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CITY OF SAN BER~DINO - REQUEST .oR COUNCIL ACTION
From: ARDRBW GRBBII, DIRBC'l'OR OP PIIlARCB
Subject:
RBSOLUTIOII AtI'l'IIORIZIIIG ISStlARCB OP
IMPRuvJ<IU5IIT BOIIDS ARD APPROVIIIG TIlE
BOND PRUCBASB At:R_, PRELIMINARY
OFFICIAL STA~ ARD PISCAL AGBIII'.l'
AGRBBIIBII'.l' FOR ASSBSllMBIi'r DISTRICT. 987
Dept: PIIlARCB
Date: OCTOBER 24, 1991
Synopsis of Previous Council ection:
March 11, 1991
Res. 91-71
Reso1ution of Intention
Ju1y 19, 1991
Res. 91-334
Reso1ution estab1ishing and confirming
Assessment District 987 and asseS&DBDt
1evy.
Recommended motion:
- Adopt Reso1ution
CLkJ JJ~
Signatu re
Contact person:
Supporting tlata atteched:
Phone:
Ward:
FUNDING REQUIREMENTS:
Amount:
$709,105.38
Source: 255-691-53925 Imorov......nt _nil
. 33tnL39r54Q1~edUlption Fund
Finance: ~ ...., .
Bond Debt Service wi11 be provided from proeprty
owner asseS&DBDts.
Council Notes:
Anpnrt~ Itf:lm Nn
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',CITY OF SAN BER~RDINO - REQUEST OR COUNCIL ACTION
STAFF REPORT
Previous actions of the Mayor and Common Council have adopted the
Resolution of Intention and confirmation of Assessments for
necessary capital improvements for Assessment District 987
(Verdemont Area). The next step in this process is the issuance
of Limited obligation Improvement Bonds.
The bond issuance will require the attached issuance
authorization resolution approved by the Mayor and Common
Council. Approval will also be required for the Preliminary
Official statement, Bond Purchase Agreement and Fiscal Agent
Agreement which are also attached. The amount of Bonds to be
sold is $709,105.38. This amount represents the difference
between the estimated cost of the applicable portions of the
project ($876,812.23) and the amount of assessments which were
prepaid by the August 28, 1991 deadline ($167,706.85).
The Bond issue will be for 20 years with varying maturities and
the interest rate will be determined by the market conditions at
the time of sale. The anticipated time of sale is December 2,
1991. At that meeting the interest rate will be presented for
approval of the Mayor and Common Council. The proceeds from the
bond sale will be delivered to the city by December 18, 1991.
Bank of America will be the fiscal agent for this bond issue.
The dept service which will begin in september 1993 will be
provided totally by property owner assessments.
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RESOLUTION NO.
RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS;
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS;
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS; AND
APPROVING THE BOND PURCHASE AGREEMENT
WHEREAS, the Mayor and Common Council (the "Common
council") of the City of San Bernardino (the "City")
adopted Resolution of Intention No. 91-71 (the
"Resolution of Intention"), on March 11, 1991, relating
to the construction and acquisition of certain public
improvements in and for the city of San Bernardino
Assessment District No. 987 (Verdemont Area) (the
"Assessment District"), as described therein, pursuant to
the provisions of the Municipal Improvement Act of 1913
(the "1913 Act"), being Division 12 (commencing with
Section 10000) of the Streets and Highways Code of the
State of California; and
WHEREAS, the Resolution of Intention provided that
bonds, to represent unpaid assessments and to bear
interest at rates not to exceed the maximum rate
permitted by law would be issued in the manner provided
by the Improvement Bond Act of 1915 (the "1915 Act"),
being Division 10 (commencing with section 8500) of the
Streets and Highways Code of the State of California, and
that said bonds would mature not to exceed thirty-nine
(39) years from the 2nd day of September next succeeding
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEME~ BONDS;
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS;
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS; AND
APPROVING THE BOND PURCHASE AGREEMENT
twelve (12) months from their date; and
WHEREAS, an assessment and diagram were duly made
and filed with the Common Council, and, after a hearing
duly noticed and held, said assessment was confirmed,
levied and approved by Resolution No. 91-334 adopted by
the Common Council on July 19, 1991; and
WHEREAS, said assessment and diagram were duly
recorded on July 29, 1991, in the office of the
Superintendent of the Streets of the City, and said
diagram was recorded in the office of the county Recorder
of the County in Assessment District Maps Book 63, pages
53-72 on August 1, 1991, all in the time, form and manner
required by law; and
WHEREAS, said assessment was in the total amount of
$709,105.38 and was apportioned upon the several
subdivisions of land in the assessment district in
proportion to the estimated benefits to be received by
such subdivisions, respectively, from said work,
acquisitions and improvements as shown in said
assessment; and a notice of assessment was duly recorded
in the office of the County Recorder of the County on
August 1, 1991, all in time, form and manner required by
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTkICT NO. 987
(VERDEKONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS;
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS;
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS; AND
APPROVING THE BOND PURCHASE AGREEMENT
law; and
WHEREAS, all sums assessed under the assessment
proceedings were due and payable to the Treasurer of the
City and or before the close of business on August 28,
1991; and
WHEREAS, the Treasurer has heretofore determined
that the total unpaid assessments is $709,105.38; and
WHEREAS, as authorized by the Resolution of
Intention the Mayor and Common Council have determined to
issue bonds, secured by the total of unpaid assessments,
designated "City of San Bernardino Assessment District
No. 987 (Verdemont Area) Limited Obligation Improvement
Bonds" (the "Bonds"); and
WHEREAS, a notice of the apportioned share of the
cost of the items to be constructed and acquired with the
proceeds of the sale of the bonds has been mailed to the
owner of each parcel with the Assessment District and a
period of thirty (30) days was allowed during which each
prope~~y owner in the Assessment District could pay in
cash all or a portion of the assessment attributable to
such items; and
WHEREAS, following the expiration of said thirty
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS ~
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS~
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS ~ AND
APPROVING THE BOND PURCHASE AGREEMENT
(30) day cash collection period, the amount of
$709,105.38 remains unpaid and the Mayor and Common
Council hereby find and determine to issue the Bonds in
an amount equal to such unpaid portion and to approve all
necessary and proper documents and transactions in
connection therewith~
NOW, THEREFORE, the Mayor and Common Council of the
city of San Bernardino do hereby resolve as follows:
Section 1.
The above recitals are all true and
correct.
Section 2 .
The Mayor and Common Council have
reviewed all proceedinqs heretofore taken relative to the
foreqoinq and have found, as a result of such review, and
do hereby find and determine that all acts, conditions
and thinqs required by law to exist, happen and be
performed precedent to and in the issuance of
improvements bonds as hereinafter provided do exist, have
happened, and have been performed in due time, form and
manner as required by law and the city is now authorized
by law to authorize the issuance of the Bonds.
Section 3. A sinqle series of bonds desiqnated City
of San Bernardino Assessment District No. 987 (Verdemont
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUN'J' OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS:
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS:
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS: AND
APPROVING THE BOND PURCHASE AGREEMENT
Area) Limited Obligation Improvement bonds is hereby
authorized to be issued in the principal amount of
$709,105.38, upon the terms and conditions contained in
the Fiscal Agent Agreement, tentatively dated as of
December 1, 1991, (the "Fiscal Agent Agreement") by and
between the city and Bank of America National Trust and
Savings Association duly organized and existing under and
by virtue of the laws of the United States of America, as
fiscal agent (the "Fiscal Agent").
Section 4. The proposed form of the fiscal Agent
Agreement, to be entered into between the City and the
Fiscal Agent, a copy of which is attached hereto as
Exhibit A and incorporated herein and made a part hereof
is hereby approved. The Mayor and the City Clerk are,
and each of them is, hereby authorized and directed to
execute and deliver the Fiscal Agent Agreement, in
substantially said form, with such changes, insertions
and omissions therein as the Mayor, the city Attorney and
Bond Counsel may require or approve, such requirement or
approval to be conclusively evidenced by the execution of
the Fiscal Agent Agreement by the Mayor. If the Fiscal
Agent Agreement is not executed within 120 days of the
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RESOWTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS 1
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS 1
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS 1 AND
APPROVING THE BOND PURCHASE AGREEMENT
date hereof, the authorization to the Mayor and the City
Clerk to execute the Fiscal Aqent Aqreement shall no
lonqer be effective and the Fiscal Aqent Aqreement shall
be null and void.
Section 5.
The form of Preliminary Official
Statement of the qity, with respect to the Bonds, a copy
of whi.ch is attached hereto as Exhibit B and incorporated
herein and made a part hereof, is hereby approved. The
Mayor is hereby authorized and directed to cause to be
prepared a final Official Statement with respect to the
Bonds (the "Official Statement"), consistinq of said
Preliminary Official Statement, with such chanqes therein
as the City Attorney or Bond Counsel may require or
approve, and to execute the Official Statement.
The
Underwriter is hereby authorized to distribute said
Preliminary Official Statement to persons who may be
interested in purchasinq the Bonds, and the Underwriter
is hereby directed to deliver copies of the final
Official Statement to all actual purchasers of the Bonds.
The Mayor is authorized to certify to the Underwriter
that the Preliminary Official Statement is deemed final
as of its date, within the meaninq of Rule 15c2-12
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS;
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS;
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS; AND
APPROVING THE BOND PURCHASE AGREEMENT
promulgated under the Securities Exchange Act of 1934
(except for the omission of certain final pricing, rating
and related information as permitted by said Rule).
Section 6.
The proposed form of Bond Purchase
Agreement (the "Bond Purchase Agreement"), between Stone
& Youngberg (the "Underwriter") and the city, a copy of
which is attached hereto as Exhibit C and incorporated
herein and made a part hereof, is hereby approved. The
Underwriter is authorized and directed to present the
Bond Purchase Agreement in substantially said form, with
such changes, insertions and omissions therein as the
Mayor, the City Attorney or Bond Counsel may require or
approve, such requirement or approval to be conclusively
evidenced by the execution of the Bond Purchase Agreement
by the Mayor with the price, interest rate, and
Underwriter's discount on the Bonds, as determined based
upon a pricing by the Underwriter of the Bonds, at the
next meeting of the Common Council.
Section 7. The Mayor, the Treasurer, the Finance
Director, the city Clerk and the officers of the City
are, and each of them hereby is, authorized and directed
to do any and all things, and to execute and deliver any
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RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS r
APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS r
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS r AND
APPROVING THE BOND PURCHASE AGREEMENT
and all documents which they may deem necessary or
advisable in order to consummate the issuance of the
Bonds and otherwise to carryout, give effect to and
comply with the terms and intent of this resolution, the
Bonds, the Fiscal Agent Agreement, the Bond purchase
Agreement and the Official Statement.
Section 8 .
This resolution shall take effect
immediately upon its adoption.
I HEREBY CERTIFY that the foregoing resolution was
duly adopted by the Mayor and Common Council of the City
of San Bernardino at a
meeting
thereof, held on the
day of
, 1991, by the following vote, to wit:
council Members:
~
ABSTAIN lI.RC:ml'
AXn
ESTRADA
REILLY
HERNANDEZ
MAUDSLEY
MINOR
POPE-LUDLAM
MILLER
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1 RESOLUTION OF THE CITY OF SAN BERNARDINO, CALIFORNIA
PROVIDING FOR THE ISSUANCE OF $709,105.38 AGGREGATE
2 PRINCIPAL AMOUNT OF ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA) LIMITED OBLIGATION IMPROVEMENT BONDS;
3 APPROVING VARIOUS FINANCING DOCUMENTS FOR SAID BONDS;
APPROVING THE OFFICIAL STATEMENT FOR SAID BONDS; AND
4 APPROVING THE BOND PURCHASE AGREEMENT
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Rachel Krasney, City Clerk
this
The foregoiJ)g resolution is hereby approved
day of , 1991.
w. R. Holcomb, Mayor
Approved as to form
and legal content:
JAMES F. PENMAN
City Attorney
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FISCAL AGENT AGREEMENT
Approved and Established by
CITY OF SAN BERNARDINO
in connection with
ASSESSMENT DISTRICT NO. 987
(VERDEMONT AREA)
$709,105.38
Limited Obligation Improvement Bonds
City of San Bernardino Assessment District No. 987
(Verdemont Area)
Dated as of December 1, 1991
,.."..:_,.-'-.-0:_""-"-'"."".0....
Section
Recitals
Section 1.01.
Section 1.02.
Section 1.03.
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
Section 3.05.
Section 3.06.
Section 3.07.
Section 3.08.
Section 3.09.
Section 4.01.
Section 4.02.
Section 4.03.
Section 4.04.
Section 4.05.
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TABLE OF CONTENTS
. . . . . . . . . .
ARTICLE I
DEFINITIONS
Definitions . . . . . . .
Interpretation. . . . . .
Equality of Bonds; Pledge of
Assessments; No Obligation to CUre
Deficiency . . . . . . . . . .
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Unpaid Assessments . . .
Type and Nature of Bonds;
Liability . . . . . . .
Validity of Bonds . . . .
Authorization and Purpose
Limited
of Bonds
ARTICLE III
TERMS AND PROVISIONS OF BONDS
Authorization and Designation of the
Bonds . . . . . . . . . . . . . .
Terms of Bonds .. . . . . . . . .
Execution and Authentication . . .
Registration, Exchange or Transfer
Bond Register . . . . . . . . . . .
Mutilated, Lost, Destroyed or Stolen
Bonds . . . . . . . . . . . . . .
Form of Bonds; Temporary Bonds
Form of the Bonds . . . . . . . . .
Application of Proceeds of the Sale of
the Bonds and of the Cash Payments
ARTICLE IV
REDEMPTION OF BONDS
Privilege of Redemption of Bonds
Selection of Bonds for Redemption
Notice of Redemption . . . . . .
Partial Redemption of Bonds . . .
Effect of Notice and Availability of
Redemption Money . . . . . . . .
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41133-5-IFA-C9/0419l
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Section
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ARTICLE V
CREATION OF FUNDS AND ACCOUNTS;
APPLICATION OF PROCEEDS AND ASSESSMENTS
Section 5.01. Funds and Accounts 24
Section 5.02. Assessment Fund . . . . 25
Section 5.03. Administrative Expense Fund 26
Section 5.04. Redemption Fund . 27
Section 5.05. Reserve Fund 28
Section 5.06. Improvement Fund 29
Section 5.07. Rebate Fund 30
Section 5.08. Investments . . . 31
ARTICLE VI
COVENANTS AND WARRANTY
Section 6.0l. Warranty . . . . 33
Section 6.02. Covenants . . . . 33
ARTICLE VII
AMENDMENTS TO AGREEMENT
Section 7.0l. Amendments Not Requiring Bondowner
Consent . . . . . . . . . . . 36
Section 7.02. Amendments Requiring Bondowner
Consent . . . . . . . . . . . 37
Section 7.03. Notation of Bonds; Delivery of
Amended Bonds . . . . . . 38
ARTICLE VIII
FISCAL AGENT
Section 8.0l. Fiscal Agent . . . . . . . . . . . 39
Section 8.02. Removal of Fiscal Agent . . . . 40
Section 8.03. Resignation of Fiscal Agent . . . 40
Section 8.04 Merger or Consolidation of Fiscal
Agent . . . . . . . . . . 41
Section 8.05. Liability of Fiscal Agent . . . 41
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.01. Event of Default . . . . . . . . 42
Section 9.02. Remedies of Owners . . . . . . . 42
Section 9.03. Actions by Fiscal Agent as Attorney-
in-Fact . . . . . . . . . . . . . 43
ARTICLE X
DEFEASANCE
Section 10.0l. Defeasance . . . . . . . . . . . 44
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ARTICLE. XI
MISCELLANEOUS
Section 11.01. Cancellation of Bonds . . . 45
Section 11. 02. Execution of Documents and Proof of
Ownership . . . . . . . . . 46
Section 11. 03. Unclaimed Moneys . . . . . . 46
Section 11. 04 . provisions Constitute Contract;
Successors . . . . . . . . . . 47
Section 11. 05. Further Assurances; Incontestability 47
Section 11. 06. Severability . . . . . 48
Section 11. 07 . General Authorization 48
Section 11. 08. Liberal Construction 48
Section 11. 09 . Notice . . . . . . . . 48
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FISCAL AGENT AGREEMENT
This Fiscal Agent Agreement (the "Agreement") dated as
of December 1, 1991, is approved and entered into by the City of
San Bernardino (the "City"), a political subdivision of the State
of California (the "State"), in connection with Assessment
District No. 987 (Verdemont Area) of the City (the "Assessment
District"), and to provide direction to Bank of America National
Trust and Savings Association (the "Fiscal Agent").
Ii X T N R .s. .s. R T H:
WHEREAS, the Mayor and Common Council of the City (the
"Common Council"), on March 11, 1991, adopted its Resolution of
Intention No. 91-71 relating to the construction and acquisition
of certain public improvements in the Assessment District, as
described therein, pursuant to the provisions of the Municipal
Improvement Act of 1913 (the "1913 Act"), being Division 12 of
the Streets and Highways Code of the State of california; and
WHEREAS, the Resolution of Intention provided that
serial bonds to represent unpaid Assessments and to bear interest
at a maximum rate of not to exceed the maximum rate permitted by
law would be issued in the manner provided by the Act and that
said bonds would mature not to exceed thirty-nine (39) years from
the 2nd day of September next succeeding twelve (12) months from
their date; and
WHEREAS, an Assessment and diagram were duly made and
filed with the office of the City Clerk and, after a hearing duly
noticed and held, said Assessment was confirmed, levied and
approved by Resolution No. 91-334 adopted by the Mayor and Common
Council on July 19, 1991; and
WHEREAS, said Assessment and diagram were duly recorded
on July 29, 1991, in the office of the Superintendent of Streets
of the City and duly recorded on August 1, 1991, in the office of
the County Recorder of the County of San Bernardino all in the
time, form and manner required by law; and
WHEREAS, said Assessment was in the total amount of
$876,812.20 and was apportioned upon the several subdivisions of
land in the Assessment District in proportion to the estimated
benefits to be received by such subdivisions, respectively, from
said work, acquisitions and improvements as shown in said
Assessment; and a Notice of Assessment was duly recorded in the
office of the Recorder of the County on August 1, 1991, all in
the time, form and manner required by law; and
WHEREAS, all sums assessed under proceedings for the
Assessment District were due and payable to the Finance Director
on or before the close of business on August 28, 1991; and
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WHEREAS, the Finance Director has heretofore determined
that the Unpaid Assessments total $709,105.38; and
WHEREAS, the City has determined to issue bonds secured
by the unpaid assessments for improvements in the amount of
$709,105.38 and issued in the principal amount of $709,105.38;
and
WHEREAS, following the expiration of the collection
period, the amount of $709,105.38 remains unpaid and the Mayor
and Common Council have found and determined that it is necessary
and desirable to issue bonds in an amount equal to such unpaid
portion; and
In consideration of the mutual covenants herein
contained and for other valuable consideration, the parties
hereto do hereby agree as follow:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context
otherwise requires, the following terms shall have the following
meanings:
"A&k" means the Improvement Act of 1915, being Division
10 (commencing within Section 8500) of the California Streets and
Highways Code.
"1913 Act" means the Municipal Improvement Act, being
Division 12 (commencing with Section 10000) of the California
Streets and Highways Code.
"Administrative Excense Reauirement" means an amount to
be specified each year by the Finance Director of the City as a
percentage of each assessment installment, to be used for
Administrative Expenses. The Administrative Expense Requirement
is authorized to be collected by the Resolution of Intention in
an amount not to exceed five percent of the amount of each
assessment installment; such costs to be in addition to any costs
collected pursuant to Sections 8682 and 8682.1 of the Act.
"Administrative Exoenses" means the ordinary and
necessary fees and expenses for determination of the Assessment
and administering the levy and collection of the Assessment and
of servicing, calling and redeeming the Bonds, including any and
all of the following: the fees and expenses of the Fiscal Agent
(including any fees or expenses of its counsel), the expenses of
the City in carrying out its duties hereunder (including, but not
limited to, annual audits and costs incurred in the levying and
collection of the Assessment) including the fees and expenses of
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its counsel and all other costs and expenses of the City or the
Fiscal Agent incurred in connection with the discharge of their
respective duties hereunder and, in the case of the City, in any
way related to the administration of the Assessment District.
"Administrative Exoense Fund" means the fund by that
name established pursuant to Section 5.03.
"Aqreement" means this Fiscal Agent Agreement, as
amended or supplemented pursuant to the terms hereof.
"Assessment" or "Assessments" means the special
assessments levied under these proceedings in accordance with the
1913 Act and the Resolution of Intention.
"Assessment District" means Assessment District No. 987
(Verdemont Area) of the City.
"Assessment Fund" means the fund by that name
established pursuant to Section 5.02.
"Assessment Installment" means the annual assessment
representing unpaid Assessments placed on the property tax bill
of property owners within the Assessment District.
"Authorized Investments" means, subject to applicable
law, (1) Federal Securities; (2) taxable government money market
portfolios rated in one of the two highest rating categories by
Standard & Poor's Corporation restricted to obligations with
maturities of one year or less, insured or fully guaranteed as to
the principal and interest thereon by the full faith and credit
of the United States of America or by repurchase agreements
collateralized by such obligations; (3) tax-exempt obligations,
including tax exempt money market funds; (4) commercial paper of
"prime" quality of the highest ranking or of the highest letter
and numerical rating as provided for by Moody's Investors Service
and Standard & Poor's Corporation, limited to issuing
corporations that are organized and operating within the United
States and having total assets in excess of five hundred million
dollars ($500,000,000) and having an "A" or higher rating for
such corporation's debt, other than commercial paper, if any, as
provided for by Moody's Investors Service and Standard & Poor's
Corporation and which may not exceed 180 days maturity nor
represent more than 10% of the outstanding paper of an issuing
corporation; (5) notes, bonds or other obligations which are at
all times secured by a perfected first security interest in
securities of the types listed by Section 53651 of the California
Government Code as eligible securities for purpose of securing
local agency deposits or which are listed as an Authorized
Investment under any of the clauses (1) through (4) of this
definition (except those described in this clause (5)) and which
have a market value, determined at least weekly, at least equal
to 102% of the amount of principal and accrued interest in such
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obligation, which shall be placed by delivery into the custody of
a trust company or the trust department of a bank which is not
affiliated with the issuer of the secured obligation, and the
security interest shall be perfected in accordance with the
requirements of the Uniform Commercial Code or federal
regulations applicable to the types of securities in which the
security interest is granted; and any other investment in which
funds of the City may be legally invested pursuant to Government
Code Section 53635; (7) repurchase agreements secured by Federal
Securities; and (8) time or demand deposits (including those of
the Fiscal Agent) fully insured by the Federal Deposit Insurance
Corporation or with institutions rated in one of the two highest
rating categories by Moody's Investors Services or Standard &
Poor's Corporation.
"Averaae Annual Debt Service" means for the Bonds, the
average over all Bond Years of the annual debt service from the
date of such bonds to their maturity, including:
(1) the principal amount of all OUtstanding Bonds
payable in such Bond Year at maturity; and
(2) the interest payable on the aggregate principal
amount of the Bonds OUtstanding in such Bond Year assuming
the Bonds are retired as scheduled.
"Bond Counsel" means an attorney or firm of attorneys,
selected by the City, of nationally recognized standing in
matters pertaining to the tax treatment of interest on bonds
issued by states and their political subdivisions, duly admitted
to the practice of law before the highest court of any state of
the United States of America or the District of Columbia.
"Bond Reaister" means the books which the Fiscal Agent
shall keep or cause to be kept, on which the registration and
transfer of the Bonds shall be recorded.
"Bond Year" means with respect to the Bonds the one
year period or shorter period ending each year on September 2.
"Bondowner" or "OWner" means the person or persons in
whose name or names any Bond is registered as shown on the books
of the Fiscal Agent maintained pursuant to Section 3.05.
"Bonds" means the City of San Bernardino Assessment
District No. 987 (Verdemont Area) Limited Obligation Improvement
Bonds issued to represent Unpaid Assessments authorized to be
levied pursuant to Resolution No. 91-334 adopted by the Mayor and
Common Council on July 19, 1991.
"Business Dav" means any day of the year other than a
Saturday, Sunday, a day on which the New York Stock Exchange is
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closed or any day on which the Fiscal Agent is not open for
business.
"Cash Pavment" means, with respect to any Assessment,
an amount paid in cash by the property owner on such Assessment.
"~" means the City of San Bernardino, California.
"Closinq Date" means the date of delivery of the Bonds
by the City and payment therefor by the original purchaser
thereof, being December [ ], 1991 for the Bonds.
"~" means the Internal Revenue Code of 1986, as
amended.
"Common Council" means the Common Council of the City
of San Bernardino.
"Comoletion of Pro;ect" means a certificate delivered
by the City to the Fiscal Agent of (i) the expenditure,
commitment or transfer pursuant to Section 5.06 of all moneys in
the Improvement Fund having occurred and (ii) the filing and
recordation of a notice of completion by the City with respect to
each of the improvements.
"Countv" means the County of San Bernardino,
California.
"Federal Securities" means subject to applicable law,
United States Treasury notes, bonds, bills or certificates of
indebtedness including United States Treasury Obligations - State
and Local Government Series ("SLGS") or other direct obligations
issued by the United States Treasury for which the faith and
credit of the United States are pledged for the payment of
principal and interest; and obligations issued by banks for
cooperatives, federal land banks, federal intermediate credit
banks, federal home loan banks, the Federal Home Loan Bank Board,
the Tennessee Valley Authority, or other federal agencies or
United States Government-sponsored enterprises.
"Finance Director" means the Finance Director of the
City or his designatee approved by the Mayor and Common Council.
"Fiscal Aqent" means Bank of America National Trust and
Savings Association duly organized and existing under and by
virtue of the laws of the United States of America, at its
principal corporate trust office in San Francisco, California,
and its successors or assigns, or any other bank or trust company
which may at any time be substituted in its place as provided in
Sections 8.02, 8.03 and any successor thereto.
"Fiscal Year" means the twelve-month period terminating
on June 30 of each year, or any other annual accounting period
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hereafter selected or designated by the City as its Fiscal Year
in accordance with applicable law.
"Imorovement Fund" means the fund by that name
established pursuant to Section 5.06.
"Indeoendent Financial Consultant" means a financial
consultant or firm of such consultants generally recognized to be
well qualified in the financial consulting field, appointed and
paid by the City and who, or each of whom:
(1) is in fact independent and not under the
domination of the City;
(2) does not have any substantial interest, direct or
indirect, with the City; and
(3) is not connected with the City as a membet,
officer or employee of the City, but who may be regularly
retained to make annual or other reports to the City.
"Interest PaYment Date" means each March 2 and
September 2, commencing March 2, 1992.
"Maximum Annual Debt Service" shall be the maximum sum
obtained for any Bond Year by totaling the following for such
Bond Year:
(1) the principal amount of all OUtstanding Bonds
payable in such Bond Year at maturity; and
(2) the interest payable during such Bond Year on all
Outstanding Bonds, assuming that all Outstanding Bonds are
retired as scheduled (except to the extent that such
interest is to be paid from the proceeds of the sale of any
of the Bonds) .
"Outstandina Bonds" or "OUtstandina" means all Bonds
theretofore issued by the City, except:
(1) Bonds theretofore cancelled or surrendered for
cancellation in accordance with Section 11.01 hereof;
(2) Bonds selected for payment or redemption of which
moneys shall have been theretofore deposited in trust
(whether upon or prior to the maturity or the redemption
date of such Bonds), provided that, if such Bonds are to be
redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in this
Agreement; and
(3) Bonds defeased but without notice being given
pursuant to Sections 10.01(b) or (c) hereof.
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"Pro;ect" means the public facilities located in the
Assessment District, as more particularly described in the
Resolution of Intention.
"Pro;ect Costs" means the amounts nece~sary to finance
the construction and acquisition of the Project and the
incidental costs associated therewith, including Administrative
Expenses until such time as the City begins collecting the
Administrative Expense Requirement.
"Rebate Fund" means the fund by that name established
pursuant to Section 5.07.
"Rebate Reauirement" shall have the meaning ascribed to
it in the Tax Certificate.
"Record Date" means the fifteenth day preceding each
Interest Payment Date, whether or not such day is a Business Day.
"Redemotion Fund" means the fund by that name
established pursuant to Section 5.04.
"Reserve Fund" means the fund by that name established
pursuant to Section 5.05.
"Reserve Reauirement" means, as of any date of
calculation, an amount equal to the lesser of (a) Maximum Annual
Debt Service on all Bonds then OUtstanding or (b) 125% of Average
Annual Debt Service on all Bonds then Outstanding, provided,
however, that the Reserve Requirement for any Bonds issued under
this Agreement, shall not exceed 10% of the proceeds of such
Bonds. The Reserve Requirement shall be reduced upon any
redemption of Bonds pursuant to Section 4.01 hereof. Such
reduction shall be in the percentage that the Bonds redeemed bear
to the original principal amount of the Bonds.
"Resolution of Intention" means Resolution No. 91-71,
adopted by the Mayor and Common Council of the City on March 11,
1991, stating the City's intention to form the Assessment
District, levy the Assessments, and construct the Project.
"Resolution of Issuance" means Resolution No.
adopted by the Mayor and Common Council of the City on ---
November 18, 1991 authorizing the issuance of the Bonds, and
approving the terms and provisions of this Agreement.
"Suoerintendent of Streets" means the Director of the
City of San Bernardino Public Works Department, or his or her
designee.
