustee will temporarily hold from the
distribution, an amount sufficient to provide for the property taxes due should the City
not prevail in its current effort with the County.
For the 1999 COPs, there is a balance of original bond proceeds that remain in a capital
reserve fund. Those proceeds will be used to prepay the portion of the 1999 COPs
which is currently being funded by the General Fund (i.e., that portion related to the
police station lease). By doing so, the General Fund will be relieved of a portion of its
ongoing debt service obligation resulting in an annual budgetary savings. Additionally,
after paying off that portion of the lease payments, the residual amou nt of funds that
remain in the capital reserve will be distributed to the City to be used for capital needs.
As a result of the decrease in the total outstanding debt balance related to the police
station portion of the 1999 COPs, the Debt Reserve Fund requirement will be
correspondingly reduced, and this recalculation will make available an additional
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distribution to the City for capital needs. This transaction too, however, has an
outstanding property tax issue with San Bernardino County, and the Trus tee is required
to temporarily hold from the distribution an amount sufficient to provide for the property
taxes due if the City does not prevail in its effort with the County.
Fiscal Impact
Each of the above-described restructuring transactions has a unique fiscal impact:
2005 Pension Obligation Bonds
The negotiated settlement of this debt obligation results in the elimination of
approximately $45.1 million of former pension obligation bond claims. The resulting
obligation will have its first scheduled payment expected to be due in 2018 with
payments to extend through 2046. The first payment of $1,000,000 is included in the
FY 2017/18 preliminary budget. Successive years will be budgeted consistent with the
payment obligation schedule.
1996 Lease Revenue Refunding Bonds
Replacing the Reserve Fund (approximately $1,061,000) with a Surety Bond (cost equal
to approximately $151,000) will make available approximately $910,000 for use by the
City for capital needs. Of this amount, $400,000 will initiall y be held in a corporate trust
account by the 1996 Bonds trustee, as the City resolves an outstanding property tax
issue with the County of San Bernardino. At the effective date of the bankruptcy, the
balance (expected to be approximately $510,000) will b e sent to the City. Outstanding
remaining debt service on this obligation is roughly $1,005,000 per year through 2023.
The payment due for FY 2017/18 is included in the preliminary budget. Successive
years will be budgeted consistent with the payment obligation schedule.
1999 Refunding Certificates of Participation
Of the balance in the Reserve Fund (approximately $1,143,000) following the
defeasance of the General Fund portion of the 1999 COPs, approximately $496,000 will
be released to the City. $300,000 of the amount to be released to the City will initially
be held by the 1996 Bonds trustee in a corporate trust account as the City resolves an
outstanding property tax issue with the County of San Bernardino, but the residual of
approximately $196,000 will be available on the effective date for use by the City for
capital needs. The remainder of the Reserve Fund (approximately $647,000) will
remain in reserve for the allocated RDA portion of the 1999 COPs.
Further, for the 1999 COPs, the remaining bond proceeds held by the trustee of
$4,025,000 will be used to repay the portion of the remaining outstanding debt allocated
to the General Fund (approximately $3,226,000) of the 1999 COPs. The remaining
portion of the proceeds (approximately $799,000) will be released to the City to be used
for capital needs at the effective date. The City will also be able to use the police
station as collateral for future financing. Outstanding remaining debt service on this
obligation is roughly $485,000 per year th rough 2024.
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Together, the 1996 Bonds and 1999 COPs transactions will provide approximately
$1,505,000 of cash to the City immediately and an additional $700,000 of additional
cash once the outstanding property tax issue is resolved with the County.
Conclusion
The agreement creating the JPFA designates the Council as the JPFA governing board
and the Mayor as the Chairperson of the JPFA. Accordingly, it is requested that the
City Council, acting on behalf of the City and, separately, as the JPFA governing board,
adopt the attached resolutions and thereby authorize the City Manager and other
authorized officers, on behalf of the City, and the Mayor and other authorized officers on
behalf of the JPFA, to sign the supporting documents listed below and any oth er
documents or agreements necessary to place into effect the negotiated restructuring
terms described above.
Attachments
Attachment 1 – Resolution of the Mayor and City Council of the City of San Bernardino
Authorizing the Amendment of Documents Relating to the Taxable Pension Obligation
Bonds, 2005 Series A, Approving the Execution and Delivery of Certain Documents in
Connection Therewith and Certain Other Matters
Ex. A: Supplemental Trust Agreement
Ex. B: Exchange Agreement
Ex. C: Commerzbank Note
Ex. D: Ambac Note
Attachment 2 – Resolution of the Mayor and City Council of the City of San Bernardino
Authorizing the Amendment of Documents Relating to the Lease Revenue Refunding
Bonds (City Hall Project) Series 1996, Approving the Execution and Delivery of Certain
Documents in Connection Therewith and Certain Other Matters
Ex. A: Amendment No. 1 to City Hall Lease Agreement
Attachment 3 – Resolution of the Mayor and City Council of the City of San Bernardino
Authorizing the Amendment of Documents Relating to the Refunding Certificates of
Participation (1999 Police Station, South Valle and 201 North E Street Projects),
Approving the Execution and Delivery of Certain Documents in Connection Therewith
and Certain Other Matters
Ex. A: Amendment No. 1 to Trust Agreement
Ex. B: Amendment No. 1 to Police Station Lease Agreement
Ex. C: Escrow Agreement
Ex. D: Police Station Lease Termination
Ex. E: Site and Facility Lease Termination
Attachment 4 – Resolution of the Mayor and City Council of the City of San Bernardino
Acting as the San Bernardino Joint Powers Financing Authority Authorizing the
Amendment of Documents Relating to the Lease Revenue Refunding Bonds (City Hall
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Project) Series 1996, Approving the Execution and Delivery of Certain Docum ents in
Connection Therewith and Certain Other Matters
Ex. A: Amendment No. 1 to Trust Indenture
Ex. B: Amendment No. 1 to City Hall Lease Agreement
Ex. C: Guaranty Agreement
Ex. D: Commitment
Attachment 5 – Resolution of the Mayor and City Council of the City of San Bernardino
Acting as the San Bernardino Joint Powers Financing Authority Authorizing the
Amendment of Documents Relating to the Refunding Certificates of Participation (1999
Police Station, South Valle and 201 North E Street Projects), Approvi ng the Execution
and Delivery of Certain Documents in Connection Therewith and Certain Other Matters
Ex. A: Amendment No. 1 to Trust Agreement
Ex. B: Amendment No. 1 to Police Station Lease Agreement
Ex. C: Police Station Lease Termination
Ex. D: Site and Facility Lease Termination
Copies of the exhibits to the resolutions are available in the City Clerk’s Office.
Ward: Citywide
Synopsis of Previous Council Actions:
On July 18, 2012, the Mayor and Common Council directed the filing of a Petition under
Chapter 9 of the United States Bankruptcy Code following the adoption of a Declaration of
a Fiscal Emergency in the City of San Bernardino.
On November 26, 2012, the Mayor and Common Council adopted the Pendency Plan,
Resolution 2012-27, which included the Fiscal Year 2012/13 and Fiscal Year 2013/14
General Fund Budgets and incorporated the Pre-Pendency Plan adopted on September 5,
2012.
On May 18, 2015, the Mayor and Common Council adopted Resolution No. 2015-103,
approving a Recovery and Fiscal Plan.
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DOCSOC/1798414v7/200430-0003
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RESOLUTION NO.______
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE TAXABLE PENSION OBLIGATION BONDS, 2005 SERIES A, APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the “City”), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously issued the Taxable Pension Obligation Bonds, 2005 Series A-
1 (the “2005 Series A-1 Bonds”) and 2005 Series A-2 (the “2005 Series A-2 Bonds” and,
together with the 2005 Series A-1 Bonds, the “Bonds”); and
WHEREAS, the Bonds were issued pursuant to a Trust Agreement, dated as of October
1, 2005 (the “Trust Agreement”), by and between the City and Wells Fargo Bank, National
Association, as trustee; and
WHEREAS, the City, the holder of the Bonds, and the insurer of the 2005 Series A-2
Bonds entered into a settlement agreement dated as of March 28, 2016 (the “Settlement
Agreement”); and
WHEREAS, the Mayor and the City Council of the City have determined that it is in the
best interest of the City to amend the Trust Agreement and to enter into certain other documents
in order: (i) to cause the refunding and cancellation of the 2005 Series A-1 Bonds in exchange for
a note to be issued by the City that is payable to Commerzbank Finance & Covered Bond S.A.,
the holder of the 2005 Series A-1 Bonds (the “Commerzbank Note”); and (ii) to amend the 2005
Series A-2 Bonds to provide that such 2005 Series A-2 Bonds shall be non-recourse to the City;
and (iii) to issue a note payable to Ambac Assurance Corporation, the bond insurer of the 2005
Series A-2 Bonds (the “Ambac Note” and, together with the Commerzbank Note, the “Notes”);
and
WHEREAS, the Bankruptcy Court for the Central District of California (the
“Bankruptcy Court”) in the City’s chapter 9 bankruptcy case (the “Bankruptcy Case”), by order
entered on February 7, 2017, among other things: (i) authorized the City to enter into, execute
and deliver additional documents that the City reasonably deems necessary to implement the
Settlement Agreement, and (ii) confirmed the City’s Plan of Adjustment in its Bankruptcy Case.
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DOCSOC/1798414v7/200430-0003
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS:
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Section 1. The Supplemental Trust Agreement, in substantially the form attached
hereto as Exhibit “A,” is hereby approved. The Mayor, any member of the City Council, the City
Attorney, the City Manager or the designee thereof (the “Authorized Officers”) are hereby
authorized and directed to execute and deliver the Supplemental Trust Agreement with such
changes, insertions and omissions as may be recommended by the City Attorney or by Stradling
Yocca Carlson & Rauth, a Professional Corporation (“Special Counsel”) and approved by the
officer executing the same, said execution being conclusive evidence of such approval.
Section 2. The Exchange Agreement, in substantially the form attached hereto as
Exhibit “B,” is hereby approved. The Authorized Officers are hereby authorized and directed to
execute and deliver the Exchange Agreement with such changes, insertions and omissions as may
be recommended by the City Attorney or by Special Counsel and approved by the officer
executing the same, said execution being conclusive evidence of such approval.
Section 3. The Commerzbank Note and the Ambac Note, in substantially the forms
attached hereto as Exhibits “C” and “D”, respectively, are hereby approved. The Authorized
Officers are hereby authorized and directed to execute and deliver the Notes with such changes,
insertions and omissions as may be recommended by the City Attorney or by Special Counsel
and approved by the officer executing the same, said execution being conclusive evidence of
such approval.
Section 4. The Authorized Officers and any other proper officer of the City, acting
singly, be and each of them hereby is authorized and directed to execute and deliver any and all
documents and instruments and to do and cause to be done any and all acts and things necessary
or proper for carrying out the transactions contemplated by the Supplemental Trust Agreement,
the Exchange Agreement and this Resolution. All prior actions of the Authorized Officers and
other officers or staff of the City with respect to this matter are hereby ratified and approved.
Section 5. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement, as amended by the
Supplemental Trust Agreement, unless the context otherwise clearly requires.
19.b
Packet Pg. 547 Attachment: Debt Restructuring. ATTACHMENT 1 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
DOCSOC/1798414v7/200430-0003
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Section 6. This Resolution shall take effect immediately upon its adoption.
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Packet Pg. 548 Attachment: Debt Restructuring. ATTACHMENT 1 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE TAXABLE PENSION OBLIGATION BONDS, 2005 SERIES A, APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
City Council of the City of San Bernardino at a ____________ meeting thereof, held on the
_______ day of __________________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this ________ day of ______________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By: _________________________
19.b
Packet Pg. 549 Attachment: Debt Restructuring. ATTACHMENT 1 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
ATTACHMENT 2
Resolution of the Mayor and City Council of the City of San Bernardino
Authorizing the Amendment of Documents Relating to the Lease
Revenue Refunding Bonds (City Hall Project) Series 1996, Approving
the Execution and Delivery of Certain Documents in Connection
Therewith and Certain Other Matters
19.c
Packet Pg. 550 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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RESOLUTION NO.______
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE LEASE REVENUE REFUNDING BONDS (CITY HALL PROJECT) SERIES
1996, APPROVING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS
IN CONNECTION THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the “City”), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously approved the issuance by the San Bernardino Joint Powers
Financing Authority (the “Authority”) of Lease Revenue Refunding Bonds (City Hall Project)
Series 1996 (the “Bonds”) to refinance the acquisition of certain facilities; and
WHEREAS, the Bonds were issued pursuant to a Trust Indenture, dated as of December
1, 1996 (the “Trust Indenture”), by and between the Authority and U.S. Bank National
Association, as trustee; and
WHEREAS, the Bonds were secured by payments made by the City under a City Hall
Lease Agreement, dated as of December 1, 1996 (the “City Hall Lease Agreement”), by and
between the Authority, as lessor of certain assets described in the City Hall Lease Agreement,
and the City, as lessee; and
WHEREAS, the Mayor and the Common Council of the City have determined that it is
in the best interest of the City to amend the City Hall Lease Agreement in order to permit the
substitution of a reserve surety in lieu of cash to fund the Reserve Fund established under the
Trust Indenture.
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19.c
Packet Pg. 551 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS:
Section 1. Amendment No. 1 to City Hall Lease Agreement, in substantially the form
attached hereto as Exhibit “A,” is hereby approved. The Mayor, any member of the City
Council, the City Attorney, the City Manager or the designee thereof (the “Authorized Officers”)
are hereby authorized and directed to execute and deliver Amendment No. 1 to City Hall Lease
Agreement with such changes, insertions and omissions as may be recommended by the City
Attorney or by Stradling Yocca Carlson & Rauth, a Professional Corporation (“Special
Counsel”) and approved by the officer executing the same, said execution being conclusive
evidence of such approval.
Section 2. The Authorized Officers and any other proper officer of the City, acting
singly, be and each of them hereby is authorized and directed to execute and deliver any and all
documents and instruments and to do and cause to be done any and all acts and things necessary
or proper for carrying out the transactions contemplated by Amendment No. 1 to City Hall Lease
Agreement and this Resolution. All prior actions of the Authorized Officers and other officers or
staff of the City with respect to this matter are hereby ratified and approved.
Section 3. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Indenture unless the context
otherwise clearly requires.
Section 4. This Resolution shall take effect immediately upon its adoption.///
///
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19.c
Packet Pg. 552 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE LEASE REVENUE REFUNDING BONDS (CITY HALL PROJECT) SERIES
1996, APPROVING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS
IN CONNECTION THEREWITH AND CERTAIN OTHER MATTERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
City Council of the City of San Bernardino at a ____________ meeting thereof, held on the
_______ day of __________________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this ________ day of ______________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By: _________________________
19.c
Packet Pg. 553 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
EXHIBIT A TO RESOLUTION
Amendment No. 1 to City Hall Lease Agreement
19.c
Packet Pg. 554 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT
This AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT (this “Amendment”) is
made and entered into as of [______], 2017 by and between the SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, a public body corporate and politic existing under the laws
of the State of California (the “Authority”), as lessor, and the CITY OF SAN BERNARDINO, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the “City”), as lessee.
RECITALS
A. The Authority and the City previously entered into a Lease Agreement, dated as of
December 1, 1996 (the “Original City Hall Lease Agreement”), pursuant to which the Authority
leased certain property to the City in exchange for the payment of Lease Payments by the City.
B. The Lease Payments have been assigned by the Authority to U.S. BANK
NATIONAL ASSOCIATION, as trustee (the “Trustee”) under a Trust Indenture, dated as of
December 1, 1996 (as amended, the “Trust Indenture”), by and between the Authority and the
Trustee. The Trustee applies the Lease Payments to repay the $16,320,000 original aggregate
principal amount of Lease Revenue Refunding Bonds (City Hall Project) Series 1996 issued by the
Authority.
C. The Authority and the Trustee desire to amend the Trust Indenture to permit the
Authority to deposit a reserve surety in the Reserve Fund established under the Indenture.
D. The City has agreed to repay the provider of any reserve surety deposited in the
Reserve Fund for draws upon such reserve surety and to pay expenses and accrued interest thereon.
E. The City and the Authority desire to amend the Original City Hall Lease Agreement
pursuant to Section 11.11 thereof in order to reflect the City’s agreement set forth in Recital D.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original City Hall Lease Agreement unless specifically modified by this Amendment.
All of the terms and conditions set forth in the Original City Hall Lease Agreement that are not
specifically modified by this Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Trust Indenture, or, if not defined therein, the Original
City Hall Lease Agreement.
SECTION 3. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 2.1(f):
“Condemnation. The City hereby covenants and agrees that as long
as any of the Bonds remain Outstanding, the City will not exercise
any power of condemnation with respect to the Project or any portion
thereof. The City further covenants and agrees that if for any reason
the foregoing covenant is determined to be legally unenforceable, or
19.c
Packet Pg. 555 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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if the City fails to abide by such covenant and condemns the Project
or any portion thereof, then for the purpose of determining fair
compensation for such taking, the fair market value of the Project
shall be assumed to be not be less than (i) if the Bonds are then
subject to optional redemption, the aggregate principal of, premium if
any, and interest on the Bonds through the earliest practicable date for
optional redemption for which notice can be given in accordance with
the terms of the Trust Indenture after the payment of compensation by
the City to the Trustee for such taking, or (ii) if the Bonds are not then
subject to optional redemption, the amount necessary to fully defease
the Bonds in accordance with the terms of Section 13.01 of the Trust
Indenture.”
SECTION 4. The phrase “Exhibit “D” hereto” at the end of the first sentence of Section
4.4(a) of the Original City Hall Lease Agreement is hereby deleted and the following is substituted
therefor: “Section 1.01 of the Trust Indenture.”
SECTION 5. The following is hereby added to the end of Section 4.4(d) of the Original
City Hall Lease Agreement:
“Any Additional Payments required to be paid by the City pursuant to
Section 4.6 of the Lease Agreement shall constitute fair rental value
for the Project.”
SECTION 6. The following is hereby added after the first paragraph of Section 4.6 of the
Original City Hall Lease Agreement:
“The City shall pay when due all amounts due to any Provider under
any Reimbursement Agreement, or otherwise payable by the City to
the Provider, and the interest due thereon pursuant to Section 4.4(c)
hereof, and all such amounts shall constitute Additional Payments
under this Lease Agreement. Further, the City shall pay to any
Provider when due all Policy Costs. All Additional Payments
described in this section are subject to abatement to the same extent
Lease Payments are abated pursuant to and in accordance with
Section 6.3.”
SECTION 7. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.12:
“No Merger of Estates. So long as any Bonds remain Outstanding
under the Trust Indenture, the fee and leasehold estates to City Hall
shall not merge, but shall always be kept separate and distinct
notwithstanding the union of such estates in the Agency, the City, the
Authority, or any third party by purchase or otherwise.”
19.c
Packet Pg. 556 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
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SECTION 8. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.13:
“Waiver by City. The City shall waive the benefits of Sections 1932(2) and 1933(4)
of the California Civil Code and any and all other rights to terminate this Lease
Agreement by virtue of damage or destruction to the Project; provided that the
foregoing shall not affect the provisions hereof relating to the abatement of Lease
Payments and Additional Payments in accordance herewith, including but not limited
to Sections 6.3 and 4.6.”
SECTION 9. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 10. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Indenture (1996 Refunding Lease Revenue Bonds),
dated as of [__________], 2017, have been satisfied.
SECTION 11. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, and all of which shall constitute but one of the same instrument.
[This space intentionally left blank; signature page immediately follows.]
19.c
Packet Pg. 557 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
S-1
[Signature Page to ’96 Lease Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to City Hall
Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
City Manager
19.c
Packet Pg. 558 Attachment: Debt Restructuring.Attach 2 Resolution re 1996 Lease Rev Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring
This Page Is Left Intentionally Blank
ATTACHMENT 3
Resolution of the Mayor and City Council of the City of San Bernardino
Authorizing the Amendment of Documents Relating to the Refunding
Certificates of Participation (1999 Police Station, South Valle and 201
North E Street Projects), Approving the Execution and Delivery of
Certain Documents in Connection Therewith and Certain Other Matters
19.d
Packet Pg. 559 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION NO.______
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE REFUNDING CERTIFICATES OF PARTICIPATION (1999 POLICE
STATION, SOUTH VALLE AND 201 NORTH E STREET PROJECTS), APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the “City”), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously authorized the execution and delivery of Refunding
Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects)
(the “Certificates”) to refinance the acquisition of certain facilities; and
WHEREAS, the Certificates were executed and delivered pursuant to a Trust
Agreement, dated as of September 1, 1999 (the “Trust Agreement”), by and among the City, the
San Bernardino Joint Powers Financing Authority (the “Authority”) and U.S. Bank National
Association, as trustee (the “Trustee”); and
WHEREAS, the Certificates were secured by payments made by the City under a Police
Station Lease Agreement, dated as of September 1, 1999 (the “Police Station Lease
Agreement”), by and between the Authority, as lessor of certain assets described in the Police
Station Lease Agreement, and the City, as lessee; and
WHEREAS, the Mayor and the Common Council of the City have determined that it is
in the best interest of the City to amend the Trust Agreement and the Police Station Lease
Agreement and enter into an Escrow Agreement (the “Escrow Agreement”) with U.S. Bank
National Association, as Escrow Agent, in order to enable the City and the Authority to apply
certain moneys held thereunder to prepay the Certificates; and
WHEREAS, the Mayor and the Common Council of the City have determined that, upon
the prepayment of the Certificates, it is in the best interest of the City to enter into a termination
agreement for the Police Station Lease Agreement with the Authority (the “Police Station Lease
Termination”) and, as successor lessor to the Successor Agency to the Redevelopment Agency
of the City of San Bernardino, to enter into a termination agreement for a Police Station Site and
Facility Lease dated as of September 1, 1999 (the “Site and Facility Lease Termination”).
19.d
Packet Pg. 560 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS:
Section 1. Amendment No. 1 to Trust Agreement, in substantially the form attached
hereto as Exhibit “A,” is hereby approved. The Mayor, any member of the Common Council,
the City Attorney, the City Manager or the designee thereof (the “Authorized Officers”) are
hereby authorized and directed to execute and deliver Amendment No. 1 to Trust Agreement
with such changes, insertions and omissions as may be recommended by the City Attorney or by
Stradling Yocca Carlson & Rauth, a Professional Corporation (“Special Counsel”) and approved
by the officer executing the same, said execution being conclusive evidence of such approval.
Section 2. Amendment No. 1 to Police Station Lease Agreement, in substantially the
form attached hereto as Exhibit “B,” is hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Amendment No. 1 to Police Station Lease
Agreement with such changes, insertions and omissions as may be recommended by the City
Attorney or by Special Counsel and approved by the officer executing the same, said execution
being conclusive evidence of such approval.
Section 3. The Escrow Agreement, in substantially the form attached hereto as
Exhibit “C,” is hereby approved. The Authorized Officers are hereby authorized and directed to
execute and deliver the Escrow Agreement with such changes, insertions and omissions as may
be recommended by the City Attorney or by Special Counsel and approved by the officer
executing the same, said execution being conclusive evidence of such approval.
