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, CITY OF SAN BERNA.ADINO - REQUEST F,- A COUNCIL ACTION
From: CRAIG A. GRAVES
Subject: Assessment District No. 977A
(June and Cajon Acquisition
District)- Adoption of Resolution
Authorizing the Issuance of Bonds
and making the Award for Sale
Dept: City Treasurer I s Office
Date: March 25, 1990
Synopsis of Previous Council action:
8-7-89 Resolutions approving Bond Counsel, Underwriter and Assessment
Engineer were adopted.
1-22-90 - Resolutions making findings on Petition, adopting Proposed
Boundary Map and Passing on "Report" were adopted.
3-5-90 - Resolutions accepting works of Improvement and approving
"As-Built" Certificate and confiming assessments were adopted.
Recommended motion:
Adopt resolutions
Contact person:
Craig A. Graves/Verne Nad
Phone: 5021 or 5026
Sixth
Supporting data attached: Yes
Ward:
FUNDING REQUIREMENTS:
Amount:~83, 412
Source: Assessment District
Bond Proceeds
Finance: 251-651- 5 3 925
Council Notes:
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, CITY OF SAN BERNARDINO - REQUEST F~A COUNCIL ACTION
STAFF REPORT
Attached for the consideration of the Mayor and Common Council is the
Resolution authorizing the Issuance of Bonds, Approving the Bond Indenture
and the Official Statement and Making the Award for the Sale of Bonds and
providing for the establishment of a Redemption Fund. The Bonds
are to be sold in amount of approximately $683,412 for the Assessment
District No. 977A (the Cajon and June Acquisition District). These
resolutions would accept the offer from Bateman Eichler, Hill Richards
to purchase the bonds and approve the Official Statement for the bonds.
It also approves the bond indenture and names Security Pacific National
Bank as Fiscal Agent.
7'>_O?fi4
1
RESOLUTION NO.
2
RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING
3 ISSUANCE OF BONDS, APPROVING BOND INDENTURE AND OFFICIAL
STATEMENT FOR A SPECIAL ASSESSMENT DISTRICT
4
WHEREAS, the COMMON COUNCIL of the CITY OF SAN BERNARDINO,
5
CALIFORNIA, is conducting proceedings for the construction of
6
certain public improvements in a special assessment district
7
pursuant to the terms and provisions of the "Municipal Improve-
8
ment Act of 1913", being Division 12 of the Streets and Highways
9
Code of the state of California, said special assessment
10
district known and designated as ASSESSMENT DISTRICT NO. 977A
11
(hereinafter referred to as the "Assessment District"); and,
12
WHEREAS, this legislative body has previously declared in
13
its Resolution of Intention to issue bonds to finance said
14
improvements,
said bonds to issue pursuant to the terms and
15
provisions of the "Improvement Bond Act of 1915", being Division
16
10 of said Code; and,
17
WHEREAS, at this time this legislative body is desirous to
18
set forth all formal terms and conditions relating to the
19
authorization, issuance and administration of said bonds; and,
20
WHEREAS, there has been presented, considered and ready for
21
approval a bond indenture setting forth formal terms and
22
conditions relating to the issuance and sale of bonds; and,
23
WHEREAS,
there has also been presented an Official
24
Statement containing information including but not limited to
25
the Assessment District and the type of bonds, including terms
26
and conditions thereof; and,
27
28
//
3/9/90
RESOLUTION A~THORIZING ISSUANCE OF BONDS
1
2
WHEREAS, this legislative body hereby further determines
3 that the unpaid assessments shall be specifically in the amount
4 as shown and set forth in the Certificate of Paid and Unpaid
5 Assessments as certified by and on file with the Treasurer, and
6 for particulars as to the amount of said unpaid assessments,
7 said Certificate and listshall control and govern.
8
9
10
11
12
13
14
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO THAT:
RECITALS
SECTION 1.
The above recitals are true and correct.
BOND AUTHORIZATION
SECTION 2. This legislative body does authorize the
issuance of bonds pursuant to the terms and provisions of the
15 "Improvement Bond Act of 1915", being Division 10 of the Streets
16 and Highways Code of the State of California, and also pusuant
17 to the specific terms and conditions as set forth in the BOND
18
19
20
21
22
23
24
INDENTURE presented herein.
BOND INDENTURE
SECTION 3.
The BOND INDENTURE is approved substantially in
the form presented herein, and is subject to modifications as
necessary and as approved by the Treasurer, with the concurrence
Final
BOND
INDENTURE shall be
approval of the
of Bond Counsel.
by the signature
of
the Treasurer upon
conclusively evidenced
25 final delivery of bonds and receipt of proceeds.
A copy of said
26 BOND INDENTURE shall be kept on file with the transcript of
27 these proceedings and open for public inspection.
28 / /
3/9/90
RESOLL,<ION AUTHORIZING ISSUANCE (
BONDS
1
2
3
OFFICIAL STATEMENT
SECTION 4.
The Official Statement, as prepared and
4 submitted, is hereby approved and adopted, and the execution and
5 distribution is hereby authorized.
A copy of said Official
6 statement shall be kept on file with the transcript of these
7 proceedings and remain open for public inspection.
8
FINAL ASSESSMENTS
9
SECTION 5.
The Certificate of Paid and Unpaid Assessments,
10 as certified by the Treasurer, shall remain on file in that
11 office and be open for public inspection for 'all particulars as
12 it relates to the amount of unpaid assessments to secure bonds
for this Assessment District.
13
14
SUPERIOR COURT FORECLOSURE
15
SECTION 6.
In the event of delinquency in the payment of
16 any installment of unpaid assessments, this legislative body
17 does specifically covenant for the benefit of the owners of the
18 bonds that it does hereby authorize judicial foreclosures to be
19 made if assessment collections in any year are less than ninety-
20 five percent (95%) of the assessment installments due and
21 payable; however, foreclosure actions may be deferred if the
22 reserve fund balance is not less than the original reserve fund
23 amount.
For further particulars and specifics, reference is
24 made to the Bond Indenture to be approved prior to any issuance
25 and delivery of bonds.
26 APPOINTMENT OF FISCAL AGENT
27
SECTION 7. This legislative body does hereby appoint
Security Pacific National Bank
28
3/9/90
RESOLUTION, AUTHORIZING ISSUANCE OF BO.~S
1
2 as Fiscal Agent for the bonds.
The Treasurer is hereby autho-
3 rized to execute, with the concurrence of Bond Counsel, a Fiscal
4 Agent Agreement which is consistent with the terms of the
5 proposal previously received from the Fiscal Agent.
6
I HEREBY CERTIFY that the foregoing resolution was duly
7 adopted by the Mayor and Common Council of the city of San
8
Bernardino at a
meeting thereof, held
9
on the
day of
1990, by the
10 following vote, to wit:
11
12
AYES: Council Members
13
14
NOES:
15
ABSENT:
16
17
City Clerk
18
19
The foregoing resolution is hereby approved this
20
day of
1990.
21
22
23
w. R. Holcomb, Mayor
city of San Bernardino
24
Approved as to form and legal content:
25
26
James F. Penman
City Attorney
By ft/J1/Jlt~/2A P~<-,I
//
27
28
3/9/90
BOND INDENTURE
This Bond Indenture (the "Indenture") dated as of April 2, 1990, entered into and
approved by the City of San Bernardino, (the "Issuer"), a municipal corporation, to
establish the terms and conditions pertaining to the issuance of bonds in a special
assessment district known and designated as ASSESSMENT DISTRICT NO. 977A (the
"Assessment District").
SECTION 1.
SECTION 2.
SECTION 3.
SECTION 4.
SECTION 5.
SECTION 6.
Issuance, Designation and Amount. Pursuant to the provisions of the
"Improvement Bond Act of 1915" (the "Act"), being Division 10 of the
Streets and Highways Code of the State of California, the Issuer does
hereby authorize the issuance of bonds to represent unpaid assessments
within the Assessment District in principal amount not to exceed
$740,350.00, and designated as the City of San Bernardino Assessment
District No. 977A Limited Obligation Improvement Bonds (the "Bonds").
Term of Bonds. Bonds to represent the unpaid assessments, and bear
interest at a rate not to exceed the current legal maximum rate of 12%
per annum, will be issued in the manner provided in the "Improvement
Bond Act of 1915", being Division 10 of the Streets and Highways Code
of the State of California, the last installment of which Bonds shall
mature a maximum of and not to exceed nineteen (19) years from the
second day of September next succeeding twelve (12) months from their
date. The provisions of Part 11.1 of said Act, providing an
alternative procedure for the advance payment of assessments and the
calling of Bonds shall apply.
Reqistered Bonds and Denominations. Said Bonds shall be issuable only
as fully reg istered Bonde in the denomination of $5,000, or any
integral multiple thereof, except for one bond maturing in the first
year of maturity, which shall include the amount by which the total
issue exceeds the maximum integral multiple of $S, 000 contained
therein.
Date of Bonds. All of said Bonds shall be dated the 2nd day of April,
1990, and interest shall accrue from that date.
Maturity. The Bonds shall be issued in serial form with annual
maturities on September 2nd of every year succeeding twelve (12) months
after their date, until the whole is paid. The amount maturing each
year shall be such as to result in approximately equal annual debt
service during the term of the issue as reflected by the interest rate
and/or rates and principal amounts maturing in the respective years of
maturity as shown on Exhibit "A" attached hereto and incorporated
herein by this reference, and the Issuer shall, immediately upon
completion of the cash collection period, prescribe the denominations
of the Bonds, which shall be in convenient amounts, not necessarily
equal, and shall further provide for their issuance and delivery.
Interest. Each Bond shall be of a single maturity and shall bear
interest at the rate as set forth in Exhibit "A" attached hereto for
said Bonds from the interest payment date next preceding the date on
1
SECTION 7.
SECTION 8.
which it authenticated and registered, unless said Bond 1s authenti-
cated and registered as of an interest payment date, in which case it
shall bear interest from said interest payment date, or unless said
Bond is authenticated and registered prior to the first interest
payment date, in which case it shall bear interest from its date, until
payment of its principal sum has been discharged.
Place of Payment. The principal on the Bonds shall be payable in
lawful money of the United States of America upon surrender of the Bond
at the office of Security Pacific , the designated registrar, transfer
agent and paying agent of the Issuer ("Fiscal Agent"), or such other
registrar, transfer agent or paying agent as may be designated by
supplemental Indenture of the Issuer.
Interest on said Bonds shall be paid on March 2 and September 2 of each
year, commencing September 2, 1990, by check or draft to the registered
owner thereof at his address as it appears on the books of registration
as of the 15th day of the month immediately preceding said interest
payment date.
Redemption.
(a) Optional Redemption. The Bonds maturing on or after September 2,
1991, may be redeemed prior to maturity, in whole or in part, at
the option of the Issuer, on September 2, or on any March 2 or
September 2 thereafter at a redemption price equal to 103% of the
principal amount thereof, together with accrued interest to the
date of redemption, from any source of funds.
(b) Mandatory Redemption. The Bonds maturing on or after September 2,
1991, shall be subject to mandatory redemption prior to maturity,
in whole or in part, on September 2, 1990, or on any March 2 or
September 2 thereafter at a redemption price equal to 103% of the
principal amount thereof, together with accrued interest to the
date of redemption, from monies representing the prepayment of
assessments or surplus funds transferred from the Improvement
Fund.