"Suoolemental Fiscal Aqent Aqreement" or "Suoolement"
means any supplemental agreement amending or supplementing this
Agreement.
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"Tax Certificate" means the Certificate delivered upon
the issuance of the Bonds relating to Section 148 of the Code, or
any functionally similar replacement Certificate.
"Tax-Exemot" means, with reference to an Authorized
Investment, an Authorized Investment the interest earnings on
which are excludable from gross income for federal income tax
purposes pursuant to Section 103(a) of the Code, other than one
described in Section 57(a) (5) (C) of the Code.
"Treasurer" means the Treasurer of the City or the
designatee approved by the Mayor and Common Council.
"Underwriter" means Stone & Youngberg, the original
underwriter of the Bonds. Tl (L
1.3 "fee. ...'\tJ
"Un~d Assessments" means the Eight Hundred Seventy-
Six Thousand ight Hundred and Twelve Dollars and Twenty gaseS'
($876, 812.~ due and payable to the Finance Director as of the
close of business on August 28, 1991, as reduced by any cash
payments from property owners made during the cash collection
period before the issuance of any Bonds.
"Yield,' with respect to the Bonds, shall have the
meaning ascribed to such term in the Tax Certificate.
Section 1.02. Interoretation.
(a) Unless the context otherwise indicates, words
expressed in the singular shall include the plural, and vice
versa and the use of the neuter, masculine, or feminine gender is
for convenience only and shall be deemed to mean and include the
neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the
table of contents hereof are solely for convenience of reference,
do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
Section 1.03. Equalitv of Bonds: Pledae of
Assessments: No Obliaation to CUre Deficiencv. Pursuant to the
1913 Act, the Act and this Agreement, the Bonds secured by the
Unpaid Assessments shall be equally payable from the Assessments
without priority for number, issue date, date of sale, date of
execution, or date of delivery, and the payment of the interest
on and principal of the Bonds and any premiums upon the
redemption thereof shall be exclusively paid from the Assessments
and moneys on deposit in the Redemption Fund, the Improvement
Fund and the Reserve Fund which are hereby set aside for the
payment of the Bonds. The Assessments and any interest earned on
the funds established herein shall constitute a trust fund held
for the benefit of the Owners of the Bonds to be applied to the
payment of the interest on, premium, if any, and principal of the
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Bonds and so long as any of the Bonds remain Outstanding and
shall not be used for any other purpose, except as permitted by
the 1913 Act, the Act, this Agreement or any Supplemental Fiscal
Agent Agreement.
Nothing in this Agreement or any Supplemental Fiscal
Agent Agreement shall preclude the redemption prior to maturity
of any Bonds subject to call and redemption and payment of said
Bonds from proceeds of refunding bonds issued under Division 11.5
of the California Streets and Highways Code, or under any other
law of the State of California.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Section 2.01. Un,naid Assessments. The Assessments
rema1n1ng unpaid, and the aggregate thereof, are as shown on the
list presented to the Mayor and Common Council and the aggregate
amount thereof is $709,105.38. For a particular description of
the lots or parcels of land bearing the respective assessment
numbers set forth in said unpaid list and upon which Assessments
remain unpaid, severally and respectively, reference is hereby
made to the Assessment to the diagram, recorded in the office of
the Superintendent of Streets after confirmation by the Mayor and
Common Council, the several lots or parcels of land represented
by said assessment numbers being so numbered and designated upon
said diagram and assessment as so confirmed and recorded,
severally and respectively, and to the Assessment approved and
confirmed by resolution of the City, which is also recorded in
the office of said Superintendent of Streets.
Collection of the remaining Unpaid Assessments shall
cease in the event sufficient moneys are available to redeem
Bonds as provided in Section 5.05.
Section 2.02. Tvne and Nature of Bonds: Limdted
Liabilitv. Notwithstanding anything contained herein, in the
Bonds, Sections 8800 through 8809 of the Act, any other provision
of law, or in any of the resolutions adopted in connection with
the proceedings for the Assessment District to the contrary, all
Bonds authorized pursuant to this Agreement shall be a special
obligation of the City, and the City shall not under any
circumstances (including, without limitation, after any
installment of principal or interest of any Assessment levied on
any lot or parcel in the Assessment District becomes delinquent
or after the City acquires title to any such lot or parcel
whether through foreclosure or otherwise) be obligated to pay
principal, premium, if any, or interest on the Bonds from any
source whatsoever other than the Redemption Fund (including any
transfers thereto from the Reserve Fund). Neither the City, the
Mayor, the Common Council, the officers or employees of the City,
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any person or entity acting for or on behalf of the City in
connection with the issuance of the Bonds or in connection with
the formulation or operation of the Assessment District, nor any
persons executing the Bonds, shall be liable personally on the
Bonds or be subject to any personal liability for the Bonds or
any personal liability or accountability whatsoever by reason of
or in connection with the issuance of the Bonds or by reason of
any act or acts or the failure or omission to take any act or
acts (including, without limitation, a negligent act or omission)
in connection with or related to the formulation or operation of
the Assessment District.
THE MAYOR AND COMMON COUNCIL DETERMINED AND DECLARED IN
THE RESOLUTION OF INTENTION THAT, PURSUANT TO SECTION 8769 OF THE
ACT, THE CITY WILL NOT OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS
FROM THE TREASURY OF THE CITY TO CURE ANY DEFICIENCY WHICH MAY
OCCUR IN THE REDEMPTION FUND. THIS DETERMINATION, HOWEVER, SHALL
NOT PREVENT THE CITY, IN ITS SOLE DISCRETION, FROM SO ADVANCING
SUCH FUNDS.
Section 2.03. Validity of Bonds. The validity of the
authorization and issuance of the Bonds shall not be affected in
any way by any proceedings taken by the City for the financing of
the Project, or by any contracts made by the City in connection
therewith, and shall not be dependent upon the completion of the
financing of the Project or upon the performance by any person of
his obligation with respect to the Project, and the recital
contained in the Bonds that the same are issued pursuant to the
Act shall be conclusive evidence of their validity and of the
regularity of their issuance.
Section 2.04. Authorization and Puroose of Bonds. The
Bonds shall be designated 'City of San Bernardino Assessment
District No. 987 (Verdemont Area) Limited Obligation Improvement
Bonds' and shall be issued by the City under and pursuant to the
1913 Act and the Act and under and pursuant hereto, as reduced by
any cash payments from property owners made during the cash
collection period before the issuance of the Bonds. The Bonds
shall be issued pursuant hereto. The designation of the Bonds
shall be "City of San Bernardino Assessment District No. 987
(Verdemont Area) Limited Obligation Improvement Bonds." The
Bonds may contain or have endorsed thereon such other descriptive
provisions, specifications and words not inconsistent with the
provisions hereof as may be desirable or necessary to comply with
custom or the rules of any securities exchange or commission or
brokerage board or otherwise as may be determined by the City
prior to the delivery thereof.
The purpose for which the Bonds are to be issued is to
provide funds to pay costs of the acquisition and construction of
the Project (or for making reimbursements to the City for such
costs of acquisition and construction theretofore paid by it),
including payment of costs incidental to or connected with such
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acquisition and construction, or for the repayment of funds
advanced to or for the Assessment District.
ARTICLE III
TERMS AND PROVISIONS OF BONDS
Section 3.01. Authorization and Desianation of the
Bonds. The City has reviewed all proceedings heretofore taken
relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all
acts, conditions and things required by law to exist, happen and
be performed precedent to and in the issuance of the Bonds do
exist, have happened and have been performed in due time, form
and manner as required by the Act and the 1913 Act, and the City
is now authorized, pursuant to each and every requirement of the
Act and the 1913 Act and hereof, to issue the Bonds upon the
security of the Unpaid Assessments in the aggregate principal
amount of Seven Hundred Nine Thousand One Hundred Five Dollars
and Thirty-Eight cents ($709,105.38) in the form and manner
provided herein, which the Bonds shall be entitled to the
benefit, protection and security of the provisions hereof.
Section 3.02. Terms of Bonds.
(a) The interest on and principal of and redemption
premiums, if any, on the Bonds shall be payable in lawful money
of the United States of America at the office of the Fiscal
Agent.
(b) The Bonds shall be issued as fully registered
Bonds in the denomination of five thousand dollars ($5,000) or
any integral multiple of five thousand dollars ($5,000) (not
exceeding the principal amount of the Bonds maturing at anyone
time) except for one bond in the first year of maturity which
shall contain the amount by which the issue exceeds an integral
multiple of $5,000 (such excess amount being equal to $4,105.38).
(c) The Bonds shall be dated December 1, 1991 and
shall mature on September 2 of the years, and in the respective
principal amounts set forth opposite such years, and shall bear
interest at the respective rates per annum, set forth in the
following table:
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Maturity Date
(Seotember 2)
Principal
Amount
Interest
Rate
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(d) Each Bond shall bear interest from the Interest
Payment Date next preceding its date of authentication, and
registration, unless (i) its date of authentication is an
Interest Payment Date, in which event the Bond shall bear
interest from its authentication date, (ii) its date of
authentication is after a Record Date and is before the
immediately succeeding Interest Payment Date, in which event the
Bond shall bear interest from the Interest Payment Date
immediately succeeding the date of its authentication or
(iii) its date of authentication is before the close of business
on the first Record Date, in which event the Bond shall bear
interest from its dated date; provided, that if at the time of
registration of any Bond interest is then in default on the
OUtstanding Bonds, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid
or made available for payment.
payment of interest on the Bonds due on or before
the maturity or prior redemption thereof shall be made only to
the person whose name appears in the registration books required
to be kept by the Fiscal Agent pursuant to Section 3.05 as the
registered owner thereof at the close of business, such interest
to be paid by check mailed to such registered owner at his
address as it appears on such books or at such other address as
he may have filed with the Fiscal Agent for that purpose.
Payment of the principal of and redemption premiums, if any, on
the Bonds shall be made only to the person whose name appears in
the registration books required to be kept by the Fiscal Agent
pursuant to Section 3.05 as the registered owner thereof, such
principal and redemption premiums, if any, to be paid only on the
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surrender of the Bonds at the office of the Fiscal Agent at
maturity or on redemption prior to maturity.
(e) The Bonds shall recite in substance that the
interest on and principal of and redemption premiums, if any, on
the Bonds are payable solely from the levy of the Unpaid
Assessments, and that the Bonds are limited obligations of the
City and that the City will not obligate itself to advance
available funds from its treasury to cure any deficiency in the
Redemption Fund.
(f) From and after the issuance of the Bonds, the
findings and determinations of the Mayor and Common Council shall
be conclusive evidence of the existence of the facts so found and
determined in any action or proceeding in any court in which the
validity of such Bonds is at issue, and no bona fide purchaser of
any of such Bonds shall be required to independently establish
the existence of any fact or the performance of any condition or
the taking of any proceeding required prior to such issuance or
the application of the purchase price paid for such Bonds. The
validity of the issuance of the Bonds shall not be dependent on
or affected in any way by (i) any defect in the proceedings taken
by the City for the acquisition and construction of the Project,
or (ii) any contracts made by the City in connection therewith,
or (iii) the failure to complete the acquisition and construction
of the Project. The recital contained in the Bonds that the
Bonds are issued under and pursuant to the Act and the 1913 Act
and under and pursuant hereto shall be conclusive evidence of
their validity and of the regularity of their issuance and all
Bonds shall be incontestable from and after their issuance.
Bonds shall be deemed to be issued, within the meaning hereof,
whenever the definitive Bonds (or any temporary Bonds
exchangeable therefor) have been delivered to the purchaser
thereof and the purchase price thereof received.
Section 3.03. Execution and Authentication. The Bonds
shall be signed on behalf of the City by the manual or facsimile
signature of the Treasurer of the City and by the manual or
facsimile signature of the City Clerk in their capacity as
officers of the City, and the seal of the City (or a facsimile
thereof) shall be impressed, imprinted, engraved or otherwise
reproduced thereon, and attested by the signature of the Clerk.
In case anyone or more of the officers who shall have signed or
sealed any of the Bonds shall cease to be such officer before the
Bonds so signed and sealed have been authenticated and delivered
by the Fiscal Agent (including new Bonds delivered pursuant to
the provisions hereof with reference to the transfer and exchange
of Bonds or to lost, stolen, destroyed or mutilated Bonds), such
Bonds shall nevertheless be valid and may be issued as if the
person who signed or sealed such Bonds had not ceased to hold
such office.
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Only such Bonds as shall bear thereon such certificate
of authentication in the form set forth in Section 3.08 hereto
shall be entitled to any right or benefit under this Agreement,
and no Bond shall be valid or obligatory for any purpose until
such certificate of authentication shall have been duly executed
by the Fiscal Agent.
Section 3.04. Reaistration. Exchanae or Transfer. The
registration of any Bond may, in accordance with its terms, be
transferred upon the Bond Register by the person in whose name it
is registered, in person or by his or her duly authorized
attorney, upon surrender of such Bond for cancellation at the
principal corporate trust office of the Fiscal Agent, accompanied
by delivery of a written instrument of transfer in a form
approved by the Fiscal Agent and duly executed by the Bondowner
or his or her duly authorized attorney.
Bonds may be exchanged at the principal corporate trust
office of the Fiscal Agent for a like aggregate principal amount
of Bonds of other authorized denominations of the same maturity.
The Fiscal Agent will not charge the Owner for any new Bond
issued upon any exchange or transfer, but shall require the Owner
requesting such exchange or transfer to pay any tax or other
governmental charge required to be paid with respect to such
exchange or transfer. Whenever any Bond or Bonds shall be
surrendered for registration of transfer or exchange, the City
shall execute, and the Fiscal Agent shall authenticate and
deliver, a new Bond or Bonds of the same maturity for a like
aggregate principal amount; provided, that the Fiscal Agent shall
not be required to register transfers or make exchanges of Bonds
during the period from the Record Date to the next succeeding
Interest Payment Date.
Section 3.05. Bond Reaister. The Fiscal Agent will
keep or cause to be kept, at its principal corporate trust
office, sufficient books for the registration and transfer of the
Bonds which shall at all times upon reasonable prior notice be
open to inspection by the City, and, upon presentation for such
purpose, the Fiscal Agent shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to
be transferred on said Bond Register, Bonds as herein provided.
The City and the Fiscal Agent may treat the owner of
any Bond whose name appears on the Bond Register as the absolute
Owner of such Bond for any and all purposes, and the City and the
Fiscal Agent shall not be affected by any notice to the contrary.
The City and the Fiscal Agent may rely on the address of the
Owner as it appears in the Bond Register for any and all
purposes. It shall be the duty of the Bondowner to give written
notice to the Fiscal Agent of any change in the Owner's address
so that the Bond Register may be revised accordingly.
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Section 3.06. Mutilated. Lost. Destroved or Stolen
Bonds. If any Bond shall become mutilated, the City shall
execute, and the Fiscal Agent Shall authenticate and deliver, a
new Bond of like tenor, date, maturity and principal amount in
exchange and substitution for the Bond so mutilated, but only
upon surrender to the Fiscal Agent of the Bond so mutilated.
Every mutilated Bond so surrendered to the Fiscal Agent shall be
handled in accordance with Section 11.01 of this Agreement. If
any Bond shall be lost, destroyed or stolen, evidence of such
loss, destruction or theft may be submitted to the Fiscal Agent
and, if such evidence is satisfactory to the Fiscal Agent and, if
indemnity satisfactory to the City and the Fiscal Agent shall be
given, the City, at the expense of the Bondowner, shall execute
and the Fiscal Agent shall authenticate and deliver, a new Bond
of like tenor and maturity, numbered and dated as such Fiscal
Agent shall determine in lieu of and in substitution for the Bond
so lost, destroyed or stolen. Any Bond issued in lieu of any
Bond alleged to be lost, destroyed or stolen, shall be equally
and proportionately entitled to the benefits hereof with all
other Bonds issued hereunder. The Fiscal Agent shall not treat
both the original Bond and any replacement Bond as being
Outstanding Bonds for the purpose of determining the principal
amount of Bonds which may be executed, authenticated and
delivered or for the purpose of determining any percentage of
Bonds Outstanding hereunder, but both the original and
replacement bond shall be treated as one and the same.
Notwithstanding any other provision of this Section, in lieu of
delivering a new Bond to replace a Bond which has been mutilated,
lost, destroyed or stolen, and which has matured, the Fiscal
Agent may make payment with respect to such Bond.
Section 3.07. Form of Bonds: Temoorarv Bonds. The
definitive Bonds shall be printed from steel engraved or
lithographic plates, and the Bonds and the certificate of
authentication shall be substantially in the form provided in
Section 3.08.
Until definitive Bonds shall be prepared, the City may
cause to be executed and delivered, in lieu of such definitive
Bonds, temporary bonds in typed, printed, lithographed or
engraved form and in fully registered form, subject to the same
provisions, limitations and conditions as are applicable in the
case of definitive Bonds, except that they may be in any
denominations authorized by the City. Until exchanged for
definitive Bonds, any temporary bond shall be entitled and
subject to the same benefits and provisions of this Agreement as
definitive Bonds. If the City issues temporary Bonds, it will
execute and furnish definitive Bonds without unnecessary delay
and thereupon any temporary Bond may be surrendered to the Fiscal
Agent at its office, without expense to the Owner, in exchange
for a definitive Bond of the same maturity, interest rate and
principal amount in any authorized denomination. All temporary
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Bonds so surrendered shall be cancelled by the Fiscal Agent and
shall not be reissued.
Section 3.08. Form of the Bonds. The Bonds shall be
in substantially the following form, the blanks to be filled in
with appropriate words and figures, namely:
[FORM OF FACE OF BOND]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
REGISTERED
REGISTERED
NUMBER
$
CITY OF SAN BERNARDINO
ASSESSMENT DISTRICT No. 987
(Verdemont Area)
LIMITED OBLIGATION IMPROVEMENT BONDS
INTEREST
RATE
MATURITY
DATE
BOND
DATE
CUSIP
NUMBER
%
September 2,
December 1, 1991
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
Under and by virtue of the Improvement Bond Act of
1915. Division 10 (commencing with Section 8500) of the Streets
and Highways Code (the "Act"), the City of San Bernardino (the
"City"), State of California will, out of the redemption fund for
the payment of the bonds issued upon the unpaid portion of
assessments made for the acquisitions, work and improvements more
fully described in proceedings taken pursuant to Resolution of
Intention No. 91-71 (the "Resolution of Intention"), adopted by
the Mayor and Common Council of the City on the 11th day of March
1991, pay to the registered owner set forth above on the maturity
date stated above, the principal sum set forth above in lawful
money of the United States of America. Interest on the bonds
shall be payable on September 2 and March 2 of each year (each an
"Interest Payment Date"), commencing March 2, 1992, payable from
the Interest payment Date next preceding the date on which this
bond is authenticated, unless (i) such date of authentication is
an Interest Payment Date, in which event interest shall be
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payable from such date of authentication, (ii) the date of
authentication is after the fifteenth day preceding an Interest
Payment Date (the "Record Date") but prior to the immediately
succeeding Interest Payment Date, in which event interest shall
be payable from the Interest Payment Date immediately succeeding
the date of authentication, or (iii) the date of authentication
is prior to the close of business on February 16, 1992, in which
event interest shall be payable from the date of the bonds;
provided, however, that if at the time of authentication of this
bond, interest is in default, interest on this bond shall be
payable from the last Interest Payment Date to which the interest
has been paid or made available for payment.
Both the principal hereof and redemption premium hereon
are payable at the principal corporate trust office of Bank of
America National Trust and Savings Association, as Transfer
Agent, Registrar and Paying Agent (the "Fiscal Agent") in Los
Angeles, California, and the interest hereon is payable by check
mailed to the owner hereof at the owner's address as it appears
on the records of the Fiscal Agent or at such address as may have
been filed with the Fiscal Agent for that purpose, at the close
of business on the applicable Record Date.
This bond will continue to bear interest after maturity
at the rate above stated; provided, it is presented at maturity
and payment hereof is refused upon the sole ground that there are
not sufficient moneys in said redemption fund with which to pay
the same. If it is not presented at maturity, interest hereon
will run until maturity.
This bond shall not be entitled to any benefit under
the Act or the Fiscal Agent Agreement, as defined on the reverse
hereof, or become valid or obligatory for any purpose, until the
certificate of authentication and registration hereon endorsed
shall have been signed by the Fiscal Agent.
THE CITY BAS DBC~V1m AND DBTB1lXINBD IN THE RESOLUTION
OF IN'l'BN'l'ION THAT PtJRSUANT TO SBCTION 8769 OF THE ACT IT WILL NOT
OBLIGATE ITSELF TO ADVANCB AVAILABLE PUNDS PROM THE CITY TREASURY
TO CURB ANY DBFICIENCY WHICH MAY OCCUR IN THE BOND REDEMPTION
PUND .
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF
FULLY SET FORTH AT THIS PLACE.
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IN WITNESS WHEREOF, the City of San Bernardino has
caused this bond to be signed in facsimile by the Treasurer of
said City and by the City Clerk of the City of San Bernardino and
has caused its corporate seal to be reproduced in facsimile
hereon, all as of the 1st day of December, 1991.
CITY OF SAN BERNARDINO
Clerk of the City of
San Bernardino
Treasurer of the
City of San Bernardino
[SEAL]
[Certificate of Authentication and Registration]
This is one of the bonds described in the within
mentioned Fiscal Agent Agreement, which has been authenticated
and registered on the __ day of
, 1991.
By:
Authorized Officer
[FORM OF BACK OF BOND]
This bond is one of several annual maturity of bonds of
like date, tenor and effect, but differing in amounts, maturities
and interest rates, issued by the City under the Act and the
Fiscal Agent Agreement as hereinafter defined for the purpose of
providing means for paying for the improvements described in the
proceedings, and is secured by the moneys in said redemption fund
and by the unpaid portion of said assessments made for the
payment of said improvements, and, including principal and
interest, is payable exclusively out of said fund.
This bond or any portion of it in the amount of five
thousand dollars ($5,000), or any integral multiple thereof, may
be deemed and paid in advance of maturity in whole or in part, at
the option of the City, on any Interest Payment Date, by giving
at least 30 days' notice by first class mail, postage prepaid to
the registered owner hereof at the owner's address as it appears
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on the registered books of the Fiscal Agent upon payment of the
principal amount thereof, plus accrued interest to the date of
redemption, plus a premium of 3% of the principal amount thereof.
The bonds are subject to mandatory redemption in whole
or in part in integral multiples of $5,000 on any Interest
Payment Date, from Prepayment of assessments by property owners
or from the proceeds of refunding bonds by giving thirty (30)
days notice to the registered owners thereof at the owner's
address as it appears on the registration books of the Fiscal
Agent at the prices shown above.
This bond is transferable by the registered owner
hereof, in person or by the owner's attorney duly authorized in
writing, at the office of the Fiscal Agent, subject to the terms
and conditions provided in the Fiscal Agent Agreement, including
the payment of certain charges, if any, upon surrender and
cancellation of this bond. Upon such transfer a new registered
bond or bonds of any authorized denomination or denominations, of
the same maturity, for the same aggregate principal amount, will
be issued to the transferee in exchange hereof.
Bonds shall be registered only in the name of an
individual (including joint owners), a corporation, a
partnership, or a trust.
Neither the City nor the Fiscal Agent shall be required
to make such exchanges or to register such transfers of bonds
during the period from the Record Date to the next succeeding
Interest Payment Date.
The City and the Fiscal Agent may treat the owner
hereof, as shown on the bond register kept by the Fiscal Agent,
as the absolute owner for all purposes, and the City and the
Fiscal Agent shall not be affected by any notice to the contrary.
This bond is subject to refunding pursuant to the
procedures of Division 11.5 (commencing with Section. 9500) of the
Streets and Highways Code of the State of California.
[Form of Assignment]
ASSIGNMENT
For value received the undersigned doles) hereby sell,
assign and transfer unto
(insert social
security number or taxpayer identification number) the written
bond and doles) hereby irrevocably constitute and appoint
attorney to transfer the same on the register of the Fiscal Agent
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of the City of San Bernardino with full power of substitution in
the premises.
Date:
SIGNATURE GUARANTEED:
NOTE:
The signature(s) to this Agreement must correspond with
the name(s) as written on the face of the within bond
in every particular, without alteration or enlargement
or any change whatsoever and the signature(s) must be
guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company.
Section 3.09. Annlication of Proceeds of the Sale of
the Bonds and of the Cash Pavments. Upon the receipt of payment
for the Bonds when the same have been duly sold by the City and
upon receipt of the Cash Payments with respect to the Bonds from
the City, the City and the Fiscal Agent shall set aside and
deposit the proceeds of the sale of the Bonds and the Cash
Payment in the following accounts and funds in the following
order:
(1) The City shall deposit the sum of $75,000,
representing Administrative Expenses of the City until
such time as the City begins collecting the
Administrative Expense Requirement into the Improvement
Fund;
(2) The City shall deposit into the Interest Account
of the Redemption Fund, a sum equal to the amount of accrued
interest received on the Bonds;
(3) The Fiscal
Fund, the sum of $
Requirement;
Agent shall deposit into the Reserve
which is equal to the Reserve
(4) The City shall deposit the remainder of the
proceeds of the sale of the Bonds into the Improvement Fund
and shall deposit the sum of $ , representing a
portion of the Cash Payments received with respect to the
Bonds into the Cash payment Account.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. privileae of Redemotion of Bonds. Any
Bonds subject to redemption prior to maturity pursuant hereto
shall be redeemable, at the option of the Finance Director, upon
sixty (60) days' notice to the Fiscal Agent as provided in this
article, at such times, upon payment of a redemption price of
103%, as permitted by Section 8651.5 of the Act, and upon such
terms (in addition to and consistent with the terms contained in
this article) as may be specified herein: orovided that
redemption of Bonds other than from the application of refunding
bond proceeds shall be made only from and to the extent of funds
on deposit with the Fiscal Agent and available for such purpose
on the date such notice is given.
Any Bond may be redeemed in whole or in part in
integral multiples of $5,000 on any Interest Payment Date, at the
option of the Finance Director, upon thirty (30) days' notice to
the Bondowner, from moneys on deposit with the Fiscal Agent, upon
payment of the principal amount thereof, plus accrued interest
thereon to the date of redemption, plus a premium of 3% of the
principal amount thereof.
Any Bond shall be redeemed in whole or in part in
integral multiples of $5,000 on any Interest Payment Date from
proceeds of refunding bonds pursuant to Division 11.5 of the Bond
Law or from prepayments of Assessments by property owners
deposited in the Prepayment Account of the Redemption Fund, upon
thirty (30) days notice to the Bondowner upon payment of the
principal amount thereof plus accrued interest thereon to the
date of redemption plus a premium of 3% of the principal amount
thereof.
Section 4.02. Selection of Bonds for Redemotion. If
less than all of the outstanding Bonds are to be redeemed, the
City shall designate the Bonds to be redeemed and the Fiscal
Agent shall select the Bonds to be redeemed as required by
Section 8768 of the Act. The Bonds shall be selected for
redemption by lot in such a way that the annual debt service for
such Bonds shall, insofar as possible, be level. The Fiscal
Agent shall promptly notify the City in writing of the Bonds, or
portions thereof, selected for redemption.
In lieu, or partially in lieu, of such call and
redemption, moneys deposited in the Prepayment Account of the
Redemption Fund may be used to purchase Outstanding Bonds in the
manner hereinafter provided. Purchases of OUtstanding Bonds may
be made by the City prior to the selection of Bonds for
redemption by the Fiscal Agent, at public or private sale as and
when and at such prices as the City may in its discretion
determine, but only at prices (including brokerage or other
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expenses) of not more than par plus accrued interest, and any
accrued interest payable upon the purchase of Bonds may be paid
from the amount in the Redemption Fund for payment of interest on
the next following Interest Payment Date.
Section 4.03. Notice of Redemotion. When Bonds are to
be called for redemption under Section 4.01 and the Fiscal Agent
has received the required notice from the City, the Fiscal Agent
shall give notice, in the name of the City, of the redemption of
such Bonds. Such notice of redemption shall (a) specify the
serial numbers and the maturity date or dates of the Bonds
selected for redemption, except that where. all the Bonds subject
to redemption, or all the Bonds of one maturity, are to be
redeemed, the serial numbers thereof need not be specified; (b)
state the date fixed for redemption and for surrender of the
Bonds to be redeemed; (c) state the redemption price; (d) state
the place or places where the Bonds are to be surrendered for
redemption; and (e) in the case of Bonds to be redeemed only in
part, state the portion of such Bonds which is to be redeemed.
Such notice shall further state that on the date fixed for
redemption, there shall become due and payable on each Bond or
portion thereof called for redemption, the principal thereof,
together with any premium, and interest accrued to the redemption
date, and that from and after such date, interest thereon shall
cease to accrue and be payable. At least thirty (30) days but no
more than sixty (60) days prior to the redemption date, the
Fiscal Agent shall mail a copy of such notice, by first class
mail, postage prepaid, to the respective Owners thereof at their
addresses appearing on the Bond Register. The actual receipt by
the Owner of any Bond of notice of such redemption shall not be a
condition precedent thereto, and failure to receive such notice
shall not affect the validity of the proceedings for the
redemption of such Bonds, or the cessation of interest on the
redemption date. A certificate by the Fiscal Agent that notice
of such redemption has been given as herein provided shall be
conclusive as against all parties.
