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'OF SAN BER~RDINO - REQUEST 90R COUNCIL ACTION
CITY
From: CRAIG A. GRAVES, City Treasurer
Su~~t: Assessment District N. 977B
(June and Cajon Acquisition
District)-Adoption of Resolution
authorizing the Issuance of Bonds,
Bond Indenture, Bond Purchase Contract
~nn P~A n~~;~;~' ~~~~o~on~
Dept: City Treasurer's Office
De~: March 25, 1991
Synopsis of Previous Council action:
8-7-89 - Resolutions approving Bond Counsel, Unden~riter and Assessment
Engineer were adopted.
4-14-90 - Resolutions authorizing issuance of Bonds and the Award of Sale
for 977A were adopted.
1-32-91 - Resolutions making appointments, adopting boundary nan, declaring
intention, passing on Report and setting hearing adopted.
3-11-91 - Resolution accepting works of iMprovement and Resolution
confirming assessment adopted.
R~ommended motion:
Adopt Resolution.
Con~ct person: Craig A. Graves
Supporting dete e~hed: Yes
Phone: 5021
Werd: Sixth
FUNDING REQUIREMENTS:
Amount: $1,015,000.00
Source: 251-651-53925
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Finence: L~~ D ,~
Funded through sale of bonds for
Assessment District 977B
Council Notes:
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~ SAN BERrRRDINO - REQUEST ~R COUNCIL ACTION
CITY
STAFF REPORT
Attached for the consideration of the Mayor and Common Council
is the Resolution authorizing the Issuance of Bonds, Ap~roving
the Forms of Bond Indenture, the Bond Purchase Contract and the
Preliminary Official Statement. This approves all fornal
terms and conditions relating to the sale of bonds through the
approval of the Bond Indenture, accepts the proposal for the
sale of bonds submitted by Bateman Eichler, Hill Richards and
approves the form of the Preliminary Official Statement. It
also names Security Pacific National Bank as Fiscal Agent.
The bonds are to be sold in the amount of approximately
$1,015,000.000 for Assessment District 977B (the Cajon and June
Acquisition District). Assessment District 977A, the adjoining
district was completed in April of 1990.
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1
RESOLUTION NO.
2
RESOLUTION OF THE CITY .OF SAN BERANRDINO AUTHORIZING
3 ISSUANCE OF BONDS, APPROVIIlG FORMS OF BOND INDENTURE, BOND
PURCHASE CONTRACT AND PRELIMINARY OFFICIAL STATEMENT FOR A
4 SPECIAL ASSESSMENT DISTRICT
5
WHEREAS, the COMMON COUNCIL of the CITY OF SAN BERNARDINO,
6 CALIFORNIA, is conducting proceedings for the installation of
7 certain public improvements in a special assessment district
8 pursuant to the terms and provisions of the "Municipal Improve-
9 ment Act of 1913", being Division 12 of the Streets and Highways
10 Code of the state of California, said special assessment
11 district known and designated as ASSESSMENT DISTRICT NO. 977B
12 (hereinafter referred to as the "Assessment District"); and,
13
WHEREAS, this legislative body has previously declared in
14 its Resolution of Intention to issue bonds to finance said
15 improvements, said bonds to issue pursuant to the terms and
16 provisions of the "Improvement Bond Act of 1915", being Division
17 10 of said code; and,
18
WHEREAS, at this time this legislative body is desirous to
19 set forth all formal terms and conditions relating to the autho-
20 rization, issuance and administration of said bonds; and,
21
WHEREAS, there has been presented, considered and ready for
22 approval a bond indenture setting forth formal terms and condi-
23 tions relating to the issuance and sale of bonds; and,
24
WHEREAS, there has also been presented for consideration by
25 this legislative body a form of Bond Purchase contract authoriz-
26 ing the sale of bonds to Bateman Eichler, Hill Richards, a divi-
27 sion of Kemper Securities Group, the designated underwriter;
28 and,
3/22/91
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RESOUJrION AUl'lDRIZ:m; ISStJAN:E OF OONDS
FOR ASSESSMENl' DISl'RIcr NO. 977B
1
2
WHEREAS, there has also been presented for consideration by
3
this legislative body a form of Preliminary Official Statement
4 containing information including but not limited to the Assess-
5 ment District and the type of bonds, including terms and condi-
6 tions thereof1 and,
7
WHEREAS, this legislative body hereby further determines
8 that the unpaid assessments shall be specifically in the amount
9 as shown and set forth in the Certificate of Paid and Unpaid
10 Assessments as certified by and on file with the Treasurer, and
11 for particulars as to the amount of said unpaid assessments,
12 said Certificate and list shall control and govern.
13 NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS:
14 RECITALS
15
SECTION 1.
That the above recitals are true and correct.
16
BOND AUTHORIZATION
17
SECTION 2.
That this legislative body does hereby autho-
18 rize the issuance of bonds pursuant to the terms and provisions
19 of the "Improvement Bond Act of 1915", being Division 10 of the
20 Streets and Highways Code of the state of California, and also
21 pusuant to the specific terms and conditions as set forth in the
22 BOND INDENTURE presented herein.
23 BOND INDENTURE
24
SECTION 3.
The BOND INDENTURE is approved substantially in
25 the form presented herein, subject to modifications as necessary
26 and as approved by the Treasurer, with the concurrence of Bond
27
Counsel.
Final approval of the BOND INDENTURE shall be conclu-
28 sively evidenced by the signature of the Treasurer upon final
3/21/91
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REroLurION AurlDRIZrnG ISSUANCE OF OONDS
FOR ASSESSMENT DISl'RIcr m. 977B
1
2
delivery of bonds and receipt of proceeds.
A copy of said BOND
3 INDENTURE shall be kept on file with the transcript of these
4
proceedings and open for public inspection.
5
BOND PURCHASE CONTRACT
6
SECTION 4.
That the BOND PURCHASE CONTRACT as submitted by
7 Bateman Eichler, Hill Richards, the designated underwriter, is
8 hereby approved substantially in the form presented herein,
9 subject to modifications as necessary and approved by the
10 Treasurer, with the concurrence of Bond Counsel, with the final
11
pricing of bonds being delegated to the Treasurer.
Final
12 Acceptance of the BOND PURCHASE CONTRACT shall be evidenced by
13 the signature of the Mayor on behalf of the City.
14 PRELIMINARY OFFICIAL STATEMENT
15
SECTION 5.
That the PRELIMINARY OFFICIAL STATEMENT is
16 approved substantially in the form presented, subject to modifi-
17 cations as necessary and as approved by the Treasurer, with the
18 concurrence of Bond Counsel, and execution and distribution is
19
hereby authorized.
A copy of said PRELIMINARY OFFICIAL STATE-
20 MENT shall be kept on file with the transcript of these proceed-
21 ings and remai~ open for public inspection.
22 FINAL ASSESSMENTS
23
SECTION 6.
That the Certificate of Paid and Unpaid Assess-
24 ments, as certified by the Treasurer, shall remain on file in
25 that office and be open for public inspection for all particu-
26 lars as it relates to the amount of unpaid assessments to secure
27 bonds for this Assessment District.
28 II
3/21/91
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m:soImION wOuZING ISSUANCE OF WIDS
FOR ASSESSMENl' DISFRIcr N). 977B
1
SUPERIOR COURT FORECLOSURE
2
This legislative body does further specifically
SECTION 7.
3
covenant for the benef.it of the bondholders to commence and
4
prosecute to completion foreclosure actions regarding delinquent
5
installments of the assessments in the manner, within the time
6
limits and pursuant to the terms and conditions as set forth in
7
the Bond Indenture as submitted and approved through the adop-
8
tion of this Resolution, and the Director of Finance and the
9
City Attorney are hereby authorized and directed to commence and
prosecute the foreclosure actions and to take such other actions
as said officers deem appropriate from time to time to carry out
the purposes of this Section.
I HEREBY CERTIFY that the foregoing resolution was duly
adopted by the Mayor and common council of the City of San
15
meeting thereof, held on the
Bernardino at a
16
, 1991, by the following vote, to wit,
day of
17
AYES,
Council Members
18
19
NOES,
20
ABSENT,
21
22
City Clerk
23
The foregoing resolution is hereby approved this
day
24
1991.
of
25
w. R. Holcomb, Mayor
26 City of San Bernardino
27 Approved as to form and legal content,
28
James F. Penman
m, ~<".,
By' .~/.
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I}i/],~
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BOND INDENTURE
This Bond Indenture (the "Indenture"). dated as of April 15, 1991, 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. 977B (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 a principal amount not to exceed
$1,013,048.90, and designated as the City of San Bernardino Assessment
District No. 977B 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 alterna-
tive procedure for the advance payment of assessments and the calling
of Bonds shall apply.
Registered Bonds and Denominations. Said Bonds shall be issuable only
as fully registered Bonds 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 $5,000 contained
therein.
Date of Bonds. All of said Bonds shall be dated the 2nd day of April,
1991, 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
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SECTION 7.
SECTION 8.
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which it authenticated and registered, unless said Bond is authenti-
cated and registered as of an interest payment date, in which case it
shall bear interest from aaid intereat payment date, or unlesa aaid
Bond ia 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 diacharged.
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 National Bank in Los Angeles,
California, the designated registrar, transfer agent and paying agent
of the Issuer ("Fiscal Agent"), or such other registrar, transfer agent
or paying agent aa may be deaignated by aupplemental Indenture of the
I.suer.
Intereat on said Bonds shall be paid on March 2 and September 2 of each
year, commencing September 2, 1991, by check or draft to the regiatered
owner thereof at his address as it appears on the books of registration
as of the 15th day immediately preceding said interest payment date.
Redemption.
(a) Optional Redemption. The Bonds may be redeemed prior to maturity,
in whole or in part, at the option of the Issuer, 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 shall be subject to mandatory
redemption prior to maturity, in whole or in part in increments of
$5,000.00, on any March 2 or September 2 at a redemption price
equal to 103' of the principal amount thereof, together with
accrued interest to the date of redemption, from monies represent-
ing the prepayment of assessments.
(c) Selection of Bonds for Redemption. If less than all of the
outstanding Bonds are to be redeemed, the Fiscal Agent ahall
aelect the Bonds to be redeemed in authorized denominations from
each maturity in the same proportion which auch maturity repre-
senta with respect to all of the outstanding Banda and by lot
within a aingle maturity I 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 divid-
ing 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.
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(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 appl<icable redemption date, or when Bonds
are otherwise to be reC\eemed pursuant to this Section B, the
Fiacal 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) speoify the numbers of the Bonds selected for
redemption, except that where all the Bonda are subject to redemp-
tion, 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 ahall
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 ahall not affect the validity of
the proceedinga for the redemption of auch BondS, or the ceaaation
of intereat on the redemption date. A certificate by the Fiacal
Agent that notice of such redemption haa been given as herein
provided shall be conclusive as againat all parties, and it shall
not be open to any bondowner to show that he or she failed to
receive notice of auch redemption.
(e) Partial Redemption of Bonda. Upon aurrender of any Bond to be
redeemed in part only, the Iaauer ahall execute and the Fiacal
Agent shall authenticate and deliver to the bondowner, at the
expenae of the Iaauer, a new Bond or Bonda of authorized denomina-
tiona equal in aggregate principal amount to the unredeemed
portion of the Bond surr-endered, 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 thia Section B,
and the amount neceaaary for the redemption having been made
available for that purpoae and being available therefor on the
date fixed for such redemption.
(1) The Bonda, or portiona thereof, deaignated 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 aurrender thereof at the principal
corporate truat office of the Fiacal Agent, such Bonds shall
be redeemed at the specified redemption price;
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SECTION 9.
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(3) From and after the redemption date the Bonds or portions
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 portlion 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.
Transfer of ReQistered Bonds. Any Bond may, in accordance with its
terms, be transferred, upon the bookB of regiBtration required to be
kept pursuant to the provisions of Section 11, by the owner in whose
name it iB regiBtered, or by hiB duly authorized attorney or legal
repreBentative, upon Burrender of such Bond for registration of Buch
tranBfer, accompanied by delivery of a written inBtrument of tranBfer
in a form approved by the FiBcal Agent and duly executed by the owner
of Baid BondB.
The FiBcal Agent Bhall require the payment by the Bondholder requeBting
such tranBfer of any tax or other governmental charge required to be
paid with reBpect to Buch tranBfer and such chargeB aB provided for in
the BYBtem of regiBtration for regiBtered 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 thiB
Indenture, and in an aggregate principal amount equal to the principal
amount of such Bond or principal amount of Buch Bond or Bonds so Burren-
dered. In all ca.es in which Bonds shall be exchanged or transferred,
the Fiscal Agent shall authenticate at the earliest practical time,
Bond. in accordance with the provisions of this Indenture. All Bonds
surrendered in such exchange or registration transfer Bhall 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 BondB of the Bame
serieB, intereBt rate and maturity, subject to the termB and conditionB
provided in the system of regiBtration for regiBtered debt obligationB,
including the payment of certain charges, if any, upon Burrender and
cancellation of the Bond. Upon such tranBfer and exchange, a new regiB-
tered Bond or Bonds of any authorized denomination or denominationB of
the Bame maturity for the Bame aggregate principal amount will be
iBBued to the tranBferee in exchange therefor.
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SECTION 11. Books of Reqistration. 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 ",ay prescribe, register or transfer or
cause to be registered. 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
officer 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-
tion, delivery and issue, shall be as binding as though those who
signed and attested the same 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.
Security Pacific National Bank
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
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date and tenor in exchange and substitution for and upon the cancella-
tion of auch mutilated Bond or in lieu of and in aubatitution for Buch
Bond mutilated, deBtroyed, Btolen or 10Bt, upon the owner'B paying the
reaBonable expenBeB and chargell in connection therewith, and, in the
caBe of a Bond deBtroyed, Btolen or 10Bt, hiB filing with the FiBcal
Agent and IaBuer of evidence BatiBfactory to them that Buch Bond waB
deBtroyed, Btolen or 10Bt, and of hiB ownerBhip thereof, and furniBhing
the FiBcal Agent and IBBuer with indemnity satiBfactory to them.
SECTION 16. Cancellation of BondB. All Bonda paid or redeemed, either at or before
maturity, shall be cancelled upon the payment or redemption of Buch
BondB, and Bhall be delivered to the FiBcal Agent when Buch payment or
redemption iB made. All Bonda cancelled under any of the proviaions of
this Indenture Bhall be destroyed by the FiBcal Agent, which shall
execute a certificate in duplicate describing the Bonds so deatroyed,
and shall retain said executed certificate in its permanent files for
the issue.
SECTION 17. APplication of Bond proceeds. The proceeds of the aale of Bonds and
any good faith security deposit ahall be received by the FiBcal Agent
and depoaited in accordance with written instructions of the Iaauer to
be provided at the time of, or prior to, the delivery of the Bonds.
SECTION 18. Creation of Funds. The Fiscal Agent iB hereby authorized and directed
to eatablish the following FundB for purposes of making payment for the
coatB and expenaea for the worka of improvement and payment of
principal and intereat on the Bonds. The Funda to be created are
designated as followB:
IMPROVEMENT FUND: The proceeds from the sale of the BondS, after
deposit of required amountB in the Reserve Fund and Redemption Fund,
Bhall be placed by the Fiscal Agent in the Fund hereby created,
purauant to Sectiona 10602 and 10424 of the California Streets and
HighwaYB Code, as amended, which ahall be called the "Improvement
Fund", and the moniea in Baid Fund ahall be uaed only for Project COBtB
aB that term is defined hereinafter. "Project COBtB" ahall mean the
coata of acquiaition or conatruction of the works of improvement aB
author ized in the aaBeaament proceedinga and all incidental COBtB
related thereto, all aa more particular deacribed in the Engineer'B
Report for ABBeBBment DiBtrict No. 9778 on file in the office of the
City Clerk.
Upon receipt of a "Payment RequeBt Form" in BubBtantially the form
attached hereto aa Exhibit "8", duly executed by the Mayor, the
TreaBurer or the deBignee of either official (each an "Authorized
RepreBentative"), the Fiacal Agent Bhall pay the Project COBtB from
amounts in the Improvement Fund directly to the contractor of Buch
other perBon, corporation or entity entitled to payment hereunder
unlesB the ISBuer requeBta payment to be made to the contractor or auch
other party jointly, in which caBe Baid Project costs shall be paid
jointly. The FiBcal Agent Bhall be reBponaible for the Bafekeeping and
investment of the monieB held in the Improvement Fund and the diaposi-
tion thereof in accordance with the written inatructiona of the IBBuer
and thiB Indenture. The FiBcal Agent may rely on an executed Payment
RequeBt Form aB complete authorization for said payments.
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Any surplus in the Improvement Fund after completion of the improve-
ments shall remain in the Improvement Fund for a period of not less
than two (2) nor more than three (3) years from the receipt of Bond
proceedll all provided in Sectio,! 10427.1 of the California Street II and
Highways Code, and thereafter shall be utilized or distributed as deter-
mined by the I8suer.
REDEMPTION FUNDI The Fi8cal Agent i8 hereby authorized and directed to
keep a Redemption Fund de8ignated by the name of the proceedingll, into
which shall be placed (i) initially, an amount from proceed8 of the
Bonds which, together with accrued interellt, if any, on the Bondll
equa18 the interest on the Bonds to september 2, 1991, (ii) all 8um8
received for the collection of the allses8ments and the interest
thereon, together with all penaltie8, if applicable, and (iii) any
surplulI in the Improvement Fund authorized by the Issuer purlluant to
Street8 and Highways Code Section 10427.1 to be credited against unpaid
aS8e8sments.
The IS8uer 8hall tran8fer or caU8e to be tran8ferred all Sum8 received
for the collection of the aS8ellsments, interellt and penalties thereon,
and all sums received for the prepayment of a8ses8ment8 to the Fiscal
Agent within fifteen (15) bU8ine8s daY8 of the receipt thereof by the
Issuer.
Principal of and interest on said Bonds shall be paid by the Fiscal
Agent to the regilltered owners out of the Redemption Fund to the extent
fund8 on depo8it in 8aid Redemption Fund are available therefor. In
all re8pect8 not recited herein, lIaid Bondll IIhall be governed by the
provi8ions of the Act. Under no circumstance8 shall be the Bond8 or
intere8t thereon be paid out of any other fund except a8 provided by
law.
Prior to the firllt redemption date there IIhall be established by the
Fisal Agent a prepayment lIubaccount within the Redemption Fund to be
known as the Prepayment Account ("Prepayment Account"). The Fiscal
Agent 8hall depo8it in the Prepayment Account all monie8 received from
the Treasurer representing the principal of and redemption premium on
any prepaid a8sellsment8. Such amounts ehall be identified in writing
to the Fillcal Agent. Such monies shall be applied 801ely to the
payment of principal of and pr....ium on Bonds to be redeemed prior to
maturity pur8uant to the provi8ion8 of section B of thi8 Indenture.
RESERVE FUNDI Purlluant to Part 16 of Division 10 of the California
Street8 and Highways Code, all amended, there shall be created a special
reserve fund for the Bonds to be designated by the name of the Asse8S-
ment Di8trict and specified as the "Reserve Fund". An amount equal to
ten percent (10\) of the principal amount of the Bond8 i8sued 8hall be
depo8ited in the Re8erve Fund out of the Bond proceeds.
Monie8 in the Re8erve Fund 8hall be applied by the Fiscal Agent as
followsl
A. Whenever there are inllufficient fundll in the Redemption Fund to pay
the next maturing installment of principal of or interellt on the
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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 Issuer to the Fiscal Agent
within ten (10) business days of receipt thereof by the Issuer 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" 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 principal amount of the outstanding 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 period from the date of such computation through the final
maturity of any outstanding Bonds.
D. on June 30 of each year, 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.
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E. All sums remaining in the Reserve Fund in the year in which the
lallt inlltallmentll of the allllellllments become due and payable shall
be credited toward the a..ea.menta as follows:
Prior to June 30th of the Fiscal Year next preceding the Fillcal
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 Issuer 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 exces. 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
is.ue. The payment. shall be made in cash by the Issuer to the respec-
tive owners of the parcels except that, if the exce.s is not greater
than one thousand dollars ($1,000), the excess may be transferred to
the General Fund of the Issuer.
REBATE FUND, The Fiscal Agent shall transfer into the Rebate Fund all
amounts required by the Issuer to be transferred in acordance with the
provisions of the Arbitrage Rebate Provisions attached hereto as
Exhibit "CO. Subject to the provisions of said Arbitrage Rebate Provi-
sions, amounts on deposit in the Rebate Fund shall only be applied to
payments made to the United States of America in accordance with
written instructions of the Issuer. Notwithstanding any other provi-
sions 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 Section 19 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 from the Issuer stating that the autho-
rized improvements have been completed, (ii) three (3) years from the
date of delivery of the Bonds, or (Hi) the date on which the Fiscal
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Agent receives written notice from the Issuer 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 Pund.
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 pund 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 Piscal 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.
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, the
Fiscal Agent shall not be responsible for any loss from any investments
pursuant to this Indenture.
"Authorized Investments" means any of the following to the extent such
securities are eligible for the legal investment of funds of the
District:
(1)
United States
indebtedness,
United states
interest;
Treasury notes, bonds, bills or certificates of
or those for which the faith and credit of the
is pledged for the payment of principal 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 federal savings and loan
association; provided, that such certificates of deposit shall be
(i) continuously and fully insured by the Pederal Deposit
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Insurance corporation or the Federal Savings and Loan In.urance
corporation, or (ii) issued by any bank or trust company organized
under the law. of any state .of the United States of America or any
national banking associati9n (including the Fiscal Ag.nt) having a
combined capital and surplus of at lea.t on. hundred million
dollar. ($100,000,000), and such certif icates shall have maturi-
tie. of .ix (6)months or l.ss, or (iii) continuously ..nd fully
secur.d by such securiti.. as are described in clause (1) ..bove,
which securities shall have a market value (a. det.rmin.d on a
m..rked-to-mark.t basi. calculat.d at l....t w..kly, and .xclu.ive
of accrued inter.st) of not less than the principal amount of such
c.rtificat.. of depo.it;
(3) Bills of .xchang. or time drafts drawn on and acc.pt.d by a commer-
cial bank (including the Fiscal Ag.nt), oth.rwis. known as
bank.rs' acc.ptances, which are eligible for purchas. by members
of the F.deral Re.erve syst.m; provid.d, that purchases of
eligible bank.rs' acc.ptanc.s may not exceed two hundred sev.nty
(270) days' maturity;
(4) commercial paper of "prime" quality of the high.st ranking or of
the highest letter and numerical rating as provided by either
Moody'S or Standard' poor'., 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 i.suer' s debentures, other than commer-
cial paper, as provided by either Moody'S or standard' Poor's;
provided, that purchases of eligible commercial paper may not
exceed one hundred eighty (180) days' m..turity nor represent more
than ten percent (10\) of the outstanding commercial paper of an
issuing corporation;
(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 riscal Agent) or any national banking as.ociation
or government bond de..ler reporting to, trading with and recog-
nized as a primary dealer by, the rederal 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 repurcha.e agreement to
be held by any such bank, trust company or primary de..ler having a
combined capital and .urplus of at least one hundred million
dollars ($100,000,000) and being independent of the issuer of such
repurchase ..greement, and ( ii) maint..ined ..t a m..rket v..lue (a.
determined on .. marked-to-market basis calculated ..t le..st weekly)
of not less th..n 103\ of the amount so inve.ted; and,
(6) Bonds, notes, warrants or other evidence of indebtedness of the
state of California or of any political subdivi.ion 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 Stand..rd
& poor's.
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(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
special 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 SU1>8rior Court Foreclosure. In the event of delinquency
in the payment of any installments of unpaid assessments, 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 delinquenciea in the payment of assess-
ment installments throughout the Assessment District exceed five
percent (5\), the Average Annual Debt Service on the BondS, the Issuer
shall commence foreclosure action(s) on all parcels for which the
payment of assessment installments are delinquent 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 at an
amount at least equal to the Reserve Requirement.
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 deeme4 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
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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
purchaae 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 National
Bank as Fiscal Agent for the Bonds and approves the Fiscal Agent Agree-
ment 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
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
aucc...or thereto, may be removed by the Isauer and a aucc..eor or
successors may be appointed. so long as any Bonds are outstanding and
unpaid the Fiscal Agent and any successor or successors thereto desig-
nated 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 ~hall compensate the Fiscal Agent for the
performance of its services hereunder pursuant to the Fiscal Agent
Agreement.
A Fiscsl Agent appointed hereunder may resign at any time upon 90 days'
written notice and after appointment of a successor. Upon merger,
consolidstion or reorganization of a Fiscal Agent, the Issuer will
appoint a new Fiscal Agent, which may be the corporation resulting from
such reorganization.
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SECTION 27, Liability of Fiscal Acrent. The. recitals of fact and all promises,
covenants and agreements contained herein and in the Bonds shall be
taken .a statementa, 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 ths 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 negligencs 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.
la) 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;
lb) 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 out8tanding as
and when the same shall become due and payable; or
lc) by depo8iting 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
the interest to accrue thereon and monie8 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
eame shall become due and payable;
then, at the election of the Issuer, and notwithstanding that any Bonds
ehall not have been surrendered for psyment, 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 re8pect to all outstanding Bonds shall cease and
terminate, except for the obligation of the Fiscal Agent to payor
caU8e to be paid to the owner8 of the Bond8 not 80 8urrendered and
paid, all 8um8 due thereon. Notice of 8uch election shall be filed
with the Fiscal Agent. Any fund8 held by the Fiscal Agent, at the time
of receipt of such notice from the 18suer, which are not required for
the purpo8e above mentioned, 8hall be paid over to the IS8Uer.
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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 provision&' 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 suit, 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 r~aining 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; provided, however, that before the repayment of such
monies to the Issuer as aforesaid, the Fiscal Agent may (at the cost of
the Issuer) first publish at least once in a nationally recognized
financial publication published in New York, New York, and Los Angeles,
Californ1a, a not1c., 1n such form ae 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. Arbitraqe Rebate Exemption Covenant. The term "bond proceeds" as used
1n th1s 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 Bond has been authorized to be issued, within six (6) months follow-
ing the date of delivery of the Bonds to the initial purchaser thereof.
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In determining the amount to be expended in accordance with the
previouely deecribed requirement, investment proceeds shall be limited
to amounte earned on the bond proceeds before the close of the six (6)
month period described hereinabove.
In the event that the Iseuer does not satisfy the expenditure require-
ments of this Section, the Issuer shall aesure compliance with applic-
able requirements contained in the Code for rebate to the federal
governm.nt of exc.ee investment earninge, if any, with reepect to
earninge on the bond proceeds, the inveetment proceeds, and on other
applicable funds.
Notwithstanding any other provieion of thie Section, the Iesuer shall
aeeur. compliance with applicable requiremente 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 funde 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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YEAR
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EXHIBIT. "A"
MATURITY SCHEDULE
PRINCIPAL
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INTEREST RATE
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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,
A.....ment Di.trict No. 977B Improv.ment Fund e.tabli.h.d by the Bond Ind.nture
dated April 15, 1991, to the person, corporation or other entity designat.d below as
Paye., the sum .et forth b.low .uch de.ignation, in payment of the Project co.ts
described below. The amount shown below i. due and payable under a purchase order,
contract or other authorization with respect to the Project Costs described b.low
and has not formed the ba.is of any prior requ..t for payment.
paye..
Addre.s.
Amount. $
D..cription of proj.ct co.t. or portion thereof acc.pted by the Trea.urer on behalf
of A.....m.nt Di.trict No. 977B, and authoriz.d to be paid to the Payee.
Executed by Authoriz.d Repr...ntativ.
of the City of San Bernardino
Signature,
Name.
Title,
Dated.
Payment Reque.t No.
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BXHIBIT .C.
ARBITRAGE REBATE PROVISIONS
This document sets forth instruction. regarding the investment and disposition of
monies deposited in various funds and accounts established for the City of San
Bernardino ("Issuer") Assessment District No. 911B in aggregate principal amount of
$1,013,048.90 ("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 commencing on the
Delivery Date of the Bonds and each 12 month period thereafter.
~. The term "Code" means the Internal Revenue Code of 1986.
Delivery Date. The term "Delivery 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 d.scribed in this paragraph
(1)), over
(b) The amount that would have been earned if the Yield on such Non-purpos.
Obligations (other than amounts attributable to an exc.ss describBd in
thie paragraph (1)) had been equal to the Yield on the Bonds,
plus
(2) Any income attributable to the excess described in paragraph (1).
Gross Proceeds. The term "Gross Proceeds" means the sum of the following amounts:
(1) Or ig inal proceeds, 1. 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;
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(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 (2) above) or investment proceeds in Non-purpose Obligations,
increased by any profits and decreased jif 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 (1) 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 165(g)(2)(A) or (B) of the Code), obligation, annuity or investment-type
property within the meaning of Section 148(b)(2) of the Code in which Gross Proceeds
are invested, but, excluding, however, ob~igations 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 Obliqation. 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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Regulations. 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.
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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, as appropriate, for purposes of ultimate
rebate to the United States, an amount equal to Excess Investment Earnings.
Calculation of Excess Investment Earninqs, 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 (l)(a) of the definition of Excess Investment Earnings, the aggre-
gate 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, ao that gain or loss on the dispo-
sition of such Investment Property shall be computed with reference to such
fair market value as ita 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).
(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
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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 subeequent 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 Oblicration 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 Iseuer shall aseure that inve.tment transaction. are on an arme-length
baeie. In the event that Non-purpose Obligations consist of certificates of depoeit
or investment contracts, inve.tment in such Non-Purpose Obligations shall be made in
accordance with the procedures described in applicable Regulations ae from time time
in effect.
MAINTENANCE OF RECORDS. The Issuer .hall keep and retain for a period of .ix (6)
years following the retirement of the Bonde, record. of all determinations made
pursuant to the.e In.tructions.
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CITY OF SAN BERNARDINO
1915 ACT LIMITED OBLIGATION IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 977B
PURCHASE CONTRACT
April _, 1991
Mayor and Common Council
City of San Bernardino
300 North "0" Street
San Bernardino, California 92418
Dear Mayor and Councilmembers:
Bateman EiChler, Hill Richards, a division of Kemper
Securities Group, Inc. (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 Deliverv 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 city, 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. 977B (the "Bonds"), in an aggregate
principal amount not to exceed $1,013,048.90, dated as of
April 2, 1991 bearing interest from said date (payable on
March 2 and September 2 in each year commencing September 2,
1991) 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
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be payable and subject to redemption as provided in a Bond
Indenture adopted by the City on April _, 1991, (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 City's Attorney, the city'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 , 1991 or such
later date as may be acceptable to the Underwriter (the
"Closing Date"), (i) at the offices of Brown, Harper, Burns
and Hentschke, 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, Harper, Burns and
Hentschke, 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. ReDresentations.
The City represents
underwriter that:
Warranties and Aqreements of the ci tv.
and warrants to and agrees with the
(a)
under the
has, and
power and
The City is duly organized and validly existing
Constitution and laws of the State of California and
at the Closing Date will have, full legal right,
authority (i) to enter into this Purchase Contract,
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(ii) to issue, sell and deliver the Bonds to the Underwriter
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 subject 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.
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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. 977B (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.
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(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.
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(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 resul t 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 7.1:1 lien to value ratio.
3. Conditions to the Obliaations 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 the opinion of Brown,
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Harper, Burns and Hentschke ("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) At the Closing Date, taxes and assessments
shall not be delinquent on properties within the Assessment
District, 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
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statement or otherwise is or would be in violation of the
federal securities laws as amended and then in effect;
(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
securities 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
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City council, or such other city official as may be
approved by the Underwriter:
(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 op1n1on, 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, insolvency 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
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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)
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' 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, Harper, Burns and
Hentschke, 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
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therein, in the light of the cirCUDlstances 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 statistical data contained in the
Official statement); and such memoranda of said firms, or
of other counsel specified by the Underwriter.
(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 equity, 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
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obligations under this Purchase Contract, and the Bonds;
(3) to the best of the knowledge of the City's Attorney
the City has duly and validly adopted the Indenture, and
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 dated as of November 13, 1990 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 185 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
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therein, in the light of the circumstances under which
they were made, not misleading:
(xi) such additional legal op1n1ons, certificates
(including a non-arbitrage certificate), instruments and
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
Underwriter 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
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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
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.
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5 . EXlJenses.
(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 Director of Finance, city of
San Bernardino, 300 North "0" 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, a division of Kemper Securities Group, Inc. 700
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South Flower Street, 26th Floor, Los Angeles, California
90017, Attention: Public Finance Department.
7. Parties in Interest. This Purchase Contract is made
solely for the benefit of the city and the Underwriter
(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 . Surv i val of RelJresentations 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. Offerina 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. Counteroarts. This Agreement may be executed in any
number of counterparts.
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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,
a divsion of Kemper securities Group, Inc.
By
senior Vice President
Accepted:
CITY OF SAN BERNARDINO
Its Mavor
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BXJlJ:BJ:T A '1'0 PURCBASB COIl'l'RACT
Maturity
Seotember 2
Princioal
Annual Rate
Interest
Debt service
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
23,048.90
25,000
25,000
30,000
30,000
35,000
35,000
40,000
40,000
45,000
45,000
50,000
55,000
60,000
65,000
70,000
75,000
80,000
90,000
95.000
Total $1,013,048.90
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 __th day of April, 1991.
CITY OF SAN BERNARDINO
BATEMAN EICHLER, HILL RICHARDS
a division of Kemper
securities Group, Inc.
By:
By:
Senior vice President
Mayor
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BXRXBXT B TO PURCDSB CONTRACT