(c) Selection of Bonds for Redemption. If less than all of the
outstanding Bonds are to be redeemed, the Fiscal Agent shall
select the Bonds to be redeemed in authorized denominations from
each maturity in the same proportion which such maturity
represents with respect to all of the outstanding Bonds and by lot
within a single maturity; provided, however, that the portion of
any Bond of a denomination of more than $5,000 to be redeemed
shall be in the principal amount of $5,000 or a multiple thereof,
and that, in selecting portions of such Bonds for redemption, the
"Fiscal Agent shall treat each such Bond as representing that
number of Bonds of $5,000 denominations which is obtained by
dividing the principal amount of such Bonds to be redeemed in part
by $5,000. The Fiscal Agent shall promptly notify the Issuer in
writing of the Bonds, or portions thereof, selected for
redemption.
2
(d) Notice of Redemption. When the Fiscal Agent shall receive notice
from the Issuer of its election to redeem Bonds at least sixty
(60) days prior to the applicable redemption date, or when Bonds
are otherwise to be redeemed pursuant to this Section 8, the
Fiscal Agent shall give notice, in the name and at the expense of
the I sauer, of the redemption of such Bonds. Such notice of
redemption shall (a) specify the numbers of the Bonds selected for
redemption, except that where all the Bonds are subject to
redemption, the numbers thereof need not be specified; (b) state
the date fixed for redemption; (c) state the redemption price; (d)
state the place or places where the Bonds are to be redeemed; and
(e) in the case of Bonds to be redeemed only in part, state the
portion of the Bond which is to be redeemed. Such notice shall
further state that on the date fixed for redemption there shall
become due and payable on each Bond, or portion thereof called for
redemption, the principal thereof, together with any premium, and
interest accrued to the redemption date, and that from and after
such date, interest thereon shall cease to accrue and be payable.
At least 30 days but no more than 45 days prior to the redemption
date, the Fiscal Agent shall mail by first class mail, a copy of
such notice, postage prepaid, to the respective owners of the
Bonds to be redeemed at their addresses appearing on the bond
register. The actual receipt by the owner of any Bond of notice of
such redemption shall not be a condition precedent thereto, and
failure to receive such notice shall not affect the validity of
the proceedings for the redemption of such Bonds, or the cessation
of interest on the redemption date. A certificate by the Fiscal
Agent that notice of such redemption has been given as herein
provided shall be conclusive as against all parties, and it shall
not be open to any bondowner to show that he or she failed to
receive notice of such redemption.
(e) Partial Redemption of Bonds. Upon surrender of any Bond to be
redeemed in part only, the Issuer shall execute and the Fiscal
Agent shall authenticate and deliver to the bondowner, at the
expense of the Issuer, a new Bond or Bonds of authorized denomina-
tions equal in aggregate principal amount to the unredeemed
portion of the Bond surrendered, with the same interest rate and
the same maturity.
(f) Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in this Section B,
and the amount necessary for the redemption having been made
available for that purpose and being available therefor on the
date fixed for such redemption:
(1) The Bonds, or portions thereof r designated for redemption
shall, on the date fixed for redemption, become due and
payable at the redemption price thereof as provided in this
Indenture, anything in this Indenture or in the Bonds to the
contrary notwithstanding;
Upon presentation and surrender thereof at the principal
corporate trust office of the Fiscal Agent, such Bonds shall
be redeemed at the specified redemption price;
3
(3) From and after the redemption date the Bonds or port ions
thereof so designated for redemption shall be deemed to be no
longer outstanding and such Bonds or portions thereof shall
cease to bear further interest; and
(4) From and after the date fixed for redemption no owner of any
of the Bond or portion thereof so designated for redemption
shall be entitled to any of the benefits of this Indenture,
or to any other rights, except with respect to payment of the
redemption price and interest accrued to the redemption date
from the amounts so made available.
SECTION 9.
Transfer of ReQistered Bonds. Any Bond may, in accordance with its
terms, be transferred, upon the books of registration required to be
kept pursuant to the provisions of Section 12, by the owner in whose
name it is registered, or by his duly authorized attorney or legal
representative, upon surrender of such Bond for registration of such
transfer, accompanied by delivery of a written instrument of transfer
in a form approved by the Fiscal Agent and duly executed by the owner
of said Bonds.
The Fiscal Agent shall require the payment by the Bondholder requesting
such transfer of any tax or other governmental charge required to be
paid with respect to such transfer and such charges as provided for in
the system of registration for registered debt obligations.
No transfer of Bonds shall be required to be made during the fifteen
(15) days preceding the selection of any Bonds for redemption prior to
the maturity thereof, nor with respect to any Bond which has been
selected for redemption prior to the maturity thereof.
Upon any such registration of transfer, a new Bond or Bonds shall be
authenticated and delivered in exchange for such Bond, in the name of.
the transferee, of any denomination or denominations authorized by this
Indenture, and in an aggregate principal amount equal to the principal
amount of such Bond or principal amount of such Bond or Bonds so surren-
dered. In all cases in which Bonds shall be exchanged or transferred,
the F iecal Agent shall authenticate at the earliest practical time,
Bonds in accordance with the provisions of this Indenture. All Bonds
surrendered in Buch exchange or registration transfer shall forthwith
be cancelled.
SECTION 10. Exchange of Bonds. Bonds may be exchanged at the office of the Fiscal
Agent for a like aggregate principal amount of Bonds of the same
series, interest rate and maturity, subject to the terms and conditions
provided in the system of registration for registered debt obligations,
including the payment of certain charges, if any, upon surrender and
cancellation of the Bond. Upon such transfer and exchange, a new regis-
tered Bond or Bonds of any authorized denomination or denominations of
the same maturity for the same aggregate principal amount will be
issued to the transferee in exchange therefor.
4
SECTION 11. Books of Registration. There shall be kept by the Fiscal Agent suffi-
cient books for the registration and transfer of the Bonds and, upon
presentation for such purpose, the Fiscal Agent shall, under such
reasonable regulations as it may prescribe, register or transfer or
cause to be reg latered or transferred, on said register, Bonds as
hereinbefore provided.
SECTION 12. Execution of Bonds. The Bonds shall be executed in facsimile by the
Treasurer and by the City Clerk, and the corporate seal shall be
imprinted in facsimile on the Bonds. The Bonds shall then be delivered
to the Fiscal Agent for authentication and registration. In case an
of f icer who shall have signed or attested to any of the Bonds by
facsimile or otherwise shall cease to be such officer before the authen-
tication, delivery and issuance of the Bonds, such Bonds nevertheless
may be authenticated, delivered and issued, and upon such authentica-
t ion, de 1 i very and issue, shall be as binding as though those who
signed and attested the Bame had remained in office.
SECTION 13. Authentication. Only such of the Bonds as shall bear thereon a certifi-
cate of authentication substantially in the form below, manually
executed by the Fiscal Agent, shall be valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certifi-
cate of the transfer agent and registrar shall be conclusive evidence
that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder, and are entitled to the benefits of this
Indenture.
FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described
in the Bond Indenture authorizing
the issuance of the Bonds.
as Fiscal Agent
By:
Authorized signatory
Dated:
SECTION 14. Ownership of Bonds. The person in whose name any Bond shall be regis-
tered shall be deemed and regarded as the absolute owner thereof for
all purposes, and payment of or on account of the principal and redemp-
tion premium, if any, of any such Bond, and the interest on any such
Bond, shall be made only to or upon the order of the registered owner
thereof or his legal representative. All such payments shall be valid
and effectual to satisfy and discharge the liability upon such Bond,
including the redemption premium, if any, and interest thereon, to the
extent of the sum or sums so paid.
SECTION 15. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond secured
hereby shall become mutilated or be destroyed, stolen or lost, the
Issuer shall cause to be executed and authenticated a new Bond of like
5
date and tenor in exchange and substitution for and upon the cancella-
tion of such mutilated Bond or in lieu of and in substitution for such
Bond mutilated, destroyed, stolen or lost, upon the owner's paying the
reasonable expenses and charges in connection therewith, and, in the
case of a Bond destroyed, stolen or lost, his filing with the Fiscal
Agent and Issuer of evidence satisfactory to them that such Bond was
destroyed, stolen or lost, and of his ownership thereof, and furnishing
the Fiscal Agent and Issuer with indemnity satisfactory to them.
SECTION 16. Cancellation of Bonds. All Bonds paid or redeemed, either at or before
maturity, shall be cancelled upon the payment or redemption of such
Bonds, and shall be delivered to the Fiscal Agent when such payment or
redemption is made. All Bonds cancelled under any of the provisions of
this Indenture shall be destroyed by the Fiscal Agent, which shall
execute a certificate in duplicate describing the Bonds so destroyed,
and shall retain said executed certificate in its permanent files for
the issue.
SECTION 17. Application of Bond Proceeds. The proceeds of the sale of Bonds and
any good faith security deposit shall be received by the Fiscal Agent
and deposited in accordance with written instructions of the Issuer to
be provided at the time of, or prior to, the delivery of the Bonds.
SECTION 18. Creation of Funds. The Fiscal Agent is hereby authorized and directed
to establish the following Funds for purposes of making payment for the
costs and expenses for the works of improvement and payment of
principal and interest on the Bonds. The Funds to be created are
designated as follows:
IMPROVEMENT FUND: The proceeds from the sale of the Bonds, after
deposit of required amounts in the Reserve Fund and Redemption Fund,
shall be placed by the Fiscal Agent in the Fund hereby created,
pursuant to sections 10602 and 10424 of the California Streets and
Highways Code, as amended, which shall be called the "Improvement
Fund", and the monies in said Fund shall be used only for Project Costs
as that term is defined hereinafter. "Project Costs" shall mean the
costs of acquisition or construction of the works of improvement as
author ized in the assessment proceedings and all incidental costs
related thereto, all as more particular described in the Engineer'S
Report for Assessment District No. 977A on file in the office of the
City Clerk.
Upon receipt of a "Payment Request Form" in substantially the form
attached hereto as Exhibit "B", duly executed by the i'iayor , the
Treasurer or the designee of either official (each an "Authorized
Representative"), the Fiscal Agent shall pay the Project Costs from
amounts in the Improvement Fund directly to the contractor of such
other person, corporation or entity entitled to payment hereunder
unless the Issuer requests payment to be made to the contractor or such
other party jointly, in which case said Project Costs shall be paid
jointly. The Fiscal Agent shall be responsible for the safekeeping and
investment of the monies held in the Improvement Fund and the disposi-
tion thereof in accordance with the written instructions of the Issuer
and this Indenture. The Fiscal Agent may rely on an executed Payment
Request Form as complete authorization for said payments.
6
Any surplus in the Improvement Fund after completion of the improve-
ments shall remain in the Improvement Fund for a period of not more
than two (2) years from the receipt of Bond proceeds. Any such surplus
shall be transferred by the Fiscal Agent at the written direction of
the Treasurer to the Redemption Fund within such two (2) year period
and shall thereafter be utilized by the Fiscal Agent pursuant to the
written directions of the Treasurer to either call Bonds prior to
maturity or to pay debt service on the Bonds on the next succeeding
Interest Payment Date.
REDEMPTION FUND: The Fiscal Agent is hereby authorized and directed to
keep a Redemption Fund designated by the name of the proceedings, into
which shall be placed (i) initially, an amount from proceeds of the
Bonds which, together with accrued interest, if any, on the Bonds
equals the interest on the Bonds to September 2, 1990, (ii) all Bums
received for the collection of the assessments and the interest
thereon, together with all penalties, if applicable, and (iii) any
surplus in the Improvement Fund authorized by the Issuer pursuant to
streets and Highways Code Section 10427.1 to be credited against unpaid
assessments, or alternatively, to be utilized to call Bonds prior to
maturity.
The Issuer shall transfer or cause to be transferred all sums received
for the collection of the assessments, interest and penalties thereon,
and all sums received for the prepayment of assessments to the Fiscal
Agent within fifteen (15) business days of the receipt thereof by the
Issuer.