Section 4. The Police Station Lease Termination, in substantially the form attached
hereto as Exhibit “D”, is hereby approved. The Authorized Officers are hereby authorized and
directed to execute and deliver Police Station Lease Termination with such changes, insertions
and omissions as may be recommended by the City Attorney or by Special Counsel and
approved by the officer executing the same, said execution being conclusive evidence of such
approval.
19.d
Packet Pg. 561 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 5. The Site and Facility Lease Termination, in substantially the form
attached hereto as Exhibit “E”, is hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Site and Facility Lease Termination with such
changes, insertions and omissions as may be recommended by the City Attorney or by Special
Counsel and approved by the officer executing the same, said execution being conclusive
evidence of such approval.
Section 6. The Authorized Officers and any other proper officer of the City, acting
singly, be and each of them hereby is authorized and directed to execute and deliver any and all
documents and instruments and to do and cause to be done any and all acts and things necessary
or proper for carrying out the transactions contemplated by Amendment No. 1 to Trust
Agreement, Amendment No. 1 to Police Station Lease Agreement, the Escrow Agreement, the
Police Station Lease Termination, the Site and Facility Lease Termination and this Resolution.
All prior actions of the Authorized Officers and other officers or staff of the City with respect to
this matter are hereby ratified and approved.
Section 7. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement unless the context
otherwise clearly requires.
Section 8. This Resolution shall take effect immediately upon its adoption.
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Packet Pg. 562 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE REFUNDING CERTIFICATES OF PARTICIPATION (1999 POLICE
STATION, SOUTH VALLE AND 201 NORTH E STREET PROJECTS), APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
City Council of the City of San Bernardino at a ____________ meeting thereof, held on the
_______ day of __________________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this ________ day of ______________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By: _________________________
19.d
Packet Pg. 563 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT A TO RESOLUTION
Amendment No. 1 to Trust Agreement
19.d
Packet Pg. 564 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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AMENDMENT NO. 1 TO TRUST AGREEMENT
(1999 Refunding Certificates of Participation)
This AMENDMENT NO. 1 TO TRUST AGREEMENT (this “Amendment”) is made and
entered into and dated as of [ ], 2017 by and between U.S. BANK NATIONAL
ASSOCIATION, as trustee (the “Trustee”), the SAN BERNARDINO JOINT POWERS
FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of
the State of California (the “Authority”), and the CITY OF SAN BERNARDINO, a municipal
corporation and charter city duly organized and existing under the laws of the State of California (the
“City”).
RECITALS
A. The Trustee, the Authority and the City previously entered into a Trust Agreement,
dated as of September 1, 1999 (the “Original Agreement”), pursuant to which the City caused the
execution and delivery of $15,480,000 original aggregate principal amount of Refunding Certificates
of Participation (1999 Police Station, South Valle and 201 North E Street Projects) (the
“Certificates”).
B. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (as
amended, the “Police Station Lease Agreement”), by and between the Authority, as lessor of certain
assets described in the Police Station Lease Agreement, and the City, as lessee.
C. The City desires: (i) to prepay all Lease Payments under the Police Station Lease
Agreement (the “Police Station Lease Payments”) and thereby to cause the defeasance of a portion
of the Certificates in accordance with the provisions of Section 10.1 of the Police Station Lease
Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to the aggregate
unpaid principal component of such Lease Payments; and (ii) to cause the optional partial redemption
of Certificates in a principal amount equal to the aggregate unpaid principal component of such
Lease Payments on the earliest practicable date after such redemption for which notice of redemption
can be given in accordance with Section 4.03 hereof.
The Trustee, the Authority and the City desire to amend the Original Agreement in order to
permit moneys held in the Capital Reserve Fund established under the Original Agreement, as well
as moneys held in the Reserve Fund established under the Original Agreement, to be applied: (i) to
prepay the Police Station Lease Payments; and (ii) to the partial defeasance and optional partial
redemption of Certificates.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Agreement unless specifically modified by this Amendment. All of the
terms and conditions set forth in the Original Agreement that are not specifically modified by this
Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Agreement.
19.d
Packet Pg. 565 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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SECTION 3. Section 1.01 shall be amended to add the following definitions in the
appropriate alphabetical order:
“Police Station Lease Amendment” means that certain Amendment No. 1 to
Police Station Lease Agreement dated as of [__________], by and between the
Authority and the City.”
“Police Station Lease Agreement” means that certain Police Station Lease
Agreement, dated as of September 1, 1999, by and between the Authority, as
lessor, and the City, as lessee, as amended by the Police Station Lease
Amendment.”
SECTION 4. Section 3.06(a) is hereby deleted in its entirety and replaced with the
following:
“(a) The moneys in the Capital Reserve Fund shall be disbursed by the
Trustee as follows: (i) at the written direction of the City with the prior written
consent of the Bond Insurer, as directed by the City Manager of the City to be
applied to pay certain capital expenses within the City; or (ii) at the written
direction of the City with the prior written consent of the Bond Insurer, to
prepay Lease Payments and to apply such funds: (A) to the defeasance of a
portion of the Certificates in accordance with Section 14.01 hereof in a
principal amount equal to the aggregate unpaid principal component of such
Lease Payments; and (B) to the optional partial redemption of Certificates in a
principal amount equal to the aggregate unpaid principal component of such
Lease Payments on the earliest practicable date after such redemption for which
notice of redemption can be given in accordance with Section 4.03 hereof. The
Trustee may disburse moneys from the Capital Reserve Fund: (1) with respect
to payment of capital expenses, only upon receipt of: (I) a sequentially
numbered requisition or an instruction, signed by the Executive Director of the
Authority or the City Manager of the City, as applicable (or such officer’s
designee, such designation to be evidenced in writing delivered to the Trustee),
setting forth the capital improvements to be performed or reimbursed and the
amounts to be disbursed for payment or reimbursement of such capital
improvements; and (II) the written consent of the Bond Insurer; or (2) with
respect to prepayment of the Police Station Lease Agreement, only upon receipt
of: (I) an instruction signed by the Executive Director of the Authority or the
City Manager of the City, as applicable (or such officer’s designee, such
designation to be evidenced in writing delivered to the Trustee): (x) setting
forth the amounts to be disbursed from the Capital Reserve Fund for
prepayment of Lease Payments; (y) certifying that, together with amounts
disbursed from the Reserve Fund pursuant to Section 6.06, the total amount of
funds to be released is sufficient to prepay the Lease Payments in full; and (z)
directing the Trustee to redeem in accordance with Section 4.01(a) Certificates
in an aggregate principal amount equal to the principal component of such
Lease Payments at the earliest practicable date for which notice of redemption
can be given in accordance with Section 4.03 hereof; (II) the written consent of
the Bond Insurer; and (III) the certification required by Section 4.02. Any
requisition or instruction hereunder shall be signed by the Authority
19.d
Packet Pg. 566 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
3
Representative or the City Representative, as applicable, and the City shall
provide the Bond Insurer with a copy of any such requisition or instruction
concurrently with delivering such requisition or instruction to the Trustee. The
Trustee will hold any funds disbursed pursuant to Section 3.06(a)(ii), together
with any earnings thereon, in trust for the sole and exclusive benefit of the
Owners pending the required redemption under Section 4.01(a).”
SECTION 5. Section 4.02 is hereby amended to add the following at the end of the section:
“Notwithstanding the foregoing, in the case of an optional redemption of
Certificates occurring as a result of the prepayment of any Lease Payments, the
order of redemption of the Certificates will be determined in a manner to ensure
that the amount and timing of the remaining Lease Payments will be sufficient
to pay principal and interest on the remaining Certificates when due, as certified
by an independent financial consultant reasonably acceptable to the Trustee and
the Bond Insurer.”
SECTION 6. The following is hereby added as Section 6.06:
“Section 6.06. Application in Event of Partial Prepayment of Lease
Payments. In connection with a prepayment of Lease Payments pursuant to
Article X of any Lease Agreement and a redemption of Certificates pursuant to
Section 4.01(a), amounts in the Reserve Fund may be applied to such
prepayment so long as the amount on deposit in the Reserve Fund following
such prepayment equals or exceeds the Reserve Requirement after taking into
account the redemption of the Certificates under Section 4.01(a). The City
shall provide to the Trustee, with a copy to the Bond Insurer, a certificate of a
City Representative (a) setting forth the amounts to be disbursed from the
Reserve Fund for the prepayment of the applicable Lease Agreement, and
(b) directing the Trustee to redeem in accordance with Section 4.01(a) an
amount of Certificates equal to the amount of funds being released at the
earliest practicable date. Such certificate shall be accompanied by the
certification required by Section 4.02. The Trustee will hold any funds
disbursed pursuant to this Section 6.06 in trust for the sole and exclusive benefit
of the Owners pending the required redemption under Section 4.01(a).”
SECTION 7. As an inducement to the Trustee and the Bond Insurer consenting to this
Amendment, the City hereby makes the following representations:
(a) Other than as set forth on Schedule “1” hereto (collectively, the “Defaults”), no
defaults that are required to be cured pursuant to Section 365(b)(1)(A) of Title 11 of
the United States Code (the “Bankruptcy Code”) exist under that certain Continuing
Disclosure Agreement between the City and the Trustee, dated as of September 29,
1999 (the “Continuing Disclosure Agreement”), the Original Agreement or the Lease
Agreements (collectively, the “1999 Refunding Certificates of Participation
Agreements (Police Station/201 North E Street/South Valle)”).
(b) Other than as set forth on Schedule “2” hereto, as of the date hereof, the City has
given, or caused to be given notice of all Listed Events (as defined in the Continuing
19.d
Packet Pg. 567 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4
Disclosure Agreement) in accordance with the terms of the Continuing Disclosure
Agreement and Rule 15c2-12 as adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
(c) The City is not a party to any agreement that modifies or purports to modify any of
the 1999 Refunding Certificates of Participation Agreements (Police Station/201
North E Street/South Valle).
(d) Each of the 1999 Refunding Certificates of Participation Agreements (Police
Station/201 North E Street/South Valle) is in full force and effect.
(e) The City has duly authorized its execution, delivery and performance of this
Amendment and the Police Station Lease Amendment, and each of this Amendment
and the Police Station Lease Amendment constitutes a legal, valid and binding
obligation of the City enforceable in accordance with its terms.
SECTION 8. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 9. This Amendment shall become effective upon the satisfaction of each of the
following conditions precedent:
(a) The City has executed and delivered the Police Station Lease Amendment, in the
form annexed as Exhibit A hereto.
(b) The City has cured, or provided adequate assurance acceptable to the Trustee and the
Bond Insurer that it will promptly cure, the Defaults.
(c) The City shall have caused to be delivered to the Trustee, the City and the Bond
Insurer a written opinion from nationally-recognized bond counsel, in substantially
the form attached hereto as Exhibit B.
(d) The United States Bankruptcy Court for the Central District of California, Riverside
Division, or such other court that lawfully exercises jurisdiction (the “Bankruptcy
Court”) over the case commenced by the City under chapter 9 of the Bankruptcy
Code and styled In re City of San Bernardino, California, Case No. 6:12-28006-MJ,
has issued a final and non-appealable order, in form and substance satisfactory to the
Trustee and the Bond Insurer, approving the Plan of Adjustment of Debts of City of
San Bernardino, California (May 29, 2015) (as such Plan of Adjustment may be
amended from time to time with the consent of the Bond Insurer, the “Plan of
Adjustment”).
(e) The City provides a written certification from a City Representative that, as of the
date on which the Amendment becomes effective, each of the representations set
forth in SECTION 7 is true and correct.
(f) The “Effective Date” under the Plan of Adjustment has occurred.
19.d
Packet Pg. 568 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
5
The Trustee, acting at the direction of the Bond Insurer, and the City may waive any of the
conditions precedent set forth in subsections (b) or (e) of this SECTION 9.
SECTION 10. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument
SECTION 11. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 12. Except as otherwise amended pursuant to this Amendment, the Trust
Agreement shall remain unchanged, is hereby ratified and confirmed, and shall continue to be in full
force and effect and binding upon the parties hereto
[This space intentionally left blank; signature page immediately follows.]
19.d
Packet Pg. 569 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’99 Trust Agreement Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Trust
Agreement to be duly executed as of the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION
By:
Authorized Officer
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
19.d
Packet Pg. 570 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Schedule “1”
DEFAULTS
1. Tax liens exist on the leased property as set forth on the following pages.
19.d
Packet Pg. 571 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1BONDOBLIGATIONDOCUMENTEVIDENCINGREALPROPERTYSECURITYLEASEDPROPERTYDESCRIPTIONAPNNO.TAXAMOUNTDUE(asof3/31/16)RefundingCertificatesofParticipation(PoliceStation,SouthValleand201NorthEStreet)("1999RefundingCertificates")CityobligatedtomakepaymentsunderleasebetweentheCityandtheJPFAforpropertyidentifiedasthePoliceStationSite.NoneThePoliceStationSitelocatedat710N.“D”Street.LegaldescriptionofasingleparcelsetforthinExhibitAtoleasebetweenCityandJPFAidentifiedasParcel1ofParcelMapNo.14725.ThiscorrespondstoAPN0140Ͳ281Ͳ52pertheCountyAssessorrecords.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRedevelopmentAgency(“RDA”)totheEconomicDevelopmentCorp.(“EDC”)inMarch2011andthensubsequentlytransferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$710,939.33.0140Ͳ281Ͳ52$710,939.3319.d
Packet Pg. 572 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
21999RefundingCertificatesCityobligatedtomakepaymentsunderleasebetweentheCityandtheJPFAforpropertydescribedasthe201N.“E”StreetSite(legallydescribedinExhibitAasParcel1Aand1BtotheleasewhichwasrecordedasDoc.No.19990408375).DeedofTrustencumbering201N.“E”StreetsiterecordedasDoc.No.19990408316LegaldescriptionoftwoparcelssetforthinExhibitA.Parcel1AislegallydescribedasParcel27ofParcelMap688.ThiscorrespondstoAPN0134Ͳ321Ͳ24pertheCountyAssessorrecords.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRDAtotheEDCinMarch2011andthensubsequentlytransferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$296,271.04.Parcel1Bisaneasementforingressandegress.0134Ͳ321Ͳ24$296,271.041999RefundingCertificatesCityobligatedtomakepaymentsdueundertheleasebetweentheCityandtheJPFAforpropertyNoneThelegaldescriptionappearstoconsistofcertainrightsͲofͲwayintheareaofHuntsLane,RedlandsBoulevard,“E”NoneknownNoneknown19.d
Packet Pg. 573 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
3describedastheSouthValleimprovements(legallydescribedinExhibitAasconsistingoffourseparateparcelswhichwasrecordedasDoc.No.19990408318).Street,WatermanAvenueandCarolineStreetbasedonthelegaldescriptionsintheSouthVallelease.SanBernardinoJointPowersFinancingAuthorityLeaseRevenueBonds(CityHallProject)Series1996)Cityobligatedtomakepaymentsfor“Project”asdefinedinIndenture.IndenturedefinesProjectas“CityHallandtheParkingStructuredescribedcollectivelyinExhibit“A”totheLeaseAgreement.”Theterm“LeaseAgreement”meansthe“LeasePurchaseAgreementdatedDecember1,1996”betweentheAuthorityandtheCity.ThisNoneParcelsdescribedinExhibitsAtoLeaseAgreementcontainlegaldescriptionsofParcelsA,B,BͲ1,C,DandParkingStructure.ParcelsA,BandBͲ1referenceportionsof“Parcels24and25ofParcelMap688inCityofSanBernardino….”TheseparcelsweresubsequentlysplitandthelegaldescriptionofthepropertynowappearstocorrespondwiththefollowingparcelsshownonAssessorParcelMapNo.0134pages25and31:(a)0134Ͳ251Ͳ58(identifiedasPlazaEast);(b)ParcelAandBͲ1ThatportionofthislegaldescriptionnowidentifiedasPlazaEast,APN0134Ͳ251Ͳ58,hasoutstandingtaxesdueof$46,654.93.NoknowntaxesduefortheremainderofthelegallydescribedpropertywhichappearstobethelandunderCityHall(APN0134Ͳ251Ͳ51).19.d
Packet Pg. 574 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4LeaseAgreementwasrecordedasDoc.No.19970104310.0134Ͳ251Ͳ51(whichappearstobethegroundundertheCityHallbuilding);and(c)0134Ͳ251Ͳ61(theCityHallbuildingitself).ParcelsCandDareeasementsforthebenefitsofParcelsA,BandBͲ1.TheParkingStructureislegallydescribedasParcel28ofParcelMapNo.688.PertheCountyAssessor’srecords,thisparcelcorrespondstoAPN.0134Ͳ311Ͳ50.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRDAtotheEDCinMarch2011andthensubsequentlyParcelBNoneforCityHallbuilding(APN0134Ͳ251Ͳ61).ParcelsCandDNoneknownfortheseeasements.ParkingStructureLegaldescriptioncorrespondstoAPN0134Ͳ311Ͳ50forwhichtaxesaredueof$317,435.69.19.d
Packet Pg. 575 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
5transferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$317,435.69.19.d
Packet Pg. 576 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
DOCSSM/3032612v1/200430-0003
Schedule 2
None.
19.d
Packet Pg. 577 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT A
Amendment No. 1 to Police Station Lease Agreement
19.d
Packet Pg. 578 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
1
AMENDMENT NO. 1 TO POLICE STATION LEASE AGREEMENT
This AMENDMENT NO. 1 TO POLICE STATION LEASE AGREEMENT (this
“Amendment”) is made and entered into and dated as of [ ], 2017 by and between the
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the “Authority”), and the CITY OF
SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under the
laws of the State of California (the “City”).
RECITALS
A. U.S. Bank National Association, the Authority and the City previously entered into a
Trust Agreement, dated as of September 1, 1999 (as amended, the “Trust Agreement”), pursuant to
which the City caused the execution and delivery of $15,480,000 original aggregate principal amount
of Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street
Projects) (the “Certificates”).
B. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (the
“Original Police Station Lease Agreement”), by and between the Authority, as lessor of certain
assets described in the Original Police Station Lease Agreement, and the City, as lessee.
C. The City desires: (i) to prepay all Lease Payments under the Original Police Station
Lease Agreement (the “Police Station Lease Payments”) and thereby to cause the defeasance of a
portion of the Certificates in accordance with the provisions of Section 10.1 of the Original Police
Station Lease Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to
the aggregate unpaid principal component of such Lease Payments; and (ii) to cause the optional
partial redemption of Certificates in a principal amount equal to the aggregate unpaid principal
component of such Lease Payments.
D. The Authority and the City desire to amend the Original Police Station Lease
Agreement pursuant to Section 8.3(d) thereof and the second paragraph of Section 10.01 of the Trust
Agreement in order to permit moneys held in the Capital Reserve Fund established under the Trust
Agreement to be applied to prepay the Police Station Lease Payments.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Police Station Lease Agreement unless specifically modified by this
Amendment. All of the terms and conditions set forth in the Original Police Station Lease
Agreement that are not specifically modified by this Amendment are hereby ratified and shall remain
in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Police Station Lease Agreement.
SECTION 3. The third sentence of the second paragraph of Section 10.2 is hereby deleted
in its entirety and replaced with the following:
19.d
Packet Pg. 579 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
“Such option shall be exercised, in the event of prepayment in full, by
depositing with said notice cash and/or instructing the Trustee to apply
moneys held in the Capital Reserve Fund, in an aggregate amount which,
together with amounts then on deposit in the Reserve Fund, the
Insurance and Condemnation Fund and the Lease Payment Fund, will be
sufficient to pay the aggregate unpaid component of the Lease Payments
attributable to the Certificates then due but unpaid, or in the event of
prepayment in part, by depositing with said notice cash, and/or
instructing the Trustee to apply moneys held in the Capital Reserve
Fund, in each case in an amount divisible by $5,000 equal to the amount
desired to be prepaid together with any Lease Payments attributable to
the Certificates then due but unpaid.”
SECTION 4. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Agreement, dated as of [ ], 2017.
SECTION 6. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument.
SECTION 7. Except as otherwise amended pursuant to this Amendment, the Original
Police Station Lease Agreement shall remain unchanged, is hereby ratified and confirmed, and shall
continue to be in full force and effect and binding upon the parties hereto.
[This space intentionally left blank; signature page immediately follows.]
19.d
Packet Pg. 580 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’99 Lease Amendment Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Police
Station Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
City Manager
19.d
Packet Pg. 581 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT B
Opinion of Bond Counsel
19.d
Packet Pg. 582 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
STRADLING YOCCA CARLSON & RAUTH, P.C.
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CA 92660-6422
SYCR.COM
CALIFORNIA
NEWPORT BEACH
SACRAMENTO
SAN DIEGO
SAN FRANCISCO
SANTA BARBARA
SANTA MONICA
COLORADO
DENVER
NEVADA
RENO
WASHINGTON
SEATTLE
_____ __, 2017
City of San Bernardino
San Bernardino, California
San Bernardino Joint Powers Financing Authority
San Bernardino, California
U.S. Bank National Association
Los Angeles, California
National Public Finance Guarantee Corporation
Purchase, New York
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of San Bernardino (the “City”) and the San
Bernardino Joint Powers Financing Authority (the “Authority”) in connection with the execution of:
(1) Amendment No. 1 to Police Station Lease Agreement, dated as of ____, 2017 (the “Lease
Amendment”), by and between the City and the Authority; and (2) Amendment No. 1 to Trust
Agreement, dated as of _____, 2017 (the “Trust Agreement Amendment” and, together with the
Lease Amendment, the “Amendments”), by and among the City, the Authority and U.S. Bank
National Association, as trustee (the “Trustee”), each relating to the $15,480,000 original aggregate
principal amount of Refunding Certificates of Participation (1999 Police Station, South Valle and
201 North E Street Projects) (the “Certificates”). The execution of the Amendments was authorized
pursuant to Resolution No. ___ of the City and Resolution No. ___ of the Authority, each adopted on
____ __, 20__. All capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Trust Agreement Amendment.
In rendering our opinion, we have examined the applicable law and originals or certified
copies of: (i) the Amendments; (ii) the Police Station Lease Agreement, dated as of September 1,
1999 (the “Original Lease”), by and between the City and the Authority; (iii) the Trust Agreement,
dated as of September 1, 1999 (the “Original Trust Agreement” and, together with the Original
Lease, the “Original Agreements”), by and among the City, the Authority and the Trustee; (iv) the
19.d
Packet Pg. 583 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
_____ __, 2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Two
resolutions of the City and the Authority approving the Amendments; and (v) such other information
and documents as we have deemed necessary to render the opinions set forth herein.
Based upon and in reliance on the foregoing, we are of the opinion that:
(a) The Amendments have been duly authorized, executed and delivered by the City and
the Authority in accordance with the amendment provisions of the Original Agreements and
constitute amendments that the City and the Authority deem desirable and which do not materially
adversely affect the interests of the Owners of the Certificates.
(b) Assuming due authorization, execution and delivery of the Trust Agreement
Amendment by the Trustee, the Amendments constitute the legal, valid and binding obligations of
the City and the Authority enforceable against the City and the Authority in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in
appropriate cases and by the limitations on remedies against public agencies in the State of
California. In addition, neither the execution and delivery of the Amendments nor any of the
transactions contemplated thereby will adversely affect the enforceability of the Original Agreements
against the City and the Authority, as applicable.
