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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Subject: Authorization for City to participate in a
pooled tax and revenue anticipation note
(TRAN) financing program for cash flow
and for prefunding Pension
Contributions for FY 2005/06
From: Barbara Pachon,
Director of Finance
Dept: Finance
Date: May 2, 2005
ORIG1NAL
Synopsis of Previous Council action:
6/6/94 -
6/5/95 -
5/20/96 -
6/2/97 -
6/1/98 -
5/17/99-
5/1/00-
4/16/01-
4/15/04-
Resolution #94-131 adopted City participation in TRAN program.
Resolution #95-177 adopted City participation in TRAN program.
Resolution #96-112 adopted City participation in TRAN program.
Resolution #97-165 adopted City participation in TRAN program.
Resolution #98-129 adopted City participation in TRAN program.
Resolution #99-89 adopted City participation in TRAN program.
Resolution #00-98 adopted City participation in TRAN program.
Resolution #01-78 adopted City participation in TRAN program.
Resolution #04-112 adopted City participation in TRAN program.
Recommended motion:
Adopt Resolution
~~~ Iii
x..;Signature
Contact person:
Supporting data attached:
Barbara Pachon. Director of Finance
ext. 5242
Phone:
Yes
Ward:
FUNDING REQUIREMENTS: Amount: Estimated net earnin!!s to City - 538.000 to General Fund FY 2005-06
(cash flow). Estimated net savings to City - $112,000 for FY
2005-06.
Source: fAeet. No.) 001-000-4505 UnterestIncome)
001-xxx-5026 (pERS Pension Contribution)
. ~. DescpDtlj>D) -I/)/'
FlUanee: W~~46
CouDeil Notes:
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Agenda ltem No. J!J
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
Subiect
The purpose of this resolution is to authorize the City's participation in a pooled Tax Revenue
and Anticipation Note (TRAN) financing program for FY 2005/06. The participation is made
up of two elements: the more traditional TRAN for cash flow and a newer program offered to
pre-fund annual contributions to PERS for pension contributions.
Background
The League of California Cities, along with the California State Association of Counties, has
developed a program that allows local governments to borrow funds and issue notes to
provide monies for anticipated cash flow deficits. The program is being offered through the
California Statewide Community Development Authority, a joint powers authority established
to assist California communities with financing programs. The City of San Bernardino
participated in this program for nine years between 1994 through 2004. For the last year, the
City issued $16.31 million in TRANS in the two programs offered.
TRANs are typically tax-exempt obligations issued for periods of one year or less to offset
cash flow shortages as the result of predictable receipts and disbursements. Tax.exempt
TRANs must follow rnles issued by the Internal Revenue Service to retain their tax-exempt
status. As an example, property tax related revenues are typically distributed to cities only a
few times during the year. This source of revenue generates over $17 million per year in
General Fund revenues for the City of San Bernardino. These payments would typically be
received in four payments towards the second half of the fiscal year. Since the City's
expenditures are typically constant every month, the delay in receiving property tax related
revenue creates a cash flow shortfall in the General Fund in the beginning months of the year.
The issuance of a TRAN will provide a source of funds to cover these periodic cashflow
deficits. In addition, TRAN borrowing rates are typically anywhere from 1 to 2 percentage
points below available investment rates and the difference between the borrowing rates and
the reinvestment rate (arbitrage) can be retained by the local government, provided the TRAN
is issued in accordance with federal regulations.
A second TRAN program is available for the second time in FY 2005/06 to provide funds for
prepayment of annual pension costs. The benefit of this program is based on a significant
discount PERS is offering to entities that pay their annual pension costs in a lump sum at the
beginning of the fiscal year. The City will make a lump-sum payment to PERS for
$13,102,600 instead of semi-monthly contributions throughout the fiscal year of $13,600,800.
The TRAN would provide an infusion of cash in July and be repaid by funds set aside from
reduced expenditures for the remainder of the year. The TRAN Bond Counsel and Financial
Advisor have indicated to us that this element of the TRAN will be a taxable issue and only
about 90% ($11,000,000) can be funded through the TRAN. The estimated remaining 10%
($2,102,600) of the prepayment will be paid from Water Department money and city funds
Page - 2
Staff Report
that will be included in the FY 05-06 budget for PERS costs. Participation in this program is
still desired based on current short-term borrowing rates and the significant discount offered
byPERS.
Financial hnoact
For the cash flow TRAN, at an estimated size based on cash flow shortages of$8,100,000, the
estimated net earnings are as follows:
Interest earnings at 2.5%
Interest costs at 1.6%
Costs ofIssuance, etc
$202,500
(129,000)
( 28.900)
NET EARNINGS
44,600
For the pension obligation TRAN, at an estimated size of $11,000,000, the estimated net
savings are as follows:
Sayings in amount paid to PERS
Estimated interest costs
Estimated issuance costs and discount
$448,000
(301,000)
(35.000)
112,000
NET SAVINGS
The proposed TRAN would be a one-year obligation issued July 1, 2005 and due on June 30,
2006. The City Treasurer has reviewed this fmancing program and concurs with the City's
participation for 2005/06.
Recommendation
Staff recommends the Mayor and City Council adopt the attached resolution which authorizes
the issuance of Tax and Revenue Anticipation Note (TRANs) in an amount not to exceed
$20,000,000. The actual TRANs issued will be computed on projected cash flows and limited
by federal tax law. The resolution also authorizes various financing documentation including
the attached purchase agreement. The resolution further authorizes the City to continue as a
member of the California Statewide Community Development Authority which is required for
participation in this TRAN.