Principal of and interest on said Bonds shall be paid by the Fiscal
Agent to the registered owners out of the Redemption Fund to the extent
funds on deposit in said Redemption Fund are available therefor. In
all respects not recited herein, said Bonds shall be governed by the
provisions of the Act. Under no circumstances shall be the Bonds or
interest thereon be paid out of any other fund except as provided by
law.
Prior to the first redemption date there shall be established by the
Fleal Agent a prepayment subaccount within the Redemption Fund to be
known as the Prepayment Account ("Prepayment Account t1) . The Fiscal
Agent shall deposit in the Prepayment Account all monies received from
the Treasurer and designated in writing by the Treasurer as represent-
ing the principal of and redemption premium on any prepaid assessments
or surplus monies transferred from the Improvement Fund to be utilized
for the redemption of Bonds. The Treasurer shall direct the Fiscal
Agent in writing to apply such monies either to the payment of
pr inc ipal of and premium on Bonds to be redeemed pr lor to maturity
pursuant to the provisions of Section 8 of this Indenture or the
payment of debt service on the Bonds payable on the next succeeding
Interest Payment Date.
RESERVE FUND: Pursuant to Part 16 of Division 10 of the California
Streets and Highways Code, as amended, there shall be created a special
7
reserve fund for the Bonds to be designated by the name of the Assess-
ment District and specified as the "Reserve Fund". An amount equal to
ten percent (10%) of the principal amount of the Bonds issued shall be
deposited in the Reserve Fund out of the Bond proceeds.
Monies in the Reserve Fund shall be applied by the Fiscal Agent as
follows:
A. Whenever there are insufficient funds in the Redemption Fund to pay
the next maturing installment of principal of or interest on the
Bonds on the business day preceding such date of payment, the
Fiscal Agent shall transfer the amount necessary to make up such
deficiency from the Reserve Fund to the Redemption Fund. The
amounts so advanced shall be reimbursed upon receipt thereof by the
Issuer and transfer thereof to the Fiscal Agent for deposit into
the Reserve Fund from the proceeds of redemption or sale of the
parcels for which payment of delinquent installments of assessments
and interest thereon have been made from the Reserve Fund. Such
proceeds shall be transferred by the Treasurer to the Fiscal Agent
within ten (10) business days of receipt thereof by the Treasurer
and the Fiscal Agent shall immediately deposit such proceeds in the
Reserve Fund.
B. In the event an unpaid assessment is paid in cash in advance of the
final Bond maturity date, the Issuer is required to credit such
prepaid assessment with a proportionate share of the Reserve Fund,
thus reducing the total amount of the Reserve Fund. The amount to
be so credited is the pro-rata share of the original amount
deposited in the Reserve Fund, less any amount previously trans-
ferred from the Reserve Fund to the Redemption Fund as a result of
the delinquency in the payment of assessment installments for the
parcel for which the assessment is being prepaid. The Issuer shall
direct the Fiscal Agent in writing to transfer the amount represent-
ing such credit from the Reserve Fund to the Redemption Fund.
c. Interest earned on permitted investments of Reserve Fund monies
shall remain in the Reserve Fund so that the amount therein may
accumulate to and subsequently be maintained at the "Reserve
Requirement... "Reserve Requirement II means an amount equal to the
lesser of (i) the maximum annual debt service on the Bonds, (ii)
125% of the average annual debt service on the Bonds, or (iii) 10%
of the original principal amount of the Bonds. "Annual Debt
Service" on the Bonds for each year ending September 2 shall equal
the sum of (a) the interest falling due on the outstanding Bonds in
such 12 month period, assuming that the outstanding Bonds are
retired as scheduled, and (b) the principal amount of the outstand-
ing Bonds falling due during such 12 month period. "Average Annual
Debt Service" shall mean the average annual debt service during the
term of the Bonds. "Maximum Annual Debt Service" shall mean, as
computed from time to time, the largest annual debt service during
the per iod from the date of such computation through the f lnal
maturity of any outstanding Bonds.
8
D. Prior to each interest payment date, any interest earned on the
investment of monies on deposit in the Reserve Fund which would
cause the amount therein to exceed the Reserve Requirement shall be
transferred by the Fiscal Agent to the Redemption Fund and shall be
credited towards unpaid assessments each year during which part of
the Bonds remain outstanding. The auditor's record prepared
pursuant to section 8682 of the Act shall reflect credits against
each of the unpaid assessments in the manner provided in Section
10427.1 therein in amounts equal to each assessment parcels'
proportionate share of any Reserve Fund disbursement.
Notwithstanding the foregoing, the Treasurer may direct the Fiscal
Agent in writing to transfer the interest earnings described in the
preceding paragraph to the Rebate Fund if such funds are required
to be utilized to make payments to the United states in accordance
with the Arbitrage Rebate Provisions attached hereto as Exhibit
"C".
E. All sums remaining in the Reserve Fund in the year in which the
last installments of the assessments become due and payable shall
be credited toward the assessments as follows:
Prior to June 30th of the Fiscal Year next preceding the Fiscal
Year in which the last unpaid assessment installment becomes due
and payable, the Issuer shall determine the amount remaining in the
Reserve Fund, if any, after all sums advanced and interest thereon
have been reimbursed, and shall order the same to be distributed
and/or credited pursuant to its written direction in the manner set
forth in Section 10427.1 of the Act, provided only that where all
or any part of such assessments remain unpaid and are payable
installments, the amount apportioned to each parcel shall be
credited against the last unpaid assessment installment, then such
excess shall be credited against the next to last unpaid assessment
installment.
Whenever the balance in the Reserve Fund is sufficient to retire all
remaining outstanding Bonds, whether by advance retirement or other-
wise, collection of the principal and interest on the assessments shall
be discontinued and the Reserve Fund shall be liquidated by the Fiscal
Agent pursuant to the written direction of the Treasurer and utilized
in the retirement of the Bonds.
In the event that the balance in the Reserve Fund at the time of liqui-
dation exceeds the amount required to retire all outstanding Bonds in
the issue, the excess shall be apportioned to each parcel upon which
the individual assessment remained unpaid at the time the balance in
the Reserve Fund was sufficient to retire all outstanding Bonds in the
issue. The payments shall be made in cash by the Issuer to the respec-
tive owners of the parcels except that, if the excess is not greater
than one thousand dollars ($1,000), the excess may be transferred to
the General Fund of the Issuer.
9
REBATE FUND: The Fiscal Agent shall transfer into the Rebate Fund all
amounts required by the Treasurer to be transferred in acordance with
the provisions of the Arbitrage Rebate Provisions attached hereto as
Exhibit "e". subject to the provisions of said Arbitrage Rebate
Provisions, amounts on deposit in the Rebate Fund shall only be applied
to payments made to the United states in accordance with written
instructions of the Issuer. Notwithstanding any other provisions of
this Indenture, all earnings on amounts on deposit in the Rebate Fund
shall remain therein until paid to the Federal government.
SECTION 19. Investments. Obligations purchased as investments of monies in any of
the funds and accounts in which investments are authorized shall be
deemed at all times to be part of such funds and accounts. Except as
provided in Sectlon 18 hereof with respect to the Reserve Fund and the
Rebate Fund, all investment earnings on monies held under this Inden~
ture shall, prior to the earlier of (i) the substantial completion of
the works of improvement, which shall be established by receipt by the
Fiscal Agent of a written notice signed by the Treasurer stating that
the authorized improvements have been completed, (11) two (2) years
from the date of delivery of the Bonds, or (iii) the date on which the
Fiscal Agent receives written notice from the Treasurer stating that an
amount equal to the Bond proceeds allocable to the works of improvement
and authorized incidental expense have been expended ("Completion
Date"), be deposited into the Improvement Fund. After the Completion
Date, all such investment earnings shall be deposited in the Redemption
Fund. Subject to the restrictions set forth herein, monies in said
funds and accounts may from time to time be invested by the Fiscal
Agent at the written direction of the Issuer, or if no such written
direction is given, in Authorized Investments (as defined hereinafter)
and described in (7) below, provided that:
(a) Monies in the Improvement Fund shall be invested in obligations
which will by their terms mature as close as practicable to the
date the Issuer estimates the monies represented by the particular
investment will be needed for withdrawal from such fund;
(b) Monies in the Redemption Fund shall be invested only in obliga-
tions which will by their terms mature on such dates so as to
ensure the payment of principal of and interest on the Bonds as
the same become due; and
(c) Half of the monies in the Reserve Fund may be invested in obliga-
tions which shall mature not more than five (5) years from the
date of purchase by the Fiscal Agent and the balance may be
invested in obligations which shall mature not more than ten years
from the date of purchase by the Fiscal Agent, provided that no
such obligation shall mature later than the final maturity of the
bonds.
The Fiscal Agent shall sell at the best price reasonably obtainable or
present for redemption any obligations so purchased whenever it may be
necessary to do so in order to provide monies to meet any payment or
transfer for such funds and accounts or from such funds and accounts.
10
For the purpose of determining at any given time the balance in any
such funds or accounts, any such investments constituting a part of
such funds and accounts shall be valued at the lesser of their market
value or cost. Notwithstanding anything herein to the contrary I the
Fiscal Agent shall not be responsible for any loss from any investments
pursuant to this Indenture.
"Authorized
securities
District:
Investments" means any of the following to the extent such
are eligible for the legal investment of funds of the
(1 )
United states
indebtedness,
United States
interest;
Treasury notes, bonds, bills
or those for which the faith
is pledged for the payment
or certificates of
and credit of the
of pr inc ipal and
(2) Time certificates of deposit or negotiable certificates of deposit
issued by a state or nationally chartered bank or trust company,
including the Fiscal Agent, or a state or fed~ral savings and loan
association; provided, that such certificates of deposit shall be
(i) continuously and fully insured by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance
Corporation, or (ii) issued by any bank or trust company organized
under the laws of any state of the United States of America or any
national banking association (including the Fiscal Agent) having a
combined capital and surplus of at least one hundred million
dollars ($100,000,000), and such certificates shall have maturi-
ties of six (6 )months or less, or (Hi) continuously and fully
secured by such securities as are described in clause (1) above,
which securities shall have a market value (as determined on a
marked-to-market basis calculated at least weekly, and exclusive
of accrued interest) of not less than the principal amount of such
certificates of deposit;
(3) Bills of exchange or time drafts drawn on and accepted by a commer-
cial bank (including the Fiscal Agent), otherwise known as
bankers' acceptances, which are eligible for purchase by members
of the Federal Reserve System; provided, that purchases of
eligible bankers' acceptances may not exceed two hundred seventy
(270) days' maturity;
(4) Commercial paper of "prime" quality of the highest ranking or of
the highest letter and numerical rating as provided by either
Moody's or Standard & Poor's, which commercial paper is limited to
issuing corporations that are organized and operating within the
United states of America and that have total assets in excess of
five hundred million dollars ($500,000,000) and that have an "A"
or higher rating for the issuer t s debentures f other than commer-
cial paper, as provided by either Moody's or Standard & Poor's;
prov ided f that purchases of eligible commercial paper may not
exceed one hundred eighty (180) days' maturity nor represent more
than ten percent (10%) of the outstanding commercial paper of an
issuing corporation;
11
(5) Any repurchase agreement with any bank or trust company organized
under the laws of any state of the United states of America
(including the Fiscal Agent) or any national banking association
or government bond dealer reporting to, trading with and recog-
nized as a primary dealer by, the Federal Reserve Bank of New
York, which agreement is secured by anyone or more of the
securities described in clause (1) above; provided, that the under-
lying securities are (i) required by the repurchase agreement to
be held by any such bank, trust company or primary dealer having a
combined capital and surplus of at least one hundred million
dollars ($100,000,000) and being independent of the issuer of such
repurchase agreement, and ( ii) maintained at a market value (as
determined on a marked-to-market basis calculated at least weekly)
of not less than 103% of the amount so invested; and,
(6) Bonds, notes, warrants or other evidence of indebtedness of the
state of California or of any political subdivision or public
agency thereof which are rated in one of the two highest short-
term or long-term rating categories by either Moody's or Standard
& Poor's.