(c) Neither the execution and delivery of the Amendments nor any of the transactions
contemplated thereby will adversely affect the exclusion from gross income for federal income tax
purposes of interest with respect to the Certificates. In order for interest with respect to the
Certificates to be excluded from gross income for federal income tax purposes subsequent to their
date of issuance, it is necessary that certain provisions of the Internal Revenue Code of 1986, as
amended, be complied with on a continuous basis. We have made no independent investigation as to
whether there has been such compliance in the present case. Accordingly, we express no opinion as
to whether interest with respect to the Certificates is presently excluded from gross income for
federal income tax purposes or is exempt from State of California personal income taxation as of the
date of this opinion. This opinion letter does not constitute a reaffirmation of any opinions
previously delivered by this firm or any other with respect to the Certificates, the Original
Agreements or any amendments thereto.
The opinions expressed herein are based upon our analysis and interpretation of existing
laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters not
directly addressed by such authorities. We call attention to the fact that such opinions may be
affected by actions taken or events occurring after the date hereof. We have not undertaken to
determine, or to inform any person, whether such actions or events are taken or occur. We expressly
disclaim any obligation to update this opinion letter. No attorney-client relationship exists between
us and you with respect to the Certificates or the Amendments.
19.d
Packet Pg. 584 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
_____ __, 2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Three
Our opinion is limited to matters governed by the laws of the State of California and federal
law. We assume no responsibility with respect to the applicability or the effect of the laws of any
other jurisdiction.
We have not been engaged, nor have we undertaken, to advise any party or to opine as to any
matters not specifically covered herein, including, but not limited to, matters relating to compliance
with any securities laws.
This opinion letter may be relied upon only by you and may not be circulated, quoted from or
relied upon by any other party without our prior written consent.
Respectfully submitted,
19.d
Packet Pg. 585 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT B TO RESOLUTION
Amendment No. 1 to Police Station Lease Agreement
19.d
Packet Pg. 586 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
AMENDMENT NO. 1 TO POLICE STATION LEASE AGREEMENT
This AMENDMENT NO. 1 TO POLICE STATION LEASE AGREEMENT (this
“Amendment”) is made and entered into and dated as of [ ], 2017 by and between the
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the “Authority”), and the CITY OF
SAN BERNARDINO, a municipal corporation and charter city duly organized and existing under the
laws of the State of California (the “City”).
RECITALS
A. U.S. Bank National Association, the Authority and the City previously entered into a
Trust Agreement, dated as of September 1, 1999 (as amended, the “Trust Agreement”), pursuant to
which the City caused the execution and delivery of $15,480,000 original aggregate principal amount
of Refunding Certificates of Participation (1999 Police Station, South Valle and 201 North E Street
Projects) (the “Certificates”).
B. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (the
“Original Police Station Lease Agreement”), by and between the Authority, as lessor of certain
assets described in the Original Police Station Lease Agreement, and the City, as lessee.
C. The City desires: (i) to prepay all Lease Payments under the Original Police Station
Lease Agreement (the “Police Station Lease Payments”) and thereby to cause the defeasance of a
portion of the Certificates in accordance with the provisions of Section 10.1 of the Original Police
Station Lease Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to
the aggregate unpaid principal component of such Lease Payments; and (ii) to cause the optional
partial redemption of Certificates in a principal amount equal to the aggregate unpaid principal
component of such Lease Payments.
D. The Authority and the City desire to amend the Original Police Station Lease
Agreement pursuant to Section 8.3(d) thereof and the second paragraph of Section 10.01 of the Trust
Agreement in order to permit moneys held in the Capital Reserve Fund established under the Trust
Agreement to be applied to prepay the Police Station Lease Payments.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Police Station Lease Agreement unless specifically modified by this
Amendment. All of the terms and conditions set forth in the Original Police Station Lease
Agreement that are not specifically modified by this Amendment are hereby ratified and shall remain
in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Police Station Lease Agreement.
SECTION 3. The third sentence of the second paragraph of Section 10.2 is hereby deleted
in its entirety and replaced with the following:
19.d
Packet Pg. 587 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
“Such option shall be exercised, in the event of prepayment in full, by
depositing with said notice cash and/or instructing the Trustee to apply
moneys held in the Capital Reserve Fund, in an aggregate amount which,
together with amounts then on deposit in the Reserve Fund, the
Insurance and Condemnation Fund and the Lease Payment Fund, will be
sufficient to pay the aggregate unpaid component of the Lease Payments
attributable to the Certificates then due but unpaid, or in the event of
prepayment in part, by depositing with said notice cash, and/or
instructing the Trustee to apply moneys held in the Capital Reserve
Fund, in each case in an amount divisible by $5,000 equal to the amount
desired to be prepaid together with any Lease Payments attributable to
the Certificates then due but unpaid.”
SECTION 4. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Agreement, dated as of [ ], 2017.
SECTION 6. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument.
SECTION 7. Except as otherwise amended pursuant to this Amendment, the Original
Police Station Lease Agreement shall remain unchanged, is hereby ratified and confirmed, and shall
continue to be in full force and effect and binding upon the parties hereto.
[This space intentionally left blank; signature page immediately follows.]
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Packet Pg. 588 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’99 Lease Amendment Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Police
Station Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
City Manager
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Packet Pg. 589 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT C TO RESOLUTION
Escrow Agreement
19.d
Packet Pg. 590 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
ESCROW AGREEMENT
(1999 Refunding Certificates of Participation – Police Station Certificates of Participation)
THIS ESCROW AGREEMENT (1999 Refunding Certificates of Participation – Police
Station Certificates of Participation), dated as of [____], 2017 (the “Agreement”), by and
between the City of San Bernardino (the “City”) and U.S. Bank National Association, as escrow
agent (the “Escrow Agent”) and as Trustee (as such term is defined herein), is entered into in
accordance with Resolution No. [____] of the City adopted on [____], 2017 and a Trust
Agreement, dated as of September 1, 1999 (as amended, the “Trust Agreement”), by and
among the San Bernardino Joint Powers Financing Authority (the “Authority”), the City and
U.S. Bank National Association, as trustee (the “Trustee”), pursuant to which the City caused
the execution and delivery of $15,480,000 original aggregate principal amount of Refunding
Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects)
(the “Certificates”).
RECITALS
A. The Authority, as lessor, and the City, as lessee, entered into that certain Police
Station Lease Agreement (the “Police Station Lease Agreement”), dated as of September 1,
1999, pursuant to which the Authority leased certain property described therein to the City.
B. $[____] in aggregate principal amount of the Lease Payments (as such term is
defined in the Police Station Lease Agreement) remain to be paid under the Police Station Lease
Agreement (the “Remaining Lease Payments”).
C. To permit moneys held in the Capital Reserve Fund (the “Capital Reserve
Fund”) and the Reserve Fund (the “Reserve Fund”) established under the Trust Agreement to
be applied to prepay the Remaining Lease Payments and to the defeasance and optional
redemption of Certificates in an aggregate principal amount equal to the Remaining Lease
Payments (the “Redeemed Certificates”), (i) the City, the Authority and the Trustee entered into
Amendment No. 1 to the Trust Agreement, dated as of [________], 2017, and (ii) the City and
the Authority entered into Amendment No. 1 to the Police Station Lease Agreement, dated as of
[________], 2017.
D. Section 14.01 of the Trust Agreement provides for the defeasance of the
Redeemed Certificates upon the deposit with an escrow holder of security for the payment of the
Remaining Lease Payments, to be applied to prepay the Remaining Lease Payments in full on the
earliest practicable prepayment date, pursuant to Section 10.1 of the Police Station Lease
Agreement.
E. The City will irrevocably deposit with the Escrow Agent moneys disbursed from
the Capital Reserve Fund and Reserve Fund as security for the payment of Remaining Lease
Payments in accordance with Section 10.1 of the Police Station Lease Agreement to defease the
Redeemed Certificates in accordance with Section 14.01 of the Trust Agreement. Such moneys
will be used to prepay the Remaining Lease Payments, which shall cause the defeasance and
prepayment of the Redeemed Certificates on September 1, 2017 in accordance with the Trust
Agreement.
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Packet Pg. 591 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
AGREEMENT
SECTION 1. Deposit of Moneys. The City hereby instructs the Trustee to transfer
$_____ from the Capital Reserve Fund and $____ from the Reserve Fund established under the
Trust Agreement to the Escrow Agent for deposit into the Escrow Fund established hereunder.
Attached hereto as Exhibit A is a certificate from the City Manager certifying that such moneys
are sufficient to prepay the Remaining Lease Payments in full on August 15, 2017.
The Escrow Agent shall hold all such amounts in irrevocable escrow, separate and apart
from other funds of the City and the Escrow Agent, in a fund hereby created and established to
be known as the “Escrow Fund” and to be applied solely as provided in this Agreement.
SECTION 2. Payment of Certificates.
(a) Payment. The Escrow Agent shall apply the amounts on deposit in the Escrow
Fund to pay when due all regularly scheduled Lease Payments on and prior to August 15, 2017,
and to prepay all other Remaining Lease Payments in full on August 15, 2017.
(b) Redemption. The City hereby directs the Trustee to redeem, on a pro rata basis
by lot, in accordance with Section 4.01(a) of the Trust Agreement, the Redeemed Certificates at
the earliest practicable date for which notice can be given in accordance with Section 4.03 of the
Trust Agreement.
(c) Irrevocable Instructions to Provide Notice. The form of the notice required to be
mailed pursuant to Section 4.03 of the Trust Agreement is substantially in the form attached
hereto as Exhibit B. The City hereby irrevocably instructs the Escrow Agent to mail a notice of
redemption of the Redeemed Certificates in accordance with Section 4.03 of the Trust
Agreement, as required to provide for the prepayment of the Redeemed Certificates in
accordance with this Section 2.
(d) Unclaimed Moneys. Any moneys in the Escrow Fund that remain unclaimed for
two years after August 15, 2017 shall be repaid by the Escrow Agent to the City.
(e) Priority of Payments. The owners of the Redeemed Certificates shall have a first
and exclusive lien on all moneys in the Escrow Fund until such moneys are used and applied as
provided in this Agreement.
(f) Termination of Obligation. As provided in the Trust Agreement and subject to
the terms thereof, upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set
forth in Section 1, all obligations of the City under the Trust Agreement with respect to the
Redeemed Certificates shall cease, terminate and become void. As provided in Section 10.01 of
the Police Station Lease Agreement and subject to the terms thereof, the obligations of the City
under the Police Station Lease Agreement shall cease and terminate (except for the obligation to
make or cause to be made all payments from the Escrow Fund), and title to the Police Station
Site (as defined in the Police Station Lease Agreement) shall vest in the City automatically and
without further action of the City or the Authority. The Escrow Agent shall mail a notice of
defeasance, substantially in the form attached hereto as Exhibit C upon the deposit of moneys
with the Escrow Agent.
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Packet Pg. 592 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
3
SECTION 3. Application of Certain Terms of the Trust Agreement. All of the terms of
the Trust Agreement relating to the making of payments of principal and interest with respect to
the Redeemed Certificates and relating to the exchange or transfer of the Certificates are
incorporated in this Agreement as if set forth in full herein. The procedures set forth in Article
IX of the Trust Agreement relating to the resignation, removal or merger of the Trustee under the
Trust Agreement are also incorporated in this Agreement as if set forth in full herein and shall be
the procedures to be followed with respect to any resignation or removal of the Escrow Agent
hereunder.
SECTION 4. Performance of Duties. The Escrow Agent agrees to perform only the
duties set forth herein and shall have no responsibility to take any action or omit to take any
action not set forth herein.
SECTION 5. Escrow Agent’s Authority to Make Investments. The Escrow Agent shall
have no power or duty to invest any funds held under this Agreement or to sell, transfer or
otherwise dispose of the moneys held hereunder.
SECTION 6. Indemnity. The City shall indemnify, defend and hold harmless the
Escrow Agent against any and all loss, damages, liability or expense (including reasonable legal
fees and disbursements) of whatsoever kind and nature that may be imposed on, incurred by or
asserted against the Escrow Agent in connection with this Agreement or the performance of its
powers hereunder; provided, however, that the City shall not be required to indemnify the
Escrow Agent against the Escrow Agent’s own negligence, misconduct, breach of duty or bad
faith or the negligence, misconduct, breach of duty or bad faith of the Escrow Agent’s
employees. The indemnities contained in this Section shall survive the termination of this
Agreement.
SECTION 7. Responsibilities of Escrow Agent. The Escrow Agent and its agents and
employees shall not be held to any personal liability whatsoever, in tort, contract, or otherwise,
in connection with this Agreement or by reason of any non-negligent act, non-negligent omission
or non-negligent error of the Escrow Agent made in good faith in the conduct of its duties. The
statements in the “Recitals” section above shall be taken as the statements of the City, and the
Escrow Agent assumes no responsibility for the correctness thereof. The Escrow Agent makes
no representation as to the sufficiency of the moneys in the Escrow Fund to accomplish the
prepayment of the Redeemed Certificates or to the validity of this Agreement as to the City and,
except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof.
The Escrow Agent shall not be liable in connection with the performance of its duties under this
Agreement except for its own negligence, misconduct, breach of duty or bad faith or the
negligence, misconduct, breach of duty or bad faith of its employees. The duties and obligations
of the Escrow Agent shall be determined by the express provisions of this Agreement. The
Escrow Agent may consult with counsel, who may or may not be counsel to the City, and in
reliance upon the written opinion of such counsel shall have full and complete authorization and
protection in respect of any action taken, suffered or omitted by it in good faith in accordance
therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a matter be
proved or established prior to taking, suffering, or omitting any action under this Agreement,
such matter may be deemed to be conclusively established by a certificate signed by an officer of
the City.
19.d
Packet Pg. 593 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4
The City acknowledges that to the extent that regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the City the right to receive brokerage
confirmations of security transactions as they occur, the City specifically waives receipt of such
confirmations to the extent permitted by law. The Escrow Agent will furnish the City with
periodic transaction statements that include detail for all investment transactions made by the
Escrow Agent hereunder; provided that the Escrow Agent is not obligated to provide an
accounting for any fund or account that: (a) has a balance of $0.00; and (b) has not had any
activity since the last reporting date.
SECTION 8. Amendments. This Agreement is made for the benefit of the City, the
Bond Insurer (as such term is defined in the Trust Agreement) and the owners from time to time
of the Redeemed Certificates and it shall not be repealed, revoked, altered or amended without
the written consent of all such owners, the Bond Insurer, the Escrow Agent and the City;
provided, however, that the City and the Escrow Agent may, without the consent of, or notice to,
such owners, amend this Agreement or enter into such agreements supplemental to this
Agreement as shall not adversely affect the rights of such owners and as shall not be inconsistent
with the terms and provisions of this Agreement or the Trust Agreement, for any one or more of
the following purposes: (i) to cure any ambiguity or formal defect or omission in this Agreement;
(ii) to grant to, or confer upon, the Escrow Agent for the benefit of the owners of the Redeemed
Certificates any additional rights, remedies, powers or authority that may lawfully be granted to,
or conferred upon, such owners or the Escrow Agent; and (iii) to include under this Agreement
additional funds. The Escrow Agent shall be entitled to rely conclusively upon an unqualified
opinion of Stradling Yocca Carlson & Rauth, A Professional Corporation, with respect to
compliance with this Section, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the owners of the various Redeemed Certificates or
that any instrument executed hereunder complies with the conditions and provisions of this
Section.
SECTION 9. Notice to Rating Agencies. In the event that this agreement or any
provision thereof is severed, amended or revoked, the Escrow Agent shall provide written notice
of such severance, amendment or revocation to the Bond Insurer and the rating agencies then
rating the Certificates.
SECTION 10. Term. This Agreement shall commence upon its execution and delivery
and shall terminate on the later to occur of (i) the date upon which the Redeemed Certificates
have been paid in accordance with this Agreement and (ii) the date upon which no unclaimed
moneys remain on deposit with the Escrow Agent pursuant to Section 2(d) of this Agreement.
SECTION 11. Compensation. The Escrow Agent shall receive its reasonable fees and
expenses as previously agreed to by the Escrow Agent and the City and any other reasonable fees
and expenses of the Escrow Agent approved by the City; provided, however, that under no
circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any
moneys or obligations in the Escrow Fund for the payment of fees and expenses for services
rendered or expenses incurred by the Escrow Agent under this Agreement.
SECTION 12. Severability. If any one or more of the covenants or agreements provided
in this Agreement on the part of the City or the Escrow Agent to be performed should be
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Packet Pg. 594 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
5
determined by a court of competent jurisdiction to be contrary to law, such covenants or
agreements shall be null and void and shall be deemed separate from the remaining covenants
and agreements contained herein and shall in no way affect the validity of the remaining
provisions of this Agreement.
SECTION 13. Counterparts. This Agreement may be executed in several counterparts,
all or any of which shall be regarded for all purposes as an original but all of which shall
constitute and be but one and the same instrument.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
UNDER THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 15. Insufficient Funds. If at any time the Escrow Agent has actual knowledge
that the moneys in the Escrow Fund will not be sufficient to make all payments required by this
Agreement, the Escrow Agent shall notify the City in writing, of the amount thereof and the
reason therefor to the extent known to it, and the City shall cure any such deficiency. The
Escrow Agent shall have no responsibility regarding any such deficiency.
SECTION 16. Notice to City and Escrow Agent. Any notice to or demand upon the
Escrow Agent may be served or presented, and such demand may be made, at the principal
corporate trust office of the Escrow Agent at 633 West Fifth Street, 24th Floor, Los Angeles,
California 90071, Attention: Global Corporate Trust Services, Reference: San Bernardino 1999
Certificates. Any notice to or demand upon the City shall be deemed to have been sufficiently
given or served for all purposes by being mailed by registered or certified mail, and deposited,
postage prepaid, in a post office letter box, addressed to the City at 300 North “D” Street, San
Bernardino, California 92418, Attention: City Manager, with a copy to Stradling Yocca
Carlson & Rauth, P.C., 100 Wilshire Boulevard, Santa Monica, CA 90401, Attention: Paul
Glassman and Marianne Mortimer (or such other addresses as may have been filed in writing by
the City with the Escrow Agent).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Packet Pg. 595 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
6
[Signature Page to ’99 Escrow Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
CITY OF SAN BERNARDINO
By:
Mark Scott
City Manager
ATTEST:
Georgeann Hanna, City Clerk
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent
By:
Authorized Officer
19.d
Packet Pg. 596 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Exhibit A-1
EXHIBIT A
CERTIFICATE OF CITY MANAGER
The undersigned, the City Manager of the City of San Bernardino (the “City”), hereby
states and certifies on behalf of the City as follows:
1. I am the duly qualified and acting City Manager of the City, I am familiar with
the facts herein certified, and I am authorized to certify the same.
2. I am a City Representative as that term is used in the Trust Agreement, dated as of
September 1, 1999 (as amended, the “Trust Agreement”), by and among the San Bernardino
Joint Powers Financing Authority, U.S. Bank National Association (the “Trustee”) and the City.
3. I certify that the amounts disbursed from the Capital Reserve Fund and Reserve
Fund established under the Trust Agreement and deposited in accordance with that certain
Escrow Agreement, dated the date hereof, between the City and the Trustee, are sufficient to
make the regularly scheduled Lease Payment (as such term is defined in that certain Police
Station Lease Agreement, dated as of September 1, 1999, by and between the San Bernardino Joint
Powers Financing Authority, as lessor, and the City, as lessee) due on August 15, 2017 and to
prepay in full all remaining Lease Payments, provided that the foregoing determination is based
upon the certificate of Urban Futures, Inc., dated the date hereof.
Dated: __________, 2017 CITY OF SAN BERNARDINO
By:
Its: City Manager
19.d
Packet Pg. 597 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Exhibit B-1
EXHIBIT B
NOTICE OF PREPAYMENT
CERTIFICATES OF PARTICIPATION
(1999 POLICE STATION, SOUTH VALLE AND 201 NORTH E STREET PROJECTS)
EVIDENCING THE DIRECT, UNDIVIDED FRACTIONAL INTEREST OF THE OWNER
THEREOF IN LEASE PAYMENTS TO BE MADE BY THE CITY OF SAN BERNARDINO,
CALIFORNIA AS THE RENTAL FOR CERTAIN PROJECTS PURSUANT TO LEASE
AGREEMENTS WITH THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
BASE CUSIP NO. 79675P
NOTICE IS HEREBY GIVEN to the owners of the above-captioned certificates of
participation (the “Certificates”) payable under and defined in that certain Trust Agreement,
dated as of September 1, 1999 (the “Trust Agreement”), by and among the City of San
Bernardino, the San Bernardino Joint Powers Financing Authority and U.S. Bank National
Association, as trustee (the “Trustee”), that a portion of the outstanding Certificates in the
amount of $[ ] have been called for prepayment on September 1, 2017 (the “Prepayment
Date”). The Certificates were originally executed and delivered on September 29, 1999.
Certificate
No.
Original
CUSIP
Maturity
(September 1) Rate
Prepaid
Amount Price
Amount
Outstanding
After
Prepayment
New
CUSIP
11 AX0 2020 5.50% [_____] 100% [_____] [___]
12 AY8 2024 5.50% [_____] 100% [_____] [___]
The Certificates will be payable on the Prepayment Date at a prepayment price of 100%
of the principal amount plus accrued interest to such date (the “Prepayment Price”). The
Prepayment Price of the Certificates will become due and payable on the Prepayment Date.
Interest with respect to the Certificates to be prepaid will cease to accrue or be payable from and
after the Prepayment Date, and such Certificates will be surrendered to the Trustee.
To receive payment on the Prepayment Date, owners of the Certificates should present
and surrender said Certificates on the Prepayment Date at the address of the Trustee set forth
below:
Delivery Instructions
U.S. Bank National Association
Global Corporate Trust Services
111 Fillmore Avenue East
St. Paul, Minnesota 55107
19.d
Packet Pg. 598 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Exhibit B-2
REQUIREMENT INFORMATION
For a list of prepayment requirements please visit our website
at www.usbank.com/corporatetrust and click on the “Bondholder Information” link for
prepayment instructions. You may also contact our Bondholder Communications team at 1-800-
934-6802 Monday through Friday from 8 AM to 6 PM CST.
IMPORTANT NOTICE
Federal law requires the Trustee to withhold taxes at the applicable rate from the payment if an
IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for
additional information on the tax forms and instructions.
If the owner of any Certificate subject to prepayment fails to deliver such Certificate to
the Trustee on the Prepayment Date, such Certificate shall nevertheless be deemed paid on the
Prepayment Date, and the owner of such Certificate shall have no rights in respect thereof except
to receive payment of the Prepayment Price from funds held by the Trustee for such payment.
Note: The San Bernardino Joint Powers Financing Authority and the Trustee shall not
be responsible for the selection or use of the CUSIP numbers selected, nor is any representation
made as to their correctness in the notice or as printed on any Certificate. They are included
solely for the convenience of the owners.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
DATED this [____________], 2017.