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RESOLUTION NO. 2005-105
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
WHEREAS, local agencies are authorized by Section 53850 to 53858, bQth
inclusive, of the Government Code of the State of Cali fomi a (the "Act") (being Article 7.6,
Chapter 4, Part 1, Division 2, Title 5 of the Government Code) to borrow money by the
issuance of temporary notes;
WHEREAS, the legislative body (the "Legislative Body") of the local
agency specified in Section 25 hereof (the "Local Agency") has determined that a sum (the
"Principal Amount"), not to exceed the Maximum Amount of Borrowing specified in
Section 25 hereof, which Principal Amount is to be confirmed and set in the Pricing
Confirmation (as defined in Section 4 hereof), is needed for the requirements of the Local
Agency, to satisfy obligations of the Local Agency, and that it is necessary that said
Principal Amount be borrowed for such purpose at this time by the issuance of a note or
notes therefore in anticipation of the receipt of taxes, income, revenue, cash receipts and
other moneys to be received by the Local Agency for the general fund of the Local Agency
attributable to its fiscal year ending June 30, 2006 ("Fiscal Year 2005-2006'');
WHEREAS, the Local Agency hereby determines to borrow, for the
purposes set forth above, the Principal Amount by the issuance of the Note (as hereinafter
defined);
WHEREAS, it appears, and this Legislative Body hereby finds and
determines, that the Principal Amount, when added to the interest payable thereon, does not
exceed eighty five percent (85%) of the estimated amount of the uncollected taxes, income,
revenue (including, but not limited to, revenue from the state and federal governments), cash
receipts and other moneys of the Local Agency attributable to Fiscal Year 2005-2006 and
available for the payment of the principal ofthe Note and the interest thereon;
WHEREAS, no money has heretofore been borrowed by or on behalf of the
Local Agency through the issuance of tax anticipation notes or temporary notes in
anticipation of the receipt of, or payable from or secured by, taxes, income, revenue, cash
receipts or other moneys for Fiscal Year 2005-2006;
WHEREAS, pursuant to Section 53856 of the Act, certain moneys which
will be received by the Local Agency during and attributable to Fiscal Year 2005-2006 can
be pledged for the payment of the principal of the Note and the interest thereon (as
hereinafter provided);
WHEREAS, the Local Agency has determined that it is in the best interests
of the Local Agency to participate in the California Communities Cash Flow Financing
Program (the "Program"), whereby participating local agencies (collectively, the "Issuers")
will simultaneously issue tax and revenue anticipation notes;
DOCSLAl :466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
WHEREAS, the Program requires the participating Issuers to sell their tax
and revenue anticipation notes to the California Statewide Communities Development
Authority (the "Authority") pursuant to note purchase agreements (collectively, "Purchase
Agreements"), each between such individual Issuer and the Authority, and dated as of the
date of the Pricing Confirmation, a form of which has been submitted to the Legislative
Body;
WHEREAS, the Authority, in consultation with RBC Dain Rauscher, Inc., as
financial advisor for the Program (the "Financial Advisor"), will form one or more pools of
notes (the "Pooled Notes") and assign each note to a particular pool (the "Pool") and sell a
series (the "Series") of bonds (the "Bonds") secured by each Pool pursuant to an indenture
(the "Indenture") between the Authority and Wells Fargo Bank, National Association, as
trustee (the "Trustee"), each Series distinguished by whether or what type(s) of Credit
Instrument(s) (as hereinafter defined) secure(s) such Series, by the principal amounts of the
notes assigned to the Pool,' by whether interest on the Series of Bonds is a fixed rate of
interest or a variable rate of interest swapped to a fixed rate by the Authority, by whether
interest on the Series of Bonds is includable in gross income for federal income tax
purposes,or by other factors, and the Local Agency hereby acknowledges and approves the
discretion of the Authority to assign the Note to such Pool and such Indenture as the
Authority may determine;
WHEREAS, as additional security for the owners of each Series of Bonds,
all or a portion ofthe payments by all of the Issuers of the notes assigned to such Series may
or may not be secured (by virtue or in form of the Bonds, as indicated in the Pricing
Confirmation, being secured in whole or in part) by an irrevocable letter (or letters) of credit
or policy (or policies) of insurance or other credit instrument (or instruments) (collectively,
the "Credit Instrument") issued by the credit provider or credit providers designated in the
Indenture, as finally executed (collectively, the "Credit Provider"), pursuant to a credit
agreement or agreements or commitment letter or letters (collectively, the "Credit
Agreement") between the Authority and the respective Credit Provider;
WHEREAS, the net proceeds of the Note may be invested by the Local
Agency in Permitted Investments (as defined in the Indenture) or in any other investment
permitted by the laws of the State of California, as now in effect and as hereafter amended,
modified or supplemented from time to time;
WHEREAS, as part of the Program each participating Issuer approves the
Indenture, the alternative forms of Credit Agreements, if any, in substantially the forms
presented to the Legislative Body, with the final form of Indenture, type of Credit
Instrument and corresponding Credit Agreement to be determined and approved by delivery
of the Pricing Confirmation;
WHEREAS, pursuant to the Program each participating Issuer will be
responsible for its share of (a) the fees of the Trustee and the costs of issuing the applicable
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--"-
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
Series of Bonds, and (b), if applicable, the fees of the Credit Provider (which shall be
payable from, among other sources, moneys in the Costs of Issuance Fund established and
held under the Indenture), the Issuer's allocable share of all Predefault Obligations and the
Issuer's Reimbursement Obligations, ifany (each as defined in the Indenture);
WHEREAS, pursuant to the Program, the underwriter will submit an offer to
the Authority to purchase, in the case of each Pool of Notes, the Series of Bonds which will
be secured by the Indenture to which such Pool will be assigned;
WHEREAS, it is necessary to engage the services of certain professionals to
assist the Local Agency in its participation in the Program;
NOW, THEREFORE, the Legislative Body hereby finds, determines,
declares and resolves as follows:
Section 1. Recitals. This Legislative Body hereby finds and determines
that all the above recitals are true and correct.
Section 2. (A) Authorization of Issuance. This Legislative Body
hereby determines to borrow solely for the purpose of anticipating taxes, income, revenue,
cash receipts and other moneys to be received by the Local Agency for the general fund of
the Local Agency attributable to Fiscal Year 2005-2006, by the issuance of a note or notes in
the aggregate Principal Amount under Sections 53850 et seq. of the Act, designated the
Local Agency's "2005 Tax and Revenue Anticipation Note," with an appropriate series
designation if more than one note is issued (collectively, the "Note"), to be issued in the
form of a fully registered note or notes at the Principal Amount thereof, to be dated the date
of its delivery to the initial purchaser thereof, to mature (without option of prior redemption)
not more than fifteen months thereafter on a date indicated on the face thereof and
determined in the Pricing Confirmation (the "Maturity Date"), and to bear interest, payable
at maturity (and if the maturity is more than twelve months from the date of issuance,
payable on the interim payment date set forth in the Pricing Confirmation) and computed
upon the basis of a 360-day year consisting of twelve 30-day months, or a 365 or 366-day
year, as the case may be, and actual days elapsed, at a rate or rates, if more than one Note is
issued, not to exceed twelve percent (12%) per annum as determined in the Pricing
Confirmation and indicated on the face ofthe Note (the "Note Rate"). If the Series of Bonds
issued in connection with the Note is secured in whole or in part by a Credit Instrument or
such Credit Instrument secures the Note in whole or in part and all principal of and interest
on the Note is not paid in full at maturity or if payment of principal of and/or interest on the
Note is paid (in whole or in part) by a draw under, payment by or claim upon a Credit
Instrument which draw, payment or claim is not fully reimbursed on such date, such Note
shall become a Defaulted Note (as defined in the Indenture), and the unpaid portion
(including the interest component, if applicable) thereof (or the portion (including the
interest component, if applicable) thereof with respect to which a Credit Instrument applies
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
for which reimbursement on a draw, payment or claim has not been fully made) shall be
deemed outstanding and shall continue to bear interest thereafter until paid at the Default
Rate (as defined in the Indenture). If the Note or the Series of Bonds issued in connection
with the Note is unsecured in whole or in part and the Note is not fully paid at maturity, the
unpaid portion thereof (or the portion thereof to which no Credit Instrument applies which is
unpaid) shall be deemed outstanding and shall continue to bear interest thereafter until paid
at the Default Rate. In each case, however, the obligation of the Local Agency with respect
to such Defaulted Note or unpaid Note shall not be a debt or liability of the Local Agency
prohibited by Article XVI, Section 18 of the California Constitution and the Local Agency
shall not be liable thereon except to the extent of any available revenues attributable to
Fiscal Year 2004-2005, as provided in Section 8 hereof. The percentage of the Note to
which a Credit Instrument, if any, applies (the "Secured Percentage") shall be equal to the
amount of the Credit Instrument divided by the aggregate amount of unpaid principal of and
interest on the unpaid notes (or portions thereof) of all Issuers, expressed as a percentage
(but not greater than 100%) as of the maturity date.
