HomeMy WebLinkAboutCity Council - 2013-18 RESOLUTION NO. 2013-18
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH ACTING AS THE LEGISLATIVE BODY
OF THE CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1 AUTHORIZING THE
ISSUANCE OF ITS 2013 SPECIAL TAX REFUNDING BONDS IN
AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$1,200,000 AND APPROVING CERTAIN DOCUMENTS AND
TAKING CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the City Council (the "City Council") of the City of Huntington Beach,
California (hereinafter sometimes referred to as the "legislative body of the District"), has heretofore
undertaken proceedings and declared the necessity to issue bonds on behalf of the City of Huntington
Beach Community Facilities District No. 1990-1 (the "District") pursuant to the terms and provisions
of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5, of the Government Code of the State of California(the "Act"); and
Pursuant to proceedings taken and an election held on June 25, 1990, to authorize the
issuance of bonds of the District, the levy of special taxes within the District and the establishment of
an appropriations limit for the District, the District was authorized to issue bonds in one or more
series, pursuant to the Act; and
The District has previously issued its City of Huntington Beach Community Facilities
District No. 1990-1 2001 Special Tax Refunding Bonds (the "Refunded Bonds") in the aggregate
principal amount of $2,155,000 (the "Prior Bonds") to refund its City of Huntington Beach
Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds (the
"1990 Bonds"), which were issued to finance certain infrastructure improvements within the District;
and
The City Council, acting as the legislative body of the District, now desires to refund the
Prior Bonds through the issuance of bonds in an aggregate principal amount not to exceed
$1,200,000 designated as the "City of Huntington Beach Community Facilities District No. 1990-1
2013 Special Tax Refunding Bonds" (the "2013 Bonds"); and
In order to effect the issuance of the 2013 Bonds, the City Council, acting as the legislative
body of the District, desires to enter into a Bond Indenture, dated as of July 1, 2013 (the "Bond
Indenture"), with U.S. Bank National Association, as Trustee, and an Escrow Agreement with U.S.
Bank National Association, as Escrow Bank (the "Escrow Agreement") in substantially the forms
presented herewith; and
The legislative body of the District has determined in accordance with Government Code
Section 53360.4 that a negotiated sale of the Bonds to Stifel, Nicolaus & Company, Incorporated, as
underwriter (the "Underwriter") in accordance with the terms of the Bond Purchase Agreement
(defined below) approved as to form by this City Council herein will result in a lower overall cost to
the District than a public sale;
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Resolution No. 2013-18
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH,
ACTING AS THE LEGISLATIVE BODY OF THE CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1, DOES HEREBY RESOLVE, ORDER AND
DETERMINE AS FOLLOWS:
Section 1. Each of the above recitals is true and correct.
Section 2. The issuance of the 2013 Bonds in a principal amount not to exceed $1,200,000
is hereby authorized pursuant to the Act with the exact principal amount to be determined by the
officer signing the Bond Purchase Agreement in accordance with Section 7 below. The 2013 Bonds
shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be
executed on behalf of the District in accordance with Section 7 hereof and otherwise shall be
substantially in the form set forth in the Bond Indenture (herein the "Bond Indenture") on file with
the City Clerk and made a part hereof. All other provisions of the 2013 Bonds shall be governed by
the terms and conditions set forth in the Bond Indenture prepared by Bond Counsel for the District
and executed by the Mayor, City Manager or Director of Finance, or their written designees, which
Bond Indenture shall be substantially in the form presented to the City Council, with such additions
thereto and changes therein as are recommended or approved by Bond Counsel for the District and
the officers executing the same, with such approval to be conclusively evidenced by the execution
and delivery of the Bond Indenture. Capitalized terms used in this Resolution which are not defined
herein have the meaning ascribed to them in the form of the Bond Indenture.
In satisfaction of the requirements contained in Section 53363.2 of the Act, the legislative
body of the District hereby determines that: (1) it is anticipated that the purchase of the 2013 Bonds
will occur on or about June 26 2013, (2) the 2013 Bonds shall be dated their date of issuance, and be
in the denominations, have the maturity dates (which do not exceed the latest maturity date of the
Prior Bonds being refunded), and be payable at the place and be in the form specified in the Bond
Indenture, (3) the aggregate principal amount of 2013 Bonds shall not exceed $1,200,000, (4) the
2013 Bonds shall not have a final maturity date later than September 1, 2020, (5)the issuance of the
2013 Bonds shall not result in a true interest cost for the 2013 Bonds in excess of 3.0%, (6) the
Underwriter's discount for the 2013 Bonds shall not exceed 1.5% of the aggregate principal amount
thereof, and (7)the designated cost of issuing the 2013 Bonds being used to refund the Prior Bonds,
as defined by Section 53363.8 of the Act, shall include all of the costs specified in
Section 53363.8(a), (b)(2) and (c).