19.d
Packet Pg. 599 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Exhibit C-1
EXHIBIT C
NOTICE OF DEFEASANCE
CERTIFICATES OF PARTICIPATION
(1999 POLICE STATION, SOUTH VALLE AND 201 NORTH E STREET PROJECTS)
EVIDENCING THE DIRECT, UNDIVIDED FRACTIONAL INTEREST OF THE OWNER
THEREOF IN LEASE PAYMENTS TO BE MADE BY THE CITY OF SAN BERNARDINO,
CALIFORNIA AS THE RENTAL FOR CERTAIN PROJECTS PURSUANT TO LEASE
AGREEMENTS WITH THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
BASE CUSIP NO. 79675P
NOTICE IS HEREBY GIVEN to the owners of the above-captioned certificates of
participation (the “Certificates”) payable under and defined in that certain Trust Agreement,
dated as of September 1, 1999 (the “Trust Agreement”), by and among the City of San
Bernardino (the “City”), the San Bernardino Joint Powers Financing Authority (the
“Authority”) and U.S. Bank National Association, as trustee (the “Trustee”), that the City has
deposited with the Trustee moneys sufficient to prepay, on [August 15, 2017], the remaining
Lease Payments under that certain Police Station Lease Agreement (the “Police Station Lease
Agreement”), dated as of September 1, 1999, by and between the City and the Authority, which
will cause the defeasance of a portion of the Certificates as set forth below.
The Certificates to be defeased are as follows:
Certificate
No.
Original
CUSIP
Maturity
(September 1) Rate
Defeasance
Amount Price
Amount
Outstanding
After
Defeasance
New
CUSIP
11 AX0 2020 5.50% [_____] 100% [_____] [_____]
12 AY8 2024 5.50% [_____] 100% [_____] [_____]
In accordance with the Trust Agreement: (i) the defeased Certificates are deemed to have
been paid in accordance with Section 14.01 thereof; (ii) the obligations of the City, the Trustee
and the Authority under the Trust Agreement with respect to the defeased Certificates have
ceased, terminated and become void and have been released, discharged and satisfied, except as
set forth in the Trust Agreement; (iii) the right, title and interest of the Authority in the Police
Station Lease Agreement have ceased, terminated, become void and been completely discharged
and satisfied, except as set forth in the Police Station Lease Agreement; and (iv) the obligations
of the City under the Police Station Lease Agreement have ceased, terminated, become void and
been completely discharged and satisfied, except as set forth in the Police Station Lease
Agreement.
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Packet Pg. 600 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Exhibit B-2
No representation is made as to the correctness of the CUSIP number either as printed on
any Certificate or as contained herein and any error in the CUSIP number shall not affect the
validity of the proceedings for prepayment of the Certificates.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
DATED this [____________], 2017.
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Packet Pg. 601 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT D TO RESOLUTION
Police Station Lease Termination
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Packet Pg. 602 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
RECORDING REQUESTED BY: )
City of San Bernardino )
)
AND WHEN RECORDED MAIL TO: )
Stradling Yocca Carlson & Rauth )
100 Wilshire Boulevard, Fourth Floor )
Santa Monica, California 90401 )
Attn: James O. Thoma, Esq. )
Marianne S. Mortimer, Esq. )
)
[Space above for Recorder’s use.]
This document is recorded for the benefit of
the City of San Bernardino and recording is
fee-exempt under § 27383 of the Government
Code.
TERMINATION OF POLICE STATION LEASE AGREEMENT
by and between
CITY OF SAN BERNARDINO
and
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY
Dated as of [________], 2017
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Packet Pg. 603 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
TERMINATION OF POLICE STATION LEASE AGREEMENT
THIS TERMINATION OF LEASE (this “Agreement”) is dated as of [________], 2017 and
effective as of the date of recordation hereof, by and between the SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, a public body corporate and politic and existing under the
laws of the State of California (the “Authority”), as lessor, and the CITY OF SAN BERNARDINO,
a municipal corporation and charter city duly organized and existing under the laws of the State
of California (the “City”), as lessee.
RECITALS
A. The Authority, the City and U.S. Bank National Association (the “Trustee”), entered
into a Trust Agreement, dated as of September 1, 1999 (as amended, the “Trust Agreement”),
pursuant to which the City caused the execution and delivery of $15,480,000 original aggregate
principal amount of Refunding Certificates of Participation (1999 Police Station, South Valle and
201 North E Street Projects) (the “Certificates”).
B. The Authority, as lessor, and the City, as lessee, entered into that certain Police
Station Lease Agreement (the “Lease Agreement”), dated as of September 1, 1999, which was
recorded as Document No. 408313 on September 29, 1999 in the Official Records of the County of
San Bernardino, State of California (the “Official Records”), pursuant to which the Authority leased
certain property described therein (the “Property”) to the City. A legal description of the Property is
attached hereto as Exhibit A.
C. The City has notified the Authority of its intention to partially defease the Certificates
as of the date hereof and to exercise its option of partial redemption of Certificates in a principal
amount equal to the aggregate unpaid principal component of the Lease Payments (as such term is
defined in the Lease Agreement) on the earliest practicable date for which notice of redemption can
be given in accordance with Section 4.03 of the Trust Agreement.
D. The City hereby certifies that it has caused to be delivered moneys (the “Defeasance
Amount”), pursuant to that certain Escrow Agreement, dated as of even date hereof, by and between
the City and U.S. Bank National Association, as escrow agent (the “Escrow Agent”), sufficient to
prepay the Lease Payments in full, in order to partially defease the Certificates as of the date hereof
and provide funds to exercise its option of partial redemption of the Certificates on September 1,
2017.
E. In connection with the partial defeasance of the Certificates, the City and the
Authority now desire to terminate and discharge the Lease Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Recordation. This Agreement shall not be recorded until the City deposits the
Defeasance Amount with the Escrow Agent.
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Packet Pg. 604 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
2. Record Title. The Authority appoints the City as its agent to prepare, execute and file
or record, in appropriate places, such documents as may be necessary to place record title to the
Property in the City, free and clear of any liens, claims or encumbrances.
3. Termination of Lease Agreement. Effective as of the date hereof, the Authority and
the City acknowledge and agree that the Lease Agreement shall be terminated and, except for the
obligation of the City to pay Lease Payments from the moneys and securities deposited with the
Escrow Agent, shall be of no further force or effect, and from and after the date hereof, the Authority
shall have no further interest in the Property.
4. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which, when taken together, shall constitute one
agreement. The signature and acknowledgment pages from each counterpart may be removed and
attached to a single document in order to create one original instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
19.d
Packet Pg. 605 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to Police Station Lease Termination]
IN WITNESS WHEREOF, this Agreement has been executed by each party’s respective
duly authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO
By:
Mark Scott
City Manager
ATTEST:
Georgeann Hanna
City Clerk
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
R. Carey Davis
Chairperson
ATTEST:
Georgeann Hanna
Secretary
APPROVED AS TO FORM:
Gary Saenz
City Attorney
19.d
Packet Pg. 606 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
On ___________, 2017 before me, ____________________________________, Notary Public,
personally appeared R. Carey Davis, who proved to me on the basis of satisfactory evidence to be the
person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
19.d
Packet Pg. 607 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
On ___________, 2017 before me, ____________________________________, Notary Public,
personally appeared [____________], who proved to me on the basis of satisfactory evidence to be
the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
19.d
Packet Pg. 608 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT A
Description of the Property
A.P.N.: 140-281-52
DIVISION TWO:
PARCEL 1 OF PARCEL MAP NO. 14725, IN THE CITY OF SAN BERNARDINO, COUNTY OF
SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 178,
PAGES 32 THROUGH 34, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
19.d
Packet Pg. 609 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT E TO RESOLUTION
Site and Facility Lease Termination
19.d
Packet Pg. 610 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
RECORDING REQUESTED BY: )
City of San Bernardino )
)
AND WHEN RECORDED MAIL TO: )
Stradling Yocca Carlson & Rauth )
100 Wilshire Boulevard, Fourth Floor )
Santa Monica, California 90401 )
Attn: James O. Thoma, Esq. )
Marianne S. Mortimer, Esq. )
)
[Space above for Recorder’s use.]
This document is recorded for the benefit of
the City of San Bernardino and recording is
fee-exempt under § 27383 of the Government
Code.
TERMINATION OF POLICE STATION SITE AND FACILITY LEASE
by and between
CITY OF SAN BERNARDINO, AS SUCCESSOR LESSOR TO THE REDEVELOPMENT
AGENCY OF THE CITY OF SAN BERNARDINO
and
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY
Dated as of [________], 2017
19.d
Packet Pg. 611 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
TERMINATION OF POLICE STATION SITE AND FACILITY LEASE
THIS TERMINATION OF LEASE (this “Agreement”) is dated as of [________], 2017 and
effective as of the date of recordation hereof, by and between the CITY OF SAN BERNARDINO, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the “City”), as successor lessor to the Redevelopment Agency of the City of San
Bernardino (the “Agency”), and the SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY duly organized and existing under and by virtue of the laws of the State of California
(the “Authority”), as lessee.
RECITALS
A. The Authority, the City and U.S. Bank National Association (the “Trustee”), entered
into a Trust Agreement, dated as of September 1, 1999 (as amended, the “Trust Agreement”),
pursuant to which the City caused the execution and delivery of $15,480,000 original aggregate
principal amount of Refunding Certificates of Participation (1999 Police Station, South Valle and
201 North E Street Projects) (the “Certificates”).
B. The Agency, as lessor, and the Authority, as lessee, entered into that certain Police
Station Site and Facility Lease (the “Site and Facility Lease”), dated as of September 1, 1999, which
was recorded as Document No. 408312 on September 29, 1999 in the Official Records of the County
of San Bernardino, State of California (the “Official Records”), pursuant to which the Agency
leased certain property described therein (the “Property”) to the Authority. A legal description of the
Property is attached hereto as Exhibit A.
C. The Authority, as lessor, and the City, as lessee, entered into that certain Police
Station Lease Agreement (the “Lease Agreement”), dated as of September 1, 1999, which was
recorded as Document No. 408313 on September 29, 1999 in the Official Records, pursuant to which
the Authority leased the Property to the City.
D. On June 28, 2016, pursuant to the City’s Long Range Property Management Plan, the
Property was transferred from the Agency to the City. By operation of law, the City has become the
lessor under the Site and Facility Lease and assumed all the rights and obligations of the Agency
pursuant to the Site and Facility Lease.
E. The term of the Site and Facility Lease shall end when all Lease Payments (as such
term is defined in the Lease Agreement) have been fully paid or provided for in accordance with the
terms of the Lease Agreement.
F. The City has notified the Authority of its intention to partially defease the Certificates
as of the date hereof and to exercise its option of partial redemption of Certificates in a principal
amount equal to the aggregate unpaid principal component of the Lease Payments on the earliest
practicable date for which notice of redemption can be given in accordance with Section 4.03 of the
Trust Agreement.
G. The City hereby certifies that it has caused to be delivered moneys (the “Defeasance
Amount”), pursuant to that certain Escrow Agreement, dated as of even date hereof, by and between
the City and U.S. Bank National Association, as escrow agent (the “Escrow Agent”), sufficient to
19.d
Packet Pg. 612 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
prepay the Lease Payments in full, in order to partially defease the Certificates as of the date hereof
and provide funds to exercise its option of partial redemption of the Certificates on September 1,
2017.
H. In connection with the defeasance of the Certificates, the City and the Authority now
desire to terminate and discharge the Site and Facility Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Recordation. This Agreement shall not be recorded until the City deposits the
Defeasance Amount with the Escrow Agent.
2. Record Title. The Authority appoints the City as its agent to prepare, execute and file
or record, in appropriate places, such documents as may be necessary, if any, to place record title to
the Property in the City, free and clear of any liens, claims or encumbrances.
3. Termination of Site and Facility Lease. Effective as of the date hereof, the Authority
and the City acknowledge and agree that the Site and Facility Lease shall be terminated and, except
for the obligation of the City to pay Lease Payments from the moneys and securities deposited with
the Escrow Agent, shall be of no further force or effect, and from and after the date hereof, the
Authority shall have no further interest in the Property.
4. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which, when taken together, shall constitute one
agreement. The signature and acknowledgment pages from each counterpart may be removed and
attached to a single document in order to create one original instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
19.d
Packet Pg. 613 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to Police Station Site Lease Termination]
IN WITNESS WHEREOF, this Agreement has been executed by each party’s respective
duly authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO
By:
Mark Scott
City Manager
ATTEST:
Georgeann Hanna
City Clerk
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
R. Carey Davis
Chairperson
ATTEST:
Georgeann Hanna
Secretary
APPROVED AS TO FORM:
Gary Saenz
City Attorney
19.d
Packet Pg. 614 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
On ___________, 2017 before me, ____________________________________, Notary Public,
personally appeared R. Carey Davis, who proved to me on the basis of satisfactory evidence to be the
person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
19.d
Packet Pg. 615 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
On ___________, 2017 before me, ____________________________________, Notary Public,
personally appeared [____________], who proved to me on the basis of satisfactory evidence to be
the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
19.d
Packet Pg. 616 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT A
Description of the Property
A.P.N.: 140-281-52
DIVISION TWO:
PARCEL 1 OF PARCEL MAP NO. 14725, IN THE CITY OF SAN BERNARDINO, COUNTY OF
SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 178,
PAGES 32 THROUGH 34, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
19.d
Packet Pg. 617 Attachment: Debt Restructuring.Attach 3 Resolution re 99 COPs (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
ATTACHMENT 4
Resolution of the Mayor and City Council of the City of San Bernardino
Acting as the San Bernardino Joint Powers Financing Authority
Authorizing the Amendment of Documents Relating to the Lease
Revenue Refunding Bonds (City Hall Project) Series 1996, Approving
the Execution and Delivery of Certain Documents in Connection
Therewith and Certain Other Matters
19.e
Packet Pg. 618 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION NO.______
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING TO
THE LEASE REVENUE REFUNDING BONDS (CITY HALL PROJECT) SERIES 1996,
APPROVING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN
CONNECTION THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the San Bernardino Joint Powers Financing Authority (the “Authority”), a
joint exercise of powers authority duly organized and existing under and pursuant to the
Constitution and laws of the State of California, has previously issued the Lease Revenue
Refunding Bonds (City Hall Project) Series 1996 (the “Bonds”) to refinance the acquisition of
certain facilities; and
WHEREAS, the Bonds were issued pursuant to a Trust Indenture, dated as of December
1, 1996 (the “Trust Indenture”), by and between the Authority and U.S. Bank National
Association, as trustee; and
WHEREAS, the Bonds were secured by payments made by the City under a City Hall
Lease Agreement, dated as of December 1, 1996 (the “City Hall Lease Agreement”), by and
between the Authority, as lessor of certain assets described in the City Hall Lease Agreement,
and the City of San Bernardino (the “City”), a municipal corporation and charter city duly
organized and existing under and pursuant to the Constitution and laws of the State of California,
as lessee; and
WHEREAS, the Authority has determined that it is in the best interest of the Authority
to amend the Trust Indenture and the City Hall Lease Agreement in order to enable the Authority
to permit the substitution of a reserve surety in lieu of cash to fund the Reserve Fund established
under the Trust Indenture; and
WHEREAS, the Authority has determined that it is in the best interest of the Authority
to enter a Financial Guaranty Agreement (the “Guaranty Agreement”) and a Commitment to
Issue a Debt Service Reserve Surety Bond (the “Commitment”) with National Public Finance
Guarantee Corporation in order to cause the deposit of a reserve surety into the Reserve Fund to
satisfy the reserve requirement with respect to the Bonds.
19.e
Packet Pg. 619 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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NOW, THEREFORE, BE IT RESOLVED BY THE SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, AS FOLLOWS:
Section 1. Amendment No. 1 to Trust Indenture, in substantially the form attached
hereto as Exhibit “A”, is hereby approved. The Chairperson, the Vice Chairperson, the
Executive Director, the Secretary, counsel to the Authority or the designee thereof (the
“Authorized Officers”) are hereby authorized and directed to execute and deliver Amendment
No. 1 to Trust Indenture with such changes, insertions and omissions as may be recommended
by counsel to the Authority or by Stradling Yocca Carlson & Rauth, a Professional Corporation
(“Special Counsel”) and approved by the officer executing the same, said execution being
conclusive evidence of such approval.
Section 2. Amendment No. 1 to City Hall Lease Agreement, in substantially the form
attached hereto as Exhibit “B”, is hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Amendment No. 1 to City Hall Lease Agreement
with such changes, insertions and omissions as may be recommended by counsel to the
Authority or by Special Counsel and approved by the officer executing the same, said execution
being conclusive evidence of such approval.
Section 3. The Guaranty Agreement, in substantially the form attached hereto as
Exhibit “C”, is hereby approved. The Authorized Officers are hereby authorized and directed to
execute and deliver the Guaranty Agreement with such changes, insertions and omissions as may
be recommended by counsel to the Authority or by Special Counsel and approved by the officer
executing the same, said execution being conclusive evidence of such approval.
Section 4. The Commitment, in substantially the form attached hereto as Exhibit
“D”, is hereby approved. The Authorized Officers are hereby authorized and directed to execute
and deliver the Commitment with such changes, insertions and omissions as may be
recommended by counsel to the Authority or by Special Counsel and approved by the officer
executing the same, said execution being conclusive evidence of such approval.
19.e
Packet Pg. 620 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 5. The Authorized Officers and any other proper officer of the Authority,
acting singly, be and each of them hereby is authorized and directed to execute and deliver any
and all documents and instruments and to do and cause to be done any and all acts and things
necessary or proper for carrying out the transactions contemplated by Amendment No. 1 to Trust
Indenture, Amendment No. 1 to City Hall Lease Agreement, the Guaranty Agreement, the
Commitment and this Resolution. All prior actions of the Authorized Officers and other officers
or staff of the Authority with respect to this matter are hereby ratified and approved.
Section 6. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Indenture unless the context
otherwise clearly requires.
Section 7. This Resolution shall take effect immediately upon its adoption.
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19.e
Packet Pg. 621 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING TO
THE LEASE REVENUE REFUNDING BONDS (CITY HALL PROJECT) SERIES 1996,
APPROVING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN
CONNECTION THEREWITH AND CERTAIN OTHER MATTERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
City Council of the City of San Bernardino acting as the San Bernardino Joint Powers Financing
Authority at a ____________ meeting thereof, held on the _______ day of
__________________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this ________ day of ______________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By: _________________________
19.e
Packet Pg. 622 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT A TO RESOLUTION
Amendment No. 1 to Trust Indenture
19.e
Packet Pg. 623 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
AMENDMENT NO. 1 TO TRUST INDENTURE
(1996 Refunding Lease Revenue Bonds)
This AMENDMENT NO. 1 TO TRUST INDENTURE (1996 Refunding Lease Revenue
Bonds) (this “Amendment”) is made and entered into and dated as of [______], 2017 by and between
U.S. BANK NATIONAL ASSOCIATION, as trustee (the “Trustee”), and the SAN BERNARDINO
JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly organized and existing
under the laws of the State of California (the “Authority”).
RECITALS
A. The Trustee and the Authority previously entered into a Trust Indenture, dated as of
December 1, 1996 (the “Original Agreement”), pursuant to which the Authority issued $16,320,000
original aggregate principal amount of Lease Revenue Refunding Bonds (City Hall Project) Series
1996 (the “1996 Bonds”).
B. The Trustee and the Authority desire to amend the Original Agreement pursuant to
the second paragraph of Section 10.01 thereof in order to permit the substitution of a reserve surety
in lieu of cash to fund the Reserve Fund established under the Original Agreement.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Agreement unless specifically modified by this Amendment. All of the
terms and conditions set forth in the Original Agreement that are not specifically modified by this
Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Agreement.
SECTION 3. Section 1.01 of the Original Agreement is hereby amended as follows:
(a) The following definitions are hereby added in the appropriate alphabetical order:
“Additional Payments” means payments made in accordance with Section 4.6 of the City
Hall Lease Agreement.
“City Hall Lease Agreement” means that certain Lease Agreement, dated as of December 1,
1996, by and between the Authority, as lessor, and the City, as lessee, as amended by that certain
Amendment No. 1 to City Hall Lease Agreement dated as of [______], 2017.
“Late Payment Rate” means the lesser of: (A) the greater of: (i) the Prime Rate plus 3% and
(ii) the then applicable highest rate of interest on the Bonds and (B) the maximum rate permissible
under applicable usury or similar laws limiting interest rates (including limits on interest rates
applicable to obligations of the Authority). The Late Payment Rate shall be computed on the basis of
the actual number of days elapsed in a year of 360 days.
19.e
Packet Pg. 624 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
“National Financial Guaranty Agreement” means that certain Financial Guaranty Agreement
dated as of [______], 2017, by and between the Authority, as Issuer, and National Public Finance
Guarantee Corporation, as Insurer.
“Policy Costs” means draws on any Reserve Fund Credit Instrument, expenses and interest
accrued thereon at the Late Payment Rate, and any and all other amounts payable pursuant to the
terms of any Reimbursement Agreement.
“Prime Rate” means the per annum rate of interest, publicly announced from time to time by
JPMorgan Chase Bank, N.A. at its principal office in the City of New York, New York, as its prime
or base lending rate (any change in such Prime Rate to be effective on the date such changes are
announced by JPMorgan Chase Bank, N.A.). In the event that JPMorgan Chase Bank, N.A. ceases to
announce its Prime Rate publicly, the Prime Rate shall be the publicly announced prime or base
lending rate of such bank, banking association or trust company bank as each Provider in its sole and
absolute discretion shall specify.
“Provider” means National Public Finance Guarantee Corporation or any other provider of a
Reserve Fund Credit Instrument whose long term debt, or, in the case of a monoline financial
guaranty insurance company, claims paying ability, is rated, at the time such Reserve Fund Credit
Instrument is issued, “A+” or better by S&P.
“Reimbursement Agreement” means the National Financial Guaranty Agreement or any
other reimbursement agreement between a Provider and the City with respect to a Reserve Fund
Credit Instrument.
“Reserve Fund Credit Instrument” means the surety bond issued in connection with the
National Financial Guaranty Agreement or any other surety bond, municipal bond insurance policy,
unconditional irrevocable letter of credit, or any other security device, in each case issued by a
Provider in lieu of depositing cash to satisfy the Reserve Requirement.
(b) The definition of “Lease Payments” is hereby deleted and the following is substituted
therefor:
“Lease Payments” means all payments required to by paid by the City pursuant to Sections
4.4 and 4.6 of the Lease Agreement, including prepayment thereof pursuant to Article X of the Lease
Agreement.
SECTION 4. Section 5.01(b) of the Original Agreement is hereby amended to delete the
first sentence of Section 5.01(b) and substitute the following therefor: “The Authority hereby
transfers in trust and assigns to the Trustee, for the benefit of each Provider and the owners from time
to time of the Bonds, all Revenues and all of the right, title and interest of the Authority in the Lease
Agreement.”