Both the principal of and interest on the Note shall be payable in lawful
money of the United States of America. The principal of and interest on the Note at
maturity shall be paid upon surrender of the Note at the corporate trust office of Wells Fargo
Bank, National Association in Los Angeles, California.
The Note shall be issued in conjunction with the note or notes of one or more
other Issuers as part of the Program and within the meaning of Section 53853 of the Act.
(B) Anything in this Resolution to the contrary notwithstanding, the Pricing
Confirmation may specify that a portion of the authorized Principal Amount of the Note
shall be issued as a taxable Note the interest on which is includable in the gross income of
the holder thereof for federal income tax purposes (a "Taxable Note"). In such event, the
Taxable N;ote shall be issued with an appropriate series designation and other terms
reflecting such taxability of interest income, including without limitation, a taxable Note
Rate and a taxable Default Rate; the term Note, and other terms as appropriate, shall be
deemed to include or refer to such Taxable Note; and the agreements, covenants and
provisions set forth in this Resolution to be performed by or on behalf of the Local Agency
shall be for the equal and proportionate benefit, security and protection of the holder of any
Note without preference, priority or distinction as to security or otherwise of any Note over
and other Note.
Section 3. Form of Note. The Note shall be issued in fully registered
form without coupons and shall be substantially in the form and substance set forth in
Exhibit A as attached hereto and by reference incorporated herein, the blanks in said forms
to be filled in with appropriate words and figures.
Section 4. Sale .of Note; Delegation. The Note shall be sold to the
Authority pursuant to the Purchase Agreement. The form of the Purchase Agreement,
DOCSLA 1:466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
including the form of the pricing confmnation supplement (the "Pricing Confirmation") set
forth as Exhibit A thereto, presented to this meeting are hereby approved. The authorized
representatives set forth in Section 25 hereof (the "Authorized Representatives") are each
hereby authorized and directed to execute and deliver the Purchase Agreement in
substantially said form, with such changes thereto as such Authorized Representative shall
approve, such approval to be conclusively evidenced by his or her execution and delivery
thereof; provided, however, that the Purchase Agreement shall not be effective and binding
on the Local Agency until the execution and delivery of the Pricing Confirmation. The
Authorized Representatives are each hereby further authorized and directed to execute and
deliver the Pricing Confirmation in substantially said form, with such changes thereto as
such Authorized Representative shall approve, such approval to be conclusively evidenced
by his or her execution and delivery thereof; provided, however, that the interest rate on the
Note shall not exceed twelve percent (12%) per annum, the discount on the Note, when
added to the Local Agency's share of the costs of issuance of the Bonds, shall not exceed
one percent (1.0%), and the Principal Amount shall not exceed the Maximum Amount of
Borrowing. Delivery of an executed copy of the Pricing Confirmation by fax or telecopy
shall be deemed .effective execution and delivery for all purposes.
Section 5. Program Approval. The Pricing Confirmation shall indicate
whether and what type of Credit Instrument will apply.
The forms of Indenture, alternative general types and forms of Credit
Agreements, if any, presented to this meeting are hereby acknowledged, and it is
acknowledged that the Authority will execute and deliver the Indenture, one or more Credit
Agreements, if applicable, which shall be identified in the Pricing Confirmation, in
substantially one or more of said forms with such changes therein as the Authorized
Representative who executes the Pricing Confirmation shall require or approve
(substantially final forms of the Indenture and the Credit Agreement are to be delivered to
the Authorized Representative concurrent with the Pricing Confirmation), such approval of
the Authorized Representative and this Legislative Body to be conclusively evidenced by
the execution ofthe Pricing Confirmation.
Anyone of the Authorized Representatives of the Local Agency is hereby
authorized and directed to provide the Financial Advisor or the underwriter with such
information relating to the Local Agency as the Financial Advisor or the underwriter shall
reasonably request for inclusion in the Preliminary Official Statement and Official Statement
of the Authority. Upon inclusion of the information relating to the Local Agency therein,
the Preliminary Official Statement and Official Statement or such other offering document
is, except for certain omissions permitted by Rule 15c2-12 of the Securities Exchange Act of
1934, as amended (the "Rule"), hereby deemed final within the meaning of the Rule with
respect to the Local Agency and any Authorized Representative of the Local Agency is
authorized to execute a certificate to such effect. If, at any time prior to the end of the
underwriting period, as defined in the Rule, any event occurs as a result of which the
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
information contained in the Preliminary Official Statement or other offering document
relating to the Local Agency might include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the Local Agency shall promptly notify the
Financial Advisorand the underwriter.
Subject to Section 8 hereof, the Local Agency hereby agrees that if the Note
shall become a Defaulted Note, the unpaid portion (including the interest component, if
applicable) thereof or the portion (including the interest component, if applicable) to which a
Credit Instrument applies for which full reimbursement on a draw, payment or claim has not
been made by the Maturity Date shall be deemed outstanding and shall not be deemed to be
paid until (i) any Credit Provider providing a Credit Instrument with respect to the Note or
the Series of Bonds issued in connection with the Note, has been reimbursed for any
drawings, payments or claims made under or from the Credit Instrument with respect to the
Note, including interest accrued thereon, as provided therein and in the applicable Credit
Agreement, and, (ii) the holders of the Note, or Series of the Bonds issued in connection
with the Note, are paid the full principal amount represented by the unsecured portion of the
Note plus interest accrued thereon (calCulated at the Default Rate) to the date of deposit of
such aggregate required amount with the Trustee. For purposes of clause (ii) of the
preceding sentence, holders of the Series of Bonds will be deemed to have received such
principal amount upon deposit of such moneys with the Trustee.
The Local Agency agrees to payor cause to be paid, in addition to the
amounts payable under the Note, any fees or expenses of the Trustee and, to the extent
permitted by law, if the Local Agency's Note is secured in whole or in part by a Credit
Instrument (by virtue of the fact that the Series of Bonds is secured by a Credit Instrument),
any Predefault Obligations and Reimbursement Obligations (to the extent not payable under
the Note), (i) arising out of an "Event of Default" hereunder (or pursuant to Section 7
hereof) or (ii) arising out of any other event (other than an event arising solely as a result of
or otherwise attributable to a default by any other Issuer). In the case described in (ii) above
with respect to Predefault Obligations, the Local Agency shall owe only the percentage of
such fees, expenses and Predefault Obligations equal to the ratio of the principal amount of
its Note over the aggregate principal amounts of all notes, including the Note, of the Series
of which the Note is a part, at the time of original issuance of such Series. Such additional
amounts will be paid by the Local Agency within twenty-five (25) days of receipt by the
Local Agency of a bill therefor from the Trustee.