In satisfaction of the requirements contained in Section 53364.2 of the Act, the legislative
body of the District hereby determines that any savings achieved through the issuance of the 2013
Bonds shall be used to finance further facilities authorized to be financed by the District with any
amount in excess of the costs of the further facilities to be financed, as determined in the sole
discretion of the Director of Finance, or her designees, being used to reduce special taxes of the
District, and such reductions shall be made in accordance with the Act.
Section 3. The 2013 Bonds shall be executed on behalf of the District by the manual or
facsimile signature of the Mayor acting on behalf of the District, and attested with the manual or
facsimile signature of the City Clerk.
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Resolution No. 2013-18
Section 4. In accordance with the requirements of Section 53345.8(c) of the Act, the
legislative body of the District hereby determines the Fiscal Year 2012-13 assessed value of the real
property in the District subject to the special tax to pay debt service on the 2013 Bonds
($137,704,602) is at least three times the maximum principal amount of the 2013 Bonds and the
principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to
the Act or a special assessment levied on property within the District($1,200,000).
Section 5. The proceeds of the 2013 Bonds and the Special Taxes may be invested in any
of the Authorized Investments of the type described in the Bond Indenture.
Section 6. The covenants set forth in the Bond Indenture to be executed in accordance
with Section 2 above are hereby approved, shall be deemed to be covenants of the City Council in its
capacity as the legislative body of the District and shall be complied with by the District and its
officers. The Bond Indenture shall act as a bond indenture and constitute a contract between the
District and the Owners of the 2013 Bonds.
Section 7. U.S. Bank National Association is hereby appointed to act as Trustee, Registrar
and Transfer Agent for the 2013 Bonds and as Escrow Bank under the Escrow Agreement. Willdan
Financial Services ("Willdan") is hereby appointed to act as the Dissemination Agent under the
Continuing Disclosure Agreement. The Mayor, City Manager, Assistant City Manager or the
Director of Finance, or their written designees (collectively, the "Authorized Officers"), are hereby
authorized to enter into an agreement with the Trustee and Willdan to provide such services to the
District. The forms of the Continuing Disclosure Agreement, the Bond Purchase Agreement, the
Escrow Agreement and the Official Statement presented at this meeting are hereby approved and
each of the Authorized Officers is hereby authorized and directed to execute the Bond Purchase
Agreement, the Continuing Disclosure Agreement, the Escrow Agreement and the Official Statement
in substantially the form hereby approved, with such additions thereto and changes therein as are
recommended or approved by Bond Counsel for the District and the officers executing the same,
with such approval to be conclusively evidenced by the execution and delivery of such documents;
provided, however, that the Bond Purchase Agreement shall be signed only if the interest rate on the
2013 Bonds is such that the principal and total interest cost to maturity on the 2013 Bonds is less than
the principal and total interest cost to maturity on the Prior Bonds and the last maturity date of the
2013 Bonds is not later than the last maturity date of the Prior Bonds. The Underwriter is hereby
authorized to distribute the Official Statement (in both preliminary and final forms) to prospective
purchasers, and the Director of Finance, or her written designee, is hereby authorized to certify to the
Underwriter prior to the distribution of the Official Statement in preliminary form that such Official
Statement is deemed final by the District within the meaning of Rule 15c2-12 of the Securities and
Exchange Commission.
Section 8. The Authorized Officers are authorized to contract for all services necessary to
effect the issuance of the 2013 Bonds. Such services shall include, but not be limited to, printing the
2013 Bonds, the Preliminary Official Statement and the final Official Statement, obtaining legal
services, Trustee services and any other services deemed appropriate as set forth in a certificate of the
Director of Finance, or her written designee. The Authorized Officers are authorized to pay for the
cost of such services, together with other Costs of Issuance, with 2013 Bond proceeds deposited to
the Costs of Issuance Fund established pursuant to the Bond Indenture.