SECTION 5. Section 5.02 of the Original Agreement is hereby amended as follows:
(a) The third sentence of Section 5.02 is hereby deleted and the following is substituted
therefor: “All moneys at any time deposited by the Trustee in the Special Fund shall be held by the
Trustee in trust for the benefit of the Owners of the Bonds, the Bond Insurer, and each Provider.”
(b) The following is hereby added after the second paragraph of Section 5.02:
19.e
Packet Pg. 625 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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At least three (3) Business Days prior to each Payment Date, immediately after the transfer of
funds from the Special Fund to the Bond Account, if any, as provided in the preceding paragraph of
this Section 5.02, all remaining funds then held in the Special Fund shall be paid and applied by the
Trustee in the following order of priority:
FIRST, to each Provider, reimbursement of all amounts drawn under its Reserve
Fund Credit Instrument;
SECOND, to each Provider, payment of any and all other amounts then due and
owing to the Provider in accordance with the applicable Reimbursement Agreement pursuant
to which its Reserve Fund Credit Instrument was issued;
THIRD, to the Reserve Fund until the aggregate amount of previously unreimbursed
cash withdrawals from the Reserve Fund, if any, have been reduced to zero.
SECTION 6. Section 5.03 of the Original Agreement is hereby amended by deleting in its
entirety the phrase “from the proceeds of the sale of the Bonds” in the third sentence of Section 5.03
and adding the following at the end of the first paragraph of Section 5.03:
“The Authority may satisfy the Reserve Requirement by the deposit
of one or more Reserve Fund Credit Instruments in an aggregate
amount at least equal to the Reserve Requirement. Provided that the
aggregate amount of available coverage under the Reserve Fund
Credit Instruments then in effect equals the Reserve Requirement,
upon issuance of a Reserve Fund Credit Instrument, the Trustee shall
release to the City cash held in the Reserve Fund equal to the amount
of available coverage under such Reserve Fund Credit Instrument.”
SECTION 7. Section 5.04 of the Original Agreement is hereby amended by adding the
following after the first paragraph of Section 5.04:
“If, three (3) Business Days before any Payment Date when a Reserve
Fund Credit Instrument is held in the Reserve Fund, the moneys
available in the Bond Account do not equal the principal, interest and
redemption premium (if any) with respect to the Bonds then coming
due and payable and there is not sufficient cash available in the
Special Fund to pay any shortfall in the amount of such debt service
on such date, the Trustee shall draw upon each Reserve Fund Credit
Instrument in accordance with the provisions thereof and this Section.
Whether or not Lease Payments are in abatement, each Provider of
each Reserve Fund Credit Instrument will pay each portion of the
payments required hereby that is due for payment and unpaid by
reason of nonpayment or abatement by the Authority to the Trustee
on the later to occur of: (i) the date that such scheduled principal or
interest becomes due for payment and (ii) the Business Day next
following the day on which the Provider receives a demand for
payment therefor in accordance with the terms of its Reserve Fund
Credit Instrument.
19.e
Packet Pg. 626 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4
As long as a Reserve Fund Credit Instrument is in full force and effect
and the applicable Provider has not defaulted on its obligations
thereunder, the Authority and the Trustee agree to comply with the
following provisions:
The Authority shall repay any Policy Costs solely from Additional
Payments. Interest shall accrue and be payable on such draws and
expenses from the date of payment by the Provider at the Late
Payment Rate.
The Policy Costs shall be payable on the first Payment Date following
each draw on the Reserve Fund Credit Instrument or the incurrence of
any Policy Cost, provided, however, that all outstanding Policy Costs
shall be immediately due and payable by the City to the Provider
upon the earlier of the redemption of the Bonds in full and the
maturity (whether at the scheduled maturity thereof, by acceleration
or otherwise) of the Bonds. In order to secure the Authority’s
payment obligations with respect to the Policy Costs, the Authority
hereby grants a security interest in favor of each Provider
(subordinate only to that of the Owners of the Bonds) in all Revenues
and collateral pledged as security for the Bonds. The Authority
hereby agrees to file all appropriate financing statements or
documents necessary in the appropriate jurisdictions under applicable
law to perfect such interest, provided, however, that the Authority
hereby authorizes each Provider to file or record financing statements
and other filing or recording documents or instruments with respect to
such interest with or without the signature of the Authority, in such
form and in such offices as are necessary to perfect the security
interest of the Provider under this Trust Indenture.
All cash and investments in the Reserve Fund established for the
Bonds shall be transferred to the Bond Account of the Special Fund
for payment of the debt service on the Bonds before any drawing may
be made on any Reserve Fund Credit Instrument in lieu of cash.
Payment of any Policy Cost shall be made prior to replenishment of
any cash amounts. Draws on all Reserve Fund Credit Instruments on
which there is available coverage shall be made on a pro rata basis
(calculated by reference to the coverage then available thereunder)
after applying all available cash and investments in the Reserve Fund.
Payment of Policy Costs and reimbursement of amounts with respect
to the Reserve Fund Credit Instruments shall be made on a pro rata
basis prior to replenishment of any cash drawn from the Reserve
Fund. For the avoidance of doubt, “available coverage” means the
coverage then available for disbursement pursuant to the terms of the
applicable Reserve Fund Credit Instrument without regard to the legal
or financial ability or willingness of the Provider of such instrument
to honor a claim or draw thereon or the failure of such provider to
honor any such claim or draw. Amounts in respect of Policy Costs
paid to any Provider shall be credited first to interest due, then to the
19.e
Packet Pg. 627 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
5
expenses due and then to principal due. As and to the extent that
payments are made to a Provider on account of principal due, the
coverage under the Reserve Fund Credit Instrument issued by such
provider will be increased by a like amount, subject to the terms of
such Reserve Fund Credit Instrument.
The Trustee shall ascertain the necessity for a claim upon any Reserve
Fund Credit Instrument in accordance with the provisions of this
Section and provide notice to the Provider at least three (3) Business
Days prior to each date upon which interest, principal, or any
redemption premium is due on the Bonds.
The prior written consent of the applicable Provider shall be a
condition precedent to the deposit of any Reserve Fund Credit
Instrument provided in lieu of a cash deposit into the Reserve Fund.
Amounts on deposit in the Reserve Fund shall be applied solely to the
payment of debt service due on the Bonds.
The Authority is not obligated: (i) to make any additional deposits
into the Reserve Fund in the event that a Provider defaults on its
obligation to make payments under its Reserve Fund Credit
Instrument; or (ii) to replace a Reserve Fund Credit Instrument in the
event of a rating downgrade of its Provider.
Cash on deposit in the Reserve Fund shall be used (or investments
purchased with such cash shall be liquidated and the proceeds applied
as required) prior to any drawing on any Reserve Fund Credit
Instrument.
Each Reserve Fund Credit Instrument shall expire on the earlier of the
date the Bonds are no longer Outstanding and the final maturity date
of the Bonds.”
SECTION 8. Section 6.03 of the Original Agreement is hereby deleted and the following is
substituted therefor:
“All amounts received by the Trustee pursuant to any right given or
action taken by the Trustee under the provisions of this Indenture
shall be applied by the Trustee in the following order upon
presentation of the several Bonds, and the stamping thereon of the
amount of the payment if only partially paid, or upon the surrender
thereof if fully paid.
First, to the payment of the fees, costs and expenses of the
Trustee in declaring such Event of Default and in carrying out the
provisions of this Article VI, including reasonable compensation to its
agents, attorneys and counsel;
19.e
Packet Pg. 628 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
6
Second, to the payment of the principal and interest on the
Bonds then due and unpaid, to the extent permitted by law, provided,
however, that in the event such amounts shall be insufficient to pay in
full the principal and interest on the Bonds, then such amounts shall
be applied in the following order of priority:
(a) first, to the payment in full of the principal due
on the Outstanding Bonds; and
(b) second, to the payment of interest on the
Bonds;
Third, to each Provider, reimbursement of all amounts drawn
under its Reserve Fund Credit Instrument; and
Fourth, to each Provider, payment of any and all other
amounts then due and owing to the Provider in accordance with the
terms of any applicable Reimbursement Agreement.”
SECTION 9. Section 11.01 of the Original Agreement is hereby amended to delete the first
paragraph of Section 11.01 and to add the following in lieu thereof:
“The Authority covenants and agrees with the Owners of the Bonds, the Bond Insurer
and each Provider that it will perform all obligations and duties imposed under the Site and
Facility Lease and the Lease Agreement and that it will continue to pay, and the Trustee
hereby covenants that it will continue to collect, all Lease Payments, including without
limitation all Additional Payments and Policy Costs, under the Lease Agreement until the
latest of the date that (i) the Outstanding Bonds have been paid and discharged in accordance
with the terms hereof and all other amounts due and owing hereunder have been paid as
provided herein, (ii) each Reserve Fund Credit Instrument shall have been terminated in
accordance with its terms and tendered by the Trustee to its Provider for cancellation without
being presented for draw and all Policy Costs due and owing have been paid to each Provider
in full, and (iii) the Policy of Bond Insurance shall have been terminated in accordance with
its terms and tendered by the Trustee to the Bond Insurer for cancellation without being
presented for draw and all amounts due and owing to the Bond Insurer have been paid in
full.”
SECTION 10. Section 13.01 of the Original Agreement is hereby amended to add the
following to the end of Section 13.01:
“Notwithstanding anything to the contrary contained herein, neither the Bonds nor
this Trust Indenture shall be subject to defeasance, nor shall any obligations of the Authority
or the Trustee hereunder or thereunder terminate unless and until (i) each Reserve Fund
Credit Instrument shall have been terminated in accordance with its terms and tendered by
the Trustee to its Provider for cancellation without being presented for draw and all Policy
Costs due and owing have been paid to the Provider in full and (ii) the Policy of Bond
Insurance shall have been terminated in accordance with its terms and tendered by the
Trustee to the Bond Insurer for cancellation without being presented for draw and all
amounts due and owing to the Bond Insurer have been paid in full.”
19.e
Packet Pg. 629 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
7
SECTION 11. The Original Agreement is hereby amended to add the following as new
Section 13.16:
“Section 13.16 Additional Restrictions. Notwithstanding anything to the contrary
contained herein, (i) no Additional Bonds shall be issued without the prior written consent of
each Provider and the Bond Insurer, which consent may be withheld in their sole and
absolute discretion, and (ii) neither this Trust Indenture nor the Lease Agreement may be
amended without the prior written consent of each Provider and the Bond Insurer, which
consent may be withheld in their sole and absolute discretion.”
SECTION 12. As an inducement to the Trustee and the Bond Insurer consenting to this
Amendment, the Authority hereby makes the following representations:
(a) Other than as set forth on Schedule “1” hereto (collectively, the “Defaults”), no
defaults that are required to be cured pursuant to section 365(b)(1)(A) of title 11 of
the United States Code (the “Bankruptcy Code”) exist under any of the Original
Agreement, the City Hall Lease Agreement, or that certain Continuing Disclosure
Agreement between the City and the Trustee, dated as of December 18, 1996 (the
“Continuing Disclosure Agreement”) (collectively, the “1996 Refunding Lease
Revenue Bonds Agreements”).
(b) Other than as set forth on Schedule “1” hereto, as of the date hereof, the City has
given, or caused to be given, notice of all Listed Events (as defined in the Continuing
Disclosure Agreement) in accordance with the terms of the Continuing Disclosure
Agreement and Rule 15c2-12 as adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
(c) Neither the City nor the Authority is a party to any agreement that modifies or
purports to modify any of the 1996 Refunding Lease Revenue Bonds Agreements,
except as Amendment No. 1 to City Hall Lease Agreement dated as of [______],
2017 modifies the City Hall Lease Agreement.
(d) Each of the 1996 Refunding Lease Revenue Bonds Agreements is in full force and
effect.
(e) The Authority has duly authorized its execution, delivery and performance of this
Amendment and the City Hall Lease Amendment, and this Amendment and the City
Hall Lease Amendment, constitute legal, valid and binding obligations of the
Authority enforceable in accordance with their terms.
SECTION 13. This Amendment shall become effective upon the satisfaction of the
following conditions precedent:
(a) The City has cured, or provided adequate assurance that it will promptly cure, the
Defaults.
(b) The City shall have caused to be delivered to the Trustee, the City and the Bond
Insurer a written opinion from nationally-recognized bond counsel in the form
annexed as Exhibit “A” hereto;
19.e
Packet Pg. 630 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
8
(c) The City has obtained a written opinion from nationally-recognized bond counsel that
the National Financial Guaranty Agreement is a legal, valid and binding obligation of
the City, has been duly authorized and executed, and is enforceable against the City
in accordance with its terms.
(d) The United States Bankruptcy Court for the Central District of California, Riverside
Division, or such other court that lawfully exercises jurisdiction (the “Bankruptcy
Court”) over the case commenced by the City under chapter 9 of the Bankruptcy
Code and styled In re City of San Bernardino, California, Case No. 6:12-28006-MJ,
has issued a final and non-appealable order, in form and substance satisfactory to the
Bond Insurer, approving a Plan of Adjustment of Debts of City of San Bernardino,
California (May 29, 2015) (as such Plan of Adjustment may be amended from time to
time with the consent of the Bond Insurer, the “Plan of Adjustment”).
(e) The City provides a written certification from a City Representative that, as of the
date on which the Amendment becomes effective, each of the representations set
forth in SECTION 12 is true and correct as to the City and that all conditions set forth
in this SECTION 13 have been satisfied.
(f) The City and the Authority have executed and delivered that certain Amendment No.
1 to City Hall Lease Agreement, in the form annexed as Exhibit “B” hereto.
(g) The “Effective Date” under the Plan of Adjustment has occurred.
(h) All conditions precedent described in SECTION 9 of that certain Amendment No. 1
to Trust Agreement (1999 Refunding Certificates of Participation), dated as of
[________], 2017, have been satisfied or waived in accordance with such section.
SECTION 14. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 15. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument.
[This space intentionally left blank; signature page immediately follows.]
19.e
Packet Pg. 631 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’96 Trust Indenture Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Trust
Indenture (1996 Refunding Lease Revenue Bonds) to be duly executed as of the day and year first
written above.
U.S. BANK NATIONAL ASSOCIATION
By:
Authorized Officer
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
19.e
Packet Pg. 632 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Schedule “1”
DEFAULTS
1. Tax liens exist on the leased property as set forth on the following pages.
19.e
Packet Pg. 633 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
1BONDOBLIGATIONDOCUMENTEVIDENCINGREALPROPERTYSECURITYLEASEDPROPERTYDESCRIPTIONAPNNO.TAXAMOUNTDUE(asof3/31/16)RefundingCertificatesofParticipation(PoliceStation,SouthValleand201NorthEStreet)("1999RefundingCertificates")CityobligatedtomakepaymentsunderleasebetweentheCityandtheJPFAforpropertyidentifiedasthePoliceStationSite.NoneThePoliceStationSitelocatedat710N.“D”Street.LegaldescriptionofasingleparcelsetforthinExhibitAtoleasebetweenCityandJPFAidentifiedasParcel1ofParcelMapNo.14725.ThiscorrespondstoAPN0140Ͳ281Ͳ52pertheCountyAssessorrecords.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRedevelopmentAgency(“RDA”)totheEconomicDevelopmentCorp.(“EDC”)inMarch2011andthensubsequentlytransferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$710,939.33.0140Ͳ281Ͳ52$710,939.3319.e
Packet Pg. 634 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
21999RefundingCertificatesCityobligatedtomakepaymentsunderleasebetweentheCityandtheJPFAforpropertydescribedasthe201N.“E”StreetSite(legallydescribedinExhibitAasParcel1Aand1BtotheleasewhichwasrecordedasDoc.No.19990408375).DeedofTrustencumbering201N.“E”StreetsiterecordedasDoc.No.19990408316LegaldescriptionoftwoparcelssetforthinExhibitA.Parcel1AislegallydescribedasParcel27ofParcelMap688.ThiscorrespondstoAPN0134Ͳ321Ͳ24pertheCountyAssessorrecords.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRDAtotheEDCinMarch2011andthensubsequentlytransferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$296,271.04.Parcel1Bisaneasementforingressandegress.0134Ͳ321Ͳ24$296,271.041999RefundingCertificatesCityobligatedtomakepaymentsdueundertheleasebetweentheCityandtheJPFAforpropertyNoneThelegaldescriptionappearstoconsistofcertainrightsͲofͲwayintheareaofHuntsLane,RedlandsBoulevard,“E”NoneknownNoneknown19.e
Packet Pg. 635 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
3describedastheSouthValleimprovements(legallydescribedinExhibitAasconsistingoffourseparateparcelswhichwasrecordedasDoc.No.19990408318).Street,WatermanAvenueandCarolineStreetbasedonthelegaldescriptionsintheSouthVallelease.SanBernardinoJointPowersFinancingAuthorityLeaseRevenueBonds(CityHallProject)Series1996)Cityobligatedtomakepaymentsfor“Project”asdefinedinIndenture.IndenturedefinesProjectas“CityHallandtheParkingStructuredescribedcollectivelyinExhibit“A”totheLeaseAgreement.”Theterm“LeaseAgreement”meansthe“LeasePurchaseAgreementdatedDecember1,1996”betweentheAuthorityandtheCity.ThisNoneParcelsdescribedinExhibitsAtoLeaseAgreementcontainlegaldescriptionsofParcelsA,B,BͲ1,C,DandParkingStructure.ParcelsA,BandBͲ1referenceportionsof“Parcels24and25ofParcelMap688inCityofSanBernardino….”TheseparcelsweresubsequentlysplitandthelegaldescriptionofthepropertynowappearstocorrespondwiththefollowingparcelsshownonAssessorParcelMapNo.0134pages25and31:(a)0134Ͳ251Ͳ58(identifiedasPlazaEast);(b)ParcelAandBͲ1ThatportionofthislegaldescriptionnowidentifiedasPlazaEast,APN0134Ͳ251Ͳ58,hasoutstandingtaxesdueof$46,654.93.NoknowntaxesduefortheremainderofthelegallydescribedpropertywhichappearstobethelandunderCityHall(APN0134Ͳ251Ͳ51).19.e
Packet Pg. 636 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
4LeaseAgreementwasrecordedasDoc.No.19970104310.0134Ͳ251Ͳ51(whichappearstobethegroundundertheCityHallbuilding);and(c)0134Ͳ251Ͳ61(theCityHallbuildingitself).ParcelsCandDareeasementsforthebenefitsofParcelsA,BandBͲ1.TheParkingStructureislegallydescribedasParcel28ofParcelMapNo.688.PertheCountyAssessor’srecords,thisparcelcorrespondstoAPN.0134Ͳ311Ͳ50.TheAssessor’srecordsreflectthatthisparcelwastransferredfromtheRDAtotheEDCinMarch2011andthensubsequentlyParcelBNoneforCityHallbuilding(APN0134Ͳ251Ͳ61).ParcelsCandDNoneknownfortheseeasements.ParkingStructureLegaldescriptioncorrespondstoAPN0134Ͳ311Ͳ50forwhichtaxesaredueof$317,435.69.19.e
Packet Pg. 637 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
5transferredtotheSuccessorAgencyinNovember2014.ThetaxesdueforthisAPNare$317,435.69.19.e
Packet Pg. 638 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
This Page Is Left Intentionally Blank
EXHIBIT A
Opinion of Bond Counsel
19.e
Packet Pg. 639 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
STRADLING YOCCA CARLSON & RAUTH, P.C.
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CA 92660-6422
SYCR.COM
CALIFORNIA
NEWPORT BEACH
SACRAMENTO
SAN DIEGO
SAN FRANCISCO
SANTA BARBARA
SANTA MONICA
COLORADO
DENVER
NEVADA
RENO
WASHINGTON
SEATTLE
DOCSOC/1727133v9/200430-0003
_____ __, 2017
City of San Bernardino
San Bernardino, California
San Bernardino Joint Powers Financing Authority
San Bernardino, California
U.S. Bank National Association
Los Angeles, California
National Public Finance Guarantee Corporation
Purchase, New York
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of San Bernardino (the “City”) and the San
Bernardino Joint Powers Financing Authority (the “Authority”) in connection with the execution of:
(1) Amendment No. 1 to Lease Agreement, dated as of ______, 2017 (the “Lease Amendment”), by
and between the City and the Authority; (2) Amendment No. 1 to Trust Indenture, dated as of _____,
2017 (the “Trust Indenture Amendment” and, together with the Lease Amendment, the
“Amendments”), by and between the Authority and U.S. Bank National Association, as trustee (the
“Trustee”); and (3) the Financial Guaranty Agreement, dated as of _____ __, 2017 (the “Guaranty”),
by and between the Authority and National Public Finance Guarantee Corporation (“NPFG”), each
relating to the $16,320,000 original aggregate principal amount of San Bernardino Joint Powers
Financing Authority Lease Revenue Refunding Bonds (City Hall Project) Series 1996 (the “Bonds”).
The execution of the Amendments was authorized pursuant to Resolution No. ___ of the City and
Resolution No. ___ of the Authority, each adopted on ____ __, 2017. All capitalized terms not
defined herein shall have the meanings ascribed to such terms in the Trust Indenture Amendment.
In rendering our opinion, we have examined the applicable law and originals or certified
copies of: (i) the Amendments; (ii) the Lease Agreement, dated as of December 1, 1996 (the
“Original Lease”), by and between the City and the Authority; (iii) the Trust Indenture, dated as of
December 1, 1996 (the “Original Trust Indenture” and, together with the Original Lease, the
“Original Agreements”), by and between the Authority and the Trustee; (iv) the resolutions of the
City and the Authority approving the Amendments and the Guaranty; (v) the Guaranty; and (vi) such
other information and documents as we have deemed necessary to render the opinions set forth
herein.
19.e
Packet Pg. 640 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
_____ __, 2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Two
DOCSOC/1727133v9/200430-0003
Based upon and in reliance on the foregoing, we are of the opinion that:
(a) The Amendments have been duly authorized, executed and delivered by the City and
the Authority in accordance with the amendment provisions of the Original Agreements and
constitute amendments that cure, correct and supplement ambiguous provisions in the Original
Agreements, and which do not materially adversely affect the interests of the Owners of the Bonds.
(b) The Guaranty has been duly authorized, executed and delivered by the Authority.
(c) Assuming due authorization, execution and delivery of the Trust Indenture
Amendment by the Trustee, the Amendments constitute the legal, valid and binding obligations of
the City and the Authority enforceable against the City and the Authority in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in
appropriate cases and by the limitations on remedies against public agencies in the State of
California. In addition, neither the execution and delivery of the Amendments nor any of the
transactions contemplated thereby will adversely affect the enforceability of the Original Agreements
against the City and the Authority, as applicable.
(d) Assuming due authorization execution and delivery of the Guaranty by NPFG, the
Guaranty constitutes the legal, valid and binding obligation of the Authority enforceable against the
Authority in accordance with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting
generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial
discretion in appropriate cases and by the limitations on remedies against public agencies in the State
of California.
(e) Neither the execution and delivery of the Amendments nor any of the transactions
contemplated thereby will adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds. In order for interest on the Bonds to be excluded from gross
income for federal income tax purposes subsequent to their date of issuance, it is necessary that
certain provisions of the Internal Revenue Code of 1986, as amended, be complied with on a
continuous basis. We have made no independent investigation as to whether there has been such
compliance in the present case. Accordingly, we express no opinion as to whether interest on the
Bonds is presently excluded from gross income for federal income tax purposes or is exempt from
State of California personal income taxation as of the date of this opinion. This opinion letter does
not constitute a reaffirmation of any opinions previously delivered by this firm or any other with
respect to the Bonds, the Original Agreements or any amendments thereto.