The Fiscal Agent shall take the following additional
actions with respect to such notice of redemption provided that
neither the failure to take such actions nor any defect in the
action taken shall affect the validity of the proceedings for
such redemption:
(a) On the date on which the notice of redemption is
mailed to the Owners of the Bonds pursuant to the provisions
above, such notice of redemption shall be given by (i) first-
class mail, postage prepaid, (ii) confirmed facsimile
transmission, or (iii) overnight delivery service, to each of the
following securities depositories:
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(1) The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530
Facsimile transmission: (516) 227-4164
(516) 227-4190
Phone: (516) 227-4000
(2) Midwest Securities Trust Company
Capital Structures -- Call Notification
440 South LaSalle Street
Chicago, Illinois 60605
Facsimile transmission: (312) 663-2959
(312) 663-2960
Phone: (312) 663-2511
(3) Philadelphia Depository Trust Company
Reorganization Division
1900 Market Street
Philadelphia, Pennsylvania 19103
Facsimile transmission: (215) 496-5058
Phone: (215) 496-5008
On the date on which the notice of redemption is mailed
to the Owners of the Bonds pursuant to the provisions above, such
notice of redemption shall be given by (i) first-class mail,
postage prepaid, or (ii) overnight delivery service, to each of
the following services:
(1) Financial Information, Inc.
Daily Called Bond Service
30 Montgomery Street, lOth Floor
Jersey City, New Jersey 07302
Attention: Editor
Phone: (201) 332-5400
(2) Interactive Data Corporation's
Bond Service
22 Cortland Street
New York, New York 10007
Phone: (212) 285-0700
(3) Kenny Information Service's
Called Bond Service
65 Broadway, 16th Floor
New York, New York 10006
Phone: (212) 770-4500
(4) Moody's Municipal Government
99 Church Street, 8th Floor
New York, New York 10007
Attention: Municipal News Reports
Phone: (212) 553-0300
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(5) Standard & Poor's Called Bond Service
25 Broadway, Third Floor
New York, New York 10004
Phone: (212) 208-8000
Section 4.04. Partial Redemotion of Bonds. Upon
surrender of any Bond to be redeemed in part only, the City shall
execute and the Fiscal Agent shall authenticate and deliver to
the Owner, at the expense of the City, a new Bond or Bonds of
authorized denominations equal in aggregate principal amount to
the unredeemed portion of the same interest rate and the same
maturity.
Section 4.05. Effect of Notice and Availabilitv of
Redemotion Monev. Notice of redemption having been duly given,
as provided in Section 4.03, and the amount necessary for the
redemption having been made available for that purpose and being
available therefor on the date fixed for such redemption:
(a) the Bonds, or portions thereof, designated for
redemption shall, on the date fixed for redemption, become due
and payable at the redemption price thereof as provided in this
Agreement, anything in this Agreement or in the Bonds to the
contrary notwithstanding;
(b) upon presentation and surrender thereof at the
principal corporate trust office of the Fiscal Agent, the
redemption price of such Bonds shall be paid to the Owner
thereof;
(c) 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
(d) after the date fixed for redemption no Owner of
any of the Bonds or portions thereof so designated for redemption
shall be entitled to any of the benefits of this Agreement, 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.
ARTICLE V
CREATION OF FUNDS AND ACCOUNTS;
APPLICATION OF PROCEEDS AND ASSESSMENTS
Section 5.01. Funds and Accounts. In connection with
the Bonds issued hereunder, there are hereby created and
established the following funds and accounts. The City agrees
and covenants to maintain, so long as any Bonds are Outstanding,
the following funds and accounts:
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(1) The Assessment District No. 987 (Verdemont Area)
Improvement Fund (the "Improvement Fund") in which
there shall be established and created a
subaccount and a Cash Payment Account for the
Bonds issued hereunder; and
(2) The Assessment District No. 987 (Verdemont Area)
Administrative Expense Fund (the "Administrative
Expense Fund").
The Fiscal Agent agrees and covenants to maintain, so
long as any Bonds are Outstanding, the following funds and
accounts:
(1) The Assessment District No. 987 (Verdemont Area)
Assessment Fund (the "Assessment Fund");
(2) The Assessment District No. 987 (Verdemont Area)
Redemption Fund (the "Redemption Fund"), in which
there shall be established and created a Principal
Account, an Interest Account, and a Prepayment
Account;
(3) The Assessment District No. 987 (Verdemont Area)
Reserve Fund (the "Reserve Fund"); and
(4) The Assessment District No. 987 (Verdemont Area)
Rebate Fund (the "Rebate Fund").
All moneys in said funds and accounts shall be held by
the City or Fiscal Agent in trust and shall be accounted for
separately and apart from all other accounts, funds, moneys or
other resources and shall be allocated, applied and disbursed
solely to the uses and purposes set forth in this Article.
Section 5.02. Assessment Fund. On those dates
following the date on which the Finance Director receives money
from the Auditor-Controller of the County constituting the City's
apportionment of tax revenues (including Assessment Installments
and moneys collected representing the Administrative Expense
Requirement) received on behalf of the City, (any such
apportionment being hereinafter referred to as an
"Apportionment"), the City will authorize the Finance Director to
deposit a portion of such Apportionment to the Administration
Expense Fund as provided by Section 5.03 hereof and the City will
authorize the Finance Director to deposit the remainder of such
Apportionment and any other amounts constituting Assessment
Installments (exclusive of amounts representing the
Administrative Expense Requirement) with the Fiscal Agent for
deposit to the Assessment Fund. On or prior to the first day of
March and September of each year, the Fiscal Agent is to then
transfer moneys on deposit in the Assessment Fund in the amounts
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set forth in the following Sections, in the following order or
priority, to:
(1) the Interest Account of the Redemption Fund, an
amount sufficient to make the Interest Payment on the next
succeeding Interest Payment Date for the Bonds;
(2) the Principal Account of the Redemption Fund, with
respect to March 1 of each year up to one-half of the amount
needed to make the Principal Payment due on the following
September 2 on the Outstanding Bonds, and with respect to
September 1 of each year, an amount which, when combined
with amounts on deposit in the Principal Account, shall
equal the amount needed to make the Principal Payment due on
the following September 2 on the Outstanding Bonds;
(3) any remaining portion of each Apportionment shall
remain in the Assessment Fund.
Any moneys remaining in the Assessment Fund after the
deposits described above shall be transferred by the Fiscal
Agent, at the written direction of the City, and to the extent
that there are sufficient moneys on deposit therein, to the
Prepayment Account of the Redemption Fund and used to redeem
Bonds as provided herein. To the extent that there are
insufficient moneys to redeem Bonds, such moneys shall be used by
the Fiscal Agent, at the direction of the City, as a credit
against each of the unpaid assessments in the amounts equal to
each parcel's share or portion thereof, of the total amount of
assessment to be levied.
Upon provision for payment or redemption of all Bonds
and after payment of any amounts due to the Fiscal Agent, all
moneys remaining in the Assessment Fund shall be paid to the
City.
Section 5.03. Administrative Exoense Fund. upon
receipt of an Apportionment, the Finance Director shall transfer
the amounts designated as the Administrative Expense Requirement
to the Administrative Expense Fund. The Finance Director shall
apply the moneys on deposit in the Administrative Expense Fund
for payment of Administrative' Expenses, as directed by the
superintendent of Streets.
Fees or charges incurred by the City in performance of
its obligations hereunder, shall be paid from the Administrative
Expense Fund, and the fees or charges payable to the County for
the County's collection services described herein shall be
retained by the County, pursuant to the provisions of Section
8682 of the Act, and shall not be transferred to the City or the
Fiscal Agent or considered part of the Apportionment. Such fees
or charges shall be reimbursed or satisfied by the collection of
such fees or charges or estimates thereof with the principal of
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and interest on the Assessment Installments due at the time of
such collection. The amount of any such fees, charges or
estimates thereof shall be apportioned pro rata and shall be
collected with the same collection and enforcement procedures and
with the same priority and effect as with respect to the
collection of the principal of and interest on the Unpaid
Assessments.
The Administrative Expenses shall be paid from amounts
deposited in a subaccount of the Improvement Fund created to hold
such moneys until the County begins collecting the Administrative
Expense Requirements, as necessary for the Bonds.
Section 5.04. Redemotion Fund. The principal of and
interest on the Bonds until maturity shall be paid by the Fiscal
Agent from the Redemption Fund. At the maturity of the Bonds,
and after all principal and interest then due on any OUtstanding
Bonds has been paid or provided for, moneys in the Redemption
Fund shall be transferred to the Assessment Fund.
For the purpose of assuring that payment of principal
and interest on the Bonds will be made when due, on or prior to
the first day of March or September of each year, the Fiscal
Agent shall transfer to the Redemption Fund from the Assessment
Fund the following amounts, to be used in the following priority:
(a) An amount such that the balance in the Interest
Account one (1) day prior to each Interest Payment Date shall be
equal to the installment of interest due on the Bonds on said
Interest Payment Date. Moneys in the Interest Account shall be
used for the payment of interest on the Bonds as the same becomes
due.
(b) With respect to March 1 of each year, an amount up
to one-half of the principal payment due on the Bonds on the
following September 2 to the Principal Account, and with respect
to September 1 of each year, an amount which, when combined with
amounts on deposit in the Principal Account shall equal the
principal payment due on the Bonds on the following September 2.
Moneys in the Principal Account shall be used for the payment of
the principal of such Bonds as the same become due at maturity.
(c) Any amounts remaining in the Redemption Fund on
September 15 of each year, after all principal and interest
payments due on the prior September 2 shall be transferred to the
Assessment Fund.
preoavment Account. Moneys set aside in the Prepayment
Account of the Redemption Fund shall be used solely for the
purpose of redeeming Bonds and shall be applied on or after the
redemption date to the payment of principal of and premium on the
Bonds to be redeemed upon presentation and surrender of such
Bonds.
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Upon receiving any prepayment of an Assessment, the
Finance Director shall transfer such prepayment to the Fiscal
Agent for deposit in the Prepayment Account. At least three (3)
business days before each Interest Payment Date, the Fiscal Agent
shall withdraw from the prepayment Account and transfer to the
Redemption Fund, the installment of principal due and interest
accrued relating to such prepayment to the applicable Interest
Payment Date. Any surplus remaining in said account shall be
used to advance the maturity of the Bonds as provided in Part
11.1 of the Act.
If, after all of the Bonds have been redeemed and
cancelled or paid and cancelled, there are moneys remaining in
any account of the Redemption Fund, said moneys shall be
transferred to the Assessment Fund, provided, that if said moneys
are part of the proceeds of refunding bonds said moneys shall be
transferred to the fund or account created for the payment of
principal of and interest on such refunding bonds.
Section 5.05. Reserve Fund. There shall be created
and established a Reserve Fund for the Bonds. The amount
representing the Reserve Requirement shall be maintained in the
Reserve Fund at all times. The Reserve Requirement shall be
calculated based upon the total OUtstanding Bonds, as provided in
the definition of the Reserve Requirement.
Moneys in the Reserve Fund shall be used solely for the
purpose of paying the principal of and interest on the Bonds when
due in the event that the moneys in the Redemption Fund are
insufficient therefor, and for deposit to the Rebate Fund as
required. The Fiscal Agent shall withdraw moneys as necessary
from the Reserve Fund for deposit in the Redemption Fund on or
before the first day of March and September of each year.
In the event Unpaid Assessments are prepaid, in whole
or in part, the Assessment thus prepaid shall be reduced by an
amount equal to the ratio of the total amount initially provided
for the Reserve Fund to the total amount originally assessed in
the proceedings for the issuance of the Bonds, multiplied by the
total amount of the assessment to be prepaid, and the amount thus
determined shall be transferred from the Reserve Fund to the
Prepayment Account of the Redemption Fund. The City shall
notify, or shall cause the Fiscal Agent to be notified, of such
amounts to be transferred.
In the event that moneys in (i) the Reserve Fund, (ii)
the Redemption Fund, (iii) the Improvement Fund, and (iv) the
Assessment Fund are sufficient to retire all of the Outstanding
Bonds plus accrued interest thereon, such moneys shall be
transferred to the Redemption Fund for the Bonds and collection
of the remaining Unpaid Assessments shall cease.
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All amounts remaining in the Reserve Fund in the year
in which the last Assessment Installments become due and payable
shall be credited toward said assessments as set forth below.
On or prior to July 1st of the Fiscal Year next
preceding the Fiscal Year in which the last unpaid Assessment
Installment becomes due and payable, the City shall determine the
amount remaining in the Reserve Fund, and shall declare such
amount to be surplus and order the same to be credited in the
manner set forth in Section 10427.1 of the 1913 Act; provided
that if all or any part of such Assessments remain unpaid and are
payable in installments, the amount apportioned to each parcel
shall be credited against the last of such unpaid Assessment
Installments and, if the amount apportioned to each parcel
exceeds the amount of said last installment, then such excess
shall be credited against the next to last of such Assessment
Installments.
Notwithstanding any prov~s~ons herein to the contrary,
moneys in the Reserve Fund in excess of the Reserve Requirement
(other than investment earnings) shall be withdrawn from the
Reserve Fund by the Fiscal Agent each July 1, and shall be
transferred to the Assessment Fund and shall be used as provided
in Section 5.02.
Section 5.06. Imorovement Fund.
(a) The proceeds of the Bonds shall be deposited into
the Improvement Fund and shall be applied, with any amounts in
the Cash Payment Account, to pay (i) the costs of issuing the
Bonds, and (ii) the Project Costs, nrovided, however, that moneys
in the Cash Payment Account of the Improvement Fund shall only be
used to pay the Project Costs. Amounts to pay the costs of
issuing any Bonds shall be paid from the Improvement Fund, upon
receipt by the Fiscal Agent of written direction from the
Superintendent of Streets, stating the payee and the amount
owing. Amounts for Project Costs for the Project shall be
disbursed by the Fiscal Agent as specified by the Superintendent
of Streets, from the Improvement Fund and from the Cash Payment
Account therein, on a pro rata basis, only upon receipt of a
written certificate, substantially in the form attached hereto as
Exhibit A, from the Superintendent of Streets stating that (1)
the conditions to the release of such funds have been satisfied,
(2) the name of the person to whom payment is due, (3) the amount
to be paid, (4) the purpose for which the obligation to be paid
was incurred, (5) there has not been filed with or served upon
the City notice of any lien, right to lien or attachment upon,
stop notice or claim affecting the right to receive payment of,
any of the moneys payable to any of the persons named in such
certificate or written requisition, which has not been released
or will not be released simultaneously with the payment of such
obligation, other than materialmen's or mechanics' liens accruing
by mere operation of law.
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(b) Pursuant to Section 10427 of the 1913 Act, if,
after completion of the Project and the payment of all claims
from the Improvement Fund, notice of which shall be given to the
Fiscal Agent by the Superintendent of Streets, the Mayor and
Common Council determine that a surplus remains in the
Improvement Fund, any such surplus shall be used as follows:
(i) For transfer to the general fund of the City,
provided that the amount of any such transfer shall not
exceed the lesser of one thousand dollars ($1,000) or five
percent (5%) of the total amount expended from such
Improvement Fund;
(ii) For the maintenance of the Project;
(iii) As a credit upon Assessments and any
supplemental Assessments, in the manner provided in Section
10427.1 of the 1913 Act;
(iv) To call Bonds, thereby reducing outstanding
assessments and subsequent assessment installments; and
(v) For any other purpose authorized by Sections
10427 or 10427.1 of the 1913 Act or as otherwise
authorized by the 1913 Act.
(c) Notwithstanding anything herein to the contrary,
if within three (3) years from the Closing Date for the Bonds, '
any funds remain on deposit in the Improvement Fund, the Fiscal
Agent shall immediately invest such amount in Tax-Exempt
obligations at the direction of the City or shall restrict the
Yield on such amounts such that the Yield on such amounts is not
in excess of the Yield on such Bonds, unless in the opinion of
Bond Counsel delivered to the Fiscal Agent, such restriction is
not necessary to prevent an impairment of the exclusion of
interest on such Bonds from gross income for federal income tax
purposes.
(d) Notwithstanding the foregoing, if necessary for
any Bonds, there shall be deposited into the Improvement Fund an
amount specified in Section 3.09 to pay Administrative Expenses
until such time as the City begins collecting the Administrative
Expense Requirement.
Section 5.07. Rebate Fund.
(a) The Fiscal Agent shall establish and maintain a
fund separate from any other fund established and maintained
hereunder designated as the Rebate Fund. Subject to the transfer
provisions provided in paragraph (e) below, all moneys at any
time deposited in the Rebate Fund shall be held by the Fiscal
Agent in trust, to the extent required to satisfy the Rebate
Requirement for payment to the federal government of the United
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States of America. Neither the City nor the Owner of any Bonds
shall have any rights in or claim to such money. All amounts
deposited into or on deposit in the Rebate Fund shall be governed
by this Section and by the Tax Certificate. The Fiscal Agent
shall be deemed to have complied with such provisions if it
follows the directions of the City including supplying all
necessary information in the manner provided in the Tax
Certificate, and shall have no liability or responsibility to
enforce compliance by the City with the terms of the Tax
Certificate.
(b) The Fiscal Agent shall have no obligation to
rebate any amounts required to be rebated pursuant to this
Section, other than from moneys held in the funds and accounts
created under this Agreement or from other moneys provided to it
by the City.
(c) The Fiscal Agent shall invest all amounts held in
the Rebate Fund at the written direction of the City in Federal
Securities, subject to the restrictions set forth in the Tax
Certificate. The Fiscal Agent shall retain all earnings
(calculated by taking into account net gains or losses on sales
or exchanges and taking into account amortized discount or
premium as a gain or loss, respectively) on investments held in
the Rebate Fund. Money shall not be transferred from the Rebate
Fund except as provided in paragraph (e) below.
(d) Upon receipt of the City's written directions, the
Fiscal Agent shall remit part or all of the balances in the
Rebate Fund for the Bonds to the United States, as so directed.
In addition, on any date so directed by the City and on the first
day of any Bond Year for the Bonds, if the amount credited to the
Rebate Fund exceeds the Rebate Requirement, the Fiscal Agent will
deposit moneys into or transfer moneys out of the Rebate Fund
from or into such accounts or funds as directed in writing by the
City. Any funds remaining in the Rebate Fund after redemption
and payment of all of the Bonds and payment and satisfaction of
any Rebate Requirement shall be withdrawn and remitted to the
City.
(e) Notwithstanding any other provision of this
Agreement, including in particular Article VII hereof, the
obligation to remit the Rebate Requirement to the United States
and to comply with all other requirements of this Section and the
Tax Certificate shall survive the defeasance or payment in full
of the Bonds.
Section 5.08. Investments. Moneys held in any of the
funds and accounts under this Agreement shall be invested at the
written direction of the Finance Director only in Authorized
Investments which shall be deemed at all times to be a part of
such funds and accounts. The Fiscal Agent shall provide monthly
reports, on the tenth day of each month, of the principal
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balances and investment earnings thereon in each fund and account
maintained for the Assessment District.
. Authorized Investments may be purchased at such prices
as may be directed by the Finance Director in written directions
(or telephonic directions confirmed in writing) delivered to the
Fiscal Agent. All Authorized Investments shall be acquired
subject to the limitations set forth in Section 6.02(e), the
limitations as to maturities hereinafter in this section set
forth and such additional limitations or requirements consistent
with the foregoing as may be established by the Finance Director.
Moneys in all funds and accounts except for the Reserve
Fund shall be invested in Authorized Investments maturing, or
with respect to which payments of principal and interest are
scheduled or otherwise payable, not later than the date on which
it is estimated that such moneys will be required by the Fiscal
Agent for the purposes specified in this Agreement. Moneys in
the Reserve Fund shall be invested in Authorized Investments, 50%
of which must mature within six (6) months and 50% of which must
mature within one (1) year; however, if such investments may be
redeemed without premium or penalty on the business day prior to
each Interest Payment Date, 100% of the amount of the Reserve
Fund may be invested in such redeemable investments of any
maturity on or prior to September 2, 2011. Authorized
Investments purchased under a repurchase agreement may be deemed
to mature on the date or dates on which the Fiscal Agent may
deliver such Authorized Investments for repurchase under such
agreement.
All interest, profits and other income received from
the investment of moneys in any fund or account established
pursuant to this Agreement (with the exception of the Rebate
Fund) shall, upon receipt by the Fiscal Agent, be deposited to
the Improvement Fund until completion of construction and
thereafter to the Assignment Fund. All interest, profits and
other income received from the investment of moneys in the Rebate
Fund shall be retained in the Rebate Fund and applied in
accordance with Section 5.07 hereof.
Notwithstanding anything to the contrary contained in
this Section, an amount of interest received with respect to any
Authorized Investment equal to the amount of accrued interest, if
any, paid as part of the purchase price of such Authorized
Investment shall be credited to the fund or account for the
credit of which such Authorized Investment was acquired.
For the purpose of determining the amount in any fund
or account other than the Reserve Fund, all Authorized
Investments credited to such fund or account shall be valued at
the adjusted book value (plus, prior to the first payment of
interest following acquisition, the amount of any accrued
interest paid as part of the purchase price). Amounts in the
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Reserve Fund shall be valued at their fair market value at least
semi-annually (or more frequently as may be requested by the
Finance Director) .
The Fiscal Agent may act as principal or agent in the
making or disposing of any investment. The Fiscal Agent may sell
at the best market price obtainable, or present for redemption,
any Authorized Investment so purchased whenever it shall be
necessary to provide moneys to meet any required payment,
transfer, withdrawal or disbursement from the fund or account to
which such Authorized Investment is credited, and, subject to the
provisions of Section 8.04, the Fiscal Agent shall not be liable
or responsible for any loss resulting from such investment.
In the absence of written investment direction from the
Finance Director received at least two (2) Business Days prior to
the maturity of an Authorized Investment, the Fiscal Agent shall
invest solely in Authorized Investments set forth in subsection
(3) of the definition thereof, unless the amount to be invested
is in excess of $100,000, in which case the Fiscal Agent shall
invest such moneys in Federal Securities which are SLGS.
ARTICLE VI
COVENANTS AND WARRANTY
Section 6.01. Warranty. The City shall preserve and
protect the security, of the Bonds and the rights of the Owners
against all claims and demands of all persons.
Section 6.02. Covenants. So long as any of the Bonds
are Outstanding and unpaid, the City makes the following
covenants with the Owners under the provisions of the 1913 Act,
the Act and this Agreement (to be performed by the City or its
proper officers, agents or employees), which covenants are
necessary, convenient and desirable to secure the Bonds and tend
to make them more marketable; provided, however, that said
covenants do not require the City to expend any funds or moneys
other than the Assessments:
(a) Punctual PaYment: Covenant Aqainst Encumbrances.
The City covenants that it will receive all Assessment
Installments in trust and will, consistent with Section 5.02
hereof, deposit the Assessment Installments with the Fiscal Agent
and the City shall have no beneficial right or interest in the
amounts so deposited except as provided by this Agreement. All
such Assessment Installments, whether received by the City in
trust or deposited with the Fiscal Agent, all as herein provided,
shall nevertheless be disbursed, allocated and applied solely to
the uses and purposes herein set forth, and shall be accounted
for separately and apart from all other money, funds, accounts or
other resources of the City.
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The City covenants that it will duly and punctually pay
or cause to be paid the principal of and interest on every Bond
issued hereunder, together with the premium, if any, thereon on
the date, at the place and in the manner set forth in the Bonds
and in accordance with this Agreement to the extent Assessments
and interest earnings transferred to the Redemption Fund are .
available therefor, and that the payments into the Improvement
Fund, the Redemption Fund and the Reserve Fund will be made, all
in strict conformity with the terms of the Bonds and this
Agreement, and that it will faithfully observe and perform all of
the conditions, covenants and requirements of this Agreement and
all Supplements and of the Bonds issued hereunder. If at any
time the total balance in the Redemption Fund, the Improvement
Fund, the Assessment Fund, and the Reserve Fund is sufficient to
redeem all Outstanding Bonds pursuant to Section 4.01 hereof, the
Finance Director may direct the Fiscal Agent to effect such
redemption on the earliest date on which all outstanding Bonds
may be redeemed.
The City will not mortgage or otherwise encumber,
pledge or place any charge upon any of the Assessment
Installments, and will not issue any obligation or security
superior to the Bonds, payable in whole or in part from the
Unpaid Assessments.
(b) Commence Foreclosure Proceedinas. The District
covenants for the benefit of the Owners of the Bonds that it will
determine or cause to be determined, no later than February 15
and June 15 of each year, whether or not any owners of property
within the District are delinquent in the payment of Assessments
and, if such delinquencies exist, the City will order and cause
to be commenced no later than April 1 (with respect to the
February 15 determination) or August 1 (with respect to the June
15 determination date), and thereafter diligently prosecute, an
action in the superior court to foreclose the lien of any
Assessments or installment thereof not paid when due, orovided,
however, that the City shall not be required to order the
commencement of foreclosure proceedings if (i) the total
Assessments delinquency in the District for such Fiscal Year is
less than five percent (5%) of the total Assessments levied in
such Fiscal Year, and (ii) the Reserve Fund remains at the
Reserve Requirement. Notwithstanding the foregoing, if the City
determines that any single property owner in the District is
delinquent in excess of ten thousand dollars ($10,000) in the
payment of Assessments, then it will diligently institute,
prosecute and pursue foreclosure proceedings against such
property owner. The Finance Director shall notify the Mayor and
Common Council and the City Attorney of any delinquency requiring
the commencement of a foreclosure action pursuant hereto and the
City Attorney shall commence, or cause to be commenced, such
proceedings. The District may, but shall not be obligated to,
advance funds from any source of legally available funds in order
to maintain the Bond Reserve Fund at the Reserve Requirement.
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(c) Payment of Claims. The City will pay and
discharge any and all lawful claims for labor, materials or
supplies which, if unpaid, might become a lien or charge upon any
portion of the Project owned by the City or upon the Assessments
or any part thereof, or upon any funds in the hands of the Fiscal
Agent, or which might impair the security of the Bonds; provided
that nothing herein contained shall require the City to make such
payments so long as the City in good faith shall contest the
validity of any such claims.
(d) Books and Accounts. The City will cause the
Fiscal Agent to keep proper books or records and accounts,
separate from all other records and accounts of the City, in
which complete and correct entries shall be made of all
transactions relating to the Project, the levy of the Assessment
and the deposits to the Redemption Fund. Such books of record
and accounts shall at all times during business hours be subject
to the inspection of the City or of the Owners of not less than
ten percent (10%) of the principal amount of the Bonds then
Outstanding or their representatives authorized in writing.
(e) Tax Covenants. The City will not directly or
indirectly use, or permit the use of, the proceeds of the Bonds
or any other funds of the City or of the improvements acquired
and constructed with the proceeds of the Bonds or any part
thereof, or take or omit to take any action, which would cause
the Bonds to be "arbitrage bonds" subject to federal income
taxation by reason of Section 148 of the Internal Revenue Code of
1986, as amended (the "Code"), private activity bonds" subject to
federal income taxation by reason of Section 141(a) of the Code,
or obligations subject to federal income taxation because they
are "federally guaranteed" as provided in Section 149 (b) of the
Code; and to that end the City, with respect to the proceeds of
the Bonds and such other funds, will comply with all requirements
of such sections of the Code and all regulations of the United
States Department of the Treasury to the extent that such
requirements are, at that time, applicable and in effect, and
will comply with the provisions of the Tax Certificate.
In furtherance of the covenants of the City set forth
above, the City will comply with the Tax Certificate, and the
City hereby agrees and covenants to cause the Fiscal Agent to
establish and maintain the Rebate Fund, for the purpose of
segregating the Rebate Requirement (as that term is defined in
the Tax Certificate) from all other moneys of the City and the
Fiscal Agent in accordance with the Tax Certificate. The Fiscal
Agent shall make any required deposits to the Rebate Fund from
the funds and in the order of priority as specified in
Section 5.07 of this Agreement and the Tax Certificate.
(i) Without limiting the generality of the foregoing,
the City agrees that there shall be paid from time to time all
amounts required to be rebated to the United States pursuant to
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Section 148(f) of the Code and any temporary, proposed or final
Treasury Regulations as may be applicable to the Bonds from time
to time. This covenant shall survive payment in full or
defeasance of the Bonds. The City specifically covenants to pay
or cause to be paid to the United States, at the times described
in the Tax Certificate, the amounts required to be so paid by the
Tax Certificate. The Fiscal Agent shall comply with the
instructions of the City given in accordance with the Tax
Certificate.
(ii) Notwithstanding any prov1s10n of this Fiscal Agent
Agreement, if the City shall provide to the Fiscal Agent an
opinion of Bond Counsel that any specified action required under
this Fiscal Agent Agreement is no longer required or that some
further or different action is required to maintain the exclusion
from gross income for federal income tax purposes of interest on
the Bonds, the Fiscal Agent may conclusively rely on such opinion
in complying with the requirements of the Fiscal Agent Agreement,
and the covenants hereunder shall be deemed to be modified to the
extent notwithstanding the provisions of Article VI hereof.
(f) Comoletion of proiect. The City will diligently
carry out and continue to completion with all practical dispatch
the acquisition and construction of the Project in a sound and
economical manner. The Project to be acquired or constructed may
be amended as provided in the 1913 Act, but no amendment may be
made which would substantially impair the security of the Bonds
or the rights of the Owners. The City, or other public entities
with whom the City has executed agreements as required by
Section 10110 of the 1913 Act, will maintain the project, or
cause it to be maintained, in accordance with the customary and
reasonable maintenance and repair practices for such facilities.