Section 6. No Joint Obligation. The Note will be issued in conjunction
with a note or notes of one or more other Issuers, assigned to secure a Series of Bonds. In
all cases, the obligation ofthe Local Agency to make payments on or in respect to its Note is
a several and not a joint obligation and is strictly limited to the Local Agency's repayment
obligation under this Resolution and the Note.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
Section 7. Disposition of Proceeds of Note. A portion of the moneys
received from the sale of the Note in an amount equal to the Local Agency's share of the
costs of issuance (which shall include any fees and expenses in connection with any Credit
Instrument applicable to the Note or Series of Bonds) shall be deposited in the Costs of
Issuance Fund held and invested by the Trustee under the Indenture and expended as
directed by the Authority on costs of issuance as provided in the Indenture. The balance of
the moneys received from the sale of the Note to the Authority shall be deposited in the
Local Agency's Proceeds Subaccount hereby authorized to be created pursuant to, and held
and invested by the Trustee under, the Indenture for the Local Agency and said moneys may
be used and expended by the Local Agency for any purpose for which it is authorized to use
and expend moneys, upon requisition from the Proceeds Subaccount as specified in the
Indenture. Amounts in the Proceeds Subaccount are hereby pledged to the payment of the
Note. The Trustee will not create subaccounts within the Proceeds Fund, but will keep
records to account separately for proceeds of the Bonds allocable to the Local Agency's
Note on deposit in the Proceeds Fund which shall constitute the Local Agency's Proceeds
Subaccount.
Section 8.
Source of Payment.
(A) The principal amount of the Note, together with the interest thereon,
shall be payable from taxes, income, revenue (including, but not limited to, revenue from the
state and federal governments), cash receipts and other moneys which are received by the
Local Agency for the general fund of the Local Agency and are attributable to Fiscal Year
2005-2006 and which are available for payment thereof. As security for the payment of the
principal of and interest on the Note, the Local Agency hereby pledges certain unrestricted
revenues (as hereinafter provided, the "Pledged Revenues") which are received by the Local
Agency for the general fund of the Local Agency and are attributable to Fiscal Year 2005-
2006, and the principal of the Note and the interest thereon shall constitute a first lien and
charge thereon and shall be payable from the first moneys received by the Local Agency
from such Pledged Revenues, and, to the extent not so paid, shall be paid from any other
taxes, income, revenue, cash receipts and other moneys of the Local Agency lawfully
available therefor (all as provided for in Sections 53856 and 53857 of the Act). The term
"unrestricted revenues" shall mean all taxes, income, revenue (including, but not limited to,
revenue from the state and federal governments), cash receipts, and other moneys, intended
as receipts for the general fund of the Local Agency attributable to Fiscal Year 2005-2006
and which are generally available for the payment of current expenses and other obligations
of the Local Agency. The Noteholders, Bondholders and Credit Provider shall have a first
lien and charge on such certain unrestricted revenues as hereinafter provided which are
received by the Local Agency and are attributable to Fiscal Year 2005-2006.
In order to effect the pledge referenced in the preceding paragraph, the Local
Agency hereby agrees and covenants to establish and maintain a special account within the
Local Agency's general fund to be designated the "2005 Tax and Revenue Anticipation
DOCSLAI:466083.2 A-7
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
Note Payment Account" (the "Payment Account") and further agrees and covenants to
maintain the Payment Account until the payment of the principal of the Note and the interest
thereon. Notwithstanding the foregoing, if the Local Agency elects to have Note proceeds
invested in Permitted Investments to be held by the Trustee pursuant to the Pricing
Confirmation, a subaccount of the Payment Account (the "Payment Subaccount") shall be
established for the Local Agency under the Indenture and proceeds credited to such account
shall be pledged to the payment of the Note. The Trustee need not create a subaccount, but
may keep a record to account separately for proceeds of the Note so held and invested by the
Trustee which record shall constitute the Local Agency's Proceeds Subaccount. Transfers
from the Payment Subaccount shall be made in accordance with the Indenture. The Local
Agency agrees to transfer to and deposit in the Payment Account the first amounts received
in the months specified in the Pricing Confirmation as Repayment Months (each individual
month a "Repayment Month" and collectively "Repayment Months") (and any amounts
received thereafter attributable to Fiscal Year 2005-2006) until the amount on deposit in the
Payment Account, together with the amount, if any, on deposit in the Payment Subaccount,
and taking into consideration anticipated investment eamings thereon to be received by the
Maturity Date, is equal in the respective Repayment Months identified in the Pricing
Confirmation to the percentage of the principal and interest due on the Note specified in the
Pricing Confirmation. In making such transfer and deposit, the Local Agency shall not be
required to physically segregate the amounts to be transferred to and deposited in the
Payment Account from the Local Agency's other general fund moneys, but, notwithstanding
any commingling of funds for investment or other purposes, the amounts required to be
transferred to and deposited in the Payment Account shall nevertheless be subject to the lien
and charge created herein.
Anyone of the Authorized Representatives of the Local Agency is
hereby authorized to approve the determination of the Repayment Months and percentages
of the principal and interest due on the Note required to be on deposit in the Payment
Account and/or the Payment Subaccount in each Repayment Month, all as specified in the
Pricing Confirmation, by executing and delivering the Pricing Confirmation, such execution
and delivery to be conclusive evidence of approval by this Legislative Body and such
Authorized Representative; provided, however, that the maximum number of Repayment
Months shall be six and the maximum amount of Pledged Revenues required to be deposited
in each Repayment Month shall not exceed fifty percent (50%) of the aggregate principal
and interest due on the Note. In the event on the day in each such Repayment Month that a
deposit to the Payment Account is required to be made, the Local Agency has not received
sufficient unrestricted revenues to permit the deposit into the Payment Account of the full
amount of Pledged Revenues to be deposited in the Payment Account from said unrestricted
revenues in said month, then the amount of any deficiency shall be satisfied and made up
from any other moneys of the Local Agency lawfully available for the payment of the
principal of the Note and the interest thereon, as and when such other moneys are received
or are otherwise legally available.
OOCSLAI :466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(B) Any moneys placed in the Payment Account or the Payment
Subaccount shall be for the benefit of (i) the holder of the Note and the holders of Bonds
issued in connection with the Notes and (ii) (to the extent provided in the Indenture) the
Credit Provider, if any. The moneys in the Payment Account and the Payment Subaccount
shall be applied only for the purposes for which such Accounts are created until the principal
of the Note and all interest thereon are paid or until provision has been made for the
payment of the principal of the Note at maturity with interest to maturity (in accordance with
the requirements for defeasance of the Bonds as set forth in the Indenture) and, if applicable,
(to the extent provided in the Indenture and, if applicable, the Credit Agreement) the
payment of all Predefault Obligations and Reimbursement Obligations owing to the Credit
Provider.