19.e
Packet Pg. 641 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
_____ __, 2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Three
DOCSOC/1727133v9/200430-0003
The opinions expressed herein are based upon our analysis and interpretation of existing
laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters not
directly addressed by such authorities. We call attention to the fact that such opinions may be
affected by actions taken or events occurring after the date hereof. We have not undertaken to
determine, or to inform any person, whether such actions or events are taken or occur. We expressly
disclaim any obligation to update this opinion letter. No attorney-client relationship exists between
us and you with respect to the Bonds or the Amendments.
Our opinion is limited to matters governed by the laws of the State of California and federal
law. We assume no responsibility with respect to the applicability or the effect of the laws of any
other jurisdiction.
We have not been engaged, nor have we undertaken, to advise any party or to opine as to any
matters not specifically covered herein, including, but not limited to, matters relating to compliance
with any securities laws.
This opinion letter may be relied upon only by you and may not be circulated, quoted from or
relied upon by any other party without our prior written consent.
Respectfully submitted,
19.e
Packet Pg. 642 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT B
Amendment No. 1 to City Hall Lease Agreement
19.e
Packet Pg. 643 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
1
AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT
This AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT (this “Amendment”) is
made and entered into as of [______], 2017 by and between the SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, a public body corporate and politic existing under the laws
of the State of California (the “Authority”), as lessor, and the CITY OF SAN BERNARDINO, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the “City”), as lessee.
RECITALS
A. The Authority and the City previously entered into a Lease Agreement, dated as of
December 1, 1996 (the “Original City Hall Lease Agreement”), pursuant to which the Authority
leased certain property to the City in exchange for the payment of Lease Payments by the City.
B. The Lease Payments have been assigned by the Authority to U.S. BANK
NATIONAL ASSOCIATION, as trustee (the “Trustee”) under a Trust Indenture, dated as of
December 1, 1996 (as amended, the “Trust Indenture”), by and between the Authority and the
Trustee. The Trustee applies the Lease Payments to repay the $16,320,000 original aggregate
principal amount of Lease Revenue Refunding Bonds (City Hall Project) Series 1996 issued by the
Authority.
C. The Authority and the Trustee desire to amend the Trust Indenture to permit the
Authority to deposit a reserve surety in the Reserve Fund established under the Indenture.
D. The City has agreed to repay the provider of any reserve surety deposited in the
Reserve Fund for draws upon such reserve surety and to pay expenses and accrued interest thereon.
E. The City and the Authority desire to amend the Original City Hall Lease Agreement
pursuant to Section 11.11 thereof in order to reflect the City’s agreement set forth in Recital D.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original City Hall Lease Agreement unless specifically modified by this Amendment.
All of the terms and conditions set forth in the Original City Hall Lease Agreement that are not
specifically modified by this Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Trust Indenture, or, if not defined therein, the Original
City Hall Lease Agreement.
SECTION 3. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 2.1(f):
“Condemnation. The City hereby covenants and agrees that as long
as any of the Bonds remain Outstanding, the City will not exercise
any power of condemnation with respect to the Project or any portion
thereof. The City further covenants and agrees that if for any reason
the foregoing covenant is determined to be legally unenforceable, or
19.e
Packet Pg. 644 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
2
if the City fails to abide by such covenant and condemns the Project
or any portion thereof, then for the purpose of determining fair
compensation for such taking, the fair market value of the Project
shall be assumed to be not be less than (i) if the Bonds are then
subject to optional redemption, the aggregate principal of, premium if
any, and interest on the Bonds through the earliest practicable date for
optional redemption for which notice can be given in accordance with
the terms of the Trust Indenture after the payment of compensation by
the City to the Trustee for such taking, or (ii) if the Bonds are not then
subject to optional redemption, the amount necessary to fully defease
the Bonds in accordance with the terms of Section 13.01 of the Trust
Indenture.”
SECTION 4. The phrase “Exhibit “D” hereto” at the end of the first sentence of Section
4.4(a) of the Original City Hall Lease Agreement is hereby deleted and the following is substituted
therefor: “Section 1.01 of the Trust Indenture.”
SECTION 5. The following is hereby added to the end of Section 4.4(d) of the Original
City Hall Lease Agreement:
“Any Additional Payments required to be paid by the City pursuant to
Section 4.6 of the Lease Agreement shall constitute fair rental value
for the Project.”
SECTION 6. The following is hereby added after the first paragraph of Section 4.6 of the
Original City Hall Lease Agreement:
“The City shall pay when due all amounts due to any Provider under
any Reimbursement Agreement, or otherwise payable by the City to
the Provider, and the interest due thereon pursuant to Section 4.4(c)
hereof, and all such amounts shall constitute Additional Payments
under this Lease Agreement. Further, the City shall pay to any
Provider when due all Policy Costs. All Additional Payments
described in this section are subject to abatement to the same extent
Lease Payments are abated pursuant to and in accordance with
Section 6.3.”
SECTION 7. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.12:
“No Merger of Estates. So long as any Bonds remain Outstanding
under the Trust Indenture, the fee and leasehold estates to City Hall
shall not merge, but shall always be kept separate and distinct
notwithstanding the union of such estates in the Agency, the City, the
Authority, or any third party by purchase or otherwise.”
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SECTION 8. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.13:
“Waiver by City. The City shall waive the benefits of Sections 1932(2) and 1933(4)
of the California Civil Code and any and all other rights to terminate this Lease
Agreement by virtue of damage or destruction to the Project; provided that the
foregoing shall not affect the provisions hereof relating to the abatement of Lease
Payments and Additional Payments in accordance herewith, including but not limited
to Sections 6.3 and 4.6.”
SECTION 9. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 10. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Indenture (1996 Refunding Lease Revenue Bonds),
dated as of [__________], 2017, have been satisfied.
SECTION 11. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, and all of which shall constitute but one of the same instrument.
[This space intentionally left blank; signature page immediately follows.]
19.e
Packet Pg. 646 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’96 Lease Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to City Hall
Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
City Manager
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EXHIBIT B TO RESOLUTION
Amendment No. 1 to City Hall Lease Agreement
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Packet Pg. 648 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT
This AMENDMENT NO. 1 TO CITY HALL LEASE AGREEMENT (this “Amendment”) is
made and entered into as of [______], 2017 by and between the SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, a public body corporate and politic existing under the laws
of the State of California (the “Authority”), as lessor, and the CITY OF SAN BERNARDINO, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the “City”), as lessee.
RECITALS
A. The Authority and the City previously entered into a Lease Agreement, dated as of
December 1, 1996 (the “Original City Hall Lease Agreement”), pursuant to which the Authority
leased certain property to the City in exchange for the payment of Lease Payments by the City.
B. The Lease Payments have been assigned by the Authority to U.S. BANK
NATIONAL ASSOCIATION, as trustee (the “Trustee”) under a Trust Indenture, dated as of
December 1, 1996 (as amended, the “Trust Indenture”), by and between the Authority and the
Trustee. The Trustee applies the Lease Payments to repay the $16,320,000 original aggregate
principal amount of Lease Revenue Refunding Bonds (City Hall Project) Series 1996 issued by the
Authority.
C. The Authority and the Trustee desire to amend the Trust Indenture to permit the
Authority to deposit a reserve surety in the Reserve Fund established under the Indenture.
D. The City has agreed to repay the provider of any reserve surety deposited in the
Reserve Fund for draws upon such reserve surety and to pay expenses and accrued interest thereon.
E. The City and the Authority desire to amend the Original City Hall Lease Agreement
pursuant to Section 11.11 thereof in order to reflect the City’s agreement set forth in Recital D.
AGREEMENT
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original City Hall Lease Agreement unless specifically modified by this Amendment.
All of the terms and conditions set forth in the Original City Hall Lease Agreement that are not
specifically modified by this Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Trust Indenture, or, if not defined therein, the Original
City Hall Lease Agreement.
SECTION 3. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 2.1(f):
“Condemnation. The City hereby covenants and agrees that as long
as any of the Bonds remain Outstanding, the City will not exercise
any power of condemnation with respect to the Project or any portion
thereof. The City further covenants and agrees that if for any reason
the foregoing covenant is determined to be legally unenforceable, or
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if the City fails to abide by such covenant and condemns the Project
or any portion thereof, then for the purpose of determining fair
compensation for such taking, the fair market value of the Project
shall be assumed to be not be less than (i) if the Bonds are then
subject to optional redemption, the aggregate principal of, premium if
any, and interest on the Bonds through the earliest practicable date for
optional redemption for which notice can be given in accordance with
the terms of the Trust Indenture after the payment of compensation by
the City to the Trustee for such taking, or (ii) if the Bonds are not then
subject to optional redemption, the amount necessary to fully defease
the Bonds in accordance with the terms of Section 13.01 of the Trust
Indenture.”
SECTION 4. The phrase “Exhibit “D” hereto” at the end of the first sentence of Section
4.4(a) of the Original City Hall Lease Agreement is hereby deleted and the following is substituted
therefor: “Section 1.01 of the Trust Indenture.”
SECTION 5. The following is hereby added to the end of Section 4.4(d) of the Original
City Hall Lease Agreement:
“Any Additional Payments required to be paid by the City pursuant to
Section 4.6 of the Lease Agreement shall constitute fair rental value
for the Project.”
SECTION 6. The following is hereby added after the first paragraph of Section 4.6 of the
Original City Hall Lease Agreement:
“The City shall pay when due all amounts due to any Provider under
any Reimbursement Agreement, or otherwise payable by the City to
the Provider, and the interest due thereon pursuant to Section 4.4(c)
hereof, and all such amounts shall constitute Additional Payments
under this Lease Agreement. Further, the City shall pay to any
Provider when due all Policy Costs. All Additional Payments
described in this section are subject to abatement to the same extent
Lease Payments are abated pursuant to and in accordance with
Section 6.3.”
SECTION 7. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.12:
“No Merger of Estates. So long as any Bonds remain Outstanding
under the Trust Indenture, the fee and leasehold estates to City Hall
shall not merge, but shall always be kept separate and distinct
notwithstanding the union of such estates in the Agency, the City, the
Authority, or any third party by purchase or otherwise.”
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SECTION 8. The Original City Hall Lease Agreement is hereby amended to add the
following as new Section 11.13:
“Waiver by City. The City shall waive the benefits of Sections 1932(2) and 1933(4)
of the California Civil Code and any and all other rights to terminate this Lease
Agreement by virtue of damage or destruction to the Project; provided that the
foregoing shall not affect the provisions hereof relating to the abatement of Lease
Payments and Additional Payments in accordance herewith, including but not limited
to Sections 6.3 and 4.6.”
SECTION 9. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 10. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Indenture (1996 Refunding Lease Revenue Bonds),
dated as of [__________], 2017, have been satisfied.
SECTION 11. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, and all of which shall constitute but one of the same instrument.
[This space intentionally left blank; signature page immediately follows.]
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Packet Pg. 651 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
S-1
[Signature Page to ’96 Lease Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to City Hall
Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
CITY OF SAN BERNARDINO
By:
City Manager
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EXHIBIT C TO RESOLUTION
Guaranty Agreement
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FINANCIAL GUARANTY AGREEMENT
FINANCIAL GUARANTY AGREEMENT made as of [__________], 2016 by and
between San Bernardino Joint Powers Financing Authority (the “Issuer”) and National Public
Finance Guarantee Corporation (the “Insurer”), organized under the laws of the state of New
York.
WITNESSETH:
WHEREAS, the Issuer has issued the Obligations; and
WHEREAS, pursuant to the terms of the Document the Issuer agrees to make certain
payments on the Obligations; and
WHEREAS, the Insurer will issue its Surety Bond, substantially in the form set forth in
Annex A to this Agreement, guaranteeing certain payments by the Issuer subject to the terms and
limitations of the Surety Bond; and
WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has agreed to pay
the premium for the Surety Bond and to reimburse the Insurer for all payments made by the
Insurer under the Surety Bond, all as more fully set forth in this Agreement; and
WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this
Agreement as part of the consideration for the execution by the Insurer of the Surety Bond; and
NOW, THEREFORE, in consideration of the premises and of the agreements herein
contained and of the execution of the Surety Bond, the Issuer and the Insurer agree as follows:
ARTICLE I
DEFINITIONS; SURETY BOND
Section 1.01. Definitions. The terms which are capitalized herein shall have the
meanings specified in Annex B hereto.
Section 1.02. Surety Bond.
(a) The Insurer will issue the Surety Bond in accordance with and subject to the terms
and conditions of the Commitment.
(b) The maximum liability of the Insurer under the Surety Bond and the coverage and
term thereof shall be subject to and limited by the terms and conditions of the Surety Bond.
Section 1.03. Premium. In consideration of the Insurer agreeing to issue the Surety
Bond hereunder, the Issuer hereby agrees to pay or cause to be paid the Premium set forth in
Annex B hereto. The Premium on the Surety Bond is not refundable for any reason.
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Section 1.04. Certain Other Expenses. The Issuer will pay all reasonable fees and
disbursements (not to exceed $10,000) of the Insurer’s special counsel related to any
modification of this Agreement or the Surety Bond.
ARTICLE II
REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS OF
ISSUER AND SECURITY THEREFOR
Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses;
Indemnification.
(a) The Issuer will reimburse the Insurer, within the Reimbursement Period, without
demand or notice by the Insurer to the Issuer or any other person, to the extent of each Surety
Bond Payment with interest on each Surety Bond Payment from and including the date made to
the date of the reimbursement at the lesser of the Reimbursement Rate or the maximum rate of
interest permitted by then applicable law.
(b) The Issuer also agrees to reimburse the Insurer immediately and unconditionally
upon demand, to the extent permitted by state law, for all reasonable expenses incurred by the
Insurer in connection with the Surety Bond and the enforcement by the Insurer of the Issuer’s
obligations under this Agreement, the Document, and any other document executed in
connection with the issuance of the Obligations, together with interest on all such expenses from
and including the date incurred to the date of payment at the rate set forth in subsection (a) of
this Section 2.01.
(c) The Issuer agrees to indemnify the Insurer, to the extent permitted by state law,
against any and all liability, claims, loss, costs, damages, fees of attorneys and other expenses
which the Insurer may sustain or incur by reason of or in consequence of (i) the failure of the
Issuer to perform or comply with the covenants or conditions of this Agreement or (ii) reliance
by the Insurer upon representations made by the Issuer or (iii) a default by the Issuer under the
terms of the Document or any other documents executed in connection with the issuance of the
Obligations.
(d) The Issuer agrees that all amounts owing to the Insurer pursuant to Section 1.03
hereof and this Section 2.01 must be paid in full prior to any optional redemption or refunding of
the Obligations.
(e) All payments made to the Insurer under this Agreement shall be paid in lawful
currency of the United States in immediately available funds at the Insurer’s office at 1
Manhattanville Road, Suite 301, Purchase, New York 10577, Attention: Accounting and Insured
Portfolio Management Departments, or at such other place as shall be designated by the Insurer.
Section 2.02. Allocation of Payments. The Insurer and the Issuer hereby agree that each
payment received by the Insurer from or on behalf of the Issuer as a reimbursement to the Insurer
as required by Section 2.01 hereof shall be applied by the Insurer first, toward payment of any
unpaid premium; second, toward repayment of the aggregate Surety Bond Payments made by the
Insurer and not yet repaid, payment of which will reinstate all or a portion of the Surety Bond
Coverage to the extent of such repayment (but not to exceed the Surety Bond Limit); and third,
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upon full reinstatement of the Surety Bond Coverage to the Surety Bond Limit, toward other
amounts, including, without limitation, any interest payable with respect to any Surety Bond
Payments then due to the Insurer.
Section 2.03. Security for Payments; Instruments of Further Assurance. To the extent,
but only to the extent, that the Document, or any related indenture, trust agreement, ordinance,
resolution, mortgage, security agreement or similar instrument, if any, pledges to the Owners or
any trustee therefor, or grants a security interest or lien in or on any collateral, property, revenue
or other payments (“Collateral and Revenues”) in order to secure the Obligations or provide a
source of payment for the Obligations, the Issuer hereby grants to the Insurer a security interest
in or lien on, as the case may be, and pledges to the Insurer all such Collateral and Revenues as
security for payment of all amounts due hereunder and under the Document or any other
document executed in connection with the issuance of the Obligations, which security interest,
lien and/or pledge created or granted under this Section 2.03 shall be subordinate only to the
interests of the Owners and any trustee therefor in such Collateral and Revenues, except as
otherwise provided. The Issuer agrees that it will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any and all financing statements,
if applicable, and all other further instruments as may be required by law or as shall reasonably
be requested by the Insurer for the perfection of the security interest, if any, granted under this
Section 2.03 and for the preservation and protection of all rights of the Insurer under this
Section 2.03.
Section 2.04. Unconditional Obligation. Subject to the provisions of Section 6.3 of the
Lease Agreement governing the abatement of Lease Payments under certain circumstances, the
obligations hereunder are absolute and unconditional and will be paid or performed strictly in
accordance with this Agreement, subject to Section 6.3 of the Lease Agreement, irrespective of:
(a) any lack of validity or enforceability of, or any amendment or other modification
of, or waiver with respect to the Obligations, the Document or any other document executed in
connection with the issuance of the Obligations; or
(b) any exchange, release or nonperfection of any security interest in property
securing the Obligations or this Agreement or any obligations hereunder; or
(c) any circumstances that might otherwise constitute a defense available to, or
discharge of, the Issuer with respect to the Obligations, the Document or any other document
executed in connection with the issuance of the Obligations; or
(d) whether or not such obligations are contingent or matured, disputed or
undisputed, liquidated or unliquidated.
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Section 2.05. Insurer’s Rights. The Issuer shall repay the Insurer to the extent of
payments made and expenses incurred by the Insurer in connection with the Obligations and this
Agreement. The obligation of the Issuer to repay such amounts shall be subordinate only to the
rights of the Owners to receive regularly scheduled principal and interest on the Obligations.
Section 2.06. On-Going Information Obligations of Issuer.
(a) Annual Reports. The Issuer will provide to the Insurer annual financial
statements audited by an independent certified public accountant within 180 days of the end of
each fiscal year.
(b) Access to Facilities, Books and Records. The Issuer will grant the Insurer
reasonable access to the project financed by the Obligations and will make available to the
Insurer, at reasonable times and upon reasonable notice all books and records relative to the
project financed by the Obligations.
(c) Compliance Certificate. On an annual basis the Issuer will provide to the Insurer
a certificate confirming compliance with all covenants and obligations hereunder and under the
Document or any other document executed in connection with the issuance of the Obligations.
Section 2.07. Additional Covenants of Issuer. So long as this Agreement is in effect, the
Issuer covenants as follows:
(a) Restriction on Additional Bonds. The Issuer shall not issue any Additional Bonds
(as defined in the Document) under the Document or parity debt under the Lease Agreement for
any purpose.
(b) Removal of Trustee. To the extent of its rights under Section 9.06 of the
Document, the Issuer shall replace the Trustee at any time upon 15 days’ notice from the Insurer,
prior to the occurrence of an event of default.
ARTICLE III
AMENDMENTS TO DOCUMENT
So long as this Agreement is in effect, the Issuer agrees that it will not agree to amend the
Document or any other document executed in connection with the issuance of the Obligations,
without the prior written consent of the Insurer.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES
Section 4.01. Events of Default. The following events shall constitute Events of Default
hereunder:
(a) The Issuer shall fail to pay to the Insurer when due any amount payable under
Sections 1.03; or
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(b) Subject to the provisions of Section 6.3 of the Lease Agreement governing the
abatement of Lease Payments under certain circumstances, the Issuer shall fail to pay to the
Insurer any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have
continued for a period in excess of the Reimbursement Period; or
(c) Any material representation or warranty made by the Issuer under the Document
or hereunder or any statement in the application for the Surety Bond or any report, certificate,
financial statement, document or other instrument provided in connection with the Commitment,
the Surety Bond, the Obligations, or herewith shall have been materially false at the time when
made; or
(d) Except as otherwise provided in this Section 4.01, the Issuer shall fail to perform
any of its other obligations under the Document, or any other document executed in connection
with the issuance of the Obligations, or hereunder, provided that such failure continues for more
than 30 days after receipt by the Issuer of written notice of such failure to perform; or
(e) The Issuer shall (i) voluntarily commence any proceeding or file any petition
seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign
bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official
for such party or for a substantial part of its property, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take action for the purpose of effecting any of the
foregoing; or
(f) A proceeding shall be commenced in a court of competent jurisdiction seeking the
appointment of a receiver, trustee, custodian, sequestrator or similar official for the Issuer or for
a substantial part of its property; and such proceeding shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall continue unstayed and in
effect for 30 days.
Section 4.02. Remedies. If an Event of Default shall occur and be continuing, then the
Insurer may take whatever action at law or in equity may appear necessary or desirable to collect
the amounts then due and thereafter to become due under this Agreement or to enforce
performance of any obligation of the Issuer to the Insurer under the Document or any related
instrument, and any obligation, agreement or covenant of the Issuer under this Agreement;
provided, however, that the Insurer may not take any action to direct or require acceleration or
other early redemption of the Obligations or adversely affect the rights of the Owners. In
addition, if an Event of Default shall occur due to the failure to pay to the Insurer the amounts
due under Section 1.03 hereof, the Insurer shall have the right to cancel the Surety Bond in
accordance with its terms. All rights and remedies of the Insurer under this Section 4.02 are
cumulative and the exercise of any one remedy does not preclude the exercise of one or more of
the other available remedies.
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ARTICLE V
SETTLEMENT
The Insurer shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against the Insurer, the Issuer or any other party on
the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed,
and the Insurer’s decision thereon, if made in good faith, shall be final and binding upon the
Insurer, the Issuer and any other party on the Surety Bond. An itemized statement of payments
made by the Insurer, certified by an officer of the Insurer, or the voucher or vouchers for such
payments, shall be prima facie evidence of the liability of the Issuer, and if the Issuer fails to
immediately reimburse the Insurer upon the receipt of such statement of payments, interest shall
be computed on such amount from the date of any payment made by the Insurer at the rate set
forth in subsection (a) of Section 2.01 hereof.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Interest Computations. All computations of interest due hereunder shall be
made on the basis of the actual number of days elapsed over a year of 360 days.
Section 6.02. Exercise of Rights. No failure or delay on the part of the Insurer to
exercise any right, power or privilege under this Agreement and no course of dealing between
the Insurer and the Issuer or any other party shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Insurer would otherwise have pursuant to law or equity. No notice to or
demand on any party in any case shall entitle such party to any other or further notice or demand
in similar or other circumstances, or constitute a waiver of the right of the other party to any
other or further action in any circumstances without notice or demand.