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13-3774/97070
Resolution No. 2013-18
Section 9. All actions heretofore taken by officers and agents of the District and the City
of Huntington Beach with respect to the sale and issuance of the Bonds are hereby approved,
confirmed and ratified, and the Authorized Officers and the other officers of the City of Huntington
Beach and the District responsible for the fiscal affairs of the District are hereby authorized and
directed to take any actions and execute and deliver any and all documents as are necessary to
accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this
Resolution and the fulfillment of the purposes of the Bonds as described in the Bond Indenture. Any
document authorized herein to be signed by the Clerk of the legislative body of the District may be
signed by a duly appointed deputy clerk.
PASSED AND ADOPTED By the City Council of the City of Huntington Beach at a regular
meeting thereof held on the 3rd day of June, 2013.
0
Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Ma ger CTityyttor ey ,mv_ 5'a _
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ED AND APPROVED:
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Director of Finance
Exhibits to include:
Bond Indenture
Escro Agreement
Preliminary Official Statement
Bond Purchase Agreement
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Resolution No. 2013-18 Exhibits
Community Facilities District No. 1990-1
(Goldenwest/EIIIs Area)
• Bond Indenture
• Escrow Agreement
• Preliminary Official Statement
• Bond Purchase Agreement
Stradling Yocca Carlson&Rauth
Draft Dated 5120113
BOND INDENTURE
Between
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
Relating To
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
Dated as of 1,2013
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Table of Contents
Page
ARTICLE I
DEFINITIONS
Section1.1 Definitions.....................................................................................................................2
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1 Amount, Issuance, Purpose and Nature of Bonds.........................................................8
Section 2.2 Type and Nature of Bonds ............................................................................................8
Section 2.3 Equality of Bonds and Pledge of Net Taxes .................................................................8
Section 2.4 Description of Bonds; Interest Rates.............................................................................9
Section 2.5 Place and Form of Payment..........................................................................................9
Section2.6 Form of Bonds.............................................................................................................10
Section 2.7 Execution and Authentication.....................................................................................10
Section2.8 Bond Register..............................................................................................................10
Section 2.9 Registration of Exchange or Transfer.........................................................................I I
Section 2.10 Mutilated, Lost, Destroyed or Stolen Bonds...............................................................I I
Section 2.11 Validity of Bonds........................................................................................................12
Section 2.12 Book-Entry System.....................................................................................................12
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS AND NET TAXES
Section 3.1 Creation of Funds........................................................................................................13
Section 3.2 Disposition of Bond Proceeds.....................................................................................14
Section 3.3 Deposits to and Disbursements from Special Tax Fund.............................................14
Section 3.4 Administration Fund ...................................................................................................15
Section 3.5 Debt Service Account of the Special Tax Fund..........................................................15
Section3.6 [Reserved] ...................................................................................................................15
Section 3.7 Reserve Account of the Special Tax Fund..................................................................15
Section3.8 Rebate Fund ................................................................................................................16
Section3.9 Services Fund..............................................................................................................17
Section 3.10 Costs of Issuance Fund................................................................................................17
Section3.11 Investments .................................................................................................................18
ARTICLE IV
[RESERVED]
ARTICLE V
COVENANTS AND WARRANTY
Section5.1 Warranty......................................................................................................................19
Section5.2 Covenants....................................................................................................................19
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Table of Contents
(continued)
Page
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1 Supplemental Indentures or Orders Not Requiring Bondowner Consent...................23
Section 6.2 Supplemental Indentures or Orders Requiring Bondowner Consent..........................24
Section 6.3 Notation of Bonds; Delivery of Amended Bonds.......................................................25
ARTICLE VII
TRUSTEE
Section7.1 Trustee.........................................................................................................................25
Section 7.2 Removal of Trustee.....................................................................................................26
Section 7.3 Resignation of Trustee ...................................................................... .....26
.....................