(7) Units of a taxable government money market portfolio restricted to
obligations issued or guaranteed as to payment of principal and
interest by the full faith and credit of the united States govern-
ment or repurchase agreements collateralized by such obligations.
(8) The Local Agency Investment Fund established pursuant to Section
16429.1 of the Government Code of the State of California.
SECTION 20. No Issuer Liability. It is hereby further determined and declared that
the Issuer will not obligate itself to advance any available funds from
its Treasury to cure any deficiency or delinquency which may occur in
the Bond Redemption Fund by failure of property owners to pay annual
Bpec~al assessments. This determination shall be clearly set forth and
stated in the title of the Bonds to be issued pursuant to these proceed-
ings as authorized and required by Section 8769 of the Streets and
Highways Code of the State of California.
SECTION 21. Covenant for superior Court Foreclosure. In the event of delinquency
in the payment of any installments of unpaldassessments, the Issuer
does covenant for the benefit of the owners of the bonds that it will
review assessment records of the County not later than August 1 of each
year to determine the amount of the assessments collected in the prior
fiscal year. If the cumulative delinquencies in the payment of
assessment installments throughout the Assessment District exceed five
percent (5%) of the Average Annual Debt Service on the Bonds, the
Issuer will commence foreclosure actlon(s) in the Superior Court of the
State of California (Part 14, Division 10, "Improvement Bond Act of
1915", Streets and Highways Code) on or before November 1 of each year,
and diligently prosecute and pursue such foreclosure proceedings to
judgment and sale. Initiation of such foreclosure actions may be
deferred in any fiscal year if the Reserve Fund is maintained in an
amount equal to the Reserve Requirement.
12
SECTION 22. Covenant to Maintain Tax-Exempt Status. The Issuer covenants that it
will not make any use of the proceeds of the Bonds issued hereunder
which would cause the Bonds to become "arbitrage bonds" subject to
Federal income taxation pursuant to the provisions of Section 148(a) of
the Code, or to become "Federally-guaranteed obligations" pursuant to
the provisions of section 149(b) of the Code, or to become "private
activity bonds" pursuant to the provisions of Section 141(a) of the
Code. To that end, the Issuer will comply with all applicable require-
ments of the Code and all regulations of the United States Department
of Treasury issued thereunder to the extent such requirements are, at
the time, applicable and in effect. Additionally, the Issuer agrees to
implement and follow each and every recommendation provided by bond
counsel and deemed to be necessary to be undertaken by the Issuer to
ensure compliance with all applicable provisions of the Code in order
to preserve the exemption of interest on the Bonds from Federal income
taxation.
SECTION 23. Covenant Regarding Arbitrage. The Issuer shall not take or permit nor
suffer to be taken any action with respect to the gross proceeds of the
Bonds as such term is defined under the Code which, if such action had
been reasonably expected to have been taken, or had been deliberately
and intentionally taken, on the date of issuance of the Bonds, would
have caused the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code and the regulations promulgated thereunder.
SECTION 24. Order to Print and Authenticate Bonds. The Treasurer is hereby
instructed to cause Bonds, as set forth above, to be printed, and to
proceed to cause said Bonds to be authenticated and delivered to an
authorized representative of the purchaser, upon payment of the
purchase price as set forth in the accepted proposal for the sale of
Bonds.
SECTION 25. Arbitrage certificate. On the basis of the facts, estimates and circum-
stances now in existence and in existence on the date of issue of the
BondS, as determined by the Treasurer, said Treasurer is hereby autho-
rized to certify that it is not expected that the proceeds of the issue
will be used in a manner that would cause such obligations to be
arbitrage Bonds. Such certification shall be delivered to the
purchaser together with the Bonds.
SECTION 26. Fiscal Agent. The Issuer hereby appoints Security Pacific as
Fiscal Agent for the Bonds and approves the Fiscal Agent Agreement by
and between the Issuer and said Fiscal Agent, which Agreement is on
file in the office of the City Clerk of the Issuer. The Fiscal Agent
is hereby authorized to and shall mail interest payments to the
Bondowners, select Bonds for redemption, give notice of redemption of
Bonds, maintain the Bond register and maintain and administer the
Redemption Fund, the Reserve Fund, the Improvement Fund and the Rebate
Fund. The Fiscal Agent is hereby authorized to pay the principal of
and premium, if any, on the Bonds when the same are duly presented to
it for payment at maturity or on call and redemption, to provide for
the registration of transfer and exchange of Bonds presented to it for
such purposes, to provide for the cancellation of Bonds, all as
provided in this Indenture, and to provide for the authentication of
13
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Bonds, and shall perform all other duties assigned to or imposed on it
as provided in this Indenture. The Fiscal Agent shall keep accurate
records of all funds administered by it and all Bonds paid and
discharged by it. The Fiscal Agent initially appointed, and any
successor thereto, may be removed by the Issuer and a successor or
successors may be appointed. So long as any Bonds are outstanding and
unpaid the Fiscal Agent and any successor or successors thereto
designated by the Issuer shall continue to be Fiscal Agent of the
Issuer for all of said purposes until the designation of a successor or
successors as Fiscal Agent. The Issuer shall compensate the Fiscal
Agent for the performance of its services hereunder pursuant to the
Fiscal Agent Agreement.
A Fiscal Agent appointed hereunder may resign at any time upon 90 days'
wr it ten notice and after appointment of a successor. Upon merger,
consolidation or reorganization of a Fiscal Agent, the Issuer will
appoint a new Fiscal Agent, which may be the corporation resulting from
such reorganization.
SECTION 27. Liability of Fiscal Agent. The recitals of fact and all promises,
covenants and agreements contained herein and in the Bonds shall be
taken as statements, promises, covenants and agreements of the Issuer,
and the Fiscal Agent assumes no responsibility for the correctness of
the same and makes no representations as to the validity or sufficiency
of this Indenture or of the Bonds, and shall incur no responsibility in
respect thereof other than in connection with its duties or obligations
herein, or in the Bonds or in the certificate of authorization assigned
to or imposed upon the Fiscal Agent. The Fiscal Agent shall be under
no responsibility or duty with respect to the issuance of the Bonds for
value. The Fiscal Agent shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or
willful misconduct. The Fiscal Agent shall be protected in acting on
any notice, resolution, request, consent, certificate or other document
believed by it to be genuine and to have been signed or presented by
the proper party.
SECTION 28. Defeasance. If all outstanding Bonds shall be paid and discharged in
anyone or more of the following ways:
(a) by paying or causing to be paid the principal of and interest with
respect to all Bonds outstanding, as and when the same become due
and payable;
(b) by depositing with the Fiscal Agent, in trust, at or before
maturity, money which, together with the amounts then on deposit
in the Redemption Fund and the Reserve Fund, is fully sufficient
to pay the principal of and interest on all Bonds outstanding as
and when the same shall become due and payable; or
(c) by depositing with the Fiscal Agent, in trust, direct obligations
of, or obligations guaranteed by, the United States of America, in
which the Issuer may lawfully invest its money, in such amount as
a firm of certified public accountants selected by the Issuer
shall determine, at the expense of the Issuer, will, together with
14
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the interest to accrue thereon and monies then on deposit in the
Redemption Fund and the Reserve Fund together with the interest to
accrue thereon, be fully sufficient to pay and discharge the
principal of and interest on all Bonds outstanding as and when the
same shall become due and payable;
then, at the election of the Issuer, and notwithstanding that any Bonds
shall not have been surrendered for payment, all obligations of the
Issuer under this Indenture with respect to the Fiscal Agent shall
cease and terminate, except for the obligation to pay the fees and
expenses of the Fiscal Agent incurred to such date of deposit and any
indemnifications which by their terms survive the termination of this
Indenture, and with respect to all outstanding Bonds shall cease and
terminate, except for the obligation of the Fiscal Agent to payor
cause to be paid to the owners of the Bonds not so surrendered and
paid, all sums due thereon. Notice of such election shall be filed
with the Fiscal Agent. Any funds held by the Fiscal Agent, at the time
of receipt of such notice from the Issuer, which are not required for
the purpose above mentioned, shall be paid over to ~he Treasurer.
SECTION 29. Purpose. Proceeds from the Bonds shall be used for payment of the
costs and expenses of the authorized public capital facilities, and all
appurtenances and incidental costs as set forth above.
SECTION 30. Provisions Constitute Contract. The provisions of this Indenture and
the Bonds shall constitute a contract between the Issuer and the
bondowners and the provisions hereof and thereof shall be enforceable
by any bondowner for the equal benefit and protection of all bondowners
similarily situated by mandamus, accounting, mandatory injunction or
any other Buit, action or proceeding at law or in equity that is now or
may hereafter be authorized under the laws of the State of California
in any court of competent jurisdiction. Said contract is made under
and is to be construed in accordance with the laws of the state of
California.
After the issuance and delivery of the Bonds this Indenture shall not
be subject to recission, but shall be subject to modification to the
extent and in the manner provided in this Indenture, but to no greater
extent and in other manner.
SECTION 31. Unclaimed Funds. Notwithstanding any provisions of this Indenture,
subject to applicable state escheat laws, any monies held by the Fiscal
Agent in trust for the payment of the principal or premium, if any, or
interest on, any Bonds and remaining unclaimed for four years after the
principal of all of the Bonds has become due and payable (whether at
maturity or upon call for redemption or by declaration as provided in
this Indenture), if such monies were held at such date, or four years
after the date of deposit of such monies if deposited after said date
when all of the Bonds became due and payable, shall be repaid to the
Issuer free from the lien created by this Indenture, and all liability
of the Fiscal Agent with respect to such monies shall thereupon cease
and the bondowners shall, upon such payment, look only to the Issuer
for payment; prov ided, however, that before the repayment of such
monies to the Issuer as aforesaid, the Fiscal Agent may (at the cost of
15
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the Issuer) first publish at least once in a nationally recognized
financial publication published in New York, New York, and Los Angeles,
California, a notice, in such form as may be deemed appropriate by the
Fiscal Agent, with respect to the provisions relating to the repayment
to the Issuer of the monies held for the payment thereof.
SECTION 32. Arbitrage Rebate Exemption Covenant. The term "bond proceeds" as used
in this Section shall mean amounts actually or constructively received
by the Issuer from the sale of the Bonds. The term "investment
proceeds" as used in this Section means amounts actually or construc-
tively received from the investment of the bond proceeds.
The Issuer shall expend all of the bond proceeds, other than bond
proceeds deposited in the Reserve Fund, and all of the investment
proceeds (including investment proceeds received from the investment of
bond proceeds deposited in the Reserve Fund) for the purposes for which
the Bonds have been authorized to be issued, within six (6) months
following the date of delivery of the Bonds to the initial purchaser
thereof.
In determining the amount to be expended in accordance with the
previously described requirement, investment proceeds shall be limited
to amounts earned on the bond proceeds before the close of the six (6)
month period described hereinabove.
In the event that the Issuer does not satisfy the expenditure require-
ments of this Section, the Issuer shall assure compliance with applic-
able requ irements contained in the Code for rebate to the Federal
government of excess investment earnings, if any, with respect to
earnings on the bond proceeds, the investment proceeds, and on other
applicable funds.
Notwithstanding any other provision of this Section, the Issuer shall
assure compliance with applicable requirements contained in the Code
for rebate to the Federal government of excess investment earnings, if
any, with respect to earnings on the Reserve Fund and on other applic-
able funds after the date which is six (6) months from the date of
delivery of the bonds to the initial purchaser thereof.