(g) Collection of the Administrative Exoense
Reauirement. The City covenants that, commencing in Fiscal Year
1992-93, it will request the County collect annually an amount
specified by the Finance Director to be the Administrative
Expense Requirement, which amount will be expressed as a
percentage of the annual levy of Assessment Installments, to pay
for Administrative Expenses. The Administrative Expense
Requirement so collected shall not exceed five percent of each
assessment installment; such costs to be in addition to any costs
collected pursuant to Sections 8682 and 8682.1 of the Act.
ARTICLE VII
AMENDMENTS TO AGREEMENT
Section 7.01. Amendments Not Reauirinq Bondowner
Consent. The City may from time to time, and at any time,
without notice to or consent of any of the Bondowners, adopt
Supplements hereto for any of the following purposes:
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(a) to cure any ambiguity, to correct or supplement
any provisions herein which may be inconsistent with any other
provision herein, or to make any other provision with respect to
matters or questions arising under this Agreement or in any
resolution or order of the City relating to this Agreement,
provided that such action shall not adversely affect the
interests of the Bondowners;
(b) to add to the covenants and agreements of, and the
limitations and the restrictions upon, the City contained in this
Agreement, other covenants, agreements, limitations and
restrictions to be observed by the City which are not contrary to
or inconsistent with this Agreement as theretofore in effect;
(e) to modify, amend or supplement this Agreement in
such manner as to permit the qualification hereof under the Trust
Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal
statute, and which shall not, materially adversely affect the
interests of the Owners of the Bonds; or
(d) to modify, alter, amend or supplement this
Agreement in any other respect which is not materially adverse to
the Bondowners.
Section 7.02. Amendments Reauirina Bondowner Consent.
Exclusive of the Supplements described in Section 3.01, the
Owners of not less than a majority in aggregate principal amount
of the Bonds then Outstanding shall have the right to consent to
and approve such Supplements as shall be deemed necessary or
desirable by the City for the purpose of waiving, modifying,
altering, amending, adding to or rescinding, in any particular,
any of the terms or provisions contained in this Agreement;
provided, however, that nothing herein shall permit, or be
construed as permitting, (a) an extension of the' maturity date of
the principal, or the payment date of interest on, any Bond,
(b) a reduction in the principal amount of, or redemption premium
on, any Bond or the rate of interest thereon, (c) a preference or
priority of any Bond or Bonds over any other Bond or Bonds, or
(d) a reduction in the aggregate principal amount of the Bonds
the Owners of which are required to consent to such Supplement,
without the consent of the Owners of all Bonds then Outstanding.
If at any time the City shall desire to enter into a
Supplement, which pursuant to the terms of this section shall
require the consent of the Bondowners, the City shall so notify
the Fiscal Agent and shall deliver to the Fiscal Agent a copy of
the proposed Supplement. The Fiscal Agent shall, at the expense
of the City, cause notice of the proposed Supplement to be
mailed, by first class mail postage prepaid, to all Bondowners at
their addresses as they appear in the Bond Register. Such notice
shall briefly set forth the nature of the proposed Supplement and
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shall state that a copy thereof is on file at the office of the
Superintendent of Streets for inspection by all Bondowners. The
failure of any Bondowners to receive such notice shall not affect
the validity of such Supplement when consented to and approved by
the Owners of not less than a majority in aggregate principal
amount of the Bonds then Outstanding as required by this section.
Whenever at any time within one year after the date of the first
mailing of such notice the Fiscal Agent shall receive an
instrument or instruments purporting to be executed by the Owners
of not less than a majority in aggregate principal amount of the
Bonds then Outstanding, which instrument or instruments shall
refer to the proposed Supplement described in such notice, and
shall specifically consent to and approve the Supplement
substantially in the form of the copy referred to in such notice
as on file with the Superintendent of Streets, such proposed
Supplement, when duly executed by the City, shall thereafter
become a part of the proceedings for the issuance of the Bonds.
In determining whether the Owners of a majority of the aggregate
principal amount of the Bonds have consented to the adoption of
any Supplement, Bonds which are owned by the City or by any
person directly or indirectly controlling or controlled by or
under the direct or indirect common control with the City, shall
be disregarded and shall be treated as though they were not
OUtstanding for the purpose of any such determination.
Upon the execution and delivery by the City and the
Fiscal Agent of any Supplement and the receipt of consent to any
such Supplement from the Owners of not less than a majority in
aggregate principal amount of Bonds Outstanding in instances
where such consent is required pursuant to the provisions of this
section, this Agreement shall be, and shall be deemed to be,
modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Agreement of the City,
the Fiscal Agent and all Owners of Bonds then Outstanding shall
thereafter be determined, exercised and enforced hereunder,
subject in all respects to such modifications and amendments.
Section 7.03. Notation of Bonds: Deliverv of Amended
Bonds. After the effective date of any action taken as
hereinabove provided, the City may determine that the Bonds may
bear a notation, by endorsement in form approved by the City, as
to such action, and in that case upon demand of the Owner of any
Bond OUtstanding at such effective date and presentation of his
Bond for the purpose at the office of the Fiscal Agent or at such
additional offices as the Fiscal Agent may select and designate
for that purpose, a suitable notation as to such action shall be
made on such Bonds. If the City shall so determine, new Bonds so
modified as, in the opinion of the City, shall be necessary to
conform to such action shall be prepared and executed, and in
that case upon demand of the Owner of any Bond Outstanding at
such effective date such new Bonds shall be exchanged at the
office of the Fiscal Agent or at such additional offices as the
Fiscal Agent may select and designate for that purpose, without
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cost to each owner, for Bonds then Outstanding, upon surrender of
such Outstanding Bonds.
ARTICLE VIII
FISCAL AGENT
Section 8.01. Fiscal Aqent. Bank of America National
Trust and Savings Association, having a corporate trust office in
San Francisco, California, is hereby appointed Fiscal Agent for
the purpose of receiving all money which the City is required to
deposit with the Fiscal Agent hereunder, use and apply the same
as provided in this Agreement.
The Fiscal Agent is hereby authorized to and shall mail
by first-class mail, postage prepaid, interest payments to the
Bondowners, select Bonds for redemption, and maintain the Bond
Register. 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 upon 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 Agreement, and to
provide for the authentication of Bonds, and shall perform all
other duties assigned to or imposed on it as provided in this
Agreement. The Fiscal Agent shall keep accurate records of all
funds administered by it and all Bonds paid and discharged by it.
The Fiscal Agent is hereby authorized to pay the Bonds
when duly presented for payment at maturity, or on redemption
prior to maturity. The Fiscal Agent shall cancel all Bonds upon
payment thereof or upon the surrender thereof by the City,
pursuant to Section 11.01 hereof. The Fiscal Agent shall keep
accurate records of all Bonds paid and discharged and cancelled
by it.
Detailed records with respect to each and every
Nonpurpose Investment (as defined in the Tax Certificate)
attributable to Gross Proceeds (as defined in the Tax
Certificate) of the Bonds must be maintained by the Fiscal Agent
including: (i) purchase date, (ii) purchase price, (iii) any
accrued interest paid, (iv) face amount, (v) coupon rate,
(vi) periodicity of interest payments, (vii) disposition price,
(viii) any accrued interest received, and (ix) disposition date.
In the event a Nonpurpose Investment is subject to a receipt of
bids, the City shall maintain a record of all information
establishing fair market value on the date such investment became
a Nonpurpose Investment. Such detailed recordkeeping is required
for the calculation of the Rebate Requirement which, in part,
will require a determination of the difference between the actual
aggregate earnings of all Nonpurpose Investments and the amount
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of such earnings assuming a rate of return equal to the Yield on
the Bonds.
The City shall from time to time, subject to any
agreement between the City and the Fiscal Agent then in force,
pay to the Fiscal Agent compensation for its services, reimburse
the Fiscal Agent for all its advances and expenditures,
including, but not limited to, advances to and fees and expenses
of independent accountants, counsel and engineers or other
experts employed by it in the exercise and performance of its
powers and duties hereunder, and indemnify and save the Fiscal
Agent harmless against liabilities not arising from its own
negligence or willful misconduct which it may incur in the
exercise and performance of its powers and duties hereunder,
which indemnity shall survive discharge of the Bonds. All
amounts owed by the City to the Fiscal Agent shall constitute
Administrative Expenses.
Section 8.02. Removal of Fiscal Aqent. The City may
in the absence of an event of default at any time, in the
exercise of its sole discretion, upon thirty (30) days prior
written notice to the Fiscal Agent, remove the Fiscal Agent
initially appointed, and any successor thereto, and may appoint a
successor or successors thereto; provided that any such successor
shall be a bank or trust company doing business and having a
principal office in San Francisco or Los Angeles, California
having a combined capital (exclusive of borrowed capital) and
surplus of at least fifty million dollars ($50,000,000), and
subject to supervision or examination by federal or state
authority. If such bank or trust company publishes a report of
condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority above
referred to, then for the purposes of this section the combined
capital and surplus of such bank or trust company shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published. The City shall notify
the Bondowners in writing of any such removal of the Fiscal Agent
and appointment of a successor thereto.
Section 8.03. Resiqnation of Fiscal Aaent. The Fiscal
Agent may at any time resign by giving written notice to the
City. Upon receiving such notice of resignation, the City shall
promptly appoint a successor Fiscal Agent by an instrument in
writing; provided however, that in the event that the City does
not appoint a successor Fiscal Agent within thirty (30) days
following receipt of such notice of resignation, the resigning
Fiscal Agent may petition an appropriate court having
jurisdiction to appoint a successor Fiscal Agent. Any
resignation or removal of the Fiscal Agent and appointment of a
successor Fiscal Agent shall become effective only upon the
acceptance of appointment by the successor Fiscal Agent, and
notice to the Bondowners of the Fiscal Agent's identity and
address.
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Section 8.04 Merqer or Consolidation of Fiscal Aqent.
Any company into which the Fiscal Agent may be merged or
converted or with which any of them may be consolidated or any
company resulting from any merger, conversion or consolidation to
which any of them shall be a party or any company to which the
Fiscal Agent may sell or transfer all or substantially all of its
corporate trust business, provided that such company shall be
eligible under the Fiscal Agent Agreement, shall be the successor
to the Fiscal Agent without the execution or filing of any paper
or further act, anything herein to the contrary notwithstanding.
Section 8.05. Liabilitv of Fiscal Aqent. The recitals
of fact and all promises, covenants and agreements contained
herein and in the Bonds shall be taken as statements, promises,
covenants and agreements of the City, 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 Agreement 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
authentication assigned to or imposed upon the Fiscal Agent. The
Fiscal Agent shall have no duties or obligations other than as
specifically set forth herein. The Fiscal Agent shall be under
no responsibility or duty with respect to the issuance of the
Bonds for value. The Fiscal Agent shall not be liable in
connection with the performance of its duties hereunder, except
for its own negligence or willful misconduct.
The Fiscal Agent shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report,
Bond or other paper or documents believed by it to be genuine and
to have been signed or presented by the proper party or parties.
The Fiscal Agent may consult with counsel, who may be counsel to
the City, with regard to legal questions, and the opinion of such
counsel shall be full and complete authorization and protection
in respect of any action taken or suffered hereunder in good
faith and in accordance therewith.
The Fiscal Agent shall not be bound to recognize any
person as the Owner of a Bond unless and until such Bond is
submitted for inspection, if required, and his title thereto
satisfactorily established, if disputed.
Whenever in the administration of its duties under this
Agreement the Fiscal Agent shall deem it necessary or desirable
that a matter be proved or established prior to taking or
suffering any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed)
may, in the absence of bad faith on the part of the Fiscal Agent,
be deemed to be conclusively proved and established by a written
certificate of the City, and such certificate shall be full
warrant to the Fiscal Agent for any action taken or suffered
under the provisions of this Agreement upon the faith thereof,
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but in its discretion the Fiscal Agent may, in lieu thereof,
accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Fiscal Agent shall have no duty or obligation
whatsoever to enforce the collection of Assessments or other
funds to be deposited with it hereunder, or as to the correctness
of any amounts received, but its liability shall be limited to
the proper accounting for such funds as it shall actually
receive. No provision in this Agreement shall require the Fiscal
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
ARTICLE IX
EVENTS OF DEFAULT: REMEDIES
Section 9.01. Event of Default. Anyone or more of
the following events shall constitute an "event of default:"
(a) Default in the due and punctual payment of the
principal of or redemption premium, if any, on any Bond when and
as the same shall become due and payable, whether at maturity as
therein expressed or from mandatory redemption;
(b) Default in the due and punctual payment of the
interest on any Bond when and as the same shall become due and
payable; or
(c) Default by the City in the observance of any of
the agreements, conditions or covenants on its part in this
Agreement or in the Bonds contained, and the continuation of such
default for a period of thirty (30) days after the City shall
have been given notice in writing of such default by the Fiscal
Agent, provided that if within thirty (30) days the City has
commenced curing of the default and diligently pursues
elimination thereof, such period shall be extended to permit such
default to be eliminated.
Section 9.02. Remedies of Owners.
occurrence of an event of default, any Owner
for the equal benefit and protection of all
situated:
Following the
shall have the right
Owners similarly
(al By mandamus or other suit or proceeding at law or
in equity to enforce his or her rights against the City and any
of the members, officers and employees of the City, and to compel
the City or any such members, officers or employees to perform
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and carry out their duties under the 1913 Act and their
agreements with the Owners as provided in this Agreement;
(b) By suit in equity to enjoin any actions or things
which are unlawful or violate the rights of the Owners; or
(c) Upon the happening of an event of default (as
defined in Section 9.01), by a suit in equity to require the City
and its members, officers and employees to account as the trustee
of an express trust.
Nothing in this article or in any other prov1s10n of
this Agreement, or in the Bonds, shall affect or impair the
obligation of the City, which is absolute and unconditional, to
pay the interest on and principal of the Bonds to the respective
owners of the Bonds at the respective dates of maturity, as
herein provided, out of the Assessments pledged for such payment,
or affect or impair the right of action, which is also absolute
and unconditional, of such owners to institute suit to enforce
such payment by virtue of the contract embodied in the Bonds and
in this Agreement.
A waiver of any default of breach of duty or contract
by any Owner shall not affect any subsequent default or breach of
duty or contract, or impair any rights or remedies on any such
subsequent default or breach. No delay or omission by any Owner
to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a
waiver of any such default or an acquiescence therein, and every
power and remedy conferred upon the Owners by the 1913 Act or the
Act or by this article may be enforce and exercised from time to
time and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right
or exercise any remedy is abandoned or determined adversely to
the Owners, the City and the Owners shall be restored to their
former positions, rights and remedies as if such suit, action or
proceeding had not been brought or taken. No remedy herein
conferred upon or reserved to the Owners is intended to be
exclusive of any other remedy. Every such remedy shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing, at law or in equity or by
statute or otherwise, and may be exercised without exhausting and
without regard to any other remedy conferred by the 1913 Act, the
Act or any other law.
Section 9.03. Actions bv Fiscal Aoent as Attornev-in-
Fact. Any suit, action or proceeding which any Owner shall have
the right to bring to enforce any right or remedy hereunder may
be brought by the Fiscal Agent for the equal benefit and
protection of all Owners, and the Fiscal Agent is hereby
appointed (and the successive respective Owners of the Bonds, by
taking and holding the same, shall be conclusively deemed so to
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have appointed it) the true and lawful attorney-in-fact of the
Owners for the purpose of bring in any such suit, action or
proceeding and to do and perform any and all acts and things for
and on behalf of the Owners as a class or classes, as may be
necessary or advisable in the opinion of the Fiscal Agent as such
attorney-in-fact. The Fiscal Agent shall not be liable with
respect to any action taken or omitted to be taken by it in
accordance with the request of the Owners of not less than a
majority in aggregate principal amounts of the Bonds with respect
to any proceeding for any remedy available to the Owners or the
Fiscal Agent for exercising any trust or power conferred on the
Fiscal Agent under this Agreement.
ARTICLE X
DEFEASANCE
Section 10.01. Defeasance. If the City shall payor
cause to be paid, or there shall otherwise be paid, to the Owners
of any Outstanding Bonds the interest due thereon and the
principal thereof, at the times and in the manner stipulated
therein and in this Agreement, then the Owners of such Bonds
shall cease to be entitled to the pledge of Assessments, and all
covenants, agreements and other obligations of the City to the
Owners of such Bonds under this Agreement shall thereupon cease,
terminate and become void and be discharged and. satisfied;
provided that the covenants set forth in Sections S.07(f) and
7.02(e) shall survive the defeasance or payment of the Bonds. In
such event, the Fiscal Agent shall execute and deliver to the
City all such instruments as may be desirable to evidence such
discharge and satisfaction, and the Fiscal Agent shall pay over
or deliver to the City after payment of any amounts due the
Fiscal Agent hereunder all money or securities held by them
pursuant to this Agreement which are not required for the payment
of the interest due on, and the principal of, such Bonds.
Any Outstanding Bond shall be deemed to have been paid
within the meaning expressed in the first paragraph of this
section if such Bond is paid in anyone or more of the following
ways:
(a) by paying or causing to be paid the principal of
and interest with respect to such Bond, as and when the same
become due and payable;
(b) by depositing with the Fiscal Agent, in trust, at
or before maturity, money which, together with the amounts then
on deposit in the Assessment Fund, the Reserve Fund and the
Redemption Fund, is fully sufficient to pay the principal of,
premium and interest on all Bonds Outstanding as and when the
same shall become due and payable; or
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(c) by depositing with the Fiscal Agent, in trust,
Federal Securities in such amount as the Finance Director
determine will, together with the interest to accrue thereon and
moneys then on deposit in the Assessment Fund, the Reserve Fund
and the Redemption Fund, together with the interest to accrue
thereon without further investment, be fully sufficient to pay
and discharge the principal of, premium, if any, and interest on
all Bonds Outstanding as and when the same shall become due and
payable; then, notwithstanding that any Bonds shall not have been
surrendered for payment, all obligations of the City under This
Agreement with respect to all Outstanding Bonds shall cease and
terminate, except for the obligation of the Fiscal Agent to pay
or cause to be paid to the Owners of the Bonds not so surrendered
and paid, all sums due thereon and except for the covenants of
the City contained in Sections 5.07(f) and 7.02(e) hereof. Any
money or securities deposited with the Fiscal Agent to defease
the Bonds shall be accompanied by a certificate of a certified
public accountant confirming the accuracy of the calculations
establishing the sufficiency of such deposit, and an opinion of
Bond Counsel that the deposit of such money or securities will
not impair the exclusion from gross income or federal income tax
purposes of interest on the Bonds. Any funds held by the Fiscal
Agent at the time of payment or defeasance of the Bonds, which
are not required for the purpose above mentioned, or for payment
of amounts due the Fiscal Agent hereunder shall be paid over to
the City.
The Bonds and the original assessments shall remain in
full force and effect and the Bonds shall be secured by the
original assessments until (i) the Bonds mature, (ii) assessments
are prepaid and the Bonds are redeemed, (iii) apportionment of
the original assessments occurs pursuant to Parts 10.0 and 10.5
of Division 10 of the Bond law, or (iv) the original assessments
are superseded and supplemented by reassessments and refunding
bonds issued pursuant to Division 11 or Division 11.5 of the
Streets and Highways Code, at which time the refunding escrow
shall become the security for any outstanding Bonds not exchanged
for refunding bonds. Any proceeds of sale of any refunding bonds
may be deposited in escrow or trust with a bank or trust company
and shall be secured in accordance with the laws applicable to
funds of the City and shall be invested in Federal Securities.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Cancellation of Bonds. All Bonds
surrendered to the Fiscal Agent for payment upon maturity or for
redemption shall upon payment therefor and any Bond purchased by
the City as authorized herein shall be cancelled forthwith and
shall not be reissued. The Fiscal Agent shall hold such Bonds
for a period of seven (7) years and furnish to the City a
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certificate stating that such Bonds have been cancelled and not
reissued. After seven years, such Bonds shall be destroyed.
Section 11.02. Execution of Documents and Proof of
Ownershio. Any request, direction, consent, revocation of
consent, or other instrument in writing required or permitted by
this Agreement to be signed or executed by Bondowners may be in
any number of concurrent instruments of similar tenor, may be
signed or executed by such Owners in person or by their attorneys
appointed by an instrument in writing for that purpose, or by the
commercial bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any
instrument appointing any such attorney, and of the ownership of
Bonds shall be sufficient for the purposes of this Agreement
(except as otherwise herein provided), if made in the following
manner:
(a) The fact and date of the execution by any Owner or
his or her attorney or any such instrument and of any instrument
appointing any such attorney, may be proved by a signature
guarantee of any commercial bank or trust company located within
the United States of America. Where any such instrument is
executed by an officer of a corporation or association or a
member of a partnership on behalf of such corporation,
association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
(b) As to any Bond, the person in whose name the same
shall be registered in the Bond Register shall be deemed and
regarded as the absolute Owner thereof for all purposes, and
payment of or on account of the principal of any such Bond, and
the interest thereon, shall be made only to or upon the order of
the registered Owner thereof or his or her legal representative.
All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond and the interest thereon
to the extent of the sum or sums to be paid. The Fiscal Agent
shall not be affected by any notice to the contrary. Nothing
contained in this Agreement shall be construed as limiting the
Fiscal Agent to such proof, it being intended that the Fiscal
Agent may accept other evidence of the matters herein stated
which the Fiscal Agent may deem sufficient. Any request or
consent of the Owner or any Bond shall bind every future Owner of
the same Bond in respect of anything done or suffered to be done
by the Fiscal Agent in pursuance of such request or consent.
Section 11.03. Unclaimed Monevs. Anything in this
Agreement to the contrary notwithstanding, any money held by the
Fiscal Agent in trust for the payment and discharge of any of the
Bonds which remains unclaimed for two (2) years after the date
when such Bonds have become due and payable, if such money was
held by the Fiscal Agent at such date, or for two (2) years after
the date of deposit of such money if deposited with the Fiscal
Agent after the said date when such Bonds become due and payable,
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shall, at the written request of the City, be repaid by the
Fiscal Agent to the City, as its absolute property and free from
trust, and the Fiscal Agent shall thereupon be released and
discharged with respect thereto and the Owners shall look only to
the City for the payment of such Bonds; provided, however, that,
before being required to make any such payment to the City, the
Fiscal Agent shall, at the expense of the City, cause to be
mailed to the registered Owners of such Bonds, at their addresses
as they appear on the Bond Register, a notice that said money
remains unclaimed and that, after a date named in said notice,
which date shall not be less than thirty (30) days after the date
of the mailing of such notice, the balance of such money then
unclaimed will be returned to the City.
Section 11.04. Provisions Constitute Contract:
Successors. The provisions of this Agreement shall constitute a
contract between the City and the Bondowners and the provisions
hereof shall be construed in accordance with the laws of the
State of California.
In case any suit, action or proceeding to enforce any
right or exerc~se any remedy shall be brought or taken and the
Bondowner or the Fiscal Agent shall prevail, the Bondowner ~r the
Fiscal Agent shall be entitled to receive from the Assessment
District reimbursement for reasonable costs, expense, outlays and
attorneys' fees and should said suit, action or proceeding be
abandoned, or be determined adversely to the Bondowners or the
Fiscal Agent, then the City, the Fiscal Agent and the Bondowners
shall be restored to their former positions, rights and remedies
as if such suit, action or proceeding had not been brought or
taken.
After the issuance and delivery of the Bonds this
Agreement shall be irrepealable, but shall be subject to
modifications to the extent and in the manner provided in this
Agreement, but to no greater extent and in no other manner.
This Agreement shall be binding upon and inure to the
benefit of the City and the Fiscal Agent, and their respective
successors and assigns.
Section 11.05. Further Assurances: Incontestabilitv.
The City will adopt, make, execute and deliver any and all such
further resolutions, instruments and assurances as may be
reasonably necessary or proper to carry out the intention or to
facilitate the performance of this Agreement, and for the better
assuring and confirming unto the Owners of the Bonds of the
rights and benefits provided in this Agreement.
After the sale and delivery of the Bonds by the City,
the Bonds shall be incontestable by the City.
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Section 11.06. Severabilitv. If any covenant,
agreement or provision, or any portion thereof, contained in this
Agreement, or the application thereof to any person or
circumstance, is held to be unconstitutional, invalid or
unenforceable, the remainder of this Agreement and the
application of any such covenant, agreement or provision, or
portion thereof, to other persons or circumstances, shall be
deemed severable and shall not be affected thereby, and this
Agreement and the Bonds shall remain valid and the Bondowners
shall retain all valid rights and benefits accorded to them under
the laws of the State of California.
If any Assessment is void or unenforceable, for any
cause, or if Bonds are issued to represent or be secured by any
Assessments and such issuance is not effective through the
curative provisions in relation thereto under the 1913 Act or the
Act to make them valid and enforceable, then a reassessment shall
be made in the manner and form provided by the Act.
Section 11.07. General Authorization. The Mayor and
the City Clerk, the Superintendent of Streets, the Treasurer and
the Finance Director of the City are hereby respectively
authorized to do and perform from time to time any and all acts
and things consistent with this Agreement necessary or
appropriate to carry the same into effect.
Section 11.08. Liberal Construction. This Agreement
shall be liberally construed to the end that its purpose may be
effected. No error, irregularity, informality and no neglect or
omission herein or in any proceeding had pursuant hereto which
does not directly affect the jurisdiction of the Mayor and Common
Council shall void or invalidate this Agreement or such
proceeding or any part thereof, or any act or determination made
pursuant thereto.
Section 11.09. Notice. Any notices required to be
given to the City or the Fiscal Agent by the City or the Fiscal
Agent, as the case may be, shall be mailed, first class, or
personally delivered to the City or the Fiscal Agent at the
following addresses:
City of San Bernardino
300 North "D" Street
San Bernardino, California 92418
Attention: Finance Director
Bank of America NT & SA
555 South Flower Street
Los Angeles, California 90071
Attention: Corporation Trust Administration
Dept. No. 5510
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Either party may, by written notice designate a different address
to which notices shall be sent.
IN WITNESS WHEREOF, the Mayor of City of San Bernardino
has executed this Agreement, effective the date first written
above.
CITY OF SAN BERNARDINO
\
By:
Mayor of the City of
San Bernardino
(SEAL)
ATTEST:
Rachel Krasney, City Clerk
City of San Bernardino
APPROVED ,f\.~ T:) ;'-0:\;-'"
AND LEG,'\L COi'rrENT.
James F. P~~:1man,
City At. rney
?-~
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EXHIBIT A
Reauisition for Disbursement of proiect Costs
Payment Request No. ___
(Attach duplicate original of Payee's
statement(s) or invoice(s)
PROGRESS PAYMENT
FULL/FINAL PAYMENT
Bank of America National Trust and Savings
Association, as Fiscal Agent (the "Fiscal Agent"), is hereby
requested to pay from the Improvement Fund established for the
City of San Bernardino Assessment District No. 987 (Verdemont
Area) Limited Obligation Improvement Bonds, pursuant to Section
5.06 of the Fiscal Agent Agreement, dated as of December 1, 1991
(the "Agreement") from the City of San Bernardino (the "City") to
the Fiscal Agent, to the person, corporation or other entity
designated below as Payee, the sum set forth below such
designation, in payment of the Project Costs described below.
The amount shown below is due and payable under a purchase order,
contract or other authorization with respect to the project Costs
described below and has not formed the basis of any prior request
for payment.
The City certifies, in connection with such payment,
that: (1) the conditions to the release of such funds have been
satisfied, (2) there has not been filed with or served upon the
Issuer notice of any lien, right to lien or attachment upon, stop
notice or claim affecting the right to receive payment of, any of
the moneys payable to any of the persons named herein, which has
not been released or will not be released simultaneously with the
payment of such obligation, other than materialmens or mechanic's
liens accruing by mere operation of law, and (3) the amount
remaining in the Improvement Fund, together with interest
earnings thereon or deposited therein, will, after payment of the
amount set forth herein, be sufficient to pay all remaining
Project Costs as now estimated.
Payee:
Purpose:
Address:
Amount:
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Moneys remaining in the Improvement Fund and to be added thereto
will be sufficient to make payments of all remaining Project
Costs.
CITY OF SAN BERNARDINO
Signature:
Name:
Dated:
Title: Superintendent of Streets
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.f/!;
STONE & YOUNGBERG
ue"ERS PACIFIC STOCK EXCHANGE
December 2, 1991
15260 Venlura Bouleva.rd
Suite 900
Shennan Oeks. Califomia 91403
Telephone: (818) 906-0315
Facsimile: (818) 789-1321
The Common Council
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418
Re: Offer to Purchase Bonds in an amount not to Exceed
$709,105.38
Assessment District No. 987
Limited Obligation Improvement Bonds
(Verdemont Area)
Dear Common Council:
Pursuant to discussions with Bond Counsel, Orrick, Herrington
& Sutcliffe, and our investigation and analysis of the above
captioned Bond issue of the City of San Bernardino (the
"City"), Stone & Youngberg (the "Underwriter"), hereby offers
to purchase all of the above-referenced Bonds subject to the
following conditions:
1. The Bonds shall be issued pursuant to the
Improvement Bond Act of 1915.
2. The par value of the Bonds shall be in an amount not
to exceed $709,105.38. The Bonds shall mature in
each year and in the amounts and at the rates of
interest set forth on the Maturity Schedule attached
hereto as Exhibit "A".
3. The Bonds shall be issued in denominations of $5,000
or in integral multiples thereof and one Bond in an
odd amount due in 1993 as may be requested by the
Underwr iter.