(C) The Local Agency hereby directs the Trustee to transfer on the Note
Payment Deposit Date (as defined in the Indenture), any moneys in the Payment Subaccount
to the Bond Payment Fund (as defined in the Indenture). In addition, on the Note Payment
Deposit Date, the moneys in the Payment Account shall be transferred by the Local Agency
to the Trustee, to the extent necessary (after crediting any transfer pursuant to the preceding
sentence), to pay the principal of and/or interest on the Note, to make payments to a Swap
Provider, if any, as defined in the Indenture, pursuant to a Swap Agreement, if any, as
defined in the Indenture, or to reimburse the Credit Provider for payments made under or
pursuant to the Credit Instrument. In the event that moneys in the Payment Account and/or
the Payment Subaccount are insufficient to pay the principal of and interest on the Note in
full when due, such moneys shall be applied in the following priority: first to pay interest on
the Note; second to pay principal of the Note; third to reimburse the Credit Provider for
payment, if any, of interest with respect to the Note; fourth to reimburse the Credit Provider
for payment, if any, of principal with respect to the Note; and fifth to pay any
Reimbursement Obligations of the Local Agency and any of the Local Agency's pro rata
share of Predefault Obligations owing to the Credit Provider. Any moneys remaining in or
accruing to the Payment Account and/or the Payment Subaccount after the principal of the
Note and the interest thereon and any Predefault Obligations and Reimbursement
Obligations, if applicable, have been paid, or provision for such payment has been made,
shall be transferred to the general fund of the Local Agency, subject to any other disposition
required by the Indenture, or, if applicable, the Credit Agreement. Nothing herein shall be
deemed to relieve the Local Agency from its obligation to pay its Note in full on the
Maturity Date.
(D) Moneys in the Proceeds Subaccount and in the Payment Subaccount
shall be invested by the Trustee pursuant to the Indenture as directed by the Local Agency in
Permitted Investments as described in and under the terms of the Indenture. Any such
investment by the Trustee shall be for the account and risk of the Local Agency, and the
Local Agency shall not be deemed to be relieved of any of its obligations with respect to the
Note, the Predefault Obligations or Reimbursement Obligations, if any, by reason of such
investment of the moneys in its Proceeds Subaccount or the Payment Subaccount.
DOCSLAI :466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(E) At the written request of the Credit Provider, if any, the Local
Agency shall, within ten (10) Business Days following the receipt of such written request,
file such report or reports to evidence the transfer to and deposit in the Payment Account
required by this Section 8 and provide such additional financial information as may be
required by the Credit Provider, if any.
Section 9. Execution of Note. Anyone of the Authorized
Representatives of the Local Agency or any other officer designated by the Legislative Body
shall be authorized to execute the Note by manual or facsimile signature and the Secretary or
Clerk of the Legislative Body of the Local Agency, or any duly appointed assistant thereto,
shall be authorized to countersign the Note by manual or facsimile signature. Said
Authorized Representative of the Local Agency, is hereby authorized to cause the blank
spaces of the Note to be filled in as may be appropriate pursuant to the Pricing
Confirmation. The Authorized Representative is hereby authorized and directed to cause the
Authority to assign the Note to the Trustee, pursuant to the terms and conditions of the
Purchase Agreement, this Resolution and the Indenture. In case any Authorized
Representative whose signature shall appear on any Note shall cease to be an Authorized
Representative before the delivery of such Note, such signature shall nevertheless be valid
and sufficient for all purposes, the same as if such officer had remained in office until
delivery. The Note need not bear the seal of the Local Agency, if any.
Section 10. Intentionally Left Blank. This section has been included to
preserve the sequence of section numbers for cross-referencing purposes.
Section 11. Representations and Covenants of the Local Agency.
The Local Agency makes the following representations for the benefit of the
holder of the Note, the owners of the Bonds and the Credit Provider, if any:
(A) The Local Agency is duly organized and existing under and by virtue
of the laws of the State of California and has all necessary power and authority to (i) adopt
this Resolution and perform its obligations thereunder, (ii) enter into and perform its
obligations under the Purchase Agreement, and (iii) issue the Note and perform its
obligations thereunder.
(B) (i) Upon the issuance of the Note, the Local Agency shall have taken
all action required to be taken by it to authorize the issuance and delivery of the Note and
the performance of its obligations thereunder, and (ii) the Local Agency has full legal right,
power and authority to issue and deliver the Note.
(C) The issuance of the Note, the adoption of the Resolution and the
28 execution and delivery of the Purchase Agreement, and compliance with the provisions
hereof and thereof do not conflict with, breach or violate any law, administrative regulation,
DOCSLA1:466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
P ARTICIP ATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
court decree, resolution, charter, by-laws or other agreement to which the Local Agency is
subject or by which it is bound.
(D) Except as may be required under blue sky or other securities laws of
any state or Section 3(a)(2) of the Securities Act of 1933, there is no consent, approval,
authorization or other order of, or filing with, or certification by, any regulatory authority
having jurisdiction over the Local Agency required for the issuance and sale of the Note or
the consununation by the Local Agency of the other transactions contemplated by this
Resolution, except those the Local Agency shall obtain or perform prior to or upon the
issuance of the Note.
(E) The Local Agency has (or will have prior to the issuance of the Note)
duly, regularly and properly adopted a preliminary budget for Fiscal Year 2005-2006 setting
forth expected revenues and expenditures and has complied with all statutory and regulatory
requirements with respect to the adoption of such budget. The Local Agency hereby
covenants that it shall (i) duly, regularly and properly prepare and adopt its final budget for
Fiscal Year 2005-2006, (ii) provide to the Trustee, the Credit Provider, if any, the Financial
Advisor and the underwriter, promptly upon adoption, copies of such final budget and of
any subsequent revisions, modifications or amendments thereto and (iii) comply with all
applicable laws pertaining to its budget.
(F) The sum of the principal amount of the Local Agency's Note plus the
interest payable thereon, on the date of its issuance, shall not exceed fifty percent (50%) of
the estimated amounts ofthe Local Agency's uncollected taxes, income, revenue (including,
but not limited to, revenue from the state and federal governments), cash receipts, and other
moneys to be received by the Local Agency for the general fund of the Local Agency
attributable to Fiscal Year 2005-2006, all of which will be legally available to pay principal
of and interest on the Note.
(G) The Local Agency (i) has not defaulted within the past twenty (20)
years, and is not currently in default, on any debt obligation and (ii), to the best knowledge
of the Local Agency, has never defaulted on any debt obligation.
(H) The Local Agency's most recent audited financial statements present
fairly the financial condition of the Local Agency as of the date thereof and the results of
operation for the period covered thereby. Except as has been disclosed to the Financial
Advisor and the underwriter and the Credit Provider, if any, there has been no change in the
financial condition of the Local Agency since the date of such audited financial statements
that will in the reasonable opinion of the Local Agency materially impair its ability to
perform its obligations under this Resolution and the Note. The Local Agency agrees to
furnish to the Authority, the Financial Advisor, the underwriter, the Trustee and the Credit
Provider, if any, promptly, from time to time, such information regarding the operations,
financial condition and property of the Local Agency as such party may reasonably request.
DOCSLAl :466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(I) There is no action, suit, proceeding, inquiry or investigation, at law or
in equity, before or by any court, arbitrator, governmental or other board, body or official,
pending or, to the best knowledge of the Local Agency, threatened against or affecting the
Local Agency questioning the validity of any proceeding taken or to be taken by the Local
Agency in connection with the Note, the Purchase Agreement, the Indenture, the Credit
Agreement, if any, or this Resolution, or seeking to prohibit, restrain or enjoin the execution,
delivery or performance by the Local Agency of any of the foregoing, or wherein an
unfavorable decision, ruling or finding would have a materially adverse effect on the Local
Agency's financial condition or results of operations or on the ability of the Local Agency to
conduct its activities as presently conducted or as proposed or contemplated to be
conducted, or would materially adversely affect the validity or enforceability of, or the
authority or ability of the Local Agency to perform its obligations under, the Note, the
Purchase Agreement, the Indenture, the Credit Agreement, if any, or this Resolution.