IN WITNESS WHEREOF, the Issuer has executed this Bond Indenture effective the date
first written hereinabove.
TREASURER
CITY OF SAN BERNARDINO
STATE OF CALIFORNIA
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EXHIBIT "A"
MATURITY SCHEDULE
Maturity
September 2 Principal Annual Rate Interest Debt Service
1991 $ 13,412 6.20% $ 44,832.23 $ 58,244.23
1992 20,000 6.30% 48,225.00 68,225.00
1993 20,000 6.40% 46,965.00 66,965.00
1994 20,000 6.50% 45,685.00 65,685.00
1995 20,000 6.60% 44,385.00 64,385.00
1996 -25,000 6.70% 43,065.00 68,065.00
1997 25,000 6.80% 41,390,00 66,390.00
1998 25,000 6.90% 39,690.00 64,690.00
1999 30,000 7.00% 37,965.00 67,965.00
2000 30,000 7.10% 35,865.00 65,865.00
2001 35,000 7.20% 33,735.00 68,735.00
2002 35,000 7.25% 31,215.00 66,215.00
2003 35,000 7.30% 28,677.50 63,677.50
2004 40,000 7.35% 26,122.50 66,122.50
2005 45,000 7.40% 23,182.50 68,182.50
2006 45,000 7.45% 19,852.50 64,852.50
2007 50,000 7.50% 16,500.00 66,500.00
2008 55,000 7.50% 12,750.00 67,750.00
2009 55,000 7.50% 8,625.00 63,625.00
2010 60.000 7.50% 4.500.00 64.500.00
Total $683,412 633,227.23 1,316,639.23
17
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EXHIBIT "B"
PAYMENT REQUEST FORM
(Attach duplicate original of Payee's
statement(s) or invoice(s))
PROGRESS PAYMENT
FULL/FINAL PAYMENT
The Fiscal Agent is hereby requested to pay from the city of San Bernardino, Assess-
ment District No. 977A Improvement Fund established by the Bond Indenture dated
April 2, 1990, to the person, corporation or other entity designated below as Payee,
the sum set forth below such designation, in payment of the Project Costs described
below. The amount shown below is due and payable under a purchase order, contract
or other authorization with respect to the Project Costs described below and has not
formed the basis of any prior request for payment.
Payee:
Address:
Amount: $
Description of Project Costs or portion thereof accepted by the Treasurer on behalf
of Assessment District No. 977A, and authorized to be paid to the Payee:
Executed by Authorized Representative
of the City of San Bernardino
Signature:
Name:
Title:
Dated:
Payment Request No.
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EXHIBIT "CO
ARBITRAGE REBATE PROVISIONS
This document sets forth instructions regarding the investment and disposition of
monies deposited in various funds and accounts established for the City of San
Bernardino ("Issuer") Assessment District No. 977A in aggregate principal amount of
$ 683,412.00 ("Bonds"). THE INSTRUCTIONS SET FORTH IN THIS DOCUMENT SHALL
APPLY ONLY TO THE PROCEEDS OF THE BONDS DEPOSITED INTO THE RESERVE FUND PROVIDED
THAT THE CITY HAS COMPLIED WITH THE EXPENDITURE REQUIREMENT CONTAINED IN SECTION 32
OF THE BOND INDENTURE.
The purpose of these instructions is to provide the Issuer with information
necessary to ensure that the investment of the monies in the funds and accounts
described herein will comply with the arbitrage limitations imposed by the Internal
Revenue Code of 1986.
DEFINITIONS
For purposes of these instructions, the following terms shall have the meanings set
forth below:
Bond Year. The term "Bond Year" means the 12 month period conunencing on the
Delivery Date of the Bonds and each 12 month period thereafter.
Code. The term "Code" means the Internal Revenue Code of 1986.
Delivery Date. The term "D.elivery Date" means the date the Bonds are delivered to
the initial purchaser.
Excess Investment Earnings.
equal to the sum of:
The term "Excess Investment Earnings" means an amount
(1) The excess of
(a) The aggregate amount earned from the date of delivery of the Bonds on all
Non-purpose Obligations in which Gross Proceeds of the Bonds are invested
(other than amounts attributable to an excess described in this paragraph
( 1) ), over
(b) The amount that would have been earned if the Yield on such Non-purpose
Obligations (other than amounts attributable to an excess described in
this paragraph (1)) had been equal to the Yield on the Bonds,
plus
(2) Any income attributable to the excess described in paragraph (1).
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Gross Proceeds. The term "Gross Proceeds" means the sum of the following amounts:
(1) Original proceeds, i.e., the net amount after payment of all expenses of
issuance of the Bonds received by the Issuer as a result of the sale of the
Bonds, excluding original proceeds of the Bonds which become transferred
proceeds (determined in accordance with applicable Regulations) of obligations
issued to refund in whole or in part the Bonds;
(2) Investment proceeds, i.e., amounts received at any time by the Issuer, such as
interest and dividends, resulting from the investment of any original proceeds
(as referenced in (11 above) or investment proceeds in Non-purpose obligations,
increased by any profits and decreased (if necessary, below zero) by any losses
on such investments, excluding investment proceeds which become transferred
proceeds (determined in accordance with applicable Regulations) of obligations
issued to refund in whole or in part the Bonds;
(3) Sinking fund proceeds, i.e., amounts, other than original proceeds, investment
proceeds or transferred proceeds (as referenced in (l) above) of the Bonds,
which are held in the Redemption Fund and any other fund to the extent that the
Issuer reasonably expects to use such other funds to pay principal or interest
on the Bonds;
(4) Amounts in the Reserve Fund and in any other fund established as a reasonably
required reserve or replacement fund;
(5) Amounts, other than as specified in this definition, used to pay principal and
interest on the Bonds; and,
(6) Amounts received as a result of investing amounts described in this definition.
Investment Property. The term "Investment Property" means any security (as defined
in Section l65(g)(2)(A) or (B) of the Code), obligation, annuity or investment-type
property within the meaning of Section l48(b)(2) of the Code in which Gross Proceeds
are invested, but, excluding, however, obligations of the type described in Notice
87-22 published in the Internal Revenue Bulletin 1987-10 on March 9, 1987, and other
property excluded under the Regulations.
Non-purpose Obligation. The term "Non-purpose Obligation" means any Investment
Property which is acquired with the Gross Proceeds of the Bonds and is not acquired
in order to carry out the governmental purpose of the Bonds.
Purchase Price. The term "Purchase Price", for the purpose of computation of the
Yield of the Bonds, has the same meaning as the term "Issue Price" in Sections
1273(b) and 1274 of the Code, and, in general, means the initial offering price to
the public (not including bond houses and brokers, or similar persons or
organizations acting in the capacity of underwriters or wholesalers) at which price
a substantial amount of the Bonds are sold. The term "Purchase Price", for the
purpose of computation of Yield of Non-purpose Obligations means the fair market
value of the Non-purpose Obligation on the date of use of Gross Proceeds of the
Bonds for acquisition thereof, or if later, on the date that Investment Property
constituting a Non-purpose Obligation becomes a Non-purpose Obligation of the
Bonds.
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Requlations. The term "Regulations" means temporary and permanent Regulations
promulgated under Section 148 of the Code.
Yield. The term "Yield" means that yield which, when used in computing the present
worth of all payments of principal and interest (or other payments in the case of
Non-purpose Obligations which require payments in a form not characterized as princi-
pal and interest) on a Non-purpose Obligation or on the Bonds produces an amount
equal to the Purchase Price of such Non-purpose Obligation or the Bonds, all
computed as prescribed in applicable Regulations.
REBATE PROVISIONS
Creation of Rebate Fund. The Fiscal Agent must create a Rebate Fund. Annually, on
the last day of each Bond Year, or on the preceding business day in the event that
such last day is not a business day, the Issuer shall provide written instructions
to the Fiscal Agent directing the Fiscal Agent to transfer from the Improvement
Fund, Reserve Fund and Redemption Fund, ae appropriate, for purposes of ultimate
rebate to the United states, an amount equal to Excess Investment Earnings.
Calculation of Excess Investment Earnings. Prior to the last day of the first Bond
Year, the Issuer shall calculate the Excess Investment Earnings. Thereafter, prior
to the last day of each Bond Year and on the date of retirement of the Bonds, the
Issuer shall calculate the amount of Excess Investment Earnings. This calculation
shall be made or caused to be made by the Issuer in accordance with the following
rules:
(1) Except as provided in paragraph (2) below, in determining the amount described
in paragraph (1) (a) of the definition of Excess Investment Earnings, the aggre-
ga te amount earned on Non-Purpose Obligations shall include (i) all income
realized under Federal income tax accounting principles (whether or not the
person earning such income is subject to Federal income tax) with respect to
such Non-purpose Obligations and with respect to the reinvestment of investment
receipts from such Non-purpose Obligations (without regard to the transaction
costs incurred in acquiring, carrying, selling or redeeming such Non-purpose
Obligations), including, but not limited to, gain or loss realized on the dispo-
sition of such Non-purpose Obligations (without regard to when such gains are
taken into account under Section 453 of the Code relating to taxable year of
exclusion of gross income), and income under Section 1272 of the Code (relating
to original issue discount) and (ii) any unrealized gain or loss as of the date
of retirement of the Bonds in the event that any Non-purpose Obligation is
retained after such date.
(2) Investment Property shall be treated as acquired for its fair market value at
the time it becomes a Non-purpose Obligation, so that gain or loss on the dispo-
sition of such Investment Property shall be computed with reference to such
fair market value as its adjusted basis.
(3) In determining the amount described in paragraph (1) (b) of the definition of
Excess Investment Earnings, the Yield on the Bonds shall be determined based on
the actual Yield of the Bonds during the period between the date of issuance of
the Bonds and the date the computation is made (with adjustments for discount).
21
--
(4) In determining the amount described in paragraph (ii) of the definition of
Excess Investment Earnings, all income attributable to the excess described in
paragraph (1) of said definition must be taken into account, whether or not
that income exceeds the Yield on the Bonds, and no amount may be treated as
"negative arbitrage".
(5) In determining the amount described in the definition of Excess Investment Earn-
ings, there shall be excluded any amount earned on any fund or account which is
used primarily to achieve a proper matching of revenues and debt service within
each Bond Year and which is depleted at least once a year, except for reason-
able carryover amount not in excess of the greater of one year's earnings on
such fund or account or 1/12 of annual debt service, as well as amounts earned
on said earnings.
Payment to United States. The Issuer shall provide the Fiscal Agent with written
instructions directing the Fiscal Agent to pay from the Rebate Fund an amount equal
to Excess Investment Earnings to the United States in installments with the first
payment to be made not later than thirty (30) days after the end of the fifth Bond
Year, and with subsequent payments to be made not later than five (5) years after
the preceding payment was due. The Issuer shall assure that each such installment
is in an amount equal to at least ninety percent (90%) of the Excess Investment
Earnings with respect to the Bonds as of the close of the computation period. Not
later than sixty (60) days after the retirement of the Bonds, the Issuer shall
provide the Fiscal Agent with written instructions directing the Fiscal Agent to pay
from the Rebate Fund to the united States one hundred percent (100%) of the thereto-
fore unpaid Excess Investment Earnings of the Bonds. In the event that there are
any amounts remaining in the Rebate Fund following the payment required by the
preceding sentence, the Issuer shall request in writing that the Fiscal Agent
transfer such funds to the Issuer and use such amount for any lawful purpose of the
Issuer. The Issuer shall cause the Fiscal Agent to remit payments to the United
states at the address prescribed by the Regulations as the same may be from time to
time in effect with such reports and statements as may be prescribed by such Regula-
tions. In the event that, for any reason, amounts in the Rebete Fund are insuffi-
cient to make the payments to the United states which are required hereunder, the
Issuer shall assure that such payments are made to the United states on a timely
basis from any funds lawfully available therefor.