Section 6.03. Amendment and Waiver. Any provision of this Agreement may be
amended, waived, supplemented, discharged or terminated only with the prior written consent of
the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Paying
Agent, the Insurer may make or consent to issue any substitute for the Surety Bond to cure any
ambiguity or formal defect or omission in the Surety Bond which does not materially change the
terms of the Surety Bond nor adversely affect the rights of the Owners, and this Agreement shall
apply to such substituted surety bond. The Insurer agrees to deliver to the Issuer and to the
company or companies, if any, rating the Obligations, a copy of such substituted surety bond.
Section 6.04. Successors and Assigns; Descriptive Headings.
(a) This Agreement shall bind, and the benefits thereof shall inure to, the Issuer and
the Insurer and their respective successors and assigns; provided, that the Issuer may not transfer
or assign any or all of its rights and obligations hereunder without the prior written consent of the
Insurer.
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(b) The descriptive headings of the various provisions of this Agreement are inserted
for convenience of reference only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof
Section 6.05. Other Sureties. If the Insurer shall procure any other surety to reinsure the
Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and
assigns, so as to give to it a direct right of action against the Issuer to enforce this Agreement,
and “the Insurer,” wherever used herein, shall be deemed to include such reinsuring surety, as its
respective interests may appear.
Section 6.06. Signature on Bond. The Issuer’s liability shall not be affected by its failure
to sign the Surety Bond nor by any claim that other indemnity or security was to have been
obtained nor by the release of any indemnity, nor the return or exchange of any collateral that
may have been obtained.
Section 6.07. Waiver. The Issuer waives any defense that this Agreement was executed
subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was
executed pursuant to the Issuer’s request and in reliance on the Issuer’s promise to execute this
Agreement.
Section 6.08. Notices, Requests, Demands. Except as otherwise expressly provided
herein, all written notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been given or made when actually received, or in the case
of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a
party hereto, when sent, addressed as specified below or at such other address as any of the
parties may hereafter specify in writing to the others:
If to the Issuer: Gary Saenz, Authority Counsel
300 North D Street, 6th Floor
San Bernardino, CA 92418
If to the Paying Agent: U.S. Bank National Association
[Address to Be Inserted]
If to the Insurer: National Public Finance Guarantee Corporation
1 Manhattanville Road, Suite 301
Purchase, New York 10577
Attention: Portfolio Surveillance
Section 6.09. Survival of Representations and Warranties. All representations,
warranties and obligations contained herein shall survive the execution and delivery of this
Agreement and the Surety Bond.
Section 6.10. Governing Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State.
19.e
Packet Pg. 660 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 6.11. Counterparts. This Agreement may be executed in any number of copies
and by the different parties hereto on the same or separate counterparts, each of which shall be
deemed to be an original instrument. Complete counterparts of this Agreement shall be lodged
with the Issuer and the Insurer.
Section 6.12. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 6.13. Survival of Obligations. Notwithstanding anything to the contrary
contained in this Agreement, the obligation of the Issuer to pay all amounts due hereunder and
the rights of the Insurer to pursue all remedies shall survive the expiration, termination or
substitution of the Surety Bond and this Agreement.
19.e
Packet Pg. 661 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
(Signature Page – Financial Guaranty Agreement)
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
San Bernardino Joint Powers Financing
Authority
By:
Title:
National Public Finance Guarantee
Corporation
President
Attest:
Assistant Secretary
19.e
Packet Pg. 662 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-1
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ANNEX A
19.e
Packet Pg. 663 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-2
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DEBT SERVICE RESERVE
SURETY BOND
National Public Finance Guarantee Corporation
Purchase, New York 10577
Surety Bond No. __________
National Public Finance Guarantee Corporation (the “Insurer”), in consideration of the
payment of the premium and subject to the terms of this Surety Bond, hereby unconditionally
and irrevocably guarantees the full and complete payments that are to be applied to payment of
principal of and interest on the Obligations (as hereinafter defined) and that are required to be
made by or on behalf of San Bernardino Joint Powers Financing Authority (the “Issuer”) under
the Trust Indenture dated as of December 1, 1996 between the Issuer and the trustee named
therein, as amended and supplemented (the “Document”) to U.S. Bank National Association (the
“Paying Agent”), as such payments are due but shall not be so paid, in connection with the
issuance by the Issuer of the $16,320,000 original aggregate principal amount San Bernardino
Joint Powers Financing Authority Lease Revenue Refunding Bonds (City Hall Project) Series
1996 (the “Obligations”), provided that the amount available hereunder for payment pursuant to
any one Demand for Payment (as hereinafter defined) shall not exceed $1,005,450.00 (the
“Surety Bond Limit”); provided, further, that the amount available at any particular time to be
paid to the Paying Agent under the terms hereof (the “Surety Bond Coverage”) shall be reduced
and may be reinstated from time to time as set forth herein.
1. As used herein, the term “Owner” shall mean the registered owner of any
Obligation as indicated in the books maintained by the applicable paying agent, the Issuer or any
designee of the Issuer for such purpose. The term “Owner” shall not include the Issuer or any
person or entity whose obligation or obligations by agreement constitute the underlying security
or source of payment for the Obligations.
2. Upon the later of: (i) three (3) days after receipt by the Insurer of a demand for
payment in the form attached hereto as Attachment 1 (the “Demand for Payment”), duly
executed by the Paying Agent; or (ii) the payment date of the Obligations as specified in the
Demand for Payment presented by the Paying Agent to the Insurer, the Insurer will make a
deposit of funds in an account with U.S. Bank National Association, in New York, New York, or
its successor, sufficient for the payment to the Paying Agent, of amounts that are then due to the
Paying Agent (as specified in the Demand for Payment) subject to the Surety Bond Coverage.
3. Demand for Payment hereunder may be made by written or electronic delivery of
the executed Demand for Payment c/o the Insurer. If a Demand for Payment made hereunder
does not, in any instance, conform to the terms and conditions of this Surety Bond, the Insurer
shall give notice to the Paying Agent, as promptly as reasonably practicable, that such Demand
for Payment was not effected in accordance with the terms and conditions of this Surety Bond
and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was
not effected in accordance with this Surety Bond, the Paying Agent may attempt to correct any
19.e
Packet Pg. 664 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-3
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such nonconforming Demand for Payment if, and to the extent that, the Paying Agent is entitled
and able to do so.
4. The amount payable by the Insurer under this Surety Bond pursuant to a particular
Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond Coverage
shall be reduced automatically to the extent of each payment made by the Insurer hereunder and
will be reinstated to the extent of each reimbursement of the Insurer pursuant to the provisions of
Article II of the Financial Guaranty Agreement dated the date hereof between the Insurer and the
Obligor (the “Financial Guaranty Agreement”); provided, that no premium is due and unpaid on
this Surety Bond and that in no event shall such reinstatement exceed the Surety Bond Limit.
The Insurer will notify the Paying Agent, in writing within five (5) days of such reimbursement,
that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant
to the Financial Guaranty Agreement and such reinstatement shall be effective as of the date the
Insurer gives such notice. The notice to the Paying Agent will be substantially in the form
attached hereto as Attachment 2.
5. Any service of process on the Insurer or notice to the Insurer may be made to the
Insurer at its offices located at 1 Manhattanville Road, Suite 301, Purchase, New York 10577
and such service of process shall be valid and binding.
6. The term of this Surety Bond shall expire on the earlier of (i) January 1, 2023 and
(ii) the date on which the Issuer has made all payments required to be made on the Obligations
pursuant to the Document.
7. The premium payable on this Surety Bond is not refundable for any reason,
including the payment prior to maturity of the Obligations.
8. Any suit hereunder in connection with any payment may be brought only by the
Paying Agent within one year after (i) a Demand for Payment, with respect to such payment, is
made pursuant to the terms of this Surety Bond and the Insurer has failed to make such payment,
or (ii) payment would otherwise have been due hereunder but for the failure on the part of the
Paying Agent to deliver to the Insurer a Demand for Payment pursuant to the terms of this Surety
Bond, whichever is earlier.
9. There shall be no acceleration payment due under this Policy unless such
acceleration is at the sole option of the Insurer.
19.e
Packet Pg. 665 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-4
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In witness whereof, the Insurer has caused this Surety Bond to be executed in facsimile
on its behalf by its duly authorized officers, this _____ day of __________, 2016.
National Public Finance Guarantee
Corporation
President
Attest:
Secretary
19.e
Packet Pg. 666 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-5
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Attachment 1
Surety Bond No. [POLICY NO.]
DEMAND FOR PAYMENT
__________, 20__
National Public Finance Guarantee Corporation
1 Manhattanville Road, Suite 301
Purchase, New York 10577
Attention: President
RE: Debt Service Reserve Fund for the $16,320,000 original aggregate principal amount San
Bernardino Joint Powers Financing Authority Lease Revenue Refunding Bonds (City
Hall Project) Series 1996 (the “Obligations”)
Reference is made to Policy No. [POLICY NUMBER] (the “Policy”) issued by the
National Public Finance Guarantee Corporation (the “Insurer”). The terms which are capitalized
herein and not otherwise defined have the meanings specified in the Policy unless the context
otherwise requires.
The Paying Agent hereby certifies that:
(a) In accordance with the provisions of the Document (attached hereto as Exhibit A),
payment is due to the Owners of the Obligations on (the “Due Date”) in an amount equal to
$__________ (the “Amount Due”).
(b) The amounts legally available to the Paying Agent on the Due Date will be
$__________ less than the Amount Due (the “Deficiency”).
The Paying Agent hereby requests that payment of the Deficiency be made by the Insurer
under the Policy and directs that payment under the Policy be made to the following account by
bank wire transfer of federal or other immediately available funds in accordance will the terms of
the Policy:
[PAYING AGENT’S ACCOUNT INFORMATION]
[Paying Agent] ABA #:
G.L. Account No #:
FFC TAS #:
Ref:
Attn: Name/Phone number
19.e
Packet Pg. 667 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-6
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Beneficiary Address:
[Name of Bank]
[Street Address]
[City, State Zip]
Any person who knowingly and with intent to defraud any insurance company or other person
files an application for insurance or statement of claim containing any materially false
information, or conceals for the purpose of misleading, information concerning any fact material
thereto, commits a fraudulent insurance act, which is a crime, and shall also be subject to a civil
penalty not to exceed five thousand dollars and the stated value of the claim for each such
violation.
U.S. BANK NATIONAL ASSOCIATION
By:
Its:
19.e
Packet Pg. 668 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-7
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Attachment 2
Surety Bond No. [POLICY NO.]
NOTICE OF REINSTATEMENT
__________, 20__
U.S. Bank National Association
[Address]
Reference is made to the Surety Bond No. [POLICY NO.] (the “Surety Bond”) issued by
the National Public Finance Guarantee Corporation (the “Insurer”). The terms which are
capitalized herein and not otherwise defined have the meanings specified in the Surety Bond
unless the context otherwise requires.
The Insurer hereby delivers notice that it is in receipt of payment from the Obligor
pursuant to Article II of the Financial Guaranty Agreement and as of the date hereof the Surety
Bond Coverage is $__________.
National Public Finance Guarantee
Corporation
President
Attest:
Secretary
19.e
Packet Pg. 669 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-8
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Notices (Unless Otherwise Specified by National)
Email:
ClaimsManagement@mbia.com
Address:
1 Manhattanville Road, Suite 301
Purchase, New York 10577
19.e
Packet Pg. 670 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex B-1
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ANNEX B
DEFINITIONS
For all purposes of this Agreement and the Surety Bond, except as otherwise expressly
provided herein or unless the context otherwise requires, all capitalized terms shall have the
meaning as set out below, which shall be equally applicable to both the singular and plural forms
of such terms.
“Agreement” means this Financial Guaranty Agreement.
“Closing Date” means ____________, 2016.
“Commitment” means the commitment to issue Municipal Bond Guaranty Insurance in
the form attached hereto as Annex C.
“Debt Service Payments” means those payments required to be made by or on behalf of
the Issuer which will be applied to payment of principal of and interest on the Obligations.
“Demand for Payment” means the certificate submitted to the Insurer for payment under
the Surety Bond substantially in the form attached to the Surety Bond as Attachment 1.
“Document” means the Trust Indenture dated as of December 1, 1996 between the Issuer
and the trustee named therein, as amended and supplemented (the “Indenture”).
“Event of Default” shall mean those events of default set forth in Section 4.01 of the
Agreement.
“Insurer” has the same meaning as set forth in the first paragraph of this Agreement.
“Issuer” means San Bernardino Joint Powers Financing Authority.
“Lease Agreement” means the Lease Agreement dated as of December 1, 1996 between
the Issuer and the City of San Bernardino, as amended and supplemented.
“Obligations” means the $16,320,000 original aggregate principal amount San
Bernardino Joint Powers Financing Authority Lease Revenue Refunding Bonds (City Hall
Project) Series 1996.
“Owners” means the registered owner of any Obligation as indicated in the books
maintained by the Paying Agent, the Issuer or any designee of the Issuer for such purpose.
“Paying Agent” means U.S. Bank National Association.
“Premium” means $150,817.50, payable to the Insurer on or prior to the Closing Date.
19.e
Packet Pg. 671 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex B-2
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“Reimbursement Period” means, with respect to a particular Surety Bond Payment, the
period commencing on the date of such Surety Bond Payment and ending thirty (30) days
thereafter.
“Reimbursement Rate” means Citibank’s prime rate plus three (3) percent per annum, as
of the date of such Surety Bond Payment, said “prime rate” being the rate of interest announced
from time to time by Citibank, N.A., New York, New York, as its prime rate. The rate of interest
shall be calculated on the basis of the actual number of days elapsed over a 360-day year.
“State” means California.
“Surety Bond” means that surety bond attached hereto as Annex A and issued by the
Insurer guaranteeing, subject to the terms and limitations thereof, Debt Service Payments
required to be made by the Issuer under the Document.
“Surety Bond Coverage” means the amount available at any particular time to be paid
under the terms of the Surety Bond, which amount shall never exceed the Surety Bond Limit.
“Surety Bond Limit” means $1,005,450.00.
“Surety Bond Payment” means an amount equal to the Debt Service Payment required to
be made by the Issuer pursuant to the Document less (i) that portion of the Debt Service Payment
paid by or on behalf of the Issuer, and (ii) other funds legally available for payment to the
Owners, all as certified in a Demand for Payment.
19.e
Packet Pg. 672 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
EXHIBIT D TO RESOLUTION
Commitment
19.e
Packet Pg. 673 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
19.e
Packet Pg. 674 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
19.e
Packet Pg. 675 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
19.e
Packet Pg. 676 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
WEIL COMMENTS 5/13/2016
ACTIVE 207972295v.5
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Exhibit A
Financial Guaranty Agreement
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Packet Pg. 677 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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FINANCIAL GUARANTY AGREEMENT
FINANCIAL GUARANTY AGREEMENT made as of [__________], 2016 by and
between San Bernardino Joint Powers Financing Authority (the “Issuer”) and National Public
Finance Guarantee Corporation (the “Insurer”), organized under the laws of the state of New
York.
WITNESSETH:
WHEREAS, the Issuer has issued the Obligations; and
WHEREAS, pursuant to the terms of the Document the Issuer agrees to make certain
payments on the Obligations; and
WHEREAS, the Insurer will issue its Surety Bond, substantially in the form set forth in
Annex A to this Agreement, guaranteeing certain payments by the Issuer subject to the terms and
limitations of the Surety Bond; and
WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has agreed to pay
the premium for the Surety Bond and to reimburse the Insurer for all payments made by the
Insurer under the Surety Bond, all as more fully set forth in this Agreement; and
WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this
Agreement as part of the consideration for the execution by the Insurer of the Surety Bond; and
NOW, THEREFORE, in consideration of the premises and of the agreements herein
contained and of the execution of the Surety Bond, the Issuer and the Insurer agree as follows:
ARTICLE I
DEFINITIONS; SURETY BOND
Section 1.01. Definitions. The terms which are capitalized herein shall have the
meanings specified in Annex B hereto.
Section 1.02. Surety Bond.
(a) The Insurer will issue the Surety Bond in accordance with and subject to the terms
and conditions of the Commitment.
(b) The maximum liability of the Insurer under the Surety Bond and the coverage and
term thereof shall be subject to and limited by the terms and conditions of the Surety Bond.
Section 1.03. Premium. In consideration of the Insurer agreeing to issue the Surety
Bond hereunder, the Issuer hereby agrees to pay or cause to be paid the Premium set forth in
Annex B hereto. The Premium on the Surety Bond is not refundable for any reason.
19.e
Packet Pg. 678 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 1.04. Certain Other Expenses. The Issuer will pay all reasonable fees and
disbursements (not to exceed $10,000) of the Insurer’s special counsel related to any
modification of this Agreement or the Surety Bond.
ARTICLE II
REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS OF
ISSUER AND SECURITY THEREFOR
Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses;
Indemnification.
(a) The Issuer will reimburse the Insurer, within the Reimbursement Period, without
demand or notice by the Insurer to the Issuer or any other person, to the extent of each Surety
Bond Payment with interest on each Surety Bond Payment from and including the date made to
the date of the reimbursement at the lesser of the Reimbursement Rate or the maximum rate of
interest permitted by then applicable law.
(b) The Issuer also agrees to reimburse the Insurer immediately and unconditionally
upon demand, to the extent permitted by state law, for all reasonable expenses incurred by the
Insurer in connection with the Surety Bond and the enforcement by the Insurer of the Issuer’s
obligations under this Agreement, the Document, and any other document executed in
connection with the issuance of the Obligations, together with interest on all such expenses from
and including the date incurred to the date of payment at the rate set forth in subsection (a) of
this Section 2.01.
(c) The Issuer agrees to indemnify the Insurer, to the extent permitted by state law,
against any and all liability, claims, loss, costs, damages, fees of attorneys and other expenses
which the Insurer may sustain or incur by reason of or in consequence of (i) the failure of the
Issuer to perform or comply with the covenants or conditions of this Agreement or (ii) reliance
by the Insurer upon representations made by the Issuer or (iii) a default by the Issuer under the
terms of the Document or any other documents executed in connection with the issuance of the
Obligations.
(d) The Issuer agrees that all amounts owing to the Insurer pursuant to Section 1.03
hereof and this Section 2.01 must be paid in full prior to any optional redemption or refunding of
the Obligations.
(e) All payments made to the Insurer under this Agreement shall be paid in lawful
currency of the United States in immediately available funds at the Insurer’s office at 1
Manhattanville Road, Suite 301, Purchase, New York 10577, Attention: Accounting and Insured
Portfolio Management Departments, or at such other place as shall be designated by the Insurer.
Section 2.02. Allocation of Payments. The Insurer and the Issuer hereby agree that each
payment received by the Insurer from or on behalf of the Issuer as a reimbursement to the Insurer
as required by Section 2.01 hereof shall be applied by the Insurer first, toward payment of any
unpaid premium; second, toward repayment of the aggregate Surety Bond Payments made by the
Insurer and not yet repaid, payment of which will reinstate all or a portion of the Surety Bond
Coverage to the extent of such repayment (but not to exceed the Surety Bond Limit); and third,
19.e
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upon full reinstatement of the Surety Bond Coverage to the Surety Bond Limit, toward other
amounts, including, without limitation, any interest payable with respect to any Surety Bond
Payments then due to the Insurer.
Section 2.03. Security for Payments; Instruments of Further Assurance. To the extent,
but only to the extent, that the Document, or any related indenture, trust agreement, ordinance,
resolution, mortgage, security agreement or similar instrument, if any, pledges to the Owners or
any trustee therefor, or grants a security interest or lien in or on any collateral, property, revenue
or other payments (“Collateral and Revenues”) in order to secure the Obligations or provide a
source of payment for the Obligations, the Issuer hereby grants to the Insurer a security interest
in or lien on, as the case may be, and pledges to the Insurer all such Collateral and Revenues as
security for payment of all amounts due hereunder and under the Document or any other
document executed in connection with the issuance of the Obligations, which security interest,
lien and/or pledge created or granted under this Section 2.03 shall be subordinate only to the
interests of the Owners and any trustee therefor in such Collateral and Revenues, except as
otherwise provided. The Issuer agrees that it will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any and all financing statements,
if applicable, and all other further instruments as may be required by law or as shall reasonably
be requested by the Insurer for the perfection of the security interest, if any, granted under this
Section 2.03 and for the preservation and protection of all rights of the Insurer under this
Section 2.03.
Section 2.04. Unconditional Obligation. Subject to the provisions of Section 6.3 of the
Lease Agreement governing the abatement of Lease Payments under certain circumstances, the
obligations hereunder are absolute and unconditional and will be paid or performed strictly in
accordance with this Agreement, subject to Section 6.3 of the Lease Agreement, irrespective of:
(a) any lack of validity or enforceability of, or any amendment or other modification
of, or waiver with respect to the Obligations, the Document or any other document executed in
connection with the issuance of the Obligations; or
(b) any exchange, release or nonperfection of any security interest in property
securing the Obligations or this Agreement or any obligations hereunder; or
(c) any circumstances that might otherwise constitute a defense available to, or
discharge of, the Issuer with respect to the Obligations, the Document or any other document
executed in connection with the issuance of the Obligations; or
(d) whether or not such obligations are contingent or matured, disputed or
undisputed, liquidated or unliquidated.
19.e
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Section 2.05. Insurer’s Rights. The Issuer shall repay the Insurer to the extent of
payments made and expenses incurred by the Insurer in connection with the Obligations and this
Agreement. The obligation of the Issuer to repay such amounts shall be subordinate only to the
rights of the Owners to receive regularly scheduled principal and interest on the Obligations.
Section 2.06. On-Going Information Obligations of Issuer.
(a) Annual Reports. The Issuer will provide to the Insurer annual financial
statements audited by an independent certified public accountant within 180 days of the end of
each fiscal year.
(b) Access to Facilities, Books and Records. The Issuer will grant the Insurer
reasonable access to the project financed by the Obligations and will make available to the
Insurer, at reasonable times and upon reasonable notice all books and records relative to the
project financed by the Obligations.
(c) Compliance Certificate. On an annual basis the Issuer will provide to the Insurer
a certificate confirming compliance with all covenants and obligations hereunder and under the
Document or any other document executed in connection with the issuance of the Obligations.
Section 2.07. Additional Covenants of Issuer. So long as this Agreement is in effect, the
Issuer covenants as follows:
(a) Restriction on Additional Bonds. The Issuer shall not issue any Additional Bonds
(as defined in the Document) under the Document or parity debt under the Lease Agreement for
any purpose.
(b) Removal of Trustee. To the extent of its rights under Section 9.06 of the
Document, the Issuer shall replace the Trustee at any time upon 15 days’ notice from the Insurer,
prior to the occurrence of an event of default.