4. All Bonds shall be issued in registered form in
accordance with instructions to be determined by the
Underwriter prior to closing.
SAN FRANCISCO (415) 981-1314. SAN DIEGO (619) 452-0504
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The Common Council
City of San Bernardino
December 2, 1991
Page 2
5. The Bonds shall be dated December 1, 1991 and
delivered on or before December 18, 1991 or any
other date which is mutually agreed upon by the City
and the Underwriter.
6. The Bonds will include serials and shall mature from
September 2, 1993 through September 2, 2011.
7. The City shall establish a reserve fund in an amount
equal to ten percent (10\) of the Bond proceeds and
such reserve fund shall be established from Bond
proceeds.
8. The City shall covenant to commence judicial
foreclosure of delinquent assessments as provided on
the Fiscal Agent Agreement.
9. The City shall furnish to the Underwriter a summary
of property tax delinquencies which shall include
for such delinquencies (i) the assessor's parcel
number, (ii) the property owner's name, (iii) the
amount of delinquent property taxes and (iv) the
year or years of each delinquency. Such list shall
be furnished to the Underwriter within 60 days of
the City's receipt of the Fixed Charge Unpaid list
from the County of San Bernardino.
10. Not later than the date of Closing or the seventh
(7th) business day after the date hereof, whichever
occurs first, the City will deliver to the
Underwriter an Official statement dated the date of
December 2, 1991, in such quantities as the
Underwriter may reasonably request to permit
compliance with Rule 15c2-12 of the Securities and
Exchange Commission (17 C.F.R. 240.15c2-12),
including any appendices, maps, exhibits, reports
and statements.
11. The purchase price shall be
discount of ____\).
\ of par (a
12. The Bonds may be called for redemption prior to
maturity on any March 2 or September 2 upon payment
of 103 percent (103\) of the par value of the Bonds,
plus accrued interest to the date of surrender or
the date of redemption, whichever is earlier.
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The Common Council
City of San Bernardino
December 2, 1991
Page 3
13. The purchase price of the Bonds shall be paid in
full in clearinghouse funds to the order of the
City, upon delivery to the Underwriter of the Bonds
accompanied by:
(a) The approving legal oplnlon of Orrick,
Herrington & Sutcliffe, Bond Counsel. The legal
opinion shall be printed on the Bonds at no
charge to us.
(b) A no-litigation certificate of the City.
(c) The opinion of Orrick, Herrington & Sutcliffe,
Bond Counsel, dated the date of Closing, to the
effect that (1) the Bonds are not subject to the
registration requirements of the Securities Act
of 1933, as amended, and the Fiscal Agent
Agreement is exempt from qualification pursuant
to the Trust Indenture Act of 1939, as amended;
(2) the Purchase Contract has been duly
authorized, executed and delivered by the City
and (assuming due authorization, execution and
delivery by, and enforceability against, the
Underwriter) constitutes a valid and binding
agreement of the City; and (3) the statements
contained in the Official Statement, dated
December 2, 1991, with respect to the Bonds,
under the captions "THE BONDS", "SECURITY FOR
THE BONDS," "TAX EXEMPTION" and "APPENDIX D -
Form of Legal Opinion," insofar as such
statements purport to. summarize certain
provisions of the Fiscal Agent Agreement, the
Bonds and our opinion concerning certain federal
tax matters relating to the Bonds, are accurate
in all material respects.
14. (a) The City shall pay the following expenses
incidental to the performance of the City's
obligations hereunder: (i) the cost of the
printing of the bonds, the Preliminary Official
Statement and the Official Statement; (ii) the
fees, expenses and disbursements of engineers,
accountants, Bond Counsel, appraisers, advisers
and of any other experts or consultants and the
o
o
The Common Council
City of San Bernardino
December 2. 1991
Page 4
Fiscal Agent retained by the City; and (iii) any
other expenses and costs of the City incident to
the performance of its obligations in connection
with the authorization. issuance and sale of the
Bonds. including out-of-pocket expenses of the
City.
(b) The Underwriter shall pay all expenses incurred
by them.
15. The obligation 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
following additional conditions:
(a) At the Closing Date. the resolution authorizing
issuance of the Bonds and any other applicable
agreement shall be in full force and effect. and
shall not have been amended. modified or
supplemented except as may have been agreed 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
Orrick. Herrington & Sutcliffe. Bond Counsel for
the City. shall be necessary and appropriate:
(b) Between the date hereof and the Closing Date.
the market price or marketability of the Bonds
at the initial official prices set forth herein
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:
(1) Legislation enacted or pending by the
Congress of the United States of America or
a decision rendered by a court established
under Article III of the Constitution of the
United Sates of America or by the Tax Court
of the United States of America or an order.
o
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The Common Council
City of San Bernardino
December 2, 1991
Page 5
ruling, regulation (final, temporary or
proposed), press release or other form of
notice issued or made by or on behalf of the
Treasury Department, the Joint Tax
Committee, or the Internal Revenue Service
of the United States of America, with the
purpose or effect, directly or indirectly,
of imposing federal income taxation upon the
interest as would be received by the owners
of the Bonds;
(2) Legislation enacted or pending by the
Congress of the United States of America, 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, or 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 Resolution is not exempt from
qualification under or other requirements of
the Trust Indenture Act of 1939, as amended,
or that the issuance, offering or sale of
obligations of the general character of the
Bonds, or of the Bonds including any or all
underwriting arrangements, as contemplated
hereby or by the Official Statement or
otherwise is or would be in violation of the
federal securities laws as amended and then
in effect;
(3) Any amendments 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,
o
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The Common Council
City of San Bernardino
December 2, 1991
Page 6
securities (or interest thereon), validity
or enforceability of the assessments or the
ability of the City to acquire the
improvements or undertake the financing as
contemplated by the Resolution and the
Official Statement; or
(4) Any event occurring, or information becoming
known which, in the judgment of the
Underwriter, makes untrue or misleading in
any material respect any statement or
information contained in the Official
Statement concerning the City, the
Improvement Project, the landowners, or the
property assessed.
16. This contract is conditioned upon the successful
consummation of the Assessment District proceedings and
should said proceedings for any reason fail to be
successfully consummated, there shall be no obligation on the
part of the City.
Respectfully submitted,
STONE & YOUNGBERG
By:
Partner
Accepted this 2nd day of December, 1991
CITY OF SAN BERNARDINO
Approved as to Form and Legal Content:
James F. Penman, City Attorney
By:
By:
W.R. Holcomb, Mayor
~.~-
Maturitv Date
9/02/93
9/02/94
9/02/95
9/02/96
9/02/97
9/02/98
9/02/99
9/02/00
9/02/01
9/02/02
9/02/03
9/02/04
9/02/05
9/02/06
9/02/07
9/02/08
9/02/09
9/02/10
9/02/11
Total
o
o
Interest Rate
\
The net interest cost, which includes a discount of ____\,
is \. The average coupon rate is \.
EXHIBIT A
$709,105.38
City of San Bernardino
Assessment District No. 987
Limited Obligation Improvement Bonds
(Verdemont Area)
Principal
Amount
$
$709,105.38
All Bonds are re-offered at par.
o
o
fRELlllrwrY OfFICIAL SfA'IBIBn' DAn:D NOVFJIIfR _. 1991
In the opinion of Orrick, Herrington" Sutcli He, Bond Counsel. based on
an analysis of existing laws, regulations, rulings and court decisions and
anUlling, a.ong other .at ters, co.pl iance wi th certain covenants and
agree.ents, interest on the Bonds is excluded frOll gross incOlle for federal
incOIIe tax purposes and is exellpt froll Cal ifornia personal inco.e taxes. In
the opinion of Bond Counsel, interest on the Bonds is not a specific
preference item for purposes of the federal individual or corporate
alternative .ini.um taxes, although Bond Counsel observes that it is included
in adjusted current earnings when calculating corporate alternative minimum
taxable incOlle. Bond Counsel expresses no opinion regarding other tax
consequences relat ing to the ownership or disposi tion of, or the accrual or
receipt or interest on, the Bonds. See ''TAX EXBlPTION" herein.
$109,105.311.
CITY OF SAN BfRNARDINO
Lllln:D IBLlGATICIt IIII'RCJVBIfNI' IMImS
ASSfSSllFJfl' Dlsnncr NO. 9111
(VERDflKIff AREA)
Dated: December I, 1991
Due: September 2 as shown below
The Bonds described herein are being issued to finance the construction of
certain pub I ic infrastructure improvements specially benefitting proper! ies
within the boundaries of City of San Bernardino Assessment District No. 987
(Verdellont Area). The construction of the illprovements will be completed
pursuant to the Municipal Improvement Act of 1913 (Division 12 of the
Ca] ifornia Streets and Highways Code). The Bonds are issued pursuant to
provisions of the Improvement Bond Act of 1915 (Division 10 of the California
Streets and Highways Code).
The Bonds are issued as ful]y registered Bonds in the denomination of
$5.000 or any integra] multiple thereof with the exception of one Bond in an
odd amount due in 1993. Interest is payable on March 2, 1992. and
semiannual]y thereafter on March 2 and September 2 each year. Principal of
and premium. if any. on the Bonds shall be payable at the corporate trust
office of Bank of America. National Trust and Savings Association. San
Francisco. California. Transfer Agent, Registrar and Paying Agent (the "Fiscal
Agent"). Interest on the Bonds is payable by check or draft mai led to the
registered owners as shown on the Fiscal Agent's books as of the fifteenth da~'
preceding each interest payment date.
The Bonds are suhject to redemption on any March 2 or Septt'mht'r 2 in
advance of maturity at the option of the City of San Bernardino (the "City")
upon giving 30 days' prior notice and upon payment of the principal and
interest accrued thereon to the date of redemption or earlier surrender. plus
a redemption premium of three perct'nt (3%) of the principal amount of Bonds to
be redeemed.
o
o
Under the provIsions of the Ilprove.ent Bond Act of 1915, install.ents of
principal and interest sufficient to .eet annual Bond debt service are
included on the regular county tax bills to owners of property against which
there are unpaid assess.ents. These annual install.ents (less amounts to be
used to pay adlinistrative expenses) are to be paid into the Redelption Fund,
to be held by the City and used to pay debt service on the Bonds as it becomes
due.
To provide funds for payment of the Bonds and the interest thereon as a
result of any delinquent install.ents, the City will establish a special
Reserve Fund to be held by the Paying Agent and deposit therein Bond proceeds
in the original ..ount of ten percent (10%) of the proceeds of the Bonds. The
City is liable to advance funds to the Redemption Fund in the event of
delinquent assess.ent install.ents only to the extent of funds available in
the Reserve Fund. Additionally. the City has covenanted to initiate judicial
foreclosure in the event of a del inquency as set forth in the Fiscal Agent
Agree.ent. There is no assurance that sufficient funds will be available from
the Reserve Fund for this purpose. Thus. if during the period of delinquency,
there are insufficient available funds, a delay .ay occur in payments to the
owners of the Bonds. In accordance with Section 8769(b) of the 1915 Act. the
City has determined that it will not obligate itself to advance funds from its
treasury to cure any deficiency in the Redemption Fund.
Neither the faith and credit nor the taxing power of the City, the County
of San Bernardino, the State of California or any political subdivision
thereof is pledged to the payment of the Bonds.
See the section of this Official Statement entitled "BONDOWNERS' RISKS"
for a discussion of certain risk factors which should be considered in
addition to other matters set forth herein in considering the investment
quality of the Bonds.
1lA1lIun SOIEOOlE
Due Interest Due
Sept 2 Amount Rate frill Sept 2 Amount
1993 $ '.Ii " 2003 $
1994 2004
1995 2005
1996 2006
1997 2007
1998 2008
1999 2009
2000 2010
2001 2011
2002
Interest
Rate
f.r.ill
"
"
The Bonds are offered when, as and if issued and delivered to the
Underwriter subject to the approval of Orrick, Herrington Ir Sutcliffe, Los
Angeles, California, Bond Counsel. It is expected that the Bonds in
definitive form shall be available for delivery on or about Decelber __, 1991.
Stone Ir Youngberg
Decelber __. 1991
o
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ern Of SAN BfmWn)rNO
SaD Beraardiao CouIIly. Cal i fOrDia
IAYCIl AND '---Wl aDiCrL
I.R. Holcomb, Mayor
Esther R. Estrada, Council Me.ber First lard
Jack Re illy, Counei I Member Second lard
Ralph Hernandez, Council Me.ber Third lard
Michael Maudsley, Council Mellber Fourth lard
TOM Minor, Council Mellber Fifth lard
Valerie Pope-Ludlam, Council Member Sixth Ward
Norine Miller, Council Mellber Seventh Ward
ern ATTCIlNEY
James Penman
eln ClBll
Rachel Krasney
eln 'lRFAs.1lFR
David Kennedy
eln S1'm
Shauna Clark, City Administrator
Andrew Green, Director of Finance
Roger Hardgrave, Director of Public Works/City Engineering
ASS~~ fMilNtD
GFB-Friedrich & Associates, Inc.
Riverside. California
B(Jfl) COONSEL
Orrick. Herrington & Sutcliffe
Los Angeles, California
flsrAL AGtM
Bank of America,
National Trust and Savings Association
San Francisco. California
o
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TABlE OF aMBn'S
fm
stMMARY STATOIENT ..................................................
11fE BONDS ..........................................................
Authori ty for Issuance ........................................
Descript ion of the Bonds ......................................
Rede.pt i on of the Bonds .......................................
Purpose of the Bonds ..........................................
SECURITY FOR THE BONDS .............................................
General .......................................................
Limited Issuer Liability Upon Delinquency.....................
Covenant to Commence Superior Court Foreclosure ...............
Establ ish.ent of Special Funds ................................
Inves tments ...................................................
Sources and Uses of Funds .....................................
Priority of Lien ..............................................
Annual Debt Service ...........................................
THE IMPROVBlENT PROJECf ............................................
Si te Locat ion and Land Use ....................................
Property Tax Del inquencies ....................................
THE ASSESSMENT DISTRICT ............................................
BONDOWNERS' RISKS..................................................
General .......................................................
Limited Issuer Obligation Upon Delinquency...........
Absence of Market for the Bonds ...............................
Bankrupt cy and Forecl osure ....................................
Risk of Loss of Tax Exempt ion.................................
LEGAL OPINION ......................................................
TAX EXBlPI'ION ......................................................
DEFEASANCE .........................................................
NO LITIGATION ......................................................
NO RATING ..........................................................
UNDERWRITING .......................................................
MISCELLANEOUS ......................................................
APPENDIX A - Assessment Diagram ................. ... ........... ... A-I
APPENDIX B - Property Ownership, Assessments and Assessed
Valuation Table.................................. B-1
APPENDIX C - General Information for the City of San Bernardino... (-I
APPENDIX D - Form of Legal Opinion ............................... 1l-1
o
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10 IIDI IT lAY ar<<DN:
The purpose of this Official Stateaent is to supply inforllation to
prospective purchasers of $709.105.38* principal ..ount of City of San
Bernardino. Assessaent District No. 987 (Verde.ont Area) Liaited ObI igat ion
laproveaent Bonds (the "Bonds"). issued pursuant to the laproveaent Bond Act
of 1915 (the "Bond Law").
The infor.ation set forth herein has been furnished by the City of San
Bernardino (the "City") and by sources which are believed to be accurate and
reliable but is not guaranteed as to accuracy or coapleteness. Statements
contained in this Official Statellent which involve estillates. forecasts. or
other aatters of opinion. whether or not expressly so described herein, are
intended solely as such and are not to be construed as representations of
fact. Further. the informat ion and expressions of opinion contained here in
are subject to change without notice and neither the delivery of this Official
StateMent nor any sale made hereunder will. under any circumstances, create
any iapl icat ion that there has been no change in the affai rs of the Ci ty or
any other parties described herein.
No dealer. broker, salesperson or other person has been authorized by the
City to give any information or to .ake any representations other than those
contained in this Official Statement, and. if given or lIade. such other
infur.ation or representations must not be relied upon as having heen
authorized by the City. This Official Statement does not constitute an offer
to sell or the solicitation of an offer to buy. nor will there be any sale of.
the Bonds by any person in any jurisdiction in which it is unlawful for such
person to aake such offer, solicitation or sale.
The City deems this Official Statement to be "final" as of its date for
purposes of Rule 15c2-12 of the Securities and Exchange Commission. except for
the omission of offering prices. interest rates and principal amounts per
aaturity; it is subject to amendment following the date of its del ivery and
prior to the date of delivery of the Bonds, as necessary, in order to provide
the aost current information and specific financial data to prospective
purchasers of the Bonds.
The summaries and references to the Bond Law, the resolutions and to
other statutes and documents referred to herein do not purport to be
comprehensive or definitive, and are qualified in their entireties by
reference to each such statute and document.
The Official Statement does not constitute a contract between any' Bond
Owner and the City or the Underwriter.
IN CONNElilON IITII TIllS BOND UNDERWRITING, TIlE UNDERWRITER MAY O\TRAllOT
OR EFFEli 'ffiANSAliIONS '"101 STABILIZE OR MAINTAIN TIlE MARKET PRICE OF THE
BONDS DESCR I BED HERE I N AT A LEVEL ABOVE ntA T '" 101M I GIIT OO1fERW I SE PREVAil IN
TIlE OP~ MARKET. SUCH STABILIZING, IF COMM~CED, MAY BE DISCONTINUED AT ANY
TIME. TIlE UNDERWRITER MAY OFFER AND SELL TIlE BONDS DESOUBED HEREIN TO
CfRTAIN DEALERS BANKS AlilNG AS AGENT AT PRICES LOWER TItAN TIlE PUBLIC OFFERING
PRICES AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED fROM TIME TO TIME BY THE
UNDERWR ITER .
*Preliminary, subject to change
Jl
o
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5'-&RY Sl'A1BIfXI'
tHIS SlMWlY Sl'A1BIfXI' IS SlBJECI' IN W. 1U:o:)ITA.1~ TO 11IE DE CCIIPl.EJ'E
INRIIIATlCIf IN tHIS OFfiCIAL Sl'A1BIfXI'. INCUJDINe 11IE CDVBr PAGE AND
Al'l'BlDlas III:ImIO AND 11IE OFFaUNe OF 11IE BCIOlS TO nnmrlAL M~u~ IS lADE
KY BY IIfANS OF 11IE ENJ'IRE OFfiCIAL Sl'Al1i1IfXI.
Purpole - Assess.ent District No. 987 (Verdemont Area) (the "Assessllent
District") has been for.ed to finance the construction of roadway
i~rove.ents, including excavation, grading, curbs, gutters, sidewalk and
Isphaltic concrete pave.ent, street lights. traffic signals, sewer and water
i~rovements and related projects within the City.
The Ci ty of San Bernardino Li.i ted Ob Ii gat ion laprove.ent Bonds,
Assessllent District No. 987 (Verdemont Area), (the "Bonds") will fund a
portion of the illprovements within the Assessment District (the "Improvement
Project"). Bond proceeds wi II also be used to fund I Reserve Fund, provide
for capitalized interest and to pay the cost of issuance of the Bonds.
The tota I asses silent authorized and levied for the Assessment Di st rict
after releasing the lien with respect to those parcels which paid the
assessaent during the cash collection period is $709,105.38.
Security for the Boods - The Bonds are issued upon and secured by the unpaid
assessllents, together with interest thereon, on parcels within the Assessment
District. All of the Bonds are secured by the 1I0nies in the Redemption Fund
and the Reserve Fund created pursuant to the assessment proceedings and by the
unpaid assessments levied to provide for payment of the construction of the
laprovement Project. Principal and interest on the Bonds is payable
exclusively out of the Redemption Fund. The unpaid assessments represent
fixed liens on the assessed parcels. They do not, however, constitute a
personal indebtedness of the owners of such parcels.
Pursuant to the Bond Law, installllents of principal and interest
sufficient to aeet annual debt service on the Bonds wi II be bi lIed by the
County of San Bernardino (the "County") to owners of parcels against which
there are unpaid assessments. Upon receipt by the County and transfer to the
Ci ty, a port ion of these assessllent installments (less amounts to be used to
pay administrative expenses) are to be to the Fiscal Agent to be used to pay
Bond principal and interest as they become due. The assessment installments
bi lied against each parcel each year represent pro rata shares of the total
principal and interest coming due that year, based on the percentage which the
unpaid assessment against that parcel bears to the total of unpaid assessments
in connection with the financing.
A reserve fund (the "Reserve Fund") in an original allollnt eqllal to ten
percent (10%) of the principal amount of the Bonds (the "Reserve Requirement")
will be established from Bond proceeds. The Reserve Fund will be a source of
available funds to advance to the Redemption Fund in the event of delinquent
installments .
The City'a abliptiOll to advance fUDdI to the lecte.ptiOll Fund iD the
eveDt of delinqueDt iDltallMeDtl ahall DOt exceed the balance iD the Relerve
FUDd. The Ci ty baa DO ablipt iOll to repleDish the lelenre Fund except to the
exteDt that delinquent allealaeDtl are paid or proceeds fro. foreclolure lales
..~
-
o
o
are realized. Addilicmally, the City bal COYeIIUted UDder certaiu
cira.ataacel to iDltitate judicial roreclolure proceedillll rollOlriug DOtice
or a de Iiuqueuc:y , and thereafter diligeutly prolecute to c:o.pletiou court
roreclOlure proceedi.1 upou the lien or aD)' aad all deliuqueDt uapaid
alUDelltl aDd iDterelt. The City iI DOt required to bid at the roreclolure
ule.
For a aort cOllplett dtsc-ript ion of the securi ty for the Bonds see '"IIIE
IIIOIS". "SEa.Un RIl 11IE IIIOIS - !atahl il.Dt or Special Fuads - Relerve
Fuad". and "SEClInn RIl 11IE IIIOIS - CoYeuaat to ec-eDce Superior Court
ForecIOlure."
Fora or IIoudI - The Bonds shal I be issued as fully registered Bonds in
denoainations of $5,000 each or any integral aultiple thereof with the
exc-eption of one Bond in an odd amount due in 1993.
Redellptiou - Any Bond aay be called' for redeaption prior to aaturity on an}'
March 2 or September 2 upon payment of one hundred three percent (103%) of par
value, plus accrued interest to the date of redemption.
The Allellaeut District - The City of San Bernardino (the "City") is loc-ateu
in southwestern San Bernardino County. The City is 58 miles east of Los
An~eles. The City is served by Interstate 215 and Interstate 10, which is a
aajor transcontinental highway, which passes through the City's southern
liaits. The Assessment District encompasses 798 parcels occupying
approximately 1,200 acres. Of the 798 parcels, 655 are assessable parcels
wi th unpaid assessments tota)) ing $709,105.38. The assessments a~ainst 143
parcels were paid in full during the cash collection period, hence these
parcels do not represent security for the Bonds. Primari Iy, the land in the
Assessment District is zoned for residential development. Parcels
representing 64% of the total unpaid assessment are improved with bui ldings.
The remaining 36% of the total unpaid assessment represents unimproved
parcels. The delinquency rate within the Assessment District for current and
pr i or year's property taxes is approximate ly 11.15% of the tota I assessmen t.
See '"IIIE ASSES~ DISTRICT - Property Tax Delioqueuciel."
Allelled Valaatioul - The current 1991/92 Count). assessed valuation for the
assessable parcels in the Assessment District total $83,379,284 for land plus
improvements, which is 117 times the aggre~ate unpaid assessment lien of
$709,105.38.
ii
J
o
o
The table below au..arizes the range of value-to-Iien ratios for the 655
assessable parcels in the Assess.ent District based on the assessed valuations
as discussed above.
Value to
Burden Ratio
Assess.ent
Lien /II
" of Tota I
Burdf!n
1.00 to 1 - 2.99 to 1
3.00 to 1 - 4.99 to 1
5.00 to 1 - 9.99 to 1
10.00 to 1 - 14.99 to 1
15.00 to 1 - 24.99 to 1
Above 25.00 to 1
Total
$155,156.50 (2)
26,016.86
41,304.38
23,358.25
31,486.97
431. 782.42
$709,105.38
21. 88"
3.67
5.83
3.30
4.44
60.88
100.00%
(1) Represents the principal amount of the Bonds. Figures do not include
certain parcels whose owners have elected to pay their assessment in
ful J. Parcels with paid assessments do not represent securi ty for the
Bonds. See "SEa.un I'm tHE BCIIDS."
(2) Includes assessments totalling $50,769.24 levied on property owned by the
City of San Bernardino which have no recorded County assessed valuation.
Boodo-ners' Risks - For a discussion of certain of the investment qualities of
this issue, see ~' RISIS".
iii
o
o
$709 ,105.31-
CIlT OF SAN BBlNARDINO
LlllnD CBLlcaTI~ IIII'IlOVBIfNJ' BlJaIS
&.~ DISTRICI' NO. 917
(VERIIfJIICM AREA)
11IE BlJaIS
Author it, for I.....nee
The proceedings for the issuance by the City of San Bernardino (the
"City") of its Lillited Obligation I.prove.ent Bonds (the "Bonds"), for
Assess.ent District No. 987 (Verde.ont Area), are being conducted pursuant to
the Municipal I.prove.ent Act of 1913 (the "1913 Act") and Resolution of
Intention No. 91-71 adopted by the City of San Bernardino (the "Cit).,,) on
March II, 1991. The Bonds are issued pursuant to the provisions of a
Resolution of Issuance (the "Resolution") adopted by the City on Noveaber 18.
1991 which approves the execution of the Fiscal Agent Agreement (the
"Agreement"), dated as of December 1, 1991, by and between the City and Bank
of America National Trust and Savings Association as Fiscal Agent, and
pursuant to the provi s ions of the l.prove.ent Bond Act of 1915 (the "Bond
Law").
Descriotioo of the Bands
The Bonds are dated December 1. 1991. The Bonds are issued as serial
Bonds and lIature in various a.ounts on each September 2 cOllmencing September
2, 1993, and ending Septellber 2, 2011. Interest shall be payable cOllmencing
on March 2, 1992, and semiannually thereafter on March 2 and Septelllber 2 of
each year until .aturity. The Bonds are issued as fully registered bonds in
denominations of $5,000 or any integral multiple thereof with the exception of
one Bond in an odd allount due in 1993. Principal of and prellium, if any, on
the Bonds shall be payable at the principal corporate trust office of Bank of
America Nat iona I Trust and Savings Associat ion, San Francisco, Cal i fornia,
Transfer Agent, Registrar and Paying Agent (the "Fiscal Agent"). Interest on
the Bonds is payable by check or draft lIai led to the registered owners as
shown on the Fiscal Agent's books as of the fifteenth day preceding each
interest paYMent date. Bonds shall lIature on the dates and in the amounts as
shown on the cover page hereof.
kdmpt ioo of the Roads
Any Bond may be called for redemption prior to Maturity on any March 2 or
Septelllber 2 upon payment of 103 percent of par value, plus accrued interest
to, or the date of redellption. No interest shall accrue on a Bond beyond the
March 2 or Septelllber 2 on which such Bond is called for redemption. Notice of
redeMption .ust be given by registered or certified .ail or by personal
nrvice at least 30 days prior to the rede.ption date. The determinat ion as
to which Bond or Bonds are to be called shall be .ade by the Ci ty in
accordance wi th the Agreement. Truders of property ....ership aDd certain
other CirCUIIltueel could relult in prepay.ent of ...eIHents. Such
prepayw:nt would relult in recte.ptiOll of all or a portiCIII of the Bonds prior
to their Itated ..turitiel.
.Prelillinary, subject to change.
1
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Pla~'''e of the ........
Proceeds from the sale of the Bonds .ill be used to finance the
construction of drainage and roadway improvements, as .ore fully described in
the section herein entitled ''11tE IMPROVBlENT PROJECT".
leJiatrat iCIII. Trllllder IIIId Exm_".e
The registration of any Bond .ay, in accordance with its terms, be
transferred upon the bond register by the person in whose name it is
registered, in person or by his or her fully authorized attorney, upon
surrender of such Bond for cancellation at the principal corporate trust
office of the Fiscal Agent, accompanied by delivery of a .ritten instrument of
transfer in a form approved by the Fiscal Agent and duly executed by the
Bondowner or his or her duly authorized attorney. Bonds may be exchanged at
the principal corporate trust office of the Fiscal Agent for a like aggregate
principal amount of Bonds of other authorized denominations of the same
maturi ty,
TIle Fiscal Agent will not charge the Owner for any new Bond issued upon
any exchange or transfer, but will require the Owner requesting such exchange
or transfer to pay any tax or other governmental charge required to be paid
wi th respect to such exchange or transfer. Whenever any Bond or Bonds are
surrendered for registration of transfer or exchange, the City will execute,
and the Fiscal Agent will authenticate and deliver, a new Bond or Bonds of the
same maturity for a like aggregate principal amount; provided, that the Fiscal
Agent shall not be required to register transfers or make exchanges of Bonds
during the period from the Record Date to the next succeeding Interest Payment
Date,
Iulilated. Lost. nestrqred or StoleD Boods
If any Bond is mutilated, lost, destroyed or stolen, the City will
execute, and the Fiscal Agent wi II authent icate and de liver, a new Bond of
like tenor, date maturity and principal amount in exchange and substitution
for such Bond. Muti lated Bonds must be surrendered to the Fiscal Agent, In
the case of any lost, destroyed or stolen Bond, the Fiscal Agent and the City
lIay require sat isfactory evidence of such loss, destruction or tht'ft to bt'
submitted to the Fiscal Agent and the City prior to authenticating and
delivering a new Bond. The City and Fiscal Agent may charge the owner of the
mutilated, lost, destroyed or stolen Bond for their reasonable fees and
expenses in connection with replacing such Bond.
kIuudiJl& .Bouds
Pursuant to the Refunding Art of 1984 for 1915 Act Improvement Bonds
(Division 11.5 of the Streets and Highways Code of the State of California),
the Ci ty may issue refunding bonds for the purpose of redeeming the Bonds,
The City may issue and sell refunding bonds without giving notice to and
conducting a hearing for the owners of property in the Assessment Distrirt. or
giving notice to the Owners of the Bonds, if the Mayor and COIIIIIon (ound I find
that:
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A)
Each estimated annual instal1ment of principal
reassessment to secure the refunding bonds
corresponding annual installment of principal
original assessment;
and
is
and
interest on
less than
interes t on
the
the
the
B) The nullber of years to matur i ty of the refunding, bonds does not
exceed that of the Bonds; and
C) The .-aunts of any reassessments are computed by reducing each
original assessment by the same percentage.