Further Obligation of Issuer. The Issuer shall assure that Excess Investment
Earnings are not paid or disbursed except as provided in these instructions. To
that end, the Issuer shall assure that investment transactions are on an arms-length
basis. In the event that Non-purpose Obligations consist of certificates of deposit
or investment contracts, investment in such Non-Purpose Obligations shall be made in
accordance with the procedures described in applicable Regulations as from time time
in effect.
MAINTENANCE OF RECORDS. The Issuer shall keep and retain for a period of six (6)
years following the retirement of the Bonds, records of all determinations made
pursuant to these Instructions.
* * * *
22
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1
RESOLUTION NO.
2
3
RESOLUTION OF
SALE OF BONDS,
REDEMPTION FUND
THE
AND
CITY OF SAN BERNARDINO MAKING AWARD
PROVIDING FOR THE ESTABLISHMENT
FOR
OF A
4
WHEREAS, the COMMON COUNCIL of the CITY OF SAN BERNARDINO,
5
CALIFORNIA, has heretofore instituted and conducted proceedings
6
under the terms and provisions of the "Municipal Improvement Act
7
of 1913", being Division 12 of the Streets and Highways Code of
8
the State of California, for the construction of certain public
9
works of improvement, together with appurtenances and appurte-
10
nant work, in a special assessment district known and designated
11
as ASSESSMENT DISTRICT NO. 977A (hereinafter referred to as the
12
"Assessment District"); and,
13
WHEREAS, in the Resolution of Intention it was determined
14
and declared that bonds should issue under the provisions of the
15
"Improvement Bond Act of 1915", being Division 10 of the streets
16
and Highways Code of the State of California; and,
17
WHEREAS, there has now been received, in proper form, a
18
purchase agreement (hereinafter the "Purchase Agreement") for
19
the purchase of said bonds to issue under said proceedings,
20
which is considered to best serve the interests of owners of
21
land included within the Assessment District and should be
22
accepted.
23
NOW, THEREFORE,
BE IT RESOLVED BY THE MAYOR AND COMMON
24
COUNCIL OF THE CITY OF SAN BERNARDINO THAT:
25
SECTION 1.
The above recitals are all true and correct.
26
SECTION 2.
This legislative body does hereby make an award
27
and accept, approve and authorize the execution of the Purchase
28
3/9/90
-
RESOLUTION Mh. ~NG AWARD FOR SALE OF BOND~
1
Agreement for the improvement bonds from BATEMAN EICHLER, HILL
2
RICHARDS INCORPORATED at the interest rates and terms as set
3
forth in said Purchase Agreement as on file with the transcript
4
of these proceedings and open for public inspection.
5
SECTION 3.
Said sale is subject to all the terms and
6
conditions as set forth in the Resolution of Issuance, in the
7
Bond Indenture in its final form, and in the accepted Purchase
8
Agreement.
9
I HEREBY CERTIFY that the foregoing resolution was duly
10
adopted by the Mayor and Common Council of the City of San
11
Bernardino at a meeting thereof, held
12
on the day of 1990, by the
13
following vote, to wit:
14
15
AYES: Council Members
16
17
NOES:
18
ABSENT:
19
20
City Clerk
21
22
The foregoing resolution
day of
is hereby approved this
1990.
23
24
w. R.
City
Holcomb, Mayor
of San Bernardino
25
Approved as to form and legal content:
26
27
James F. Penman
City Attorney
28
By: ~~ /
V -
3/9/90
-
CITY OF SAN BERNARDINO
1915 ACT LIMITED OBLIGATION IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 977A
PURCHASE CONTRACT
April 16, 1990
Mayor and City Council
city of San Bernardino
300 North "D" Street
San Bernardino, California 92418
Dear Mayor and Councilmembers:
Bateman Eichler, Hill Richards, Incorporated (the
"Underwriter"), acting not as fiduciary or agent for you, but
on behalf of itself, offers to enter into this Purchase
Contract with the City of San Bernardino (the "City"), which
upon acceptance will be binding upon the City and upon the
Underwriter. This offer is made subject to the City's
acceptance by the execution of this Purchase Contract and its
delivery to the Underwriter at or before 11:59 p.m., local
time, on the date set forth herein above, and, if not so
accepted, will be subject to withdrawal by the Underwriter
upon notice delivered to the City at any time prior to the
acceptance hereof by the City.
1. Purchase. Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements
herein set forth, the Underwriter hereby agrees to purchase
from the ci ty , and the City hereby agrees to sell to the
Underwriter, all (but not less than all) of the City of San
Bernardino 1915 Act Limited Obligation Improvement Bonds for
Assessment District No. 977A (the "Bonds"), in an aggregate
principal amount not to exceed $683,412, dated as of April 2,
1990 bearing interest from said date (payable on March 2 and
September 2 in each year commencing September 2, 1990) at such
rates per annum and maturing on such dates and in such amounts
as set forth in the form of Exhibit A hereto. The Bonds shall
be substantially in the form described in, shall be issued
upon satisfaction of the contingencies set forth in, shall be
secured under the provisions of, and shall be payable and
1
subject to redemption as provided in a Bond Indenture adopted
by the City on April 16, 1990, (as amended from time to time,
the "Indenture"), the Preliminary Official statement relating
to the Bonds attached hereto as Exhibit "B" (the "Preliminary
Official statement") and the Improvement Bond Act of 1915,
constituting Division 10 of the streets and Highways Code of
the state of California (the "Act").
(b) By its acceptance of this proposal, the city
approves the Preliminary Official statement and the final
official statement relating to the Bonds (the "Official
statement") consisting of the Preliminary Official statement
with such changes as may be made thereto, with the approval of
the ci ty I s Attorney, the ci ty I S Bond Counsel and the
Underwriter, from time to time prior to the Closing Date. The
city hereby authorizes the Underwriter to use and distribute
in connection with the offer and sale of the Bonds: the
Preliminary Official statement, the Official statement the
Indenture, this Purchase Contract and all information
contained herein, and all other documents, certificates and
statements furnished by the city to the Underwriter in
connection with the transactions contemplated by this Purchase
Contract.
(c) Except as the city and the Underwriter may otherwise
agree, the City will deliver to the Underwriter at 9:00 a.m.
local time, on or before April 26, 1990 or such later date as
may be acceptable to the Underwriter (the "CLosing Date"), (i)
at the offices of Brown & Diven, in San Diego, California, the
Bonds, in definitive form (all Bonds being lithographed on
steel engraved borders and bearing CUSIP numbers), duly
executed by the City in the manner provided for in the
Indenture and the Act; and (ii) at the offices of Brown &
Diven, San Diego, California, the other documents hereinafter
mentioned and the Underwriter will accept such delivery and
pay the purchase price of the Bonds by certified or official
bank check payable in immediately available funds (such
delivery and payment being herein referred to as the
"Closing"). The Bonds shall be made available to the
Underwriter not later than 24 hours prior to the Closing Date
for purposes of inspection and packaging. The Bonds shall be
in fully registered form and shall be registered in accordance
with instructions to be supplied to the City by the
Underwriter.
2. Representations.
The City represents
underwriter that:
Warranties and Aareements of the ci tv.
and warrants to and agrees with the
(a) The city is duly organized and validly existing
under the Constitution and laws of the state of California and
has, and at the Closing Date will have, full legal right,
power and authority (i) to enter into this Purchase Contract,
(ii) to issue, sell and deliver the Bonds to the Underwriter
2
as provided herein, and (iii) to carry out, give effect to and
consummate the transactions contemplated by this Purchase
Contract, the Indenture, the Official statement and any City
resolutions or agreements referred to therein.
(b) The City has complied, and will at the Closing
Date be in compliance, in all material respects, with the
Indenture, the Act, and all other applicable laws and the
agreements referred to in subsection (a) hereof.
(c) The City has, or prior to the Closing Date, will
have, duly and validly: (i) adopted the Indenture and
approved and authorized the execution and delivery of the
Bonds, this Purchase Contract, the Official statement and any
other applicable agreements; and (ii) authorized and approved
the performance by the City of its obligation contained in,
and the taking of any and all action as may be necessary to
carry out, given effect to and consummate the transactions
contemplated by, each of said documents; and at the Closing
Date (assuming due authorization, execution and delivery by
the respective other parties thereto, where necessary) the
Bonds, the Indenture, this Purchase Contract, and any other
applicable agreements will constitute the valid, legal and
binding obligations of the City, enforceable in accordance
with their respective terms, subject to bankruptcy, insolvency
and other laws affecting the enforcement of creditors' rights
in general and to the application of equitable principles if
equitable remedies are sought.
(d) The City is not, and at the Closing Date will not
be, in any respect material to the transactions referred to
herein or contemplated hereby, in breach of or default under
any law or administrative rule or regulation of the state of
California, the United States of America, or of any
department, division, agency or instrumentality of either
thereof, or any applicable court or administrative decree or
order, or any loan agreement, note, resolution, indenture,
contract, agreement or other instrument to which the City is a
party or is otherwise subj ect or bound; and the adoption of
the Indenture, and the execution and delivery of the Bonds,
this Purchase Contract, any other applicable agreements and
the other City instruments contemplated by any of such
documents to which the City is a party, and compliance with
the provisions of each thereof, will not, in any respect
material to the transactions referred to herein or
contemplated hereby, conflict with or constitute a breach of
or default under any applicable law or administrative rule or
regulation of the State of California, the United states of
America, or of any department, division, agency or
instrumentality of either thereof, or any applicable court or
administrative decree or order or any loan agreement, note,
resolution, indenture, contract, agreement or other instrument
to which the City is a party or is otherwise subject or bound.
3
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~
-
(e) All approvals, consents, authorizations, elections
and orders of or filings or registrations with any
governmental authority, board, agency or commission having
jurisdiction which would constitute a condition precedent to,
or the absence of which would materially adversely affect, the
performance by the city of its obligations hereunder and under
the Indenture, the Bonds and any other applicable agreements
have been obtained and are in full force and effect.
(f) The Bonds, the Indenture, and other applicable
agreements conform as to form and tenor to the descriptions
thereof contained in the Official statement; and the Bonds,
when delivered to and paid for by the Underwriter on the
Closing date as provided herein, will be validly issued and
outstanding and entitled to all the benefits and security of
the Indenture.
(g) The special assessments referred to in the
Official statement have been duly and lawfully levied under
and pursuant to the Act, and such assessments constitute valid
and legally binding liens on the properties on which they have
been levied, all as described in the Official statement.
(h) Except as disclosed in the Official statement,
there are no outstanding assessment liens against any of the
properties within the City's Assessment District No. 977A (the
"Assessment District") which are senior to the assessment
liens referred to in paragraph (g) hereof.
(i) To the best knowledge of the City after diligent
inquiry, the Preliminary Official statement is, and the
Official statement will be, as of the Closing Date, true,
correct and complete in all material respects; and, to the
best knowledge of the City after diligent inquiry, the
Preliminary Official statement does not, and the Official
statement will not, as of the Closing Date, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(j) During the period commencing on the date hereof
and ending on the date 90 days following the Closing Date, if
any event shall occur of which the City has knowledge and as a
result of which it may be necessary to supplement the Official
statement in order to make the statements therein, in light of
the circumstances existing at such time, not misleading, the
City shall forthwith notify the Underwriter thereof and, if in
the opinion of the Underwriter such event requires an
amendment or supplement to the Official statement, the city
will at no expense to the Underwriter amend or supplement the
Official statement in a form and manner jointly approved by
the City and the Underwriter.