Section 7.4 Liability of Trustee......................................................................................................26
Section 7.5 Merger or Consolidation.............................................................................................27
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section8.1 Events of Default.........................................................................................................27
Section 8.2 Remedies of Owners...................................................................................................28
ARTICLE IX
DEFEASANCE
Section9.1 Defeasance..................................................................................................................29
ARTICLE X
MISCELLANEOUS
Section 10.1 Cancellation of Bonds.................................................................................................30
Section 10.2 Execution of Documents and Proof of Ownership......................................................30
Section 10.3 Unclaimed Moneys .....................................................................................................31
Section 10.4 Provisions Constitute Contract....................................................................................31
Section 10.5 Future Contracts..........................................................................................................31
Section 10.6 Further Assurances......................................................................................................31
Section10.7 Severability .................................................................................................................32
Section10.8 Notices.........................................................................................................................32
Section 10.9 Action on Next Business Day.....................................................................................32
EXHIBITA FORM OF BOND.....................................................................................................A-1
EXHIBIT B FORM OF REQUISITION FOR DISBURSEMENT OF COSTS OF
ISSUANCE...............................................................................................................B-1
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BOND INDENTURE
THIS BOND INDENTURE ("Indenture") dated as of 1, 2013, by and
between the City of Huntington Beach Community Facilities District No. 1990-1 (the "District") and
U.S. Bank National Association, as Trustee (the "Trustee"), governs the terms of the City of
Huntington Beach Community Facilities District No. 1990-1 2013 Special Tax Refunding Bonds (the
"Bonds") issued in accordance herewith.
RECITALS:
WHEREAS, the City Council of the City of Huntington Beach, California (hereinafter
sometimes referred to as the "legislative body of the District"), has heretofore undertaken
proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms
and pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal
Code of the City (the "Municipal Code") and the provisions of the Mello-Roos Community Facilities
Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of
Title 5 of the California Government Code (the "Act"); and
WHEREAS, the District has previously issued its City of Huntington Beach Community
Facilities District No. 1990-1 2001 Special Tax Refunding Bonds (the "Refunded Bonds") in the
aggregate principal amount of $2,155,000 pursuant to that certain Fiscal Agent Agreement by and
between the District and U.S. Bank Trust National Association, as fiscal agent (the "Prior Fiscal
Agent"), dated as of November 1, 2001 (the "Prior Fiscal Agent Agreement"), and the Refunded
Bonds are the only bonds of the District outstanding; and
WHEREAS, the Refunded Bonds were issued by the District to refund all of the then
outstanding City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis
Area) 1990 Special Tax Bonds (the "1990 Bonds") which were issued to finance certain
infrastructure improvements within the District; and
WHEREAS, the legislative body of the District intends to accomplish the refunding of the
Refunded Bonds through the issuance of bonds in an aggregate principal amount of
$ designated as the "City of Huntington Beach Community Facilities 2013
Special Tax Refunding Bonds" (the "Bonds") and to fund a deposit to the Reserve Account and pay
certain costs related to the issuance of the Bonds; and
WHEREAS, the District has determined that the issuance of the Bonds will provide
significant public benefits by reducing the total amount of Special Taxes to be levied for debt service
on indebtedness of the District; and
WHEREAS, the Bonds are to be issued and sold in accordance with Resolution No.
of the City Council of the City of Huntington Beach (the "City"), acting in its capacity
as the legislative body of the District, and with this Indenture; and
WHEREAS, the District has determined that all requirements of the Act for the issuance of
the Bonds have been satisfied; and
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WHEREAS, upon their issuance, the Bonds will be the only outstanding bonds of the
District, and the District is covenanting herein not to issue any future obligation or security having a
lien, charge, pledge or encumbrance on a parity with the Bonds upon the Special Taxes, except to
defease the Bonds;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants
contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby
covenant and agree, for the benefit of the Owners of the Bonds which may be issued hereunder from
time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Sections 53311 et seq. of the California Government Code.
"Administration Fund" means that certain fund by that name established pursuant to Section
3.4 hereof.
"Administrative Expenses" means the administrative costs with respect to the calculation
and collection of the Special Taxes, including all attorneys' fees and other costs related thereto, the
fees and expenses of the Trustee and any Special Tax Consultant to the District, any costs related to
the District's compliance with state and federal laws requiring continuing disclosure of information
concerning the Bonds and the District, and any other costs otherwise incurred by the City staff on
behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of
Formation and any obligation of the District hereunder.
"Administrative Expenses Cap" means $10,000 per Fiscal Year.
"Alternative Penalty Account" means the account by that name created and established in
the Rebate Fund pursuant to Section 3.1 hereof.
"Annual Debt Service" means the principal amount of any Outstanding Bonds payable in a
Bond Year at maturity and any interest payable on any Outstanding Bonds in such Bond Year, if the
Bonds are retired as scheduled.