(J) Upon issuance of the Note and execution of the Purchase Contract,
this Resolution, the Purchase Contract and the Note will constitute legal, valid and binding
agreements of the Local Agency, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy or other laws affecting creditors'
rights generally, the application of equitable principles if equitable remedies are sought, the
exercise of judicial discretion in appropriate cases and the limitations on legal remedies
against local agencies, as applicable, in the State of California.
(K) The Local Agency and its appropriate officials have duly taken, or
will take, all proceedings necessary to be taken by them, if any, for the levy, receipt,
collection and enforcement of the Pledged Revenues in accordance with law for carrying out
the provisions of this Resolution and the Note.
(L) The Local Agency shall not incur any indebtedness secured by a
pledge of its Pledged Revenues unless such pledge is subordinate in all respects to the
pledge of Pledged Revenues hereunder.
(M) So long as the Credit Provider, if any, is not in payment default under
the Credit Instrument, the Local Agency hereby agrees to pay its pro rata share of all
Predefault Obligations and all Reimbursement Obligations attributable to the Local Agency
in accordance with provisions of the Credit Agreement, if any, and/or the Indenture, as
applicable. Prior to the Maturity Date, moneys in the Local Agency's Payment Account
and/or Payment Subaccount shall not be used to make such payments. The Local Agency
shall pay such amounts promptly upon receipt of notice from the Credit Provider that such
amounts are due to it.
DOCSLA 1:466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(N) So long as any Bonds issued in connection with the Notes are
Outstanding, or any Predefault Obligation or Reimbursement Obligation is outstanding, the
Local Agency will not create or suffer to be created any pledge of or lien on the Note other
than the pledge and lien of the Indenture.
Section 12. Tax Covenants. (A) The Local Agency shall not take any
action or fail to take any action if such action or failure to take such action would adversely
affect the exclusion from gross income of the interest payable on the Note or Bonds under
Section 103 of the Internal Revenue Code of 1986 (the "Code"). Without limiting the
generality of the foregoing, the Local Agency shall not make any use of the proceeds of the
Note or Bonds or any other funds of the Local Agency which would cause the Note or
Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code, a "private
activity bond" within the meaning of Section 141(a) of the Code, or an obligation the
interest on which is subject to federal income taxation because it is "federally guaranteed" as
provided in Section 149(b) of the Code. The Local Agency, with respect to the proceeds of
the Note, will comply with all requirements of such sections of the Code and all regulations
ofthe United States Department of the Treasury issued or applicable thereunder to the extent
that such requirements are, at the time, applicable and in effect.
(B) The Local Agency hereby (i) represents that the aggregate face
amount of all tax-exempt obligations (including any tax-exempt leases, but excluding
private activity bonds), issued and to be issued by the Local Agency during calendar year
2005, including the Note, is not reasonably expected to exceed $5,000,000; or, in the
alternative, (ii) covenants that the Local Agency will take all legally permissible steps
necessary to ensure that all of the gross proceeds of the Note will be expended no later than
the day that is six months after the date of issuance of the Note so as to satisfy the
requirements of Section 148(f)(4)(B) of the Code.
(C) Notwithstanding any other proVISIOn of this Resolution to the
contrary, upon the Local Agency's failure to observe, or refusal to comply with, the
covenants contained in this Section 12, no one other than the holders or former holders of
the Note, the owners of the Bond, the Credit Provider, if any, or the Trustee on their behalf
shall be entitled to exercise any right or remedy under this Resolution on the basis of the
Local Agency's failure to observe, or refusal to comply with, such covenants.
(D) The covenants contained in this Section 12 shall survive the payment
ofthe Note.
(E) The provisions ofthis Section 12 shall not apply to a Taxable Note.
Section 13. Events of Default and Remedies.
If any of the following events occurs, it is hereby defined as and declared to
be and to constitute an "Event of Default":
OOCSLAI:466083.2 A-13
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(A) Failure by the Local Agency to make or cause to be made the transfers
and deposits to the Payment Account, or any other payment required to be paid hereunder,
including payment of principal and interest on the Note, on or before the date on which such
transfer, deposit or other payment is due and payable;
(B) Failure by the Local Agency to observe and perform any covenant,
condition or agreement on its part to be observed or performed under this Resolution, for a
period of fifteen (IS) days after written notice, specifying such failure and requesting that it
be remedied, is given to the Local Agency by the Trustee or the Credit Provider, if
applicable, unless the Trustee and the Credit Provider shall all agree in writing to an
extension of such time prior to its expiration;
(C) Any warranty, representation or other statement by or on behalf of the
Local Agency contained in this Resolution or the Purchase Agreement (including the Pricing
Confirmation) or in any requisition or any financial report delivered by the Local Agency or
in any instrument furnished in compliance with or in reference to this Resolution or the
Purchase Agreement or in connection with the Note, is false or misleading in any material
respect;
(D) A petition is filed against the Local Agency under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in effect and is not dismissed within 30 days
after such filing, but the Trustee shall have the right to intervene in the proceedings prior to
the expiration of such thirty (30) days to protect its and the Bond Owners' (or Noteholders')
interests;
(E) The Local Agency files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against it under such law; or
(F) The Local Agency admits insolvency or bankruptcy or is generally
not paying its debts as such debts become due, or becomes insolvent or bankrupt or makes
an assigrunent for the benefit of creditors, or a custodian (including without limitation a
receiver, liquidator or trustee) of the Local Agency or any of its property is appointed by
court order or takes possession thereof and such order remains in effect or such possession
continues for more than 30 days, but the Trustee shall have the right to intervene in the
proceedings prior to the expiration of such thirty (30) days to protect its and the Bond
Owners' or Noteholders' interests.
Whenever any Event of Default referred to in this Section 13 shall have
happened and be continuing, the Trustee, as holder of the Note, shall, in addition to any
other remedies provided herein or by law or under the Indenture, if applicable, have the
IXJCSLA 1 :466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
right, at its option without any further demand or notice, to take one or any combination of
the following remedial steps:
(1) Without declaring the Note to be immediately due and payable,
require the Local Agency to pay to the Trustee, as holder of the Note, an amount equal to the
principal of the Note and interest thereon to maturity, plus all other amounts due hereunder,
and upon notice to the Local Agency the same shall become immediately due and payable
by the Local Agency without further notice or demand; and
(2) Take whatever other action at law or in equity (except for acceleration
of payment on the Note) which may appear necessary or desirable to collect the amounts
then due and thereafter to become due hereunder and under the Note or to enforce any other
of its rights hereunder.
Notwithstanding the foregoing, if the Local Agency's Note is secured in
whole or in part by a Credit Instrument or ifthe Credit Provider is subrogated to rights under
the Local Agency's Note, as long as the Credit Provider has not failed to comply with its
payment obligations under the Credit Instrument, the Credit Provider shall have the right to
direct the remedies upon any Event of Default hereunder, and the Credit Provider's prior
consent shall be required to any remedial action proposed to be taken by the Trustee
hereunder.