4
.. -
(k) The Indenture creates a valid pledge of, lien upon
and security interest in the unpaid assessments in the
Assessment District and the interest thereon and the moneys in
all funds and accounts established pursuant to the Indenture,
including the investments thereof, subject in all cases to the
provisions of the Indenture permitting the application thereof
for the purposes and on the terms and conditions set forth
therein.
(1) To the best knowledge of the city after diligent
inquiry, no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
regulatory agency, or public board or body (except for actions
filed by or on behalf of the city) is pending or threatened,
in any way affecting the existence of the City or the titles
of its officers to their respective offices or seeking to
restrain or to enjoin the issuance, sale or delivery of the
Bonds, the application of the proceeds thereof in accord with
the Indenture, the collection or application of assessment
pledged or to be pledged to pay the principal of and interest
on the Bonds, or the pledge thereof, or in any way contesting
or affecting the validity or enforceability of the
assessments, the Bonds, the Indenture, any other applicable
agreements, this Purchase Contract, or any action of the City
contemplated by any of said documents, or in any way
contesting the completeness or accuracy of the Official
statement or the powers of the city or its authority with
respect to the Bonds, the Indenture, any other applicable
agreements, this Purchase Contract or any action of the city
contemplated by any of said documents, or in any way seeking
to enjoin or restrain the city from approving the development
of any of the property within the Assessment District, or
which would adversely affect the exclusion from gross income
for purposes of federal income taxes of interest paid on the
Bonds or the exemption of such interest from California
personal income taxation; nor to the best knowledge of the
city is there any basis therefor.
(m) The city will furnish such information, execute
such instruments and take such other action in cooperation
with the Underwriter as the Underwriter may reasonably request
to qualify the Bonds for offer and sale under the "blue sky"
or other securities laws and regulations of such states and
other jurisdictions of the united states as the Underwriter
may designate; provided, however, that the city shall not be
required to consent to service of process outside of
California.
(n) Any certificate signed by any official of the City
authorized to do so shall be deemed a representation and
warranty by the City to the Underwriter as to the statements
made therein.
5
(0) The City will apply the proceeds of the Bonds to
the acquisition of public improvements of benefit to the
Assessment District in accordance with the Indenture and all
other applicable documents and as described in the Official
statement.
(p) The City will not invest or otherwise use proceeds
of the Bonds in any manner which would cause the Bonds to be
considered arbitrage bonds within the meaning of Section 148
of the Internal Revenue Code of 1986, as amended.
(q) The City will give reasonable notice to the
Underwriter prior to its approval of any reapportionment of
any assessment so as to provide the Underwriter with an
opportunity to advise the City whether and to what extent such
reapportionment would result in a reduction in the security
for the Bonds provided by the unpaid assessment.
(r) The city will, at the Underwriter's request, take
any action reasonably necessary to assure or maintain the
exclusion from gross income for purposes of federal income
taxes of interest on the Bonds and will not take any action,
or permit any action to be taken with respect to which it may
exercise control, which would result in the loss of that
exclusion.
(s) The City will not refund some, but not all, of the
Bonds if, as a result of such refunding, the average value to
lien ratio applicable to parcels with unpaid assessments
securing the Bonds which were not refunded would be less than
an average 6.84:1 lien to value ratio.
3. Condi tions to the ObI iqations of the Underwriter. The
obligations of the Underwriter to accept delivery of and pay
for the Bonds on the Closing Date shall be subject, at the
option of the Underwriter, to the accuracy in all material
respects of the representations and warranties on the part of
the City contained herein as of the date hereof and as of the
Closing Date, to the accuracy in all material respects of the
statements of the officers and other officials of the City, as
well as of the other individuals referred to herein, made in
any certificates or other documents furnished pursuant to the
provisions hereof; to the performance by the City of its
obligations to be performed hereunder at or prior to the
Closing Date; and to the following additional conditions:
(a) At the Closing Date, the Indenture, and any other
applicable agreements shall be in full force and effect, and
shall not have been amended, modified or supplemented, except
as may have been agreed to in writing by the Underwriter, and
there shall have been taken in connection therewith, with the
issuance of the Bonds and with the transactions contemplated
thereby and by this Purchase Contract, all such actions as, in
6
the opinion of Brown & Diven ("Bond Counsel"), shall be
necessary and appropriate;
(b) At the Closing Date, the Official statement shall
be in form and substance satisfactory to the Underwriter.
(c)
not be
District,
At the Closing Date, taxes and assessments shall
delinquent on properties within the Assessment
except as specifically approved by the Underwriter;
(d) Between the date hereof and the Closing Date, the
market price or marketability of the Bonds (at the yields to
be set forth in Exhibit A) shall not have been materially
adversely affected, in the judgment of the Underwriter
(evidenced by a written notice to the City terminating the
obligation of the Underwriter to accept delivery of and pay
for the Bonds), by reason of any of the following:
(i) legislation introduced in or enacted by the
Congress or recommended to the Congress by the President
of the United states, the Department of the Treasury, the
Internal Revenue Service, or any member of Congress, or
favorably reported for passage to either House of Congress
by any committee of such House to which such legislation
has been referred for consideration, or a decision
rendered by a court established under Article III of the
Constitution of the United states of America or by the Tax
Court of the United States of America, or an order,
ruling, regulation (final, temporary or proposed), press
release or other form of notice issued or made by or on
behalf of the Treasury Department of the United States of
America or the Internal Revenue Service, with the purpose
or effect, directly or indirectly, of imposing federal
income taxation upon such interest as would be received by
any holder of a Bond;
(ii) legislation introduced in or enacted (or
resolution passed) by the Congress or an order, decree or
injunction issued by any court of competent jurisdiction,
or an order, ruling, regulation (final, temporary or
proposed), press release or other form of notice issued or
made by or on behalf of the Securities and Exchange
Commission, or any other governmental agency having
jurisdiction of the subject matter, to the effect that
obligations of the general character of the Bonds,
including any or all underlying arrangements, are not
exempt from registration under or other requirements of
the Securities Act of 1933, as amended, or that the
Indenture Act of 1939, as amended, or that the issuance,
offering or sale of obligations of the general character
of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Official
Statement or otherwise is or would be in violation of the
federal securities laws as amended and then in effect;
7
(iii) a general suspension of trading in securities
on the New York stock Exchange or the American stock
Exchange, the establishment of minimum prices on either
such exchange, the establishment of material restrictions
(not in force as of the date hereof) upon trading in
securities generally by any governmental authority or any
national securities exchange, a general banking moratorium
declared by federal, state of New York or state of
California officials authorized to do so, or a war or
other national calamity;
(iv) the withdrawal or downgrading of any rating of
any securities of the City by a national rating agency;
(v) any amendment to the federal or California
Constitution or action by any federal or California court,
legislative body, regulatory body or other authority
materially adversely affecting the tax status of the City,
its property, income, securities (or interest thereon),
the validity or enforceability of the assessment;
(vi) the New York stock Exchange or other national
securi ties exchange or any governmental authority, shall
impose, as to the Bonds or obligations of the general
character of the Bonds, any material restrictions not now
in force, or increase materially those now in force, with
respect to the extension of credit by, or the charge to
the net capital requirements of, underwriters;
(vii) any event occurring, or information becoming
known which, in the judgment of the Underwriter, makes
untrue in any material respect any statement or
information contained in the Official statement, or has
the effect that the Official statement contains any untrue
statement of material fact or omits to state a material
fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances
under which they were made, not misleading; or
(viii) general political, economic and market
conditions which, in the sole opinion of the Underwriter,
shall not be satisfactory to permit the sale of the Bonds.
(e) At or prior to the Closing Date, the Underwriter
shall have received two counterpart originals or certified
copies of the following documents, in each case satisfactory
in form and substance to the Underwriter:
(i) the Official statement, executed on behalf of
the City by the mayor or an authorized member of its City
Council, or such other official as may be approved by the
Underwriter;
8
(ii) the Indenture, together with a certificate of
the City Clerk of the city, dated as of the Closing Date,
to the effect that it is a true, correct and complete copy
of the one duly adopted by the City and that it has not
been amended, modified or rescinded (except as may have
been agreed to by the Underwriter) and is in full force
and effect as of the Closing Date;
(iii) an unqualified opinion, dated the Closing Date
and addressed to the City, of Bond Counsel to the effect
that the Bonds are the valid, legal, binding obligations
of the City and that the interest thereon is excluded from
gross income for purposes of federal income taxes, if not
a specific preference item for purposes of federal
individual and corporate alternative minimum taxes and is
exempt from personal income taxes of the state of
California, all as provided in the official statement,
together with an unqualified opinion of Bond Counsel,
dated the Closing Date and addressed to the Underwriter,
to the effect that such opinion addressed to the City may
be relied upon by the Underwriter to the same extent as if
such opinion was addressed to it;
(iv) an opinion, dated the Closing Date and
addressed to the Underwriter, of Bond Counsel to the
effect that (1) this Purchase Contract has been duly
authorized, executed and delivered by the City and,
assuming due authorization, execution and delivery by the
Underwriter, constitutes a legal, valid and binding
agreement of the City, enforceable in accordance with its
terms, subj ect to bankruptcy, insol vency and other laws
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by the
application of equitable principles if equitable remedies
are sought; (2) the Bonds are not subject to the
registration requirements of the Securities Act of 1933,
as amended, and the Indenture is exempt from qualification
under the Trust Indenture Act of 1939, as amended; (3) the
Bonds and the Indenture conform as to form and tenor to
the descriptions thereof contained in the Official
Statement, and the statements contained in the Official
Statement on the cover and under the captions
"Introductory Statement", "The Bonds", "Security for the
Bonds", "Special Risk Factors", "Miscellaneous Legal
Opinion", and "Miscellaneous - Tax Exempt", insofar as
such statements purport to summarize certain provisions of
the Act, the Bonds, the Indenture, and other applicable
laws and agreements, present a fair and accurate summary
of such provisions, and such summaries do not contain any
untrue statements of a material fact or omit to state a
material fact required to be stated in the Official
Statement or necessary to make the statements made
therein, in the light of the circumstances under which
they are made, not miSleading in any material respect; (4)
9
the Indenture and the Bonds constitute legal, valid and
binding agreements of the City enforceable in accordance
with their terms except as such enforceability may be
limited by bankruptcy, insolvency and other laws affecting
the enforcement of creditors I rights in general and the
application of equitable principles if equitable remedies
are sought; (5) the Indenture creates a valid pledge of,
lien upon and security interest in the proceeds of the
Bonds, the unpaid assessments in the Assessments District
and the interest thereon, and the moneys in all funds and
accounts established pursuant to the Indenture, including
the investments thereof, subject in all cases to the
provisions of the Indenture permitting the application
thereof for the purposes and on the terms and conditions
set forth therein; (6) the assessments in the Assessment
District have been duly and lawfully levied under and
pursuant to the Act and constitute valid and legally
binding liens on the respective properties on which they
were levied; and (7) based upon the information provided
to such counsel in the course of their participation in
the preparation of the Official statement and (except as
provided above) without having undertaken to determine
independently the accuracy or completeness of the
statements contained in the Official statement, such
counsel have no reason to believe that the Official
statement (except for the financial and statistical data
included therein and assumptions with respect thereto, as
to which no view need be expressed) as of the date of the
Official Statement omitted, or as of the Closing Date
omits, to state any material fact required to be stated
therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading;
(v) an opinion, dated the Closing Date and
addressed to the Underwriter, of Brown & Diven, Bond
Counsel, to the effect that (1) the Bonds are exempt from
the registration requirements of the Securities Act of
1933, as amended, and the Indenture is exempt from
qualification under the Trust Indenture Act of 1939, as
amended, and (2) based upon the information made available
to them in the course of their participation in the
preparation of the Official statement as bond counsel and
without having undertaken to determine independently or
assuming any responsibility for the accuracy, completeness
or fairness of the statements contained in the Official
Statement, such counsel do not believe that the Official
Statement, as of its date and as of the Closing Date,
contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading (except that no opinion or belief need be
expressed as to any appendices and any other financial and
10
statistical data
such memoranda
specified by the
contained in the
of said firms,
Underwriter.