ARTICLE III
AMENDMENTS TO DOCUMENT
So long as this Agreement is in effect, the Issuer agrees that it will not agree to amend the
Document or any other document executed in connection with the issuance of the Obligations,
without the prior written consent of the Insurer.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES
Section 4.01. Events of Default. The following events shall constitute Events of Default
hereunder:
(a) The Issuer shall fail to pay to the Insurer when due any amount payable under
Sections 1.03; or
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(b) Subject to the provisions of Section 6.3 of the Lease Agreement governing the
abatement of Lease Payments under certain circumstances, the Issuer shall fail to pay to the
Insurer any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have
continued for a period in excess of the Reimbursement Period; or
(c) Any material representation or warranty made by the Issuer under the Document
or hereunder or any statement in the application for the Surety Bond or any report, certificate,
financial statement, document or other instrument provided in connection with the Commitment,
the Surety Bond, the Obligations, or herewith shall have been materially false at the time when
made; or
(d) Except as otherwise provided in this Section 4.01, the Issuer shall fail to perform
any of its other obligations under the Document, or any other document executed in connection
with the issuance of the Obligations, or hereunder, provided that such failure continues for more
than 30 days after receipt by the Issuer of written notice of such failure to perform; or
(e) The Issuer shall (i) voluntarily commence any proceeding or file any petition
seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign
bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official
for such party or for a substantial part of its property, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take action for the purpose of effecting any of the
foregoing; or
(f) A proceeding shall be commenced in a court of competent jurisdiction seeking the
appointment of a receiver, trustee, custodian, sequestrator or similar official for the Issuer or for
a substantial part of its property; and such proceeding shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall continue unstayed and in
effect for 30 days.
Section 4.02. Remedies. If an Event of Default shall occur and be continuing, then the
Insurer may take whatever action at law or in equity may appear necessary or desirable to collect
the amounts then due and thereafter to become due under this Agreement or to enforce
performance of any obligation of the Issuer to the Insurer under the Document or any related
instrument, and any obligation, agreement or covenant of the Issuer under this Agreement;
provided, however, that the Insurer may not take any action to direct or require acceleration or
other early redemption of the Obligations or adversely affect the rights of the Owners. In
addition, if an Event of Default shall occur due to the failure to pay to the Insurer the amounts
due under Section 1.03 hereof, the Insurer shall have the right to cancel the Surety Bond in
accordance with its terms. All rights and remedies of the Insurer under this Section 4.02 are
cumulative and the exercise of any one remedy does not preclude the exercise of one or more of
the other available remedies.
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Packet Pg. 682 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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ARTICLE V
SETTLEMENT
The Insurer shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against the Insurer, the Issuer or any other party on
the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed,
and the Insurer’s decision thereon, if made in good faith, shall be final and binding upon the
Insurer, the Issuer and any other party on the Surety Bond. An itemized statement of payments
made by the Insurer, certified by an officer of the Insurer, or the voucher or vouchers for such
payments, shall be prima facie evidence of the liability of the Issuer, and if the Issuer fails to
immediately reimburse the Insurer upon the receipt of such statement of payments, interest shall
be computed on such amount from the date of any payment made by the Insurer at the rate set
forth in subsection (a) of Section 2.01 hereof.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Interest Computations. All computations of interest due hereunder shall be
made on the basis of the actual number of days elapsed over a year of 360 days.
Section 6.02. Exercise of Rights. No failure or delay on the part of the Insurer to
exercise any right, power or privilege under this Agreement and no course of dealing between
the Insurer and the Issuer or any other party shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Insurer would otherwise have pursuant to law or equity. No notice to or
demand on any party in any case shall entitle such party to any other or further notice or demand
in similar or other circumstances, or constitute a waiver of the right of the other party to any
other or further action in any circumstances without notice or demand.
Section 6.03. Amendment and Waiver. Any provision of this Agreement may be
amended, waived, supplemented, discharged or terminated only with the prior written consent of
the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Paying
Agent, the Insurer may make or consent to issue any substitute for the Surety Bond to cure any
ambiguity or formal defect or omission in the Surety Bond which does not materially change the
terms of the Surety Bond nor adversely affect the rights of the Owners, and this Agreement shall
apply to such substituted surety bond. The Insurer agrees to deliver to the Issuer and to the
company or companies, if any, rating the Obligations, a copy of such substituted surety bond.
Section 6.04. Successors and Assigns; Descriptive Headings.
(a) This Agreement shall bind, and the benefits thereof shall inure to, the Issuer and
the Insurer and their respective successors and assigns; provided, that the Issuer may not transfer
or assign any or all of its rights and obligations hereunder without the prior written consent of the
Insurer.
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Packet Pg. 683 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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(b) The descriptive headings of the various provisions of this Agreement are inserted
for convenience of reference only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof
Section 6.05. Other Sureties. If the Insurer shall procure any other surety to reinsure the
Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and
assigns, so as to give to it a direct right of action against the Issuer to enforce this Agreement,
and “the Insurer,” wherever used herein, shall be deemed to include such reinsuring surety, as its
respective interests may appear.
Section 6.06. Signature on Bond. The Issuer’s liability shall not be affected by its failure
to sign the Surety Bond nor by any claim that other indemnity or security was to have been
obtained nor by the release of any indemnity, nor the return or exchange of any collateral that
may have been obtained.
Section 6.07. Waiver. The Issuer waives any defense that this Agreement was executed
subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was
executed pursuant to the Issuer’s request and in reliance on the Issuer’s promise to execute this
Agreement.
Section 6.08. Notices, Requests, Demands. Except as otherwise expressly provided
herein, all written notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been given or made when actually received, or in the case
of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a
party hereto, when sent, addressed as specified below or at such other address as any of the
parties may hereafter specify in writing to the others:
If to the Issuer: Gary Saenz, Authority Counsel
300 North D Street, 6th Floor
San Bernardino, CA 92418
If to the Paying Agent: U.S. Bank National Association
[Address to Be Inserted]
If to the Insurer: National Public Finance Guarantee Corporation
1 Manhattanville Road, Suite 301
Purchase, New York 10577
Attention: Portfolio Surveillance
Section 6.09. Survival of Representations and Warranties. All representations,
warranties and obligations contained herein shall survive the execution and delivery of this
Agreement and the Surety Bond.
Section 6.10. Governing Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State.
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Packet Pg. 684 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 6.11. Counterparts. This Agreement may be executed in any number of copies
and by the different parties hereto on the same or separate counterparts, each of which shall be
deemed to be an original instrument. Complete counterparts of this Agreement shall be lodged
with the Issuer and the Insurer.
Section 6.12. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 6.13. Survival of Obligations. Notwithstanding anything to the contrary
contained in this Agreement, the obligation of the Issuer to pay all amounts due hereunder and
the rights of the Insurer to pursue all remedies shall survive the expiration, termination or
substitution of the Surety Bond and this Agreement.
19.e
Packet Pg. 685 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
(Signature Page – Financial Guaranty Agreement)
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
San Bernardino Joint Powers Financing
Authority
By:
Title:
National Public Finance Guarantee
Corporation
President
Attest:
Assistant Secretary
19.e
Packet Pg. 686 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-1
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ANNEX A
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Packet Pg. 687 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-2
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DEBT SERVICE RESERVE
SURETY BOND
National Public Finance Guarantee Corporation
Purchase, New York 10577
Surety Bond No. __________
National Public Finance Guarantee Corporation (the “Insurer”), in consideration of the
payment of the premium and subject to the terms of this Surety Bond, hereby unconditionally
and irrevocably guarantees the full and complete payments that are to be applied to payment of
principal of and interest on the Obligations (as hereinafter defined) and that are required to be
made by or on behalf of San Bernardino Joint Powers Financing Authority (the “Issuer”) under
the Trust Indenture dated as of December 1, 1996 between the Issuer and the trustee named
therein, as amended and supplemented (the “Document”) to U.S. Bank National Association (the
“Paying Agent”), as such payments are due but shall not be so paid, in connection with the
issuance by the Issuer of the $16,320,000 original aggregate principal amount San Bernardino
Joint Powers Financing Authority Lease Revenue Refunding Bonds (City Hall Project) Series
1996 (the “Obligations”), provided that the amount available hereunder for payment pursuant to
any one Demand for Payment (as hereinafter defined) shall not exceed $1,005,450.00 (the
“Surety Bond Limit”); provided, further, that the amount available at any particular time to be
paid to the Paying Agent under the terms hereof (the “Surety Bond Coverage”) shall be reduced
and may be reinstated from time to time as set forth herein.
1. As used herein, the term “Owner” shall mean the registered owner of any
Obligation as indicated in the books maintained by the applicable paying agent, the Issuer or any
designee of the Issuer for such purpose. The term “Owner” shall not include the Issuer or any
person or entity whose obligation or obligations by agreement constitute the underlying security
or source of payment for the Obligations.
2. Upon the later of: (i) three (3) days after receipt by the Insurer of a demand for
payment in the form attached hereto as Attachment 1 (the “Demand for Payment”), duly
executed by the Paying Agent; or (ii) the payment date of the Obligations as specified in the
Demand for Payment presented by the Paying Agent to the Insurer, the Insurer will make a
deposit of funds in an account with U.S. Bank National Association, in New York, New York, or
its successor, sufficient for the payment to the Paying Agent, of amounts that are then due to the
Paying Agent (as specified in the Demand for Payment) subject to the Surety Bond Coverage.
3. Demand for Payment hereunder may be made by written or electronic delivery of
the executed Demand for Payment c/o the Insurer. If a Demand for Payment made hereunder
does not, in any instance, conform to the terms and conditions of this Surety Bond, the Insurer
shall give notice to the Paying Agent, as promptly as reasonably practicable, that such Demand
for Payment was not effected in accordance with the terms and conditions of this Surety Bond
and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was
not effected in accordance with this Surety Bond, the Paying Agent may attempt to correct any
19.e
Packet Pg. 688 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-3
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such nonconforming Demand for Payment if, and to the extent that, the Paying Agent is entitled
and able to do so.
4. The amount payable by the Insurer under this Surety Bond pursuant to a particular
Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond Coverage
shall be reduced automatically to the extent of each payment made by the Insurer hereunder and
will be reinstated to the extent of each reimbursement of the Insurer pursuant to the provisions of
Article II of the Financial Guaranty Agreement dated the date hereof between the Insurer and the
Obligor (the “Financial Guaranty Agreement”); provided, that no premium is due and unpaid on
this Surety Bond and that in no event shall such reinstatement exceed the Surety Bond Limit.
The Insurer will notify the Paying Agent, in writing within five (5) days of such reimbursement,
that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant
to the Financial Guaranty Agreement and such reinstatement shall be effective as of the date the
Insurer gives such notice. The notice to the Paying Agent will be substantially in the form
attached hereto as Attachment 2.
5. Any service of process on the Insurer or notice to the Insurer may be made to the
Insurer at its offices located at 1 Manhattanville Road, Suite 301, Purchase, New York 10577
and such service of process shall be valid and binding.
6. The term of this Surety Bond shall expire on the earlier of (i) January 1, 2023 and
(ii) the date on which the Issuer has made all payments required to be made on the Obligations
pursuant to the Document.
7. The premium payable on this Surety Bond is not refundable for any reason,
including the payment prior to maturity of the Obligations.
8. Any suit hereunder in connection with any payment may be brought only by the
Paying Agent within one year after (i) a Demand for Payment, with respect to such payment, is
made pursuant to the terms of this Surety Bond and the Insurer has failed to make such payment,
or (ii) payment would otherwise have been due hereunder but for the failure on the part of the
Paying Agent to deliver to the Insurer a Demand for Payment pursuant to the terms of this Surety
Bond, whichever is earlier.
9. There shall be no acceleration payment due under this Policy unless such
acceleration is at the sole option of the Insurer.
19.e
Packet Pg. 689 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-4
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In witness whereof, the Insurer has caused this Surety Bond to be executed in facsimile
on its behalf by its duly authorized officers, this _____ day of __________, 2016.
National Public Finance Guarantee
Corporation
President
Attest:
Secretary
19.e
Packet Pg. 690 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Attachment 1
Surety Bond No. [POLICY NO.]
DEMAND FOR PAYMENT
__________, 20__
National Public Finance Guarantee Corporation
1 Manhattanville Road, Suite 301
Purchase, New York 10577
Attention: President
RE: Debt Service Reserve Fund for the $16,320,000 original aggregate principal amount San
Bernardino Joint Powers Financing Authority Lease Revenue Refunding Bonds (City
Hall Project) Series 1996 (the “Obligations”)
Reference is made to Policy No. [POLICY NUMBER] (the “Policy”) issued by the
National Public Finance Guarantee Corporation (the “Insurer”). The terms which are capitalized
herein and not otherwise defined have the meanings specified in the Policy unless the context
otherwise requires.
The Paying Agent hereby certifies that:
(a) In accordance with the provisions of the Document (attached hereto as Exhibit A),
payment is due to the Owners of the Obligations on (the “Due Date”) in an amount equal to
$__________ (the “Amount Due”).
(b) The amounts legally available to the Paying Agent on the Due Date will be
$__________ less than the Amount Due (the “Deficiency”).
The Paying Agent hereby requests that payment of the Deficiency be made by the Insurer
under the Policy and directs that payment under the Policy be made to the following account by
bank wire transfer of federal or other immediately available funds in accordance will the terms of
the Policy:
[PAYING AGENT’S ACCOUNT INFORMATION]
[Paying Agent] ABA #:
G.L. Account No #:
FFC TAS #:
Ref:
Attn: Name/Phone number
19.e
Packet Pg. 691 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-6
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Beneficiary Address:
[Name of Bank]
[Street Address]
[City, State Zip]
Any person who knowingly and with intent to defraud any insurance company or other person
files an application for insurance or statement of claim containing any materially false
information, or conceals for the purpose of misleading, information concerning any fact material
thereto, commits a fraudulent insurance act, which is a crime, and shall also be subject to a civil
penalty not to exceed five thousand dollars and the stated value of the claim for each such
violation.
U.S. BANK NATIONAL ASSOCIATION
By:
Its:
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Packet Pg. 692 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-7
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Attachment 2
Surety Bond No. [POLICY NO.]
NOTICE OF REINSTATEMENT
__________, 20__
U.S. Bank National Association
[Address]
Reference is made to the Surety Bond No. [POLICY NO.] (the “Surety Bond”) issued by
the National Public Finance Guarantee Corporation (the “Insurer”). The terms which are
capitalized herein and not otherwise defined have the meanings specified in the Surety Bond
unless the context otherwise requires.
The Insurer hereby delivers notice that it is in receipt of payment from the Obligor
pursuant to Article II of the Financial Guaranty Agreement and as of the date hereof the Surety
Bond Coverage is $__________.
National Public Finance Guarantee
Corporation
President
Attest:
Secretary
19.e
Packet Pg. 693 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex A-8
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Notices (Unless Otherwise Specified by National)
Email:
ClaimsManagement@mbia.com
Address:
1 Manhattanville Road, Suite 301
Purchase, New York 10577
19.e
Packet Pg. 694 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex B-1
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ANNEX B
DEFINITIONS
For all purposes of this Agreement and the Surety Bond, except as otherwise expressly
provided herein or unless the context otherwise requires, all capitalized terms shall have the
meaning as set out below, which shall be equally applicable to both the singular and plural forms
of such terms.
“Agreement” means this Financial Guaranty Agreement.
“Closing Date” means ____________, 2016.
“Commitment” means the commitment to issue Municipal Bond Guaranty Insurance in
the form attached hereto as Annex C.
“Debt Service Payments” means those payments required to be made by or on behalf of
the Issuer which will be applied to payment of principal of and interest on the Obligations.
“Demand for Payment” means the certificate submitted to the Insurer for payment under
the Surety Bond substantially in the form attached to the Surety Bond as Attachment 1.
“Document” means the Trust Indenture dated as of December 1, 1996 between the Issuer
and the trustee named therein, as amended and supplemented (the “Indenture”).
“Event of Default” shall mean those events of default set forth in Section 4.01 of the
Agreement.
“Insurer” has the same meaning as set forth in the first paragraph of this Agreement.
“Issuer” means San Bernardino Joint Powers Financing Authority.
“Lease Agreement” means the Lease Agreement dated as of December 1, 1996 between
the Issuer and the City of San Bernardino, as amended and supplemented.
“Obligations” means the $16,320,000 original aggregate principal amount San
Bernardino Joint Powers Financing Authority Lease Revenue Refunding Bonds (City Hall
Project) Series 1996.
“Owners” means the registered owner of any Obligation as indicated in the books
maintained by the Paying Agent, the Issuer or any designee of the Issuer for such purpose.
“Paying Agent” means U.S. Bank National Association.
“Premium” means $150,817.50, payable to the Insurer on or prior to the Closing Date.
19.e
Packet Pg. 695 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
Annex B-2
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“Reimbursement Period” means, with respect to a particular Surety Bond Payment, the
period commencing on the date of such Surety Bond Payment and ending thirty (30) days
thereafter.
“Reimbursement Rate” means Citibank’s prime rate plus three (3) percent per annum, as
of the date of such Surety Bond Payment, said “prime rate” being the rate of interest announced
from time to time by Citibank, N.A., New York, New York, as its prime rate. The rate of interest
shall be calculated on the basis of the actual number of days elapsed over a 360-day year.
“State” means California.
“Surety Bond” means that surety bond attached hereto as Annex A and issued by the
Insurer guaranteeing, subject to the terms and limitations thereof, Debt Service Payments
required to be made by the Issuer under the Document.
“Surety Bond Coverage” means the amount available at any particular time to be paid
under the terms of the Surety Bond, which amount shall never exceed the Surety Bond Limit.
“Surety Bond Limit” means $1,005,450.00.
“Surety Bond Payment” means an amount equal to the Debt Service Payment required to
be made by the Issuer pursuant to the Document less (i) that portion of the Debt Service Payment
paid by or on behalf of the Issuer, and (ii) other funds legally available for payment to the
Owners, all as certified in a Demand for Payment.
19.e
Packet Pg. 696 Attachment: Debt Restructuring.Attach 4 Resolution re 1996 Bonds (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION NO.______
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING TO
THE REFUNDING CERTIFICATES OF PARTICIPATION (1999 POLICE STATION,
SOUTH VALLE AND 201 NORTH E STREET PROJECTS), APPROVING THE
EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the “City”), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously authorized the execution and delivery of Refunding
Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects)
(the “Certificates”) to refinance the acquisition of certain facilities; and
WHEREAS, the Certificates were executed and delivered pursuant to a Trust
Agreement, dated as of September 1, 1999 (the “Trust Agreement”), by and among the City, the
San Bernardino Joint Powers Financing Authority (the “Authority”), a joint exercise of powers
authority duly organized and existing under and pursuant to the Constitution and laws of the
State of California, and U.S. Bank National Association, as trustee; and
WHEREAS, the Certificates were secured by payments made by the City under a Police
Station Lease Agreement, dated as of September 1, 1999 (the “Police Station Lease Agreement”),
by and between the Authority, as lessor of certain assets described in the Police Station Lease
Agreement, and the City, as lessee; and
WHEREAS, the Authority has determined that it is in the best interest of the Authority to
amend the Trust Agreement and the Police Station Lease Agreement in order to enable the City
and the Authority to apply certain moneys held thereunder to prepay the Certificates; and
WHEREAS, Authority has determined that it is in the best interest of the Authority, upon
the prepayment of the Certificates, to enter into a termination agreement for the Police Station
Lease Agreement with the City (the “Police Station Lease Termination”) and to enter into a
termination agreement for a Police Station Site and Facility Lease dated as of September 1, 1999,
with the City as successor lessor to the Successor Agency to the Redevelopment Agency of the
City of San Bernardino (the “Site and Facility Lease Termination”).
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Packet Pg. 697 Attachment: Debt Restructuring.Attach 5 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY, AS FOLLOWS:
Section 1. Amendment No. 1 to Trust Agreement, in substantially the form attached hereto
as Exhibit “A”, is hereby approved. The Chairperson, the Vice Chairperson, the Executive
Director, the Secretary, counsel to the Authority or the designee thereof (the “Authorized
Officers”) are hereby authorized and directed to execute and deliver Amendment No. 1 to Trust
Agreement with such changes, insertions and omissions as may be recommended by counsel to
the Authority or by Stradling Yocca Carlson & Rauth, a Professional Corporation (“Special
Counsel”) and approved by the officer executing the same, said execution being conclusive
evidence of such approval.
Section 2. Amendment No. 1 to Police Station Lease Agreement, in substantially the
form attached hereto as Exhibit “B”, is hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Amendment No. 1 to Police Station Lease
Agreement with such changes, insertions and omissions as may be recommended by counsel to
the Authority or by Special Counsel and approved by the officer executing the same, said
execution being conclusive evidence of such approval.
Section 3. The Police Station Lease Termination, in substantially the form attached
hereto as Exhibit “C”, is hereby approved. The Authorized Officers are hereby authorized and
directed to execute and deliver Police Station Lease Termination with such changes, insertions
and omissions as may be recommended by the Counsel to the Authority or by Special Counsel
and approved by the officer executing the same, said execution being conclusive evidence of
such approval.
Section 4. The Site and Facility Lease Termination, in substantially the form attached
hereto as Exhibit “D”, is hereby approved. The Authorized Officers are hereby authorized and
directed to execute and deliver Site and Facility Lease Termination with such changes, insertions
and omissions as may be recommended by the Counsel to the Authority or by Special Counsel
and approved by the officer executing the same, said execution being conclusive evidence of
such approval.
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Packet Pg. 698 Attachment: Debt Restructuring.Attach 5 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Section 5. The Authorized Officers and any other proper officer of the Authority,
acting singly, be and each of them hereby is authorized and directed to execute and deliver any
and all documents and instruments and to do and cause to be done any and all acts and things
necessary or proper for carrying out the transactions contemplated by Amendment No. 1 to Trust
Agreement, Amendment No. 1 to Police Station Lease Agreement, the Police Station Lease
Termination, the Site and Facility Lease Termination and this Resolution. All prior actions of the
Authorized Officers and other officers or staff of the Authority with respect to this matter are
hereby ratified and approved.
Section 6. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement unless the context
otherwise clearly requires.
Section 7. This Resolution shall take effect immediately upon its adoption.
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Packet Pg. 699 Attachment: Debt Restructuring.Attach 5 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING TO
THE REFUNDING CERTIFICATES OF PARTICIPATION (1999 POLICE STATION,
SOUTH VALLE AND 201 NORTH E STREET PROJECTS), APPROVING THE
EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
City Council of the City of San Bernardino acting as the San Bernardino Joint Powers Financing
Authority at a ____________ meeting thereof, held on the _______ day of
__________________, 2017, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ _____ _____ _______ _______
BARRIOS _____ _____ _______ _______
VALDIVIA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this ________ day of ______________, 2017.
R. Carey Davis, Mayor
City of San Bernardino
Approved as to form:
Gary D. Saenz, City Attorney
By: _________________________
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Packet Pg. 700 Attachment: Debt Restructuring.Attach 5 (4998 : Documents Effecting the Negotiated Debt Restructuring of Bonds)
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Packet Pg. 701 Attachment: League of CA Cities 2017 Leg Action Day (4990 : League of California Cities 2017 Legislative Action Day)
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Packet Pg. 702 Attachment: League of CA Cities 2017 Leg Action Day.ATTACHMENT 1 (4990 : League of California Cities 2017 Legislative Action Day)
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Packet Pg. 703 Attachment: League of CA Cities 2017 Leg Action Day.ATTACHMENT 1 (4990 : League of California Cities 2017 Legislative Action Day)
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Packet Pg. 704 Attachment: League of CA Cities 2017 Leg Action Day.ATTACHMENT 1 (4990 : League of California Cities 2017 Legislative Action Day)