Upon issuing refunding bonds, the Mayor and Common Council could require that
the Bonds be exchanged for refunding bonds on any basis which the Mayor and
Common Council determine is for the City's benefit, if the Bondholders consent
to the exchange. As an alternative to exchanging the refunding bonds for the
Bonds, the City could sell the refunding bonds and use the proceeds to pay the
principal of and interest and redemption premium, if any, of the Bonds as they
become due, or advance the maturity of the Bonds and pay the principal of and
interest and redemption premium thereon.
DisDOsitillll of Surolus (rom the ImDrovement Fund
The amount of any surplus remaining in the Improvement Fund after
completion of the acquisition of the Improvement Project and payment of all
claims may, at the discretion of the Mayor and Common Council be applied as
described in "SEaJRllY FOR TIlE BONDS - Establishment of Special Funds -
I..provement Fund" below.
Sources and Uses Funds.
Sources:
Principal Amount of the Bonds
Less Underwriter's Discount
Plus Accrued Interest
Total Sources
$709,105.38
$
llu..s...;.
Improvement Fund
Redemption Fund (I)
Reserve Fund
Tota I Uses
$
70.91~
$709. 105.38
(I) Equal to accrued interest and capitalized interest on the Bonds due
March 2. 1992 and September 2. ]992.
.Preliminary, subject to change
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smlun FUl 1BE IOmS
CeDeral
The Bonds are issued upon and are secured by the unpaid assessments
together wi th interest thereon and such unpaid assess.ents together wi th
interest thereon constitute a trust fund for the redemption and pay.ent of the
principal of the Bonds and the interest thereon. All the Bonds are secured by
the ~nies in the Redemption Fund and the Reserve Fund created pursuant to the
asse~s.ent proceedings and by the unpaid assess.ents levied. Principal of and
interest on the Bonds are payable exclusively out of the Redemptio~ Fund.
Although the unpaid assessments constitute fixed liens on the lots and
parcels assessed. they do not constitute a personal indebtedness of the
respective owners of such lots and parcels. There is no assurance that the
owners wi I I be financially able to pay the assessment install.ents or that
they wi II pay such insta IllIIents even though financially able to do so. See
"BONDOWNfRS' RISKS".
The unpaid assessments shall be collected in semi-annual installments.
together with interest on the declining balances. on the tax roll on which
general taxes on real property are collected and are payable and become
delinquent at the same time and in the same proportionate amounts and bear the
same proportionate penalties and interest after delinquency as do general
taxes. and the properties upon which the assess.ents were levied are subject
to the sallie provisions for sale and redemption as are properties for
nonpayment of general taxes.
Neither the faith and credit nor the taxing po.er of the City, the County
of San Bernardino, the State of California or any political lubdivision
tbereof is pledged to the plJWent of tbe Bonds.
wited luuer Liability UDOD Delinouencv
The City's liability to advance monies to pay Bond debt service in the
event of del inquent assessment installments shall not exceed the balance in
the Reserve Fund. Notwithstanding the above. the City. ma)'. at its sole
option and in its sole discretion, elect to advance available surplus funds of
the City to pay for any delinquent propert)'. However. Bondowners should not
re J)' upon the Ci ty to advance mon i es to the Redempt ion Fund if the Reserve
Fund were ever depleted.
Covenant to c. em;L.Superior Court foreclosure
The Bond Law provides that in the event any assessment or installment
thereof or any interest thereon is not paid when due, the City may order the
institution of a court action to foreclose the lien of the unpaid assessment.
In such an action, the real property subject to the unpaid assessment may be
sold at judicial foreclosure sale. This foreclosure sale procedure is not
.andatory. However, the District covenants for the benefit of the Owners of
the Bonds that it wi II determine or cause to be deter.ined, no later than
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February 15 and June 15 of each year, whether or not any owners of property
within the District are delinquent in the pay.ent of Assess.ents and, if such
delinquencies exist, the City wi II order and cause to be couenced no later
than Apri I 1 (wi th respect to the February 15 deter.inat ion), and thereafter
diligently prosecute, an action in the superior court to foreclose the lien of
any Assess.ents or install.ent thereof not paid when due, provided, however,
that the City shall not be required to order the couence.ent of foreclosure
proceedings if (i) the total Assess.ents delinquent in the District for such
Filcal Year is lesl than five percent (5\) of the total Assels.ents levied in
IUch Fiscal Year, and (i i) the Reserve Fund rellains at the Reserve
Require.ent. Notwithstanding the foregoing, if the City deter.ines that any
lin~le property owner in the District is delinquent in excess of ten thousand
dollars ($10,000) in the payment of Assess.ents, then it wi II di I igent Iy
institute, prosecute and pursue foreclosure proceedings against such property
owner. The Finance Director shall notify the Mayor and Common Council and the
City Attorney of any delinquency requiring the cOllllence.ent of a foreclosure
act ion pursuant hereto and the Ci ty Attorney shal I couence, or cause to be
conenced, such proceedings. The Ci ty lIay, but shall not be obI igated to,
advance funds fro. any source of legally available funds in order to lIaintain
the Bond Reserve Fund at the Reserve Requirement.
Delinquency in paYllent of current assessment install.ents does not result
in an acceleration of the entire amount of the assessment, therefore property
lIay be sold at foreclosure sale for only the allount of the current Iy due
installments that are delinquent.
Prior to July I, 1983, an owner whose property was sold at a foreclosure
sale could redeem the property within the period of one year from the date of
sale. Under legislation effective July I, 1983, this statutory right of
redemption was repealed. However, a period of 140 days must elapse after a
court adjudges and decrees a lien against the lot or parcel of land covered by
the assessment before the sale of such parcel can be given. Furthermore, if
the property is sold to the judgment creditor (Le. the City), the Owner's
only remedy is an action to set aside the sale, which must be brought within
six (6) months of the date of sale. If, as a result of such act ion, a
foreclosure sale is set aside, the judgllent is revived and the judgment
creditor is entitled to interest on the revived judgment as if the sale had
not been .ade. (Section 701.680 of the Code of Civil Procedure of the State
of California.) The Constitutionality of the aforementioned legislation that
repeals the one-year redemption period has not been tested and there can be no
assurance that, if tested, such legislation would be upheld. Were the
legislation invalidated, the one-year redemption right might be revived; and
property sold at foreclosure sale that is subject to redemption would be less
valuable to prospective purchasers.
Amendments to the Bond Law enacted in 1988 and effect ive Januarv I, ]QSQ
provide that under certain ci rcumstances property .ay be sold upon foredllsure
at less than the Minimum Price or without a Mini.um Price. "Mini.um Price" as
used in the Bond Law is the amount equal to the delinquent installments of
principal or interest of the assessment or reassessment, together with all
interest penalties, costs, fees, charges and other a.ounts .ore fully detailed
in the Bond Law. The court .ay authorize a sale at less than the Minimum
Price if the court determines that sale at less than the Minimum Price wi II
not result in an ultillate loss to the Bondowners or, under certain
circu.stances, if holders of 75\ or IIOre of the outstanding Bonds consent to
such sale.
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I.ple.entation of the Mini.um Price prOVISions by the court upon
foreclosure could resul t in nonpay.ent of allOunts due to Bondowners who are
not in agree.ent with the 75\ of such Bondowners required to approve the sale
at len than the Mini.uII Price. Reference should be .ade to the Bond Law,
including Sections 8832 and following, for a coaplete presentation of these
provisions.
In the event such Superior Court foreclosure or foreclosures are
necessary, there .ay be a delay in pay.ents to Bondowners pending prosecution
of the foreclosure proceedings and receipt by the City of the proceeds of the
foreclosure sale; it is also possible that no bid for the purchase of the
appl icable property would be received at the foreclosure sale. See
"BONDOWNERS' RISKS".
Eatablisbllent of Special Funds
For administering the proceeds of the sale of Bonds and payment of
interest and principal on the Bonds, the City will establish the following six
funds:
(I) The Assessment Fund to be held by the Fiscal Agent;
(2) The Improvement Fund to be held by the City in which there shall
be established and created a subaccount and a Cash Payment Account for the
Bonds;
(3) The Administrative Expense Fund to be held by the City;
(4) The Redemption Fund to be held by the Fiscal Agent in w\lich
there shall be estahl ished and created a Principal Account, an Interest
Account and a Prepayment Account;
(5) The Reserve Fundto be held by the Fiscal Agent; and,
(6) The Rebate Fund to be held by the Fiscal Agent in which there
shall be established and created an Excess Earnings Account.
Assessment Fund. On those dates following the date on which the Treasurer
receives money from the Audi tor-Cont roller of the County const i tut ing the
City's apportionment of tax revenues (including Assessment Installments and
moneys collected representing the Administrative Expense Requirement) received
on behalf of the City, (any such apportionment being hereinafter referred to
as an "Apportionment"), the City will authorize the Finance Director to
deposit such Apportionment and any other amounts constituting Assessment
Installments (exclusive of amounts representing the Administrative Expense
Requirement) with the Fiscal Agent for deposit to the Assessment Fund. On or
prior to the first day of March and Septemher of each year, the Fiscal Agent
is to then transfer .oneys on deposit in the Assessment Fund in the amounts
set forth in the following Sections, in the following order or priority, to:
(I) the Interest Account of the Redemption Fund, an amount
sufficient to .ake the Interest Payment on the next succeeding Interest
Payment Date for the Bonds;
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(2) the Principal Account of the Redelption Fund, with respect to
March 1 of each year up to one-half of the Dount needed to lake the
Principal Pa,.ent due on the following Septe.ber 2 on the Bonds, and with
respect to Septe.ber 1 of each year, an alount which, when coBbined with
alOUnts on deposit in the Principal Account, Ihall equal the uount needed
to aake the Principal Payaent due on the following Septellber 2 on the
Bonds;
(3) the Reserve Fund an alount to restore the balance to the Reserve
Requirelent; and
(4) any reaaining portion of each Apportionment shall remain in the
Assessaent Fund.
Any moneys remaining in the AssessllE'nt Fund after the deposi ts described
above sha II be trans ferred by the Fi sea I Agent, at the wr i tten di rect ion of
the City, and to the extent that there are lufficient aoneys on deposit
therein, to the Prepayment Account of the Redeaption Fund and used to redeem
Bonds as provided in the Agreement. To the extent that there are insufficient
aoneys to redeem Bonds, such moneys shall be used by the Fiscal Agent, at the
direction of the City, as a credit against each of the unpaid assessments in
the amounts equal to each parcel's share or portion thereof, of the total
amount of assessment to be levied.
Upon provision for payment or redemption of all Bonds and after
payment of any amounts due to the Fiscal Agent, all moneys remaining in the
Assessment Fund shall be paid to the City.
Admin..i1.u.ative EXDE'nSe Fund. Upon receipt of an Apportionment the Finance
Director shall transfer the amounts designated as the Administrative Expense
Requirement to the Administrative Expense Fund. The Finance Director shall
apply the moneys on deposit in the Administrative Expense Fund for payment of
Administrative Expenses, as directed by the Superintendent of Streets.
Fees or charges incurred by the City in performance of its
obligations under the Agreement, shall be paid from the Administrative Expense
Fund and the fees or charges payable to the County for the County's collection
services described in the Agreement shall be retained by the County, pursuant
to the provisions of Section 8682 of the Bond Law, and shall not be
transferred to the City or the Fiscal Agent or considered part of thE'
Apport ionlllent.
The Administrative Expenses shall be paid from amounts dE'posited in
the Improvement Fund created to hold such loneys unt i I the County beg.ins
collecting the Administrative Expense Requirements, as necessary for the Bunds.
Rede~ion Fund. The principal of and the interest on the Bonds until
aaturity shall be paid by the Fiscal Agent from the Redemption Fund. At the
aaturi ty of the Bonds, and after all principal and interest then due on any
Outstanding Bonds has been paid or provided for, loneys in the Redemption Fund
Ihall be transferred to the Assessment Fund.
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For the purpose of assuring that payment of principal and interest on
the Bonds will be made when due, on or prior to the first day of March or
Septe.ber of each year, the Fiscal Agent shall transfer to the Redemption Fund
fr~ the Assessment Fund the following amounts, to be used in the following
priority:
(a) An amount such that the balance in the Interest Account one (I)
day prior to each Interest Payment Date shall be equal to the installment of
interest due on the Bonds on said Interest PaYllent Date. Moneys in the
Interest Account shall be used for the payment of interest on the Bonds as the
s..e bec~es due.
(b) lith respect to March 1 of each year, an allount up to one-half
of the principal par-ent due on the Bonds on the following Septellber 2 to the
Principal Account, and with respect to Septe~er 1 of each year, an amount
which, when c.ined with amounts on deposit in the Principal Account shal I
equal the principal payment due on the Bonds on the following September 2.
Moneys in the Principal Account shall be used for the payment of the principal
of such Bonds as the same become due at lIaturity.
(c) Any amounts remaining in the Redemption Fund on September IS of
each year, after all principal and interest paYllents due on the prior
September 2 have been paid, shall be transferred to the Assessment Fund.
Prepayment AccQUD1. Moneys set aside in the Prepayment Account of the
Redellpt ion Fund shall be used solely for the purpose of redeeming Bonds and
shall be appl ied on or after the redempt ion date to the payment of principal
of and premium on the Bonds to be redeemed upon presentation and surrender of
such Bonds.
Upon receiving any prepayment of an Assessment, the Finance Director
shall transfer such prepayment to the Fiscal Agent for deposit in the
PrepaYllent Account. At least three (3) business days before each Interest
Payment Date, the Fiscal Agent shall withdraw from the Prepayment Account and
transfer to the Redemption Fund, the installment of principal due and interest
accrued relating to such prepayment to the applicable Interest Payment Date.
Any surplus remaining in said account shall be used to advance the maturity of
the Bonds as provided in Part 11.1 of the Bond Law.
Reserve Fund. There shall be created and established a Reserve Fund for the
Bonds. The amount representing the Reserve Requirement shall be maintained in
the Reserve Fund at all tilles. The Reserve Requirement shall be cakulated
based upon the total Outstanding Bonds, as provided in the definition of the
Reserve Requirement.
Moneys in the Reserve Fund shall be used solely for the purpose of
paying the principal of and interest on the Bonds when due in the event that
the IIOneys in the Redemption Fund are insufficient therefor, and for deposit
to the Rebate Fund as required. The Fiscal Agent shall withdraw lIoneys as
necessary from the Reserve Fund for depos i t in the Redempt ion Fund on or
before the first day of March and September of each year.
In the event that moneys in (i) the Reserve Fund, (ii) the Redemption
Fund, (iii) the Improvement Fund, and (iv) the Assessment Fund are sufficient
to retire all of the Outstanding Bonds plus accrued interest thereon. such
moneys shall be transferred to the Redemption Fund for the Bonds and
collection of the remaining Unpaid Assessments shall cease.
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Notwithstanding any provisions in the Agreement to the contrary.
aoneys in the Reserve Fund in excess of the Reserve Requi rement (other than
investment earnings) shall be withdrawn froll the Reserve Fund by the Fi scal
Agent each July I, and shall be transferred to the Assess.ent Fund and shall
be used as provided in the Agreement.
I~rovement Fund. The proceeds of the Bonds shall be deposited into the
Improve.ent Fund and shall be appl ied, wi th any Hounts in the Cash Payment
Account, to pay (i) the costs of issuing the Bonds, and (ii) the Improvement
Project costs, provided, however, that .oneys in the Cash PaYllent Account of
the Improve.ent Fund shall only be used to pay the I.prove.ent Project costs.
Aaounts to pay the costs of issuing the Bonds shall be paid from the
I.provement Fund, upon receipt by the Fiscal Agent of written direction from
the Superintendent of Streets, stating the payee and the amount owing.
Amounts for Improvement Project costs for the Improvement Project shal I be
disbursed by the Fiscal Agent as specified by the Superintendent of Streets.
from the Improvement Fund and froll the Cash Payment Account therein, on a pro
rata basis. only upon receipt of a written certificate from the Superintendent
of Streets.
(b) Pursuant to Section 10421 of the 1913 Act, if, after completion
of the Improvement Project and the payment of all claims from the Improvement
Fund, notice of which shall be given to the Fiscal Agent by the Superintendent
of Streets, the Mayor and Common Council determine that a surplus remains in
the Improvement Fund, any such surplus shall be used as follows:
(i) For transfer to the general fund of the City, provided that the
amount of any such transfer shall not exceed the lesser of one thousand
dol Jars ($1,000) or five percent (5%) of the total amount expended from
such Improvement Fund;
(ii) For the maintenance of the Improvement Project;
(iii) As a credit upon Assessments and any supplemental Assessments.
in the manner provided in Section 10421.1 of the 1913 Act;
(iv) To call Bonds. thereby reducing outstanding Assessments and
subsequent Assessment installments; and
(v) For any other purpose authorized by Sections 10421 or 10427.1 of
the 1913 Act or as otherwise authorized by the 1913 Act.
(c) Notwithstandin{!. anything in the Agreement to the contrary. if
within three (3) years from the Closing Date of the Bonds, any funds remain on
deposit in the Improvement Fund, the City shall iamediately invest such amount
in tax-exempt obligations at the direction of the City or shall restrict the
Yield on such amounts such that the Yield on such amounts is not in excess of
the Yield on the Bonds, unless in the opinion of Bond Counsel delivered to the
City, such restriction is not necessary to prevent an impairment of the
exclusion of interest on the Bonds froll gross income for federal income tax
purposes.
(d) Notwithstanding the foregoin{!., if necessary for the Bonds. there
shall be deposited into a subaccount of the Improvement Fund an amount
specified in the Agreement to pay Administrat ive Expenses unt i I such time as
the City begins collecting the Adllinistrative Expense Requirement.
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Rebate Fund. The Fiscal Agent shall establ ish and .aintain a fund separate
fro. any other fund established and .aintained under the Agree.ent designated
as the Rebate Fund. Subject to the transfer provisions provided in the
Agree.ent, all ~neys at any ti.e deposited in the Rebate Fund shall be held
by the fiscal Agent in trust, to the extent required to satisfy the Rebue
Require.ent for pay.ent to the federal govern.ent of the United States of
berica. Neither the City nor the Owner of any Bonds shall have any rights
in, or clai. to, such .oney. All ..ounts deposited into or on deposit in the
Rebate fund shall be governed by the Agreement and by the Tax Certificate.
The fiscal Agent shall be deemed to have co.plied with such provisions if it
follows the directions of the City including supplying all necessary
information in the manner provided in the Tax Certificate, and sha]1 have no
liability or responsibility to enforce co.pliance by the City with the terms
of the Tax Certificate.
layestRllts
Moneys held in any of the funds and accounts under the Agreement shal] be
invested at the written dirertion of the Finance Director only in Authorized
Investments which shal] be deemed at all times to be a part of surh funds and
arcounts, The Fisca] Agent shall provide monthly reports, on the tenth day of
each month, of the principal balances and investment earnings thereon in each
fund and account maintained for the Assessment District.
For purposes of the Agreement, the term "Authorized Investments" is
defined to mean the following, subject to applicable law, (1) Federal
Securities; (2) taxable government money market portfolios rated in one of the
two highest rating categories by Standard & Poor's Corporation restricted to
obligations with maturities of one year or less, insured or fu]ly guaranteed
as to the principal and interest thereon by the full faith and credit of the
Uni ted States of America or by repurchase agreements collateral ized by such
obligations; (3) tax-exempt obligations, including tax exempt money market
funds; (4) commercial paper of "prime" qual ity of the highest ranking or of
the highest letter and numerical rating as provided for by Moody's Investors
Service and Standard & Poor's Corporation, limited to issuing corporations
that are organized and operating within the United States and having total
assets in excess of five hundred mil]ion do]lars ($500,000,000) and having an
"A" or higher rating for such corporation's debt, other than commercial paper.
if any, as provided for by Moody's Investors Service and Standard & Poor's
Corporation and which may not exceed 180 days maturity nor represent more than
Hl% of the outstanding paper of an issuing corporat ion; (5) notes, bonds or
other obligations which are at all times secured by a perferted first sel'ur"it~'
interest in securities of the types listed by Section 53651 of the California
Government Code as e]igible serurities for purpose of seruring loral agenr,"
deposits or which are listed as an Authorized Investment under any of the
clauses (1) through (4) of this definition (except those desrribcd in this
clause (5)) and which have a market value, determined at least weekly, at
lease equal to 102\ of the amount of prinripa] and arrrued interest in such
obligation, which shall be placed by delivery into the custody of a trust
co.pany or the trust department of a bank which is not .rfi liated wi th the
issuer of the secured obligation, and the security interest shall be perferted
in accordance with the requirements of the Uniform Commercial Code or federal
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regulations applicable to the types of securities in which the security
interest is granted; and any other invest.ent in which funds of the City may
be legally invested pursuant to Government Code Section 53635; (6) repurchase
agreements secured by Federal Securities and (7) time or demand deposits
(including those of the Fiscal Agent) fully insured by the federal Deposit
Insurance Corporation or with institutions rated in one of the two highest
rating categories by Moody's Investors Services or Standard & Poor's
Corporation.
For purposes of the Agreement, the term "federal Securities" is defined to
.ean, subject to applicable law, United States Treasury notes, bonds, bills or
cert i (icates of indebtedness including Uni ted States Treasury Ob] igat ions -
State and Local Govern.ent Series ("SLGS") or other di rect obligat ions issued
by the Uni ted States Treasury for which the fai th and credi t of the Uni ted
States are pledged for the payment of principal and interest; and obligations
issued by banks for cooperatives, federal land banks, federal intermediate
credit banks, federal home loan banks, and Federal Home Loan Bank Board, the
Tennessee Valley Authority, or other federal agencies or United States
Government-sponsored enterprises.
Fiscal AJent
Bank of America Nationa] Trust and Savings Association, having a corporate
trust office in San Francisco, California, has been appointed Fiscal Agent for
the purpose of receiving all money which the City is required to deposit with
the Fisca] Agent under the Agreement.
The Fiscal Agent is authorized to mail by first-class .ail, posta~e
prepaid, interest payments to the Bondowners, select Bonds for redemption. and
maintain the Bond Register. The Fisca] Agent is further authorized to pa)' the
principal of and premium, if any, on the Bonds when the same are duly
presented to it for payment at .aturity or upon 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 the
Agreement, and to provide for the authentication of Bonds, and sha]1 perform
al] other duties assigned to or illposed on it as provided in the Agreement.
The Fisca] Agent shall keep accurate records of al] funds administered by it
and a]1 Bonds paid and discharged by it.
The City may in the absence of an event of default at any time. in the
exercise of its sole discretion, upon thirty (30) days prior written notice to
the Fiscal Agent, remove the Fiscal Agent initial]y appointed. and any
successor thereto. and .ay appoint a successor or successors thereto; provided
that any such successor shall be a bank or trust company doinF: husiness and
having a principal office in San Francisco or Los Ange]es. California having a
cOllbined capi tal (exclusive of borrowed capi ta]) and surplus of at least fi fty
.i I lion do] lars ($50,000.000), and subject to supervision or examinat ion by
federal or state authority. If such bank or trust company publishes a report
of condition at least annua]ly, pursuant to law or to the requirements of any
supervising or examining authority above referred to, then for the purposes of
this section the combined capital and surplus of such bank or trust company
shall be deemed to be i Is colllbined capi tal and surplus as set forth in i Is
IIIOSt recent report of condition so published. The City shall notify the
Bondowners in writing of any such removal of the Fiscal Agent and
apportionment of a successor thereto.
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The Fiscal Agent aay at any tille resign by glvsng written notice to the
City. Upon receiving such notice of resignation. the City shall promptly
appoint a successor Fiscal Agent by an instruaent in writing. And resignation
or reaoval of the Fiscal Agent and appointaent of a successor Fiscal Agent
shall becaae effective only upon the acceptance of appointaent by the
successor Fiscal Agent. and notice to the Bondowners of the Fiscal Agent's
identity and address.
Any caapany into which the Fiscal Agent aay be aerged or converted or with
which any of thell lIay be consol idated or any caapany resul t ing from any
.erger, conversion or consolidation to which any of thea shall be a party or
any caapany to which the Fiscal Agent lIay sell or transfer all or
substantially all of its corporate trust business, provided that such cOlllpany
shall be eligible under the Fiscal Agent Agreeaent, shall be the successor to
the Fiscal Agent without the execution or filing of any paper or further act,
anything herein to the contrary notwithstanding.
The Fiscal Agent shall not be liable in connection with the performance of
its duties under the Agreement, except for its own negligence or ,,'illful
mi sconduct.
The Fiscal Agent shall have no duty or obligation whatsoever to enforce
the collection of Assessments or other funds to be deposited with it under the
Agreement or as to the correctness of any amounts received, but its liability
shall be lillited to the proper accounting for such funds as it shall actually
receive. No provision in the Agreement shal I require the Fiscal Agent to
expend or risk its own funds or otherwise incur any financial liability in the
perfor_ance of any of its duties thereunder, or in the exercise of its rights
or powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
Alcadlents to AJreeaent
S1wDJ-c-ments Not ReQultiDJ Bondowner Consent. The Ci ty may from time to
tille, and at any time, without notice to or consent of any of the Bondowners,
adopt Supplements to the Agreement for any of the following purposes:
(a) to cure any amhiguity, to correct or supplement an~' pro\'isions
therein which may be inconsistent with any other pro\'ision therein.
or to make any other provision with respect to matters of quest ions
arising under the Agreement or in any resolution or order of the (it~.
relating to the Agreement, provided that such action shall not
adversely affect the interests of the Bondowners:
(b) to add to the covenants and agreements of, and the limitations
and the rest rict ions upon, the Ci ty contained in. the Agreellent. other
covenants, 'agreements, lillitations and restrictions to be observed 1>.1'
the City which are not contrary to or inconsistent with the Agreement
as theretofore in effect;
(c) to 1I0dify, allend or supplellent the Agreellent in such manner as to
perllit the qualification thereof under the Trust Indenture Act of
1939, as a_ended, or any sillilar federal statute hereafter in effect.
12
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and to add such other terms, condi t ions and provlS Ions as may be
permitted by said act or similar federal statute, and which shall not
materially adversely affect the interests of the Owners of the Bonds;
or
(d) to modify, alter, amend or supplement the Agreement in any other
respect which is not materially adverse to the Bondowners.
Supplements ReQuirinl!. Bondowner Consent. Exclusive of the Supplements
described above, the Owners of not less than a majority in a~~regate principal
Dount of the Bonds then Outstanding shall have the right to consent to and
approve such Supplements as shall be deemed necessary or desirable by the City
for the purpose of waiving, lIodifying, altering. amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in the
Agreement; provided, however, that nothing therein shall permit. or be
construed as permitting, (a) an extension of the maturity date of the
principal, or the payment date of interest on, any Bond. (b) a reduction in
the principal amount of, or redempt ion premium on, any Bond or the rate of
interest thereon. (c) a preference or priority of any Bond or Bonds over any
other Bond or Bonds, or (d) a reduction in the aggregate principal amount of
the Bonds the owners of which are required to consent to such Supplement.
without the consent of the owners of all Bonds then Outstanding.
EveDtl of Defaul t: Relledies
Anyone or more of the following events shall const i tute an "event of
default:"
(a) Default in the due and punctual payment of the principal of or
redempt ion premium. if any. on any Bond when and as the same shall
become due and payable. whether at maturity as therein expressed or
from mandatory redemption;
(b) Default in the due and punctual payment of the interest on any
Bond when and as the same shall become due and payable; or
(c) Default by the City in the observance of any of the a~reements.
conditions or covenants on its part in the A~reement or in the Bonds
contained, and the continuation of such default for a period of
thi rty (30) days after the Ci ty shall have been given not ice in
writing of such default by'the Fiscal Agent. provided that if within
th i rty (30) days the Ci ty has commenced curin~ of the defau I I anu
dili~ently pursues elimination thereof, such period shall be eXlended
to permit such default to be eliminated.
lUEdies of Owners. Following the occurrence of an event of defaull. an\"
Owner shall have the right for the equal benefit and protection of all o-'ners
limilarly situated:
(a) By mandamus or other suit or proceedings at law or in equity to
enforce his or her rights against the City and any of the lIembers.
officers and ellployees of the City, and to compel the City or any
luch members. officers or employees to perforll and carry oul thei r
dut ies under the 1913 Act and thei r agreements wi th the Owners as
provided in the Agreement;
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(b) By sui t in equi ty to enJoin any act ions or things which are,
unlawful or violate the rights of the Owners;
(c) Upon the happening of an event of default (as defined above), by
a suit in equity to require the City and its .ellbers, officers and
eapl~ees to account as the trustee of an express trust.