Official statement); and
or of other counsel
(vi) a certificate, dated the Closing Date and
signed by the Mayor to the effect that (1) the
representations and warranties of the City contained
herein are true and correct in all material respects on
and as of the Closing Date with the same effect as if made
on the Closing Date; (2) to the best knowledge of said
officer, no event has occurred since the date of the
Official statement which should be disclosed in the
Official statement in order to make the statements and
information therein not misleading in any material
respect; and (3) the City has complied with all the
agreements and satisfied all the conditions on its part to
be performed or satisfied under this Purchase Contract,
the Indenture, and the Official statement at and prior to
the Closing Date;
(vii) An opinion, dated the Closing Date and
addressed to the Underwriter, of the City Attorney, to the
effect that (1) to his best knowledge after diligent
inquiry no action, suit, proceeding, inquiry or
investigation, at law or in equi ty, before or by any
court, regulatory agency, public board or body, is pending
or threatened affecting the existence of the City or the
titles of its officers to their respective offices, or
seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds, the application of the proceeds
thereof in accordance with the Indenture, the collection
or application of the assessment and the interest thereon
to pay the principal of and interest on the Bonds, or
contesting or affecting the validity or enforceability of
the Bonds, the Indenture, this Purchase Contract, or
action of the City contemplated by any of said documents,
or contesting the completeness or accuracy of the Official
statement or the powers of the City or its authority with
respect to the Bonds, the Indenture, this Purchase
Contract, or any action on the part of the city
contemplated by any of said documents, or seeking to
enjoin or restrain the City from approving the development
of any of the property within the Assessment District, or
which challenges the exclusion of interest paid on the
Bonds from gross income for purposes of federal income
taxation or the exemption of such interest from California
personal income taxation, nor to his knowledge is there
any basis therefor; (2) the City is duly organized and
validly existing under the Constitution and laws of the
state of California with full legal right, power and
authority to issue the Bonds and to perform all of its
obligations under this Purchase Contract, and the Bonds;
(3) to the best of the knowledge of the city I s Attorney
the city has duly and validly adopted the Indenture, and
11
it is in full force and effect; (4) to the best of the
knowledge of the city's Attorney the City has duly
authorized, executed and delivered this Purchase Contract
and the Official statement; (5) to the best of the
knowledge of the city's Attorney assuming due
authorization, execution and delivery by the Underwriter,
this Purchase Contract constitutes a legal, valid and
binding agreement of the City enforceable in accordance
with its terms, subject to bankruptcy, insolvency and
other laws affecting the enforcement of creditors' rights
in general and to the application of equitable principles
if equitable remedies are sought; and (6) the statements
contained in the Official statement (excluding the
Appendices thereto as to which no opinion is expressed),
to the best of the knowledge of the City's Attorney and
without undertaking to verify the same with independent
investigation, do not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading;
(viii) a transcript of all proceedings relating to
the authorization, issuance, sale and delivery of the
Bonds;
(ix) a certificate, dated the Closing Date, of GFB-
Friedrich & Associates, Inc. to the effect that the
material contained in the Official statement under the
heading "The Assessment District" does not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(x) the final appraisal report of Michael
Frauenthal & Associates, Inc. setting forth appraised
values for the 96 parcels within the Assessment District
addressed therein not less than the respective appraised
values set forth in the Preliminary Official statement and
a certificate of such person dated the Closing Date,
confirming his consent to the reproduction of the
appraisal report in the Official statement and to the
effect that, as of the date hereof and as of the Closing
Date, the appraisal report set forth in the Official
statement and the statements in the Official statement
under the caption "Land Values" did not contain any untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements contained
therein, in the light of the circumstances under which
they were made, not misleading;
(xi) such additional legal opinions, certificates
(including a non-arbitrage certificate), instruments and
12
other documents as the Underwriter may reasonably request
to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the City's representations
and warranties contained herein and of the statements and
information contained in the Official statement and the
due performance or satisfaction by the City at or prior to
the Closing of all agreements then to be performed and all
conditions then to be satisfied by the City in connection
with the transactions contemplated hereby and by the
Indenture and the Official Statement.
All the opinions, letters, certificates, instruments and
other documents mentioned in this section or elsewhere in this
Purchase Contract shall be deemed to be in compliance with the
terms hereof if, and only if, they are in form and substance
satisfactory to the Underwriter.
If any of the conditions to the obligations of the
Underwri ter contained in this section or elsewhere in this
Purchase Contract shall not have been satisfied when and as
required herein, all obligations of the Underwriter hereunder
may be terminated by the Underwriter at, or at any time prior
to, the Closing Date by written notice to the city.
4. Indemnification. The City will indemnify and hold
harmless the Underwriter, and each person, if any, who
controls the Underwriter within the meaning of the Securities
Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended, from and against any and all losses, claims,
damages, expenses or liability, joint or several, to which
they or any of them may become subject under the Securities
Act of 1933, as amended and the Securities Exchange Act of
1934, as amended, or under any other statue or at common law
or otherwise, and, except as hereinafter provided, will
reimburse the Underwriter and each such controlling person, if
any, for any legal or other expenses reasonably incurred by
them or any of them in connection with investigating or
defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material
fact with respect to the information contained in the Official
Statement (including the appendices thereto) which the city
has supplied or which related directly to the Assessment
District or arise out of or are based upon the omission or
alleged omission to state therein a material fact with respect
to such information required to be stated therein or necessary
in order to make the statements therein not misleading.
Promptly after receipt by the Underwriter or any such
controlling person of notice of the commencement of any action
in respect of which indemnity may be sought against the City
under this paragraph, such person will notify the City in
writing of the commencement thereof, and, subject to the
provisions hereinafter stated, the City may assume the defense
13
of such action (including the employment of counsel, as the
case may be, and the payment of expenses) insofar as such
action shall relate to any alleged liability in respect of
which indemnity may be sought against the city. The
Underwriter or any such controlling persons shall have the
right to employ counsel in any such action and to provide or
participate in the defense thereof, and the fees and expenses
of such counsel reasonably incurred shall be at the expense of
the City, provided that the City shall consent to the
selection of such counsel. The City shall not be liable to
indemnify any person for any settlement of any such action
effected without its consent.
5. Expenses.
(a) Whether or not the Underwriter accepts delivery of
and pays for the Bonds as set forth herein, it shall be under
no obligation to pay, and the City shall payor cause to be
paid (out of the proceeds of the Bonds or any other legally
available funds of the city) all expenses incident to the
performance of the City's obligations hereunder, including but
not limited to the cost of printing, engraving and delivering
the Bonds to the Underwriter; the cost of printing,
distribution and delivery of the Preliminary Official
statement and the Official statement in reasonable quantities
as requested by the Underwriter; the fees and disbursements of
Bond Counsel, accountants, engineers, appraisers, and any
other experts or consultants retained in connection with the
Bonds; and any other expenses not specifically enumerated in
paragraph (b) of this section incurred in connection with the
issuance of the Bonds.
(b) Whether or not the Bonds are delivered to the
Underwriter as set forth herein, the city shall be under no
obligation to pay, and the Underwriter shall pay, all expenses
paid or incurred to qualify the Bonds for sale under any "blue
sky" laws; and all other expenses paid or incurred by the
Underwriter in connection with its offering and distribution
of the Bonds not specifically enumerated in paragraph (a) of
this section.
6. Notices. Any notice or other communication to be given to
the City under this Purchase Contract may be given by
delivering the same in writing to Craig A. Graves, city
Treasurer, City of San Bernardino, 300 North "D" street, San
Bernardino, California 92418; and any notice or other
communication to be given to the Underwriter under this
Purchase Contract may be given by delivering the same in
writing to Bateman Eichler, Hill Richards, Inc., 1205 Prospect
Street, Suite 550, La Jolla, California 92037, Attention:
Pamela D. Newcomb.
7. Parties
solely for
in
the
Interest.
benefit
This
of the
Purchase
City and
Contract is made
the Underwriter
14
(including successors or assignees of the Underwriter) and no
other person, including but not limited to any owner of land
within the Assessment District, shall acquire or have any
right hereunder or by virtue hereof.
8. Survival of Representations and Warranties. The
representations and warranties of the city, set forth in or
made pursuant to this Purchase Contract, shall not be deemed
to have been discharged, satisfied or otherwise rendered void
by reason of the Closing or termination of this Purchase
Contract, regardless of any investigations made by or on
behalf of the Underwriter (or statements as to the results of
such investigations) concerning such representations and
statements of the City and regardless of delivery of and
payment for the Bonds.
9. Offerinq bv Underwriter. It is understood that the
Underwriter proposes to offer the Bonds for sale to the public
(which may include selected dealers) as set forth in the
Official Statement. Concessions from the public offering
price may be allowed to selected dealers. It is understood
that the initial public offering price and concessions set
forth in the Official Statement may vary after the initial
public offering. It is further understood that the Bonds may
be offered to the public at prices other than the par value
thereof. The net premium on the sale of the Bonds, if any,
shall accrue to the benefit of the Underwriter. The City
hereby confirms the authority and use by the Underwriter of
the Official Statement.
10. Time. Time shall be of the essence of this Agreement.
11. Counterparts. This Agreement may be executed in any
number of counterparts.
15
12. Effective. This Purchase Contract shall become effective
and binding upon the respective parties hereto upon the
execution of the acceptance hereof by the City and shall be
valid and enforceable as of the time of such acceptance.
Very truly yours,
BATEMAN EICHLER, HILL RICHARDS
INCORPORATED
By
First Vice President
Accepted:
CITY OF SAN BERNARDINO
Its Mavor
16
EXHIBIT A TO PURCHASE CONTRACT
Maturity
September 2 Principal Annual Rate Interest Debt Service
1991 $ 13,412 6.20% $ 44,832.23 $ 58,244.23
1992 20,000 6.30% 48,225.00 68,225.00
1993 20,000 6.40% 46,965.00 66,965.00
1994 20,000 6.50% 45,685.00 65,685.00
1995 20,000 6.60% 44,385.00 64,385.00
1996 25,000 6.70% 43,065.00 68,065.00
1997 25,000 6..80% 41,390,00 66,390.00
1998 25,000 6.90% 39,690.00 64,690.00
1999 30,000 7.00% 37,965.00 67,965.00
2000 30,000 7.10% 35,865.00 65,865.00
2001 35,000 7..20% 33,735.00 68,735.00
2002 35,000 7.25% 31,215.00 66,215.00
2003 35,000 7.30% 28,677.50 63,677.50
2004 40,000 7.35% 26,122.50 66,122.50
2005 45,000 7.40% 23,182.50 68,182.50
2006 45,000 7.45% 19,852.50 64,852.50
2007 50,000 7.50% 16,500.00 66,500.00
2008 55,000 7.50% 12,750.00 67,750.00
2009 55,000 7.50% 8,625.00 63,625.00
2010 60.000 7.50% 4.500.00 64.500.00
Total $683,412 633,227.23 1,316,639.23
The purchase price for the Bonds shall be 98% plus accrued
interest on the Bonds from their dated date until the Closing Date.
The foregoing dates, amounts, coupon rates and purchase price have
been agreed to this 16th day of April, 1990.
CITY OF SAN BERNARDINO
BATEMAN EICHLER, HILL RICHARDS
INCORPORATED
By:
By:
-c)
\: i"-"--i.._\L b ~--LA.A.: c__'vL-i,;~
First Vice President
Mayor
EXHIBIT B TO PURCHASE CONTRACT
(Attach Preliminary Official statement)