If the Credit Provider is not reimbursed for any drawing, payment or claim,
as applicable, used to pay principal of and interest on the Note due to a default in payment
on the Note by the Local Agency, or if any principal of or interest on the Note remains
unpaid after the Maturity Date, the Note shall be a Defaulted Note, the unpaid portion
(including the interest component, if applicable) thereof or the portion (including the interest
component, if applicable) to which a Credit Instrument applies for which reimbursement on
a draw, payment or claim has not been made shall be deemed outstanding and shall bear
interest at the Default Rate until the Local Agency's obligation on the Defaulted Note is paid
in full or payment is duly provided for, all subject to Section 8 hereof.
Section 14. Trustee. The Local Agency hereby directs and authorizes the
payment by the Trustee of the interest on and principal of the Note when such become due
and payable, from amounts received by the Trustee from the Local Agency in the manner set
forth herein. The Local Agency hereby covenants to deposit funds in such account or fund,
as applicable, at the time and in the amount specified herein to provide sufficient moneys to
pay the principal of and interest on the Note on the Note Payment Deposit Date. Payment of
the Note shall be in accordance with the terms of the Note and this Resolution.
Section 15. Sale of Note. The Note shall be sold to the Authority, in
28 accordance with the terms of the Purchase Agreement, hereinbefore approved, and issued
payable to the Trustee, as assignee of the Authority.
DOCSLA 10466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
Section 16. Intentionally Left Blank. This section has been included to
preserve the sequence of section numbers for cross-referencing purposes.
Section 17. Approval of Actions. The aforementioned Authorized
Representatives of the Local Agency are hereby authorized and directed to execute the Note
and cause the Trustee to accept delivery of the Note, pursuant to the terms and conditions of
the Purchase Agreement and the Indenture. All actions heretofore taken by the officers and
agents of the Local Agency or this Legislative Body with respect to the sale and issuance of
the Note and participation in the Program are hereby approved, confirmed and ratified and
the Authorized Representatives and agents of the Local Agency are hereby authorized and
directed, for and in the name and on behalf of the Local Agency, to do any and all things and
take any and all actions and execute any and all certificates, agreements and other
documents which they, or any of them, may deem necessary or advisable in order to
consurmnate the lawful issuance and delivery of the Note in accordance with, and related
transactions contemplated by, this Resolution. The Authorized Representatives of the Local
Agency referred to above in Section 4 hereof are hereby designated as "Authorized Local
Agency Representatives" under the Indenture.
In the event that the Note or a portion thereof is secured by a Credit
Instrument, anyone of the Authorized Representatives of the Local Agency is hereby
authorized and directed to provide the Credit Provider, with any and all information relating
to the Local Agency as such Credit Provider may reasonably request.
Section 18. Proceedings Constitute Contract. The provisions of the
Note and of this Resolution shall constitute a contract between the Local Agency and the
registered owner of the Note, and such provisions shall be enforceable by mandamus or any
other appropriate suit, action or proceeding at law or in equity in any court of competent
jurisdiction, and shall be irrepealable. The Credit Provider, if any, is a third party
beneficiary of the provisions ofthis Resolution and the Note.
Section 19. Limited Liability. Notwithstanding anything to the contrary
contained herein or in the Note or in any other document mentioned herein or related to the
Note or to any Series of Bonds to which the Note may be assigned, the Local Agency shall
not have any liability hereunder or by reason hereof or in connection with the transactions
contemplated hereby except to the extent payable from moneys available therefor as set
forth in Section 8 hereof.
Section 20. Amendments. At any time or from time to time, the Local
Agency may adopt one or more Supplemental Resolutions with the written consents of the
Authority and the Credit Provider, if any, but without the necessity for consent of the owner
of the Note or of the Bonds issued in connection with the Note for anyone or more of the
following purposes:
DOCSLAl:466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
(A) to add to the covenants and agreements of the Local Agency in this
Resolution, other covenants and agreements to be observed by the Local Agency which are
not contrary to or inconsistent with this Resolution as theretofore in effect;
(B) to add to the limitations and restrictions in this Resolution, other
limitations and restrictions to be observed by the Local Agency which are not contrary to or
inconsistent with this Resolution as theretofore in effect;
(C) to confirm, as further assurance, any pledge under, and the subjection
to any lien or pledge created or to be created by, this Resolution, of any monies, securities or
funds, or to establish any additional funds or accounts to be held under this Resolution;
(D) to cure any ambiguity, supply any omission, or cure or correct any
defect or inconsistent provision in this Resolution; or
(E)
to amend or supplement this Resolution in any other respect;
provided, however, that any such Supplemental Resolution does not adversely affect the
interests of the owners of the Note or of the Bonds issued in connection with the Notes.
Any modifications or amendment of this Resolution and of the rights and
obligations of the Local Agency and of the owner of the Note or of the Bonds issued in
connection with the Note may be made by a Supplemental Resolution, with the written
consents of the Authority and the Credit Provider, if any, and with the written consent of the
owners of at least a majority in principal amount of the Note and of the Bonds issued in
connection with the Note outstanding at the time such consent is given; provided, however,
that if such modification or amendment will, by its terms, not take effect so long as the Note
or any Bonds issued in connection with the Note remain outstanding, the consent of the
owners of such Note or of such Bonds shall not be required. No such modification or
amendment shall permit a change in the maturity of the Note or a reduction of the principal
amount thereof or an extension of the time of any payment thereon or a reduction of the rate
of interest thereon, or a change in the date or amounts of the pledge set forth in this
Resolution, without the consent of the owners of such Note or the owners of all the Bonds
issued in connection with the Note, or shall reduce the percentage of the Note or Bonds the
consent of the owners of which is required to effect any such modification or amendment, or
shall change or modify any of the rights or obligations of the Trustee without its written
assent thereto.
Section 21. Severability. In the event any provision of this Resolution
shall be held invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 22. Appointment of Bond Counsel. The law firm of Orrick,
Herrington & Sutcliffe LLP, Los Angeles, California is hereby appointed as Bond Counsel
for the Program. The Local Agency acknowledges that Bond Counsel regularly performs
OOCSLAl:466083.2 A-I?
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
legal services for many private and public entities in connection with a wide variety of
matters, and that Bond Counsel has represented, is representing or may in the future
represent other public entities, underwriters, trustees, rating agencies, insurers, credit
enhancement providers, lenders, financial and other consultants who may have a role or
interest in the proposed financing or that may be involved with or adverse to Local Agency
in this or some other matter. Given the special, limited role of Bond Counsel described
above the Local Agency acknowledges that no conflict of interest exists or would exist,
waives any conflict of interest that might appear to exist, and consents to any and all such
relationships.
Section 23. Appointment of Financial Advisor and Underwriter. RBC
Dain Rauscher, Inc., Los Angeles, California is hereby appointed as financial advisor for the
Program. Lehman Brothers, Inc., together with such co-underwriters, if any, identified in
the Purchase Contract, is hereby appointed as underwriter for the Program.
Section 24. Effective Date. This Resolution shall take effect from and
after its date of adoption.
Section 25. Resolution Parameters.
(C) Name of Local Agency: City of San Bernardino
(D) Maximum Amount of Borrowing: $20,000,000
(E) Authorized Representatives:
TITLE
1. Mayor
2. City Clerk
3. City Administrator
[Attach form of Certification of the Secretary or Clerk, as appropriate, with
respect to the Resolution.]