"Authorized Investments" means any of the following investments, if and to the extent the
same are at the time legal for investment of the District's funds (the Trustee is entitled to rely upon
investment direction from the District as a certification such investment is an Authorized
Investment):
(a) Federal Securities;
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(b) Senior debt obligations, participations, or other instruments issued by a
federal agency or United States government-sponsored enterprise, including those issued by or fully
guaranteed as to principal and interest by federal agencies or United States government-sponsored
enterprises (stripped securities are only permitted if they have been stripped by the agency itself);
(c) Money market funds registered under the Federal Investment Company Act
of 1940, whose shares are registered under the Federal Securities Act of 1933 and having a rating of
AAA or better by a Nationally Recognized Statistical Rating Organization (NRSRO);
(d) Certificates of deposit secured at all times by collateral described in (a) and
(b) above. Such certificates must be issued by commercial banks, savings and loan associations or
mutual savings banks. The collateral must be held by a third party or the Trustee and the Trustee on
behalf of the Bond Owners must have a perfected first security interest in the collateral;
(e) Certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by FDIC;
(f) U.S. dollar denominated deposit accounts, federal funds and banker's
acceptances with domestic commercial banks which have a rating on their short term certificates of
deposit on the date of purchase that is rated at least A-1 or its equivalent by a NRSRO and maturing
no more than 360 days after the date of purchase (i.e., ratings on holding companies are not
considered as the rating of the bank);
(g) Commercial Paper rated, at the time of purchase, at least A-1 or its equivalent
by a NRSRO and maturing no more than 270 days after the date of purchase;
(h) Repurchase agreements with financial institutions insured by the FDIC; or
any broker-dealer with "retail customers" which falls under the jurisdiction of the Securities
Investors Protection Corporation (SIPC); or a bank or other financial institution rated in the top two
rating categories by one or more Rating Agencies; provided that: (i) the over-collateralization is at
one hundred two percent (102%), computed weekly, consisting of such securities as described in this
section, items (a) through (c); (ii) a third party custodian, the Trustee or the Federal Reserve Bank
shall have possession of such obligations; (iii)the Trustee shall have perfected a first priority security
interest in such obligations; and (iv) failure to maintain the requisite collateral percentage will require
the Trustee to liquidate the collateral;
(i) County or State-administered pooled investment funds in which the District is
statutorily permitted or required to invest to the extent that any amounts are deposited by the Trustee
into such funds and the Trustee shall have direct access to such fund;
(j California Asset Management Program (CAMP).
"Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature 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 Register" means the books which the Trustee shall keep or cause to be kept on which
the registration and transfer of the Bonds shall be recorded.
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"Bond Year," means the twelve (12) month period commencing on September 2 of each year
and ending on September 1 of the following year, and for the first Bond Year commencing on the
Delivery Date and ending on September 1, 2013.
"Bondowner" or "Owner" means the person or persons in whose name or names any Bond is
registered.
"Bonds" means the City of Huntington Beach Community Facilities District No. 1990-1
2013 Special Tax Refunding Bonds issued in the original principal amount of
"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
banks in New York, New York, Los Angeles, California, or the city where the corporate trust office
of the Trustee is located, are not required or authorized to remain closed.
"Certificate of an Authorized Officer" means a written certificate executed by one of the
Mayor, City Manager, Director of Finance of the City, or their written designees.
"City" means the City of Huntington Beach, California.
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986, together with any amendments thereto.
"Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement,
dated 1, 2013, by and between the District and Willdan Financial Services, as
dissemination agent thereunder.
"Corporate Trust Office" means the Corporate Trust Office of the Trustee at 633 W. Fifth
Street, 241h Floor, Los Angeles, California, 90071, Attention: Global Corporate Trust Services
provided, however for transfer, registration, exchange, payment and surrender of Bonds means care
of the Corporate Trust Office of U.S. Bank National Association in St. Paul, Minnesota or such other
office designated by the Trustee from time to time.
"Costs of Issuance" means the costs and expenses incurred in connection with the issuance
and sale of the Bonds, including the acceptance and initial annual fees and expenses of the Trustee,
legal fees and expenses, costs of printing the Bonds and the preliminary and final Official
Statements, financial consultants, special tax consultants and other fees and expenses set forth in a
Certificate of an Authorized Officer.
"County" means the County of Orange, California.
"Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.1
hereof.
"Delivery Date" means the date on which the Bonds were issued and delivered to the initial
purchasers thereof.
"Depository" means the securities depository acting as Depository under Section 2.12 hereof.
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"Director of Finance" means the Director of Finance of the City, or his or her designee.
"Dissemination Agent" means Willdan Financial Services, and any successor thereto.