Nothing in the Agreement, or in the Bonds, shall affect or impair the
obligation of the City, which is absolute and unconditional, to pay the
interest on and principal of the Bonds to the respective owners of the Bonds
at the respective dates of .aturity, as provided in the Agreement, out of the
Assessaents pledged for such payment, or affect or impair the right of action,
which is also absolute and unconditional, 'of such owners to institute suit to
enforce such payment by virtue of the contract ellbodied in the Bonds and in
the Agreement.
A waiver of an)' defau] t of breach of duty or contract by any Owner
shall not affect an)' subsequent default or breach of dut), or contract, or
impair any rights or remedies on any such subsequent default or breach.
If an)' suit, action or proceeding to enforce any right or exercise any
remedy is abandoned or determined adversely to the Owners, the City and the
Owners shall be restored to their former positions, rights and remedies as if
such suit, action or proceeding had not been brought or taken.
Actions by Fisca] ARent as Attornev-in-Fact. Any suit, action or
proceedings which any Owner shall have the right to bring to enforce any right
or remedy under the Agreement aay be brought by the Fiscal Agent for the equal
benefit and protection of a]1 Owners, and the Fiscal Agent is appointed (and
the successive respective Owners of the Bonds. by taking and holding the same,
shall be conclusively deemed so to have appointed it) the true and lawful
attorney-in-fact of the Owners for the purpose of bringing in any such sui t,
action or proceedings and to du and perform any and all acts and things fur
and on behalf of the Owners as a class or classes, as lIav be necessary or
advisable in the opinion of the Fiscal Agent as such attorney-in-fact. . The
Fiscal Agent shall not be liable with respect to any action taken or omitted
to be taken by it in accordance wi th the request of the Owners uf not less
than a majori ty in aggregate principal amounts of the Bonds wi th respect to
any proceedings for any remedy available to the Owners or the Fisca] Agent for
exercising any trust or power conferred un the Fiscal Agent undt'r lilt'
Agreement.
lriorily of Lien
The assessment (and any reassessment) and each installment thereof and an\'
interest and penalties thereon constitute a lien against the pan'els on whi,.h
they were illposed unt i I the same are paid. Such I ien is subordinatt' to all
fixed special assessment liens previously imposed upon the same propert)', but
has priority over all private liens and over all fixed special assessment
liens which aay thereafter be created against the property. Such lien is
co-equal to and independent of the lien for general taxes.
The City reports that approximately 15\ of the Assessment District is
subject to three landscape maintenance districts which had an estillatt'd
aggregate annual lien of $79 per parcel in fiscal year 1991/92.
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Ann...1 Debt SerYice
tahle 1 below sets forth the annual debt service on the Bonds based on the
interest rates set forth on the cover of this Official State.ent.
AIRJAL DEBT SERVla
Due s.:ptMber 2
Principal
Interest (1)
Isl1&l
$
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$
$
Totals
$
II) Includes interest acc-rued from the Bond's date of December I. 1991.
Interest is funded with Bond proceeds through September 2. 1992.
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11IE IIIPROVFJIIM PROJECr
The informat ion in the following sect ion, ''llIE IMPROV9IOO PROJECT", is
taken frOll the "Invest igat ion Report and Engineer's Report for Assessment
District No. 987 (Verdemont Area I.prove.ent District) (the Engineer's
Report") prepared by GfB-Friedrich " Assoc., Inc., Riverside, California (the
"Assessment Engineer") which is on file with the City.
leseriptiaa of lorks of l~rDVellent
The I lip rovemen t Project consists of the construction of the following
i.provellents :
ZONE 1 - PROJECT NOS. II "IV: BOX aJLVERT - PAUl AVENUE AT CABLE CREEK &
TRAFFIC SIGNAL @l PAUl AVENUE & K~DALL DRIVE
Gradin~, excavation and appurtenant construction required to install a box
culvert in Cable Creek which would raise the Palm Avenue street grade.
Improvements include detour road during construction of culver, concrete
curb, guller, sidewalk driveway approaches, handicap ramps, storm drain
modification, striping and signing, and finished roadway amenities.
The installation of a traffic signal at the intersection of Palm Avenue
and Kendall Drive including appurtenant work such as the controller,
electrical conduits and wiring traffic detector loops, miscellaneous
concrete work, and cutting and patching roadway surface.
NOTE: The fit}' of San Bernardino will lIake a contribution equal to
one-half of the construction and incidental costs (not including.
bond costs) for Zone I improvements.
ZONE 2 - I'ROJECT NO. III: OIESTNUT AVENUE STORM DRAIN & DFBRIS BASIN
Site preparation, grading, storm drain system, and appurtenant
construction required to install a storm water and debris retention
facility. Mass excavation is required for the debris basin. Reinforced
concrete pipe, manhole installation and safety related amenities are also
included.
NOTE: The Mayor and Common Counci I have determined that financinlt for 'the
construction of Chestnut Avenue Storm Drain" Debris Basin shall
come from alternate sources. Therefor, there ..i II be no
assessments in Zone 2.
ZONE 3 - PROJECT NO. I: PAUl AVENUE: CABLE CREEK TO VERD9IONT DRIVE
Street improve.ents for Palm Avenue, within a right-of-way of 88 feet.
The project includes roadway grading, concrete curb, gutter, side..alk.
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driveways, cross gutter, spandrel, asphalt concrete over native aaterials,
S" and 4" sewer with .anholes, stor. drain system, striping and signing,
and street lighting.
NOTE: The City of San Bernardino wi II .ake a contribut ion equa I to
one-half of the construction and incidental costs (not including
bond costs) for Zone 3 improvements.
Method ud FOraJla of 'Slngent SDread
The law requi res and the statutes provide that assesSllents, as levied
pursuant to the provisions of the "Municipal Improvement Act of 1913", aust be
based on the benefit that the properties receive from the lorks of
Improvement. It is further necessary that the property owners receive a
special and direct benefit distinguished frOll that of the general public.
The special benefits that inure to the property owners within the boundary
of the District occur within three (3) "Zones" of benefit, as described belo..:
ZONE I - PROJECT NO. II: BOX aJLVFRT: PALM AVENUE AT CABLE CREEK
PROJECT NO. IV: TRAFFIC SIGNAL: PALM AVENUE" KENDALL DRIVE
The .ethod of assessing parcels in Zone 1 for the traffic signal at Palm
Avenue and Kendall Drive and for the box culvert in Palm Avenue at Cable Creek
is based upon the fact that these facilities are used by all residents within
Zone I in order to gain access to the Kendall Drive interchange wi th lIighwa)'
215. The lIethod is further based on the assulllption that each residence or
dwellin~ unit ~enerates approximately the same number of auto trips each day.
Therefore one assessment unit (AU) is assigned to each existing house or
dwelling unit within Zone 1. Assessment units are assigned to vacant property
based upon the aaximum number of uni ts allowed for deve lopment by current
zoning. The following table gives the maxillum number of units allowed per
gross acre (gross acre is defined as the parcel acreage before streets and
other public uses are dedicated to public agencies).
NOTE: Parcels in Zone I designated by Assessment Numbers 153, 156, 159, 160.
161, 162, 183, 184, 185, 187 and 189 are south of Cable Creek and are,
therefor, not assessed for the box culvert (bridge) improvements at Palm
Avenue. These parcels are assessed for the traffic signal improvements at the
intersection of Palm Avenue and Kendall Drive.
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Zoning
Desi,nation
Max Dwelling Units
Per Gross Acre
AU'slGross Acre
RL - Low Residential
Estates
3.1
1
4.5
3.1
1
4.5
9
9
RE - Residential Estates
IS - Suburban Residential
RU-l Urban Residential
9
CG-l General Commercial
..
MH - Hillside Management
Overlay District
1.0
1.0
The number of AU's per parcel is dt'termined by multiplying the AU's per
gross acre by the gross acreage of the parcel and rounding down to the nearest
whole number.
.. General commercia] property is assessed at 9 AU per gross acre.
Other ust's, such as churches, are assessed at the rate that tht' zoning
designation indicates.
For the purposes of this district, large parcels (parcels that have a
density lower than the zoning designation allows) with a dwelling unit are
assessed at one AU. However, at the time that tht'y decide to lega]]y
subdivide their acreage, fees should be charged against any new parcels to
equal the assessment placed upon other simi lar parcels in Zone 1 to create
equi ty.
ZONE 2 - PROJECT NO. 11 I: CHESTNUT AVENUE STORM DRAIN" DEBRIS BASIN
The method of assessment for Zone 2 improvements, which includes Chestnut
Avenue drainage facilities, is based on the gross acreage of each parcel in
Zone 2 as it currently exists. This method is used because the amount of
drainage produced is proport ional to the acreage of each parce]. Therefore.
the assessment for each unimproved (vacant) parcel is determined by
calcu]ating the tota], gross assessable acreage within Zone 2 and di\'idin!! the
gross acreage of an individual parcel by the total gross assessahle acrea!!e to
determine the equitable portion of the total Zone 11 cost to he assessed to
tha t parce I.
There is a drainage surcharge fee arrl icahle to Zone 2 imrro\'emcnts ,,'hich
was established in May, 1990. If owners or developers have paid tht' surchar!!t'
fee, they will not be asst'ssed for the Zone 2 improvements and those fees will
be applied to Zone 2 as a contribution. If property has developed subsequent
to June, 1988 or is now being developed and the surcharge fee has not been
paid, then the assessment wil] apply.
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ZONE 3 - PROJECT NO. I: PAUl AVENUE IMPROVBlOOS ~OM CABLE
OlEEK TO VfRD9IONT DR I VE
Tbe .ethod of assess.ent for Palm Avenue i.prove.ents (Zone 3) is based on
the front footage of each assessable parcel. Said front footage reflects the
length of street i.prove.ents required and is an equitable .ethod for
assessing street i.prove.ents. An assessable parcel in Zone 3 is defined as a
parcel whose street frontage has not been constructed to its full width, and
which, as a result of this assess.ent. will be widened to its ulti.ate planned
width with curb, gutter, sidewalk and street lights. Certain sewer and storm
drain i.prove.ents will be constructed as needed. Parcels whose frontage has
previously been cOIlpletely or partially improved wi I I not be assessed for
those Zone 3 i.provements which have previously been constructed.
Tbe front footage of a Zone 3 parcel is defined as the length (in feet) of
the parcel boundary that fronts on Palm Avenue. Said front footage includes
the corner curve or corner cutoff length of parcels with streets on two sides.
rosr ESl'IIATE
SUMMARY OF PROJECT CONSTRUCTION COSTS
PROJECT NO. I: PAUl AVENUE -
CABLE OlEa; TO VfRDEMONT DRIVE
PROJECT NOS. I I " IV: BOX CllLVFRT -
PAUl AVENUE AT CABLE CREF.K "
TRAFFIC SIGNAL @ PAUl AVENUE
" KENDALL DRIVE
PROJECT NO. III:
OIESTNUT AVENUE STORM DRAIN
" DEBRIS BASIN (I)
TOTAL CONSTRUCT I ON COSTS
PREll M .
ESTIMATE
CONFIRMED
AMOUNT
$ 464,581.31
$ 464.581.31
$ 645,614.11
$ 645,614.11
$1.239.513.22
$2.349,114.69
$1. 239.513.22
$2.349.114.&11
(I) TIlE MAYOR AND COMMON rouNrll HAVE DETERMINED THAT FINANCING FOR TIlE
OfESTNUT AVENUE STORM DRAIN " DEBRIS BASIN SHALL COME FROM ALTER.'\UE
SOURCES.
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COST EST I MATE
(Continued)
Preliminary
Estiaate
J.
TOTAL CONSIRUCTION COSTS
] I. INCIDENTAL COST ESTIMATE
1. Design Engineerin~ " Surveying
2. Contract Administration
" Inspection
3. Bond Counsel
4. Assessment Engineering
S. Appraisal
6. Treasurer's Fee
7. Bond Printing, OS Publishing
8. Administration
9. Miscellaneous
Total Incidental Costs
III. TOTAL CONSTRUCTION "
INCIDOOAL COSTS
CONTRIBUTIONS
City Participation (Zone 1)
City Participation (Zone 2)
Cit). Participation (Zone 3)
TOTAL CONSTRUCTION" INCIDENTAL
COSTS LESS CONTRIBUTIONS
IV. FINANCING COSTS
1. Bond Discount
(3\ of Bond Issue)
2. Reserve Fund
(10\ of Bond Issue)
3. Capitalized Interest
(6 Months @ 8.75\)
Total Financing Costs
V. TOTAL CONSTRUITION, INCIDENTAL
" FINANCING COSTS
TOTAL CONSIRUCTION (ONE-HALF),
INCIDENTAL" FINANCING COSTS
V I . BALANCE TO ASSESSMENT
Confiraed
Moun t
$2,349,774.69
$2,349,774.69
$259,870.00
140,986.48
36,500.00
68,000.00
32,000.00
70,000.00
15,000.00
65,000.00
40,000.00
$259,870.00
140,986.48
36,500.00
68,000.00
32,000.00
70,000.00
15,000.00
65,000.00
40,000.00
............
............
$727,356.48
$727,356.48
$3,077 ,131.17
$3,077,131.17
($421,288.48)
(I ,628,286. 6Q )
(303,133.76 )
c........====
$724,422.24
$11I,733.16 $26,304.37
372 ,443.86 87,681. 22
]63, ]30. 4] 38,404.37
a..........: .......=====
$647,307.43 $]52,38Q.Qb
$3,724,438.60
............
$876,812.20
............
$3,724,438.60 $876,8]2.20
Source: GFB-Friedrich" Assoc., Inc., Riverside, California
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mE AS~~4IFWI' DISlRICI'
Site ~atillll and "'nd Ule
The Assessllent District encOllpasses over 1,200 acres. There are 798
assessable parcels in the District and 143 of these parcels elected to pa)'
assess.ents in full, leaving 655 assessable parcels. The District is bounded
on the north by the City Ii.it line, on the east by 'alnut Avenue, on the
south by State Highway 215 and Kendall Drive and on the west generally by
Little League Drive. See "Appendix A -- Assess.ent Diagram" included herein.
The gross land area of the 798 assessable parcels in the Assessment
District is approxillately 1,133 acres. The parcels within the Assessment
District are pri.arily zoned for residential developllent. The 798 assessable
parcels in the Assess.ent District range in size from .16 acres to 53.96
acres. Cas and electricity will be provided to the parcels in the Assessment
District by Southern Cal ifornia Cas Company and Southern Cal i fornia Edi son
COIIpany. 'ater and sewage facilities are provided by the City. There are
currently 419 improved assessable parcels in the District, leaving 383
unillproved assessable parcels.
The City completed its environmental review relating to the Improvement
Project on May 17, 1990. A negative declaration was issued as it was
deterllined that the Improvement Project wi I I not have significant adverse
impacts which are not mitigable. A notice of determination was filed b)' the
San Bernardino City Clerk with the County of San Bernardino on June 14, 1990.
The County's 1991/92 assessed valuation for the parcels in the District
equals $83,379,284 for land plus existing improvements. The overall value to
I ien on the assessable parcels in the Assessment District equals 117 to I.
Following the enactment of Proposition 13 (Article III A of the California
Constitution), County assessed values shown on the assessment roll reflect
1975 values as increased by two percent (2\) per annum, unless a parcel has
changed ownership or experienced new construction, in which case the assessed
valuat ion wi II more closely approximate current lIarket value. Many of the
base years of improved parcels in the Assessment District indicate 1975
values, and the County assessed values as shown in Appendix B -- "Property
Ownership, Assessments and Assessed Valuation Table" are expected to be
substantially less than actual market values.
Tahle I summarizes the range of overal I value to I ien rat ios for the
assessable parcels in the Assessment District based on assessed valuat ions of
the parcels. A complete listing of the land values and the associated burden
for all assessable parcels is set forth in Table 4.
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TABU: 1
VALlIE TO ~ ~.l,RY
Value to
Burden Rat io
Assessment
Lien tll
, of Total
Assessment
1.00 to 1 - 2.99 to 1
3.00 to 1 - 4.99 to 1
5.00 to 1 - 9.99 to 1
10.00 to 1 - 14.99 to 1
15.00 to 1 - 24.99 to 1
Above 25.00 to 1
Total
$155,156.50 (2)
26,016.86
41,304.38
23,358.25
31,486.91
431.182.42
$109,105.38
21.88\
3.61
5.83
3.30
4.44
60.88
100.00%
(1) Represents the principal amount of the Bonds.
(2) Includes assessments totalling $50,169.24 levied on property owned by the
City of San Bernardino which have no recorded (ounty assessed valuation.
lmperty Tax Delinquencies
The following property tax delinquency information, for assessable parcels
within the Assessment District, was compiled based on County public records as
of August 15, 1991. While efforts have been made to be as thorough as
possible, no warranties are given concerning the accuracy or completeness of
this information.
Although the City has covenanted with the Bondowners, under certain
circumstances, to commence judicial foreclosure proceedings in the event of
del inquency in the payment of assessment installments, there is no assurance
that delinquent assessment installments will be recovered in a timely
fashion. See "BONDOWNERS' RISKS".
TABU: 2
~.RY OF DELINQUBtClfS
Numher
of Parce Is
Delinquent
Amount
Percentage of 91/92
Assessed ValuaLi~Q_
Total Unpaid Assessable
Parce Is
198
Parcels delinquent for
1990/91 Onll (I)
34
$37.648.62
.04\
Parcels delinquent Prior Years
19
51
48.494.49
19,059.10
.OS'I.
Total Parcels delinquent (2)
.09'l.
Source: Marilyn Taylor, Tax & Special Assessment Services, Highland, CA.
(I) The amounts listed as delinquent are the actual amount of the tax levied for
1990/91 and do not include penalties.
(2) Total figures do not represent the sum of current and prior years
delinquencies as SOMe parcels are included in both categories.
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Parcels representing .09% of the 1991/92 assessed valuation of $83.379.284
have delinquent taxes totalling $79.059.70.
The current and prior years delinquent allount of $79.059.70 represents
.711\ of the $10.189,035 assessed value of the 51 parcels as indicated in the
1991-92 County assessed valuation of anessable parcels. Table 3 on the
following page sets forth the detail of the tax delinquency by parcel,
23
ASII'I' .
JI2..
26
JI
.,
..
51
"
70
..
102
113
119
128
131
158
172
178
l~O
191
192
19:
262
324
328
329
332
336
3~-;'
437
453
523
561
560
€~i
€: ~
651
6t ':
(53
654
7'\2
iS~
IO~'
-, -
. ~ .
"70~
70S'
710
711
71~
713
720
721
723
~
o
TAIlLE 3
TAX DELINOllENCY SY PlUlCEL
o
UftSSOll' S P ARCl:L NO_
I22l\
261
261
261
261
261
261
261
261
261
261
261
261
261
261
261
261
20
261
261
261
261
261
261
2G1
261
261
261
261
261
261
.;';';1
LU
261
2€1
:iEl
~El
261
20
2fl
2(1
261
2(1
261
.t (;1
261
2€1
~(l
261
~(;l
261
261
UliI:
32
41
52
52
61
62
62
082
131
142
142
151
152
182
le2
182
191
191
191
191
253
261
261
261
261
261
263
301
311
381
~?l
';'71
471
~el
4el
401
481
4El
HI
HI
HI
-in
4l?1
HI
401
HI
HI
401
HI
oGlJl
481
PAReEL
06
22
03
04
01
14
18
01
03
04
15
14
14
OB
27
33
~3
24
25
26
30
25
29
3:>
~3
37
"
39
('l~
06
.,
03
3:
31
30
:?
,-
..
2i
('
H'
11
~ :
14
15
l€
10
H
19
n
c.:
0';
Cl) 1'91/92 Count)' ...e..ed val ue.
ASSJ:SSED
VALUATION 11)
$130,050
27,061
61,200
91,800
165,240
30,781
46,818
403,259
712,980
128,809
S,762
144,167
59,918
'~O,040
110,804
170,822
378,500
375,500
572,000
776,000
87,665
117.602
109,242
106,383
120,870
88,434
134,2eZ
125,00('
1:;,500
';,"9E
: 1 ~ I 3': :
1 ~4. ~':~.
:~ 1. '8:
1 '~', 13:
1 ~::? 13:-
If 9,13:
193,132
IES.132
lE9,1:3
1 ~ ~ , 1:)
197, l~:
:. ~'':' . ~ :;:
1 i-~. 13::
1~7. D~
JES,13;'
1~3. u:-
li-!",13:
]('3,n:.
:. :,.;. .;:::~
: 1.; , 3 ~ 1.
1 ~. - , 1 ~ ~
SH'.lea Q3S
CUMDlT , PIIIOII
DlUlS TAX
DELINOUENer~s 12'
$3,043. "
208.55
615.12
905.26
1,415.40
2,469.48
1, 004. 8S
2,677.07
11,716.80
3,545.25
715.00
1,590.66
1,367.47
17,437.82
4,506.64
398.93
.2,104.67
2,050.95
3,050.91
4, 054.07
170.45
257.61
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DELINOUENCY AS
A PEIICZHTAClE or
VALur: OF P J.P.eEL
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C'."'Pt
12) Total Current and 'riot Y~.r. Delinquencies throu9h AU9ust 31, 19~].
Compiled by Marilyn Ta)'lor T.~; " Assesslflf'nt Sen:ice" Hiqhland, CA.
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1lIflJOIINaIS' RISIS
GeIIeral
Under the provIsions of the Bond Law, asses silent install.ents. from which
funds for the par-ent of annual install.ents of principal of and interest on
the Bonds are derived, will be billed to properties against which there are
unpaid assessments on the regular property tax bi lis sent to OIIners of such
propert ies. Such assessllent installllents are due and payable at the same
ti.es as, and bear the salle penalties and interest for non-paYlllent as do.
regular property tax install.ents. Assessment install.ents cannot be paid
separately frOll property taxes. Fai lure to pay less than the total of al J
property taxes and assessllent installments due wi II be considered a
delinquency in the paYllent of both property taxes and asses silent installments.
Unpaid assessments do not constitute a personal indebtedness of the owners
of the lots and parcels within the Assesseent District. There is no assurance
such owners wi]1 be able to pay their assessment installllents or that they
will pay such installllents even though financially able to do so.
The Bonds are payable from amounts collected from assessed property ~'ners
and depos i ted in the Redempt ion Fund. Therefore. time Iy payment of debt
service on the Bonds depends upon the timely paYllent of unpaid assessment
installments on land within the Assessllent District. Should the installments
not be paid on time. the City will transfer 1I0neys from the Reserve Fund
(establ ished in the allount of ten percent (10%) of the original proceeds of
the Bonds) to the Redemption Fund to cover delinquencies. Additiona]ly, the
assessllent installments are secured by a lien on the affected parcels of land
and the City has covenanted to institute foreclosure proceedings to sell land
wi th del inquent instal Iments in order to obtain funds to pay debt service on
the Bonds. See the caption "BANlRUPrCY AND F1RF.CLOSURE" herein.
Because these are the only sources of funds which must be available to pay
debt service, failure by owners of the parcels to pay assessment installments
when due, depletion of the Reserve Fund, or the inability of the City to sell
parcels which have been subject to foreclosure proceedings for amounts
sufficient to cover the de] inquent assessment installllents may result in the
inability of the City to .ake full or punctual paYllents of debt service on the
Bonds and Bondowners would therefore be adversely affected.
lJ.ited 1..~L-Obli&a~QCDtY
Pursuant to Section 8769 (b) of the Bond Law, the City has elected not to
be obligated to advance funds from the treasury of the City for delinquent
assessment insta]lments. The only obligation of the City with respet't to such
delinquencies is to transfer amounts available in the Reserve Fund 10 the
Redeeption Fund. Thus. the City's obliplioo to advuce _eys to pay Bond
debt .ervice in the event of delinquent asseSS8ent install8ents is lieited to
the baluce in the Reserve fund. The City has DO obliptioo to replenish the
Reserve fund except to the extent that delinquent alSelS8ents are paid or
proceeds frOll foreclosure sales are realized, There is no assurance that the
balance in the Reserve Fund wi II always be adequate to pay all de] inquency
installllents and, if during the period of delinquency there are insufficient
funds in the Reserve Fund, a delay lIay occur in paYllents to the owners of the
25
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Bonds. Notwithstanding the above, the City aay, at its lole option and in its
lole discretion, elect to advance available surplus funds of the City to pay
for any delinquent installments pending sale, reinstatement, or redemption of
the de Iinquent property. lIolreyer. Boacbmert abould DOt rely upcIII the City to
aclYuce _iet to tbe Redeaptioo FUDd if the Renne FUDd were eYer depleted.
Abal!llCe of larket for tbe Rnndl
No application has been made for a credit rating for the Bonds, and it is
not known whether a credit rating could be secured either now or in the future
for the Bonds. There can be no assurance that there will ever be a secondary
aarket for the purchase or sale of the Bonds, and from time to time there may
be no aarket for them, depending upon prevai ling aarket condi t ions, and the
financial condition or aarket position of firas who .ay make the secondary
market. The Bonds should therefore be considered long-term investments in
whit-h funds are committed to maturity, subject to redemption prior to maturity
as described herein.
B_nkrQptcy and Foreclosure
The payment of assessments and the abi Ii ty of the Ci ty to foreclose the
lien of a delinquent unpaid assessment, as discussed in the section entitled
"SEaJRITY fOR THE BONDS", may be I illi ted by bankruptcy, insolvency. or other
laws general I)' affecting creditors' rights or by the law of the State of
California relating to judicial foreclosure, In addition. the prosecution of
a foreclosure could be delayed due to crowded local court calendars or
procedural delays,
The various legal opinIons to be del ivered concurrent ly wi th the del ivery
of the Bonds (including Bond Counsel's approving legal opinion) will be
qualified as to the enforceability of the various legal instruments by
bankruptcy. reorganizat ion, insolvency or other s imi lar la"'s affect ing the
rights of credi tors general I)',
Although bankruptcy proceedings would not cause the assessments to become
ext inguished, bankruptcy of a property owner or of a partner or other equi ty
owner of a property owner could result in the prohibition of the establishment
of the lien for the assessments, a delay in prosecuting Superior Court
foreclosure proceedings or an adverse effect upon the property owner's ahility
or willingness to pay the assessments. and could result in the possibility of
delinquent tax installments not being paid in full. Such delay or partial
non-payment would increase the likelihood of a delay or default in payment of
the principal of. and interest on. the Bonds,
Articles XIIIA and XIIIB of the California Constitution
On June 6, 1978. California voters approved an amendment to the California
Constitution, commonly known as Proposition 13 (the Jarvis/Gann Initiatiyc)
which added Article XIIIA to the California Constitution, The effec-t of
Article XIIIA is to limit ad valorem taxes on real property. On Novemher 7.
1978, California voters approved Proposition 8, which aade certain
clarifications to Article XIIIA.
26
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Enactment of Article XIIIA has reduced the amount of federal property tax
revenues received by the City. This reduction in such revenues makes it less
likely that the City will have surplus funds, other than monies in the Reserve
fund, to pay delinquent assessment installments if the Mayor and Common
Council with the exercise of their discretion choose to do so. If there are
.ddi t ional del inquencies after exhaust ion of funds in the Reserve fund, the
City has no obligation to transfer into the Redemption fund the .mount of any
luch delinquencies out of any surplus monies of the City.
On July 2, 1979, the fifth District Court of Appeal (94 Cal. App. 3d 974)
rendered a 3-0 decision in the case of County of Fresno v. Malmstrom that
deotenlineod that special assessments are not subject to the I imitat ions of
Article XIIIA (Proposition 13). The court held the one percent tax limitation
imposed by California Constitution Article XIIIA on ad valorea taxes does not
apply to special assessments levied pursuant to the Improvement Act of 1911
(Streets and Highways Code, Section 5000 et seq. and 10000 et. seq.) and the
1913 Act. The Court further held that because special assessllents pursuant to
such acts are not within the definition of "special taxes" in Article XIIIA.
the Constitution does not require the levy of assessments and the issuance of
Bonds to be approved by a two-thirds vote of the qualified electors of the
City. On September 12, 1979, the California Supreme Court refused to hear an
appeal of the lower court's decision.
At the November 6, 1979 general election, Proposition 4 (the Gann
Initiative) was approved by the voters of California. Such proposition added
Article XIIIB to the California Constitution. Article XIIIB limits the annual
appropriations of the City to the amount of appropriations for the prior year
adjusted for changes in the cost of living and population.
On Deceomher 17, 1980, the Third District Court of Appeal (113 Cal. App. 3d
443) rendered a 3-0 decision in the case Countv of Placer v. ~ that
determined that special assessments are not subject to the I imi tat ion of
Article XIIIB (Proposition 4). The Court held that the definition of
"proceeds of taxes" imposed by Cal ifornia Constitution Article XIIIB does not
apply to special assessments and improvement bonds issued pursuant to the 1915
Act and the 1913 Act. The decision of the Court was not appealed. The
enactment of Article XIIIA of the California Constitution.(Proposition 13) and
subsequent leF,islative enactments effectively repeal the otherwise mandatory
duty on tbe part of the City, under the 1915 Act, to levy and collect a
special tax (in an amount necessary to ml'et delinquencies, but not to exceed
ten cents on each $100 of assessable property within the City in anyone year)
if other funds are not available to cover delinquencies.