III
III
III
III
DOCSLA 1:466083.2
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING AND APPROVING THE BORROWING OF
FUNDS FOR FISCAL YEAR 2005-2006; THE ISSUANCE AND SALE OF A 2005-
2006 TAX AND REVENUE ANTICIPATION NOTE THEREFOR AND
PARTICIPATION IN THE CALIFORNIA COMMUNITIES CASH FLOW
FINANCING PROGRAM
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
joint
and Common Council of the City of San Bernardino at a regular meeting thereof, held
on the 2nd day of May , 2005 by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
ESTRADA x
LONGVILLE X
MCGINNIS X
DERRY X
KELLEY X
JOHNSON X
--
McCAMMACK X
The foregoing resolution is hereby approved this
C\~~ iJ. C~~
- City Clerk
~
Approved as to
Form and legal content:
May
JAMES F. PENMAN
City A torney
.~
DOCSLA 1:466083.2
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EXHIBIT A
CITY OF SAN BERNARDINO
2005 TAX AND REVENUE ANTICIPATION NOTE, [SERIES ~~I
Interest Rate
Maturitv Date
Date of
on ginal Issue
REGISTERED OWNER:
PRINCIPAL AMOUNT: $20,000,000
FOR VALUE RECEIVED, the Local Agency designated above (the "Local
Agency"), acknowledges itself indebted to and promises to pay to the registered owner
identified above, or registered assigns, on the maturity date set forth above, the principal
sum specified above in lawful money of the United States of America, and to pay interest
thereon [on , 2006 and] at maturity at the rate of interest specified above (the
"Note Rate"). Principal of and interest on this Note are payable in such coin or currency of
the United States as at the time of payment is legal tender for payment of private and public
debts. Principal and interest at maturity shall be paid upon surrender hereof at the principal
corporate trust office of Wells Fargo Bank, National Association in Los Angeles, California,
or its successor in trust (the "Trustee"). Interest shall be calculated on the basis of a 360-day
year, consisting of twelve 30-day months. Both the principal of and interest on this Note
shall be payable only to the registered owner hereof as the same shall fall due; provided,
however, no interest shall be payable for any period after maturity during which the holder
hereof fails to properly present this Note for payment. If the Local Agency fails to pay this
Note when due or the Credit Provider (as defined in the Resolution hereinafter described and
in that certain Indenture of Trust, dated as of I, 2005 (the "Indenture''), by
and between the California Statewide Communities Development Authority and Wells
Fargo Bank National Association, as trustee), if any, is not reimbursed in full for the amount
drawn on or paid pursuant to the Credit Instrument (as defined in the Resolution and the
Indenture) to pay all or a portion (including the interest component, if applicable) of this
Note on the date of such payment, this Note shall become a Defaulted Note (as defined in
the Resolution and the Indenture and with the consequences set forth in the Resolution and
the Indenture, including, without limitation, that this Note as a Defaulted Note (and any
related reimbursement obligation with respect to a credit instrument) shall bear interest at
the Default Rate, as defined in the Indenture).
It is hereby certified, recited and declared that this Note represents the
authorized issue of the Note in the aggregate principal amount authorized, executed and
delivered pursuant to and by authority of certain resolutions of the Local Agency duly
passed and adopted heretofore, under and by authority of Article 7.6 (commencing with
Section 53850) of Chapter 4, Part I, Division 2, Title 5 of the California Govemment Code
~ If more than one Series of Bonds is issued under the Program in Fiscal Year 2005-2006 and if the
Note is pooled with notes issued by other Issuers (as defined in the Resolution).
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(collectively, the "Resolution"), to all of the provisions and limitations of which the owner
of this Note, by acceptance hereof, assents and agrees.
The principal of the Note, together with the interest thereon, shall be payable
from taxes, income, revenue, cash receipts and other moneys which are received by the
Local Agency for the general fund of the Local Agency and are attributable to Fiscal Year
2005-2006 and which are available for payment thereof. As security for the payment of the
principal of and interest on the Note, the Local Agency has pledged the first amounts of
unrestricted revenues of the Local Agency received on the last day of the Repayment
Months (as defined in the Resolution) identified in the Pricing Confirmation (as defined in
the Resolution) (and any amounts received thereafter attributable to Fiscal Year 2005-2006)
until the amount on deposit in the Payment Account (as defined in the Resolution) in each
such month, is equal to the corresponding percentages of principal of and interest due on the
Note as set forth in the Pricing Confirmation (such pledged amounts being hereinafter called
the "Pledged Revenues"), and the principal of the Note and the interest thereon shall
constitute a first lien and charge thereon and shall be payable from the Pledged Revenues,
and to the extent not so paid shall be paid from any other moneys of the Local Agency
lawfully available therefor as set forth in the Resolution. The full faith and credit of the
Local Agency is not pledged to the payment of the principal of or interest on this Note.
The Local Agency and the Trustee may deem and treat the registered owner
hereof as the absolute owner hereof for the purpose of receiving payment of or on account of
principal hereof and interest due hereon and for all other purposes, and the Local Agency
and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to
exist, to have happened and to have been performed precedent to and in the issuance of this
Note do exist, have happened and have been performed in due time, form and manner as
required by the Constitution and statutes of the State of California and that the amount of
this Note, together with all other indebtedness of the Local Agency, does not exceed any
limit prescribed by the Constitution or statutes ofthe State of California.
IN WITNESS WHEREOF, the Legislative Body of the Local Agency has
caused this Note to be executed by the manual or facsimile signature of a duly Authorized
Representative of the Local Agency and countersigned by the manual or facsimile signature
of the Secretary or Clerk of the Legislative Body as of the date of authentication set forth
below.
CITY OF SAN BERNARDINO
By:
Judith Valles, Mayor
DOCSLAl :466083.2
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___............i;,,,.J....,
-...
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
M,,"o, """ _ A'W"'" ,)< Or; I". # L'j R=I,,""o # dfJO;; -10)
Vote: Ayes --1 Nays Abstain Absent
Change to motion to amend original documents D Companion Resolutions
Null/V oid After: days /
Resolution # On Attachments: D Note on Resolution of attachment stored separately: D
PUBLISH D
POST D
Date Sent to Mayor:
Date of Mayor's Signature:
Date of Clerk/CDC Signature:
RECORD W/COUNTY D
By:
Reso. Log Updated:
Seal Impressed:
D
D
Date MemolLetter Sent for Signatl , 'ate Returned: Not Returned: D
.,
I I" Reminder Letter Sent: :rSent:
i Request for Council Action & Stan Yes
No By_
Updated CITY Personnel Folders (6 V;J __~--=, 12634): Yes No By_
Yes No By_
Updated CDC Personnel Folders (5557): Yes No By_
Updated Traffic Folders (3985, 8234,655, 92-389): Yes No By_
Copies Distributed to:
Animal Control
City Administrator
City Attorney
Code Compliance
Developm
Others:
y
~
Notes:
Ready to File:
Date:
Revised 12/18/03
EDA
D Information Services D
V Parks & Recreation D
Police Department D
D Public Services D
Water Department D
Facilities
Finance
Fire Department