"District" means City of Huntington Beach Community Facilities District No. 1990-1
established pursuant to the Act and the Resolution of Formation.
"Escrow Agreement" means the Escrow Agreement, by and between U.S. Bank National
Association, as Escrow Bank, and the District, dated as of 1, 2013.
"Escrow Bank" means U.S. Bank National Association.
"Escrow Fund" means the Escrow Fund established under the Escrow Agreement.
"Extraordinary Administrative Expenses" means Administrative Expenses required for
extraordinary District events such as foreclosure actions against delinquent taxpayers within the
District required to be prosecuted on an expedited basis pursuant to this Indenture, the approval and
implementation of actions requiring Bondowner consent under this Indenture, or actual or threatened
Bondowner or property owner litigation arising out of the Bonds or the District.
"Federal Securities" means any of the following:
(1) Cash (insured at all times by the Federal Deposit Insurance Corporation
("FDIC") or otherwise collateralized with obligations described in paragraph (2) below),
(2) Direct obligations of(including obligations issued or held in book-entry form
on the books of)the Department of the Treasury of the United States of America, or
(3) Obligations of any agency, department or instrumentality of the United States
of America the timely payment of principal of and interest on which are fully guaranteed by the
United States of America.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
following June 30.
"Gross Taxes" means the amount of all Special Taxes received by the District from the
Treasurer, together with the net proceeds collected from the sale of property pursuant to the
foreclosure provisions of this Indenture, penalties and interest received by the District in connection
with the delinquency of such Special Taxes and proceeds from any security for payment of Special
Taxes taken in lieu of foreclosure after payment of administrative costs and attorneys' fees payable
from such proceeds to the extent not previously paid as an Administrative Expense.
"Indenture" means this Bond Indenture, together with any Supplemental Indenture approved
pursuant to Article 6 hereof.
"Independent 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
District or the City, who, or each of whom:
(a) is in fact independent and not under the domination of the District or the City;
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(b) does not have any substantial interest, direct or indirect, in the District or the
City; and
(c) is not connected with the District as a member, officer or employee of the
District, but who may be regularly retained to make annual or other reports to the District or the City.
"Interest Payment Date" means each March 1 and September 1, commencing March 1, 2014;
provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment
Date will be paid on the Business Day next succeeding such date.
"Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year
prior to the final maturity of the Bonds by adding the following for each Bond Year:
(1) the principal amount of all Outstanding Bonds payable in such Bond Year
either at maturity; and
(2) the interest payable on the aggregate principal amount of the Bonds
Outstanding in such Bond Year if the Bonds are retired as scheduled.
"Net Taxes" means Gross Taxes minus amounts, not in excess of the Administrative
Expenses Cap, set aside to pay Administrative Expenses. "Nominee" means the nominee of the
Depository, which may be the Depository, as determined from time to time pursuant to Section 2.12
hereof.
"Ordinance" means, Resolution and Ordinance No. adopted by the legislative body of
the District on providing for the levying of the Special Tax.
"Outstanding" or "Outstanding Bonds" means all Bonds theretofore issued by the District,
except:
(1) Bonds theretofore cancelled or surrendered for cancellation in accordance
with Section 10.1 hereof; and
(2) Bonds which have been surrendered to the Trustee for transfer or exchange
pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10
hereof.
`'Participants" means those broker-dealers, banks and other financial institutions from time to
time for which the Depository holds the Bonds as a securities depository.
"Rating Agency" means Moody's Rating Service and Standard & Poor's or both, as the
context requires.
"Rate and Method of Apportionment" means that certain Rate and Method of Apportionment
of Special Tax approved pursuant to the Resolution of Formation as it may be amended from time to
time in accordance with the Act and this Indenture.
"Rebatable Arbitrage" means the amount (determinable as of the last day of each fifth Bond
Year and upon retirement of the Bonds) of arbitrage profits payable to the United States at all times
and in the amounts specified in Section 148(f) of the Code and any applicable Regulations.
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"Rebate Regulations" means any final, temporary or proposed Regulations promulgated
under Section 148(f) of the Code.
"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to Section 103 of the Code.
"Representation Letter" shall mean the Blanket Letter of Representations from the District to
the Depository as described in Section 2.12 hereof.
"Reserve Requirement" means that amount as of any date of calculation equal to the lesser of
(i) 10% of the initial principal amount of the Bonds, if any, (ii) Maximum Annual Debt Service on
the then Outstanding Bonds, if any; and (iii) 125% of average Annual Debt Service on the then
Outstanding Bonds.
"Resolution of Formation" means, Resolution No. 6161 adopted by the City Council on
June 25, 1990,pursuant to which the City formed the District.
"Resolution of Issuance" means Resolution No. duly adopted by the City Council,
acting in its capacity as the legislative body of the District on , 2013, approving this
Indenture, and any supplemental bond indenture approved pursuant to Article VI hereof.
"Special Taxes" means the special taxes authorized to be levied by the District in accordance
with the Ordinance, the Resolution of Formation, the Act and the Rate and Method of
Apportionment.
"Special Tax Fund" means the fund by that name established pursuant to Section 3.1.
"Supplemental Indenture" means any supplemental indenture amending or supplementing
this Indenture.
"Services Fund" means the fund by that name established pursuant to Section 3.1.
"Tax Certificate" means the certificate by that name to be executed by the District on a
Delivery Date to establish certain facts and expectations and which contains certain covenants
relevant to compliance with the Code.
"Taxable Property" means the area within the boundaries of the District which is not exempt
from application of the Special Tax by operation of law or the Rate and Method of Apportionment.
"Treasurer" means the Treasurer-Tax Collector of the County of Orange.
"Trustee" means U.S. Bank National Association, and any successor thereto.
"Underwriter" means Stifel,Nicolaus & Company, Incorporated.
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ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1 Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant to the
Act, the Bonds in the aggregate principal amount of$ shall be issued for the
purposes of refunding the Refunded Bonds, funding the Reserve Account and paying Costs of
Issuance. The Bonds shall be and are limited obligations of the District and shall be payable as to
the principal thereof and interest thereon solely from the Net Taxes and the other amounts in the
funds created hereunder, other than amounts in the Services Fund, the Rebate Fund or the
Administration Fund.
Section 2.2 Type and Nature of Bonds. Neither the faith and credit nor the taxing power
of the City, the State of California, or any political subdivision thereof other than the District is
pledged to the payment of the Bonds. Except for the Special Taxes, no other taxes are pledged to the
payment of the Bonds. The Bonds are not general or special obligations of the City or general
obligations of the District, but are limited obligations of the District payable solely from certain
amounts deposited by the District in the Special Tax Fund, as more fully described herein. The
District's limited obligation to pay the principal of and interest on the Bonds from amounts in the
Special Tax Fund is absolute and unconditional, free of deductions and without any abatement,
offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds may compel the
exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or
the forfeiture of any of their property. The principal of and interest on the Bonds are not a debt of the
City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge,
charge, lien, or encumbrance upon any of the District's property, or upon any of its income, receipts
or revenues, except the Net Taxes and other amounts in the Special Tax Fund which are, under the
terms of this Indenture and the Act, set aside for the payment of the Bonds and interest thereon and
neither the members of the legislative body of the District or the City Council of the City nor any
persons executing the Bonds, are liable personally on the Bonds, by reason of their issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Taxes for the
payment of the interest on or the principal of the Bonds or for the performance of any covenants
contained herein. The District may, however, advance funds for any such purpose, provided that
such funds are derived from a source legally available for such purpose.
Section 2.3 Equality of Bonds and Pledge of Net Taxes. Subject only to the provisions of
this Indenture permitting the application thereof for the purposes and on the terms and conditions set
forth herein, in order to secure the payment of the principal of and interest on the Bonds in
accordance with their terms, the provisions of this Indenture and the Act, the District hereby pledges
to the Owners, and grants thereto a lien on and a security interest in, all of the Net Taxes and any
other amounts held in the Special Tax Fund. Said pledge shall constitute a first lien on and security
interest in such assets, which shall immediately attach to such assets and be effective, binding and
enforceable against the District, its successors, purchasers of any of such assets, creditors and all
others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture,
irrespective of whether those parties have notice of the pledge of, lien on and security interest in such
assets and without the need for any physical delivery, recordation, filing or further act.
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Pursuant to the Act and this Indenture, the Bonds shall be equally payable from the Net
Taxes and other amounts in the Special Tax Fund, without priority for number, date of the Bonds,
date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of
the Bonds shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund,
which are hereby set aside for the payment of the Bonds. Amounts in the Special Tax Fund shall
constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest
on and principal of the Bonds and so long as any of the Bonds or interest thereon remain Outstanding
shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental
Indenture. Notwithstanding any provision contained in this Indenture to the contrary, Net Taxes
deposited in the Rebate Fund and the Services Fund shall no longer be considered to be pledged to
the Bonds, and none of the Rebate Fund, the Services Fund, the Costs of Issuance Fund or the
Administration Fund shall be construed as a trust fund held for the benefit of the Owners.
Section 2.4 Description of Bonds; Interest Rates. The Bonds shall be issued in fully
registered form in denominations of$5,000 or any integral multiple thereof. The Bonds of each issue
shall be numbered as desired by the Trustee. The Bonds shall be designated "CITY OF
HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 2013 SPECIAL
TAX REFUNDING BONDS." The Bonds shall be dated as of their Delivery Date and shall mature
and be payable on September 1 in the years and in the aggregate principal amounts and shall be
subject to and shall bear interest at the rates set forth in the table below payable on September 1,
2014 and each Interest Payment Date thereafter:
Period Ending
September I Principal Interest Rate
2014 $ %
2015
2016
2017
2018
2019
2020
Interest shall be payable on each Bond from the date established in accordance with
Section 2.5 below on each Interest Payment Date thereafter until the principal sum of that Bond has
been paid; provided, however, that if at the maturity date of any Bond funds are available for the
payment thereof in full, in accordance with the terms of this Indenture, such Bonds shall then cease
to bear interest. Interest due on the Bonds shall be calculated on the basis of a 360 day year
comprised of twelve 30 day months.
Section 2.5 Place and Form of Pam. The Bonds shall be payable both as to principal
and interest in lawful money of the United States of America. The principal of the Bonds shall be
payable upon presentation and surrender thereof at the Corporate Trust Office of the Trustee in St.
Paul, Minnesota, or at the designated office of any successor Trustee. Interest on any Bond shall be
payable from the Interest Payment Date next preceding the date of authentication of that Bond,
unless (i) such date of authentication is an Interest Payment Date in which event interest shall be
payable from such date of authentication; (ii) the date of authentication is after a 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 the first Record Date occurring after the issuance of
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such Bond, in which event interest shall be payable from the dated date of such Bond; provided,
however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond
shall be payable from the last Interest Payment Date to which the interest has been paid or made
available for payment or, if no interest has been paid or made available for payment on that Bond,
interest on that Bond shall be payable from its dated date. Interest on any Bond shall be paid to the
person whose name shall appear in the Bond Register as the Owner of such Bond as of the close of
business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class
mail, postage prepaid,to such Bondowner at his or her address as it appears on the Bond Register. In
addition, upon a request in writing received by the Trustee on or before the applicable Record Date
from an Owner of$1,000,000 or more in principal amount of the Bonds, payment shall be made on
the Interest Payment Date by wire transfer in immediately available funds to an account designated
by such Owner.
Section 2.6 Form of Bonds. The definitive Bonds may be printed from steel engraved or
lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be
substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as
the form of such Bonds and of the certificate of authentication.
Until definitive Bonds, as applicable, shall be prepared,the District 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 District. Until exchanged for definitive Bonds, as applicable, any temporary bond
shall be entitled and subject to the same benefits and provisions of this Indenture as definitive Bonds.
If the District issues temporary Bonds, it shall execute and furnish definitive Bonds, as applicable,
without unnecessary delay and thereupon any temporary Bond may be surrendered to the Trustee at
its office, without expense to the Owner, in exchange for a definitive Bond of the same issue,
maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds so
surrendered shall be cancelled by the Trustee and shall not be reissued.
Section 2.7 Execution and Authentication. The Bonds shall be signed on behalf of the
District by the manual or facsimile signature of the Mayor of the City and countersigned by the
manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity
as officers of the District and attested by the signature of the City Clerk. In case any one or more of
the officers who shall have signed any of the Bonds shall cease to be such officer before the Bonds so
signed have been authenticated and delivered by the Trustee (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
authenticated and delivered as herein provided, and may be issued as if the person who signed such
Bonds had not ceased to hold such office.
Only such Bonds as shall bear thereon such certificate of authentication in the form set forth
in Exhibit A hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be
valid or obligatory for any purpose until such certificate of authentication shall have been duly
executed by the Trustee.
Section 2.8 Bond Register. The Trustee will keep or cause to be kept, at the Corporate
Trust Office, sufficient books for the registration and transfer of the Bonds which shall be open to
inspection by the District during all regular business hours upon reasonable prior notice, and, upon
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presentation for such purpose, the Trustee 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