In early 1990, thl' U.S. Supreme Court struck down as a violat ion of l'qual
protection certain property tax assessment practices in lI'est VirF,inia. which
had resulted in vastl)' different assessments of similar properties. Sincl'
Article XIIIA provides that property may only be reassessed up to 2\ per year.
except upon change of ownership or new construction, recent purchasers may pay
substantially hi~her property taxes than longtime owners of comparahle
property in a community. The U.S. Supreme Court in the 'est VirF,inia case
expressly declined to comment in any way on the constitutionality of Article
XIIIA.
27
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Based on this decision, however, property owners in California brought
three suits challenging the acquisition value assessllent provisions of Article
XIIIA. T.o cases involve residential property, and one case involves
c~ercial property. In all three cases State trial and appellate courts have
upheld the constitutionality of Article XIIIA's asses silent rules and concluded
that the lest Virginia case did not apply to California'. I.... On June 3,
1991, the Uni ted States Suprelle Court agreed to hear the appeal in the
challenge relating to COllmercial property, but the plaintiff .ubsequently
decided to drop the case. One additional appeal has recently been accepted by
the Suprelle Court. The City cannot predict .hether the Suprelle Court wi II
hear the other appeal, and if so, how the Suprelle Court .i II resolve the
challenge to Article XIIIA. If the Court strikes down the assessment rules of
Article XIIIA it is not known .hat rules .ould then becOlle operative, and
further legislation .ould be likely. The City cannot predict .hat impact any
of these developments lIight have on its revenues or on the State's financial
obligations to local governments.
Riak of Lo.. of Tax Ex~t ioo
Failure by the City to comply with its covenants in the Agreement ,,'ith
respect to arbitrage earnings and rebate lIay result in a loss of the exclusion
of interest on the Bonds from gross income for federal income tax purposes.
IBiAL OPINleft
All proceedings in connection with the issuance of the Bonds are suhject
to the approval of Orrick, Herrington & Sutcliffe of Los Angeles, California.
Bond Counsel for the Ci ty. The unqual i fied opinion of Orrick, Herr ington &
Sutcliffe, attesting to the validity of the Bonds, shall be supplied free of
charge to the original purchaser of the Bonds. A copy of the legal opinion.
certified b)' the official in whose office the original is filed, wi II be
printed on each Bond and is attached in form as Appendix D.
Bond -Counsel's engagement is I imi ted to a review of the legal procedures
required for the authorization of the Bonds and the exemption of interest on
the Bonds from income taxat ion. See "TAX EJ(B1PTION". The opinion of Bond
Counsel wi II not consider or extend to any documents, agreements.
representations. offering circulars or other lIaterial of any kind concerning
the Bonds, including this offerin/!, circular. not lIentioned in this paragraph.
Bond Counsel undertakes no responsibility for the accuracy, completeness or
fairness of this Official Statement.
TAX t>>lIPJ' I eft
In the opInIon of Orrick, Herrington & Sutcl iffe, Bond Counsel. hased on
existing laws, regulations. rulin/!,s and court decisions. and assuminf,. among
other lIatters, cOllpliance with certain covenants and a/!,reellents, interest on
the Bonds is excluded from /!,ross income for federal income tax purposes and is
exellpt frOll State of California personal incOlle taxes.
The Internal Revenue Code of 1986. as allended (the "Code") illposes various
restrictions. conditions, and requirements relating to the exclusion from
gross incOlle for federal income tax purposes of interest on obi igat ions such
as the Bonds. The City has covenanted to comply .ith certain restrictions
28
1Il
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designed to assure that interest on the Bonds will not be included in federal
gross inc~e. Failure to comply with these covenants aay result in the
interest on the Bonds being included in federal gross income, possibly from
the date of issuance of the Bonds. The opinion of Bond Counse I assumes
coapliance with these covenants. Bond Counsel has not undertaken to determine
(or to infora any person) whether any actions taken (or not taken) or events
occurring (or not occurring) after the date of issuance of the Bonds lIay
affect the tax status of the interest on the Bonds.
Bond Counsel is further of the opinion that interest on the Bonds is not a
specific preference i tea for purposes of the federal individual or corporate
alternative ainiaulI taxes. However, Bond Counsel observes that interest on
the Bonds is included in adjusted current earnings in calculating corporate
alternative ainiauII taxable incOlle.
Certain requireaents and procedures contained or referred to in the
A~ree.ent and other relevant docuaents aay be changed, and certain actions may
be taken, under the circullstances and subject to the teras and conditions set
forth in such docullents, upon the advice or with the approving opinion of
nat ionally recognized bond counsel. Orrick, Herrington Ie Sutcl iffe expresses
no opinion as to any Bond or the interest thereon if any such change occors or
action is taken or omitted upon the advice or approval of bond counsel other
than Orrick, Herrington Ie Sutcliffe.
Although Bond Counsel has rendered an opinion that the interest on the
Bonds is excluded from federal gross income, the ownership or disposition of.
or the accrual or receipt of such interest on, the Bonds may otherwise affect
an Owner's tax liability. The nature and extent of these other tax
conseqoences will depend upon each Owner's particular tax status and the
Owner's other items of income or deduction. Bond Counsel expresses no opinion
regarding any such other tax consequences.
DEfEASANCE
The Bonds and the original assessments shal I remain in ful I force and
effect and the Bonds shall be secured by the original assessments unt i I (i)
the Bonds aature, (i i) assessments are prepaid and the Bonds are redeemed.
(iii) apportionment of the original assessments occurs porsuant to Parts 10.0
and 10.5 of Division 10 of the Bond Law, or (iv) the original assessments are
superseded and supplemented by reassessments and refunding bonds issued
pursuant to Division 11 or Division 11.5 of the Streets and Highways Code. at
which time the refunding escrow shall become the security for any outstanding
Bonds not exchanged for refunding bonds. Any proceeds of sale of any
refunding bonds lIay be deposited in escrow or trust with a bank or trust
company and shall be secured in accordance with the laws applicable to funus
of the City and shall be invested in Federal Securities.
NO LITlGATI~
There is no action, suit, or proceeding known by the City to be pending at
the present tille restraining or enjoining the del iver}' of the Bonds or in any
way contest ing or affect ing the val idi ty of the Bonds or Iny proceedinF-s of
the City taken with respect to the execution or delivery thereor. A no
litigation certificate executed by the City Attorney shall be required to be
delivered to the Underwriter siaultaneously with the delivery of the Bonds.
29
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NO RATING
The City has not lIade. and does not conte_plate or anticipate lIakintt, an
application to any rating ageney for the assign.ent of a rating to the Bonds.
UfDfRIRITlNG
Stone' Youngberg, the Underwri ter of the Bonds. has purchased the Bonds
frOll the City at an agttregate discount of S frOlll the total par
value of Bonds as set forth on the cover page of this Official Statement. The
public offering prices lIay be changed frOll tille to tille by the Underwriter.
The Underwriter lIay offer and sell Bonds to certain dealers and others at a
price lower than the offering price slated on the cover page hereof.
IISCElJANEIlIS
All quotations fro., and summaries and explanations of. the Agreement and
other statutes and documents contained herein do not purport to be complete.
and reference is made to said documents, the Agreellent and statutes for full
and complete statements of their provisions.
The Official State.ent is submitted only in connection ",ith the sale of
the Bonds by the City. All estimates, assumptions. statistical information
and other statellents contained herein, ",hi Ie taken from sources cons idered
reliable, are not guaranteed by the City or the Underwriter. The information
contained herein should not be construed as representing all conditions
affectintt the City or the Bonds.
All informat ion contained in this Official Statement pertaining to the
fity has he en furnished hy the City and the execution and delivery of this
Official Statement has been duly authorized by the City.
City of San Bernardino
By:
W.R. Holcomb
Mayor
30
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APPfJO)IX A
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API"fl'O)IX e
CDtlW. INFCIlIIATICft RB mE
eln OF SAN BEIlNARDINO
Ibe followin, information concernin, the Citv of San Bernardino and
lurroundin, areas are included only for the Durpose of supplvin2 2e~
iDWUOOD....LU&rJiiu-1hLtDlllIIlIn i tv. The Bonds are nO.1.....Ldebt of tbe Ci ty of
San Bernardino. State of California or anv of its political subdivisions and
neithu said City said State nor anv of its Dolitical subdivisions is liable
therefor.
Ceneral
The Ci ty of San Bernardino. county seat of San Bernardino County,
California. is located at the base of the San Bernardino Mountains, 58 miles
east of Los An!-eles. The City was incorporated on April 13. 1854. The City
operates under a charter form of !-overnment, directed by the Mayor and Common
Council of seven councilmen elected from their respective wards and the Mayor
elected at lar!-e by the voters.
l'Qpulat iOll
The City's population according to the 1980 census was 118.092. A summary
of the City's population from 197U to 1991 is shown below.
1970
1980
1981
1982
1983
1984
1985
1986
1987
19111l
1989
1990
199]
106.892
118.092
121, 900
129.400
128,8UO
131,000
134.700
137,400
140.900
148.900
153,700
164 .164
171,6UO
U.S. Bureau of the Census.
Est i.ated by the Populat ion
Finance. as of January I.
Research Unit. California State Departmt'nt of
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The following lists annual average nuNher of wage and salary eMployees by
industry within Riverside and San Bernardino Counties for 1985 to 1990.
livenide aDd San Bernardino Countiea
Annual Averqe EllployRnt by Industry (I)
Mining
Construction
Manufacturing,
Nondurables
Manufacturing,
Durables
Transportat ion
& Public Utilities
Wholesale Trade
Retai I Trade
Finance, Insurance
& Real Estate
Service Industries
Federal Government
State & Local
Government
Total Non Attri-
cuI tural
Agricultural, Fores-
try & Fi sher i es
Total All
Industries
1986
1,300
41,900
19,300
50,100
30,500
20,300
123,300
23,800
129,100
19,700
99.500
558,800
23,100
581.400
1987
1,300
53,400
22,800
57,900
32,200
21, 500
131,000
25,400
141,900
20,600
103.900
611 ,900
18,400
630 300
1988
1, 300
48,800
23,600
57,400
30,300
21,600
135,300
26,500
147,500
19,800
105.000
617,100
24,900
642.000
1989
1, 300
65,300
27,200
61,000
33,300
26,900
143,600
29,800
162,000
20,700
137.800
688,200
20,900
709. 100
1990
1,400
67,500
28,700
61,000
35,400
32,400
151,800
32,600
179,500
21,200
128.300
739,900
21,700
761.600
(I) Employment reported by place of work excluding workers involved in Iahor
disputes, self-employed, unpaid family and dOlllestic workers.
Source: State of California, E.ployment Development Department
llDellP men t
The civi I ian lahor force employment and unemployment for thc Rivcrsidc-San
Bernardino-Ontario labor market is shown below. The total civi I ian emr10ymcnt
as of December, 1990 was reported by the State Employmellt De\'elopmcnt
Df'parlment to be 1,071,600. Thf' total civilian unemplo)"mf'nl was ?O.bOO. a
raIl' of 6.6%.
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li.erlide-SaD Beroardioo-ODtario Labor Market
Ciyi liaD Labor Force, &lpl~ot aDd UOellpl~ot
Labor Unellploy.ent
Year fl\ Force ElInI oVllent UnellolQyment Rate
1990 1,071,600 1, 00 I, 000 70,600 6.6\
1989 1, 023,600 965,200 58,400 6.1\
1988 944,300 900,300 44,000 4.7
1987 912,300 858,000 54,300 5.9
1986 824,600 775,000 49,600 6.0
1985 778,500 722,400 56,400 7.2
1984 665,600 608,200 57,800 8.6
1983 646,100 575,500 70,800 11.0
"182 636,200 558,800 77 ,400 12.2
11181 604,400 553,700 50,700 8.4
1980 586,200 541, 500 44,700 7.6
(1) January 1 to December 31 Average.
Source: State of California, Employment Development Department.
F....IQylleot aDd loclustrv
Located wi thin San Bernardino's economic area are severa I major
ellployers. Norton Air Base is the City's single largest employer.
Approximately 4,500 civilian employees and 7,500 military personnel contribute
to San Bernardino' seconOllic envi ronllent through a gross annual pa)'roll of
$200,821,211. The principal installation at Norton is the 63rd Military
Airlift Wing, and the base serves as one of the three ports of air embarkation
and debarkation for the Pacific theatre.
The United States Air Force has announced the closing of Norton Air Force
Base, which closing lIay begin in late 1992. Although the elillination of the
area's major employer is likely to have an adverse effect on the general
econom)' of the City, steps are being taken by the City, the United States Air
Force and other affected local jurisdictions to offset such negat ive impact.
For example, the Air Force has given prelillinary approval to plans for joint
civilian and military use of Norton Air Force Base, the Air Force has released
a schedule for the clean-up of hazardous and toxic materials on the 2.400-acre
base, and the City has included the base in a redevelopment project area.
Other lIajor employers include wholesale distributors of he\'erar.es.
produce, lIeats, candy, tobacco and sundries to the entire Southern California
inland regions. Some of the leading distributors are: Gate City BeHrar.e.
Glaser Bros., Grand Central Produce, Inland Distributor, Southwestern Meat and
Provision, Desert Provision and the distributing firm of Bank, Bohemian and A.
Die!.
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The largest .anufacturing fir.s in the San Bernardino area are:
Name of CMoanv
The Sun COlIpany
California Portland Ce.ent
San Berdee Sports lear
Haley Bros.
fleetwood
Doane Products Co.
Rogers Bindery & Mail
Fanlovment
Products
475
367
360
180
146
122
U8
Printing I Publishing
Ce.ent
Clothing
lood doors
Trave I trai lers
Dog Food
Book binding
The largest nonmanufacturing firms in the San Bernardino area are:
Name of Comoanv
Norton Air Force Base(l)
San Bernardino County
Loma Linda University and
Hospi tal
City School System
Stater Bros. Market
Inland Center Mall
Santa Fe Railroad
Central City Mall
Patton Hospi tal
City of San Bernardino
TRW Systems Mana~ement
California State College,
San Bernardino
Campus Crusade for Christ.
Center
Southern Pacific Railroad
San Bernardino Valley
College
General Telephone Company
Employment
Products
12,000
8,780
51,800
3,650
3,600
2,300
2,000
1,800
1.485
1,300
1. 292
1,000
800
700
565
500
Military and Civilian
County Administration
University and Hospital
Unified School System
Supermarket
Regional Shopping Center
Transportation
Reg~onal Shopping Center
State Mental Hospital
City Administration
Research/Program
Slate Col lege
Christian Conference
Transportat ion
Community College
Communications
(1) Norton Air Force Base is closing, which lIay begin in late 1992.
Source: Research Division, State of California, 1985, San Bernardino County
Census Bureau, 1984.
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Ci ty of SaD Bernardino
NUlber of Per.its and Valuation of Taxable Tranlactions
Rrta i I Storrs --Iota I All Out Irts
No. of Taxablr No. of Taxablr
Year Prr.i ts Transact ions Prrlli ts Transact ions
1981 1,410 $ 193,340,000 3,185 $ 910,660,000
1982 1,453 830,153,000 4,504 1,008,440,000
1983 1,415 903,392,000 4,651 1, 104,198 ,000
1984 1,546 1,018,191,000 4,518 1,251,308,000
1985 1,589 1,135,263,000 4,509 1,400,991,000
1986 1,620 1,214,245,000 4,520 1,496,335,000
1981 1,614 1,295,158,000 4,456 1,611 ,041,000
1988 1,693 1,443,831,000 4,482 1,114,958,000
1989 1,160 1,511,409,000 4,396 1,898,841,000
1990 1,189 1,544,106,000 4,531 1,914,529,000
Source: State Board of Equalization, California.
Construction Activity
The fo]lowing table shows building permit valuation for the City from 1986
through 1990.
Building Per.it Valuation
(Valuation in Tbousands of Dollars)
llli ~ ....lill -1m -1m
In iJkp.ti.a1
New single-dwe]ling $ 41,351 "l 53,699 $ 29,148 $ 65,333 $ 92,126
Nrw lIu]ti-dwe]ling 89,106 18,441 151 15,012 1,103
Addi t ions, alleral ions 4.331 5.0S~ 1. 193 6.639 7.428
Tolal Rrsidrnlial $141,394 $ ", 196 $ 35,530 86,984 101,258
MJlDc:lWickDlul
New commrrcia] $ 44,912 $ 44,810 $ 37,140 $ 31,557 $ 17,153
New industrial 10,111 2,521 10,189 9,405 3,423
Olher 1,109 3,153 9,095 1,266 1.913
Addi I ions, al terat ions 13 26.5 23.076 15.994 18 ]48 18. ]53
Total Non-Residrntial 76.123 13.626 13.018 --.b6...Jlli _41l~.1142
Total Valualion $2]8.]]7 $]50.822 ~108.548 $153.3bll $147.QOO
No. of New Ihrelling Unit
Singlr-dwell ing 661 681 292 659 848
Mu It i -dwe II i ng 2.426 483 4 352 211~
Tota I Uni 15 3 081 1.164 296 1.011 1.11511
Source: "California Building Activity," Economic Scirncrs Corporation.
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Trllll8DOrtat iOll
Four Interstate Hilthways traverse San Bernardino County. Interstate 10
crosses the San Bernardino Valley in an east-west direction. Interstate 15
runs north and south, passing through the cities of San Bernardino and
Riverside. Interstate 215 traverses between ie.ecula in Riverside County and
Devore in San Bernardino County where it joins Interstate 15. Interstate 40
runs easterly froe the City of Barstow into Arizona.
U.S. Highway 95 serves the eastern sector of the County, and U.S. 395 the
western part.
Santa Fe Railroad, Union Pacific Railroad and Southern Pacific Railroad
provide regularly scheduled service, with 24-hour switching service and
reciprocal-swi tching agreellents between al I three Rai I roads . "Piggy-back"
service is available. San Bernardino is also served by AMTRAK passenger
service to all points east.
All lIajor trucking I ines have terllinals in the San Bernardino area,
providing dai Iy-scheduled service to all transcont inental points. Overnight
truck delivery is available to Los Angeles, Long Beach, San Diego, San
Francisco, Northern California, Arizona, and Nevada.
Ontario International Airport (20 lIiles west of the City) is served b)'
fourteen commercial airlines, including two intrastate and one commuter
airline. United Express connects with major carriers at Los Angeles
International Airport. Rialto Airport, a private and commuter airport,
provides general aviation service.
Greyhound Lines provides transcontinental bus service. The Southern
California Rapid Transit District (RTD) provides hourly service throughout the
San Bernardino/Riverside/Ontario Metropolitan Area. The Omnitrans System
operated by a Joint Powers Authority between the County of San Bernardino and
the cities of Chino, Colton, Fontana, Loma Linda, Montclair, Ontario,
Redlands, Rialto, San Bernardino and Upland provides regular bus service
within the City of San Bernardino and between the ten cities and county areas,
from Pomona to Calillesa.
Utilities
TIle City provides domestic water service and sanitary sewer services.
Natural gas IS supplied by Southern California Gas Company. Southern
California Edison Company provides electrical power. Telephone serviC'e is
provided by General Telephone Company.
ta.wlilx. Fad 1.i.1.in
San Bernardino has fOllr acute hospitals with 919 total bed capari!)', 4Q)
physicians/surgeons, 205 dentists, 53 optometrists, and 44 chiropractors.
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There are thirty-five ele.entary schools, eight junior high schools, four
high schools. San Bernardino Valley College (2 years). California State
University. San Bernardino (4 years), twelve parochial schools and twenty-five
business. trade, and professional schools in the City. Other institutions
located nearby are LosIa Linda University, the University of Redlands and the
University of California at Riverside.
There are 170 churches, five libraries, three newspapers, thi rteen radio
stations, thirteen 1V channels, three 1V cable syste.s, twenty-six banks.
fifteen savings and loans. twenty parks and playgrounds, fourteen theaters and
five public [tolf courses in the City. Other recreational facilities include
the 1,800 seat California Theatre of Perfor.ing Arts, and outdoor bowl seating
5,000, and a baseball park seating 500. The City has a California League
baseball franchise, the "Spirit." The City has six recreation centers and a
cultural arts center.
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city of San Bernardino
Assessment District 50. 987
Liaited obligation rmprovement Bonds
(Verdemont Area)
Distribution List
gn
city of SaD Bernardino
Public Works Department
300 North "0" street
San Bernardino, CA 92814-0001
Roger G. Hardgrave, Director of Public Worksl
city Engineer
Telephone
Telecopier
City of SaD Bernardino
300 North "0" Street
San Bernardino, CA 92814-0001
Andrew Green, Finance Director
Telephone
Telecopier
City of SaD Bernardino
City Attorney's Office
300 North "0" Street
San Bernardino, CA 92814-0001
Dennis Barlowe, Senior Assistant to
the city Attorney
Telephone
Telecopier
ASSESSMENT DXSTRXCT ADMX5XSTRATOR
Muni Financial Services
31010 Avenida Buena Suerte
Temeclua, CA 92390
Harry Clark
Telephone
Telecopier
lAl-1Il95.1
2
. ..
(714) 384-5111
(714) 384-5463
(714) 384-5242
(714) 384-5468
(714) 384-5256
(714) 384-5238
(714) 699-3990
(714) 699-3460
41133-5-lNT-IOI2I/91
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BOND COUNSEL
orrick, Berrington , Sutcliffe
777 South Figueroa Street
suite 3200
Los Angeles, CA 90017
George McFarlin
Jim Anderson
Lawrence Tonomura
UNDERWRITER
stone , Youngberg
15260 Ventura Boulevard
Suite 900
Sherman Oaks, CA 91403
John Doyle
Dawn Vincent
Telephone
Telecopier
ASSESS~RNT BRGlNEER
GPB-Priedrich , Associates, Inc.
6809 Indiana Avenue
suite 201
Riverside, CA 92506
John Friedrich
Telephone
Telecopier
PAYING/PISCAL AGENT
BaDlt AIlerica National Trust and
savings Association
Corporate Trust Department 8510
555 South Flower Street
5th Floor
Los Angeles, CA 90071
Marian Reyes
Telephone
LAl-11193.1
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(213) 612-2417
(213) 612-2400
(213) 612-2356
(818) 906-0315
(818) 789-1321
(714) 781-0811
(714) 781-8435
(213) 328-4146
41133-SUrr-10l21191
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December
, 1991
Stone & Youngberg
15260 Ventura Blvd., Suite 310
Sherman Oaks, California 91403
Re: $709,105.38 City of San Bernardino
Assessment District No. 987 (Verdemont Area)
Limited Obliqation ~rovement Bonds
Ladies and Gentlemen:
This letter is addressed to you, as the Underwriter,
pursuant to Section 13(c) of the Bond Purchase Contract, dated
December 2, 1991 (the "Purchase Contract"), between yourselves
and the City of San Bernardino (the "City") providing for the
purchase of $709,105.38 principal amount of City of San
Bernardino Assessment District No. 987 (Verdemont Area) Limited
Obligation Improvement Bonds (the "Bonds"). The Bonds are being
issued pursuant to the Fiscal Agent Agreement, dated as of
December 1, 1991 (the "Fiscal Agent Agreement"), between the City
and Bank of America National Trust and Savings Association, as
fiscal agent. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Fiscal Agent
Agreement or, if not defined in the Fiscal Agent Agreement, in
the Purchase Contract.
In addition to the opinions set forth in our final
legal opinion concerning the validity of the Bonds and certain
other matters, dated the date hereof and addressed to the City
(but which you may rely upon to the same extent as if such
opinion were addressed to you), and based on and subject to the
matters referred to in the second through fourth paragraphs of
said final legal opinion (but excluding the last sentence of the
fourth paragraph thereof) (which are hereby incorporated herein
LAI-11174.1
41133-5-JFA-10121191
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Stone & Youngberg
December ,1991
Page 2
by reference), and in reliance thereon, as of the date hereof, we
are of the following opinions or conclusions:
1. The Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the
Fiscal Agent Agreement is exempt from qualification pursuant to
the Trust Indenture Act of 1939, as amended.
2. The Purchase Contract has been duly authorized,
executed and delivered by the City, and (assuming due
authorization, execution and delivery by, and enforceability
against, the Underwriter) constitutes a valid and binding
agreement of the City.
3. The statements contained in the Official
Statement, dated December 2, 1991, with respect to the Bonds,
under the captions "THE BONDS", "SECURITY FOR THE BONDS," "TAX
EXEMPTION,. and "APPENDIX D - Form of Legal Opinion," insofar as
such statements purport to summarize certain provisions, the
Fiscal Agent Agreement, the Bonds and our opinion concerning
certain federal tax matters relating to the Bonds, are accurate
in all material respects.
This letter is furnished by us as bond counsel. No
attorney-client relationship has existed or exists between you
and our firm in connection with the Bonds or by virtue of this
letter. Our engagement with respect to the Bonds has terminated
as of the date hereof, and we disclaim any obligation to update
this letter. This letter is delivered to you as Underwriter of
the Bonds, solely for your benefit as such Underwriter and is not
to be used, circulated, quoted or otherwise referred to or relied
upon for any other purposes or by any other person. This letter
is not intended to be relied upon by owners of Bonds.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE
......Ltt1"7At
.11',l':L.IIi_JIi'A_1GnlI91
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APPENDIX D
Form of Legal Opinion
Upon delivery of the Bonds, Orrick, Herrington & Sutcliffe, Los
Angeles, California, proposes to render their final approving
opinion with respect thereto in substantially the following form:
[CLOSING DATE]
City of San Bernardino
300 North "D" Street
San Bernardino, California 82418-0001
Re: City of San Bernardino Limited Obligation
Bonds Assessment District No. 987
{Verdemont Areal
(Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel in connection with the
issuance by the City of San Bernardino (the "City") of
$709,105.38 aggregate principal amount of City of San Bernardino
Assessment District No. 987 (Verdemont Area) Limited Obligation
Improvement Bonds (the "Bonds") pursuant to the provisions of the
Municipal Improvement Act of 1913 and the Improvement Bond Act of
1915 and Resolution of Intention No. 91-71 adopted by the City of
San Bernardino on March 11, 1991 (the "Resolution"). Capitalized
terms not otherwise defined herein shall have the meanings
ascribed to them in the Resolution.
In such connection, we have reviewed the Fiscal Agent
Agreement, the Tax Certificate dated the date hereof (the "Tax
Certificate"), an opinion of counsel to the City, certifications
of the City, and others and such other documents, opinions and
matters to the extent we deemed necessary to render the opinions
set forth herein.
Certain agreements, requirements and procedures
contained or referred to in the Fiscal Agent Agreement, the Tax
LAI-11201.1
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City of San Bernardino
[CLOSING DATE]
Page 2
Certificate and other relevant documents may be changed and
certain actions (including, without limitation, defeasance of the
Bonds) may be taken or omitted under the circumstances and
subject to the terms and conditions set forth in such documents.
No opinion is expressed herein as to any Bond or the interest
thereon if any such change occurs or action is taken or omitted
upon the advice or approval of counsel other than ourselves.
The opinions expressed herein are based on an analysis
of existing laws, regulations, rulings and court decisions and
cover certain matters not directly addressed by such authorities.
Such opinions may be affected by actions taken or omitted or
events occurring after the date hereof, and we have not
undertaken to determine, or to inform any person, whether any
such actions or events are taken or do occur. OUr engagement
with respect to the Bonds has concluded with this issuance, and
we disclaim any obligation to update this letter. We have
assumed the genuineness of all documents and signatures presented
to us. We have not undertaken to verify independently, and have
assumed, the accuracy of the factual matters represented,
warranted or certified in the documents, and of the legal
conclusions contained in the opinion, referred to in the second
paragraph hereof. Furthermore, we have assumed compliance with
all covenants and agreements contained in the Resolution and the
Tax Certificate, including (without limitation) covenants and
agreement compliance with which is necessary to assure that
future actions, omissions or events will not cause interest on
the Bonds to be included in gross income for federal income tax
purposes. We call attention to the fact that the rights and
obligations under the Bonds, the Fiscal Agent Agreement and the
Tax Certificate are subject to bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium
and other similar laws relating to or affecting creditors'
rights, to the application of equitable principles, to the
exercise of judicial discretion in appropriate cases and to the
limitations on legal remedies against local agencies in the State
of California. We express no opinion on the plans,
specifications, maps and other engineering details of the
proceedings, or upon the validity of the individual separate
assessments securing the Bonds which validity depends, in
addition to the legal steps required upon the accuracy of certain
of the engineering details. Finally, we undertake no
responsibility for the accuracy, completeness or fairness of the
Official Statement or other offering material relating to the
Bonds and express no opinion relating thereto.
Based on and subject to the foregoing, and in reliance
thereon, as of the date hereof, we are of the following opinions:
LAI-11201.1
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City of San Bernardino
[CLOSING DATE]
Page 3
1. The Bonds constitute valid and binding special
assessment obligations of the City, payable solely from and
secured by the unpaid assessments and certain funds held under
the Fiscal Agent Agreement.
2. The Fiscal Agent Agreement has been duly executed
and constitutes a valid and binding obligation of the City.
3. Interest on the Bonds is excluded from gross
income for federal income tax purposes under section 103 of the
Internal Revenue Code of 1986, and is exempt from State of
California personal income taxes. Interest on the Bonds is not a
specific preference item for purposes of the federal individual
or corporate alternative minimum taxes, although we observe that
it is included in adjusted current earnings in calculating
corporate alternative minimum taxable income. We express no
opinion regarding other tax consequences related to the ownership
or disposition of, or the accrual or receipt of interest on, the
Bonds.
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE
per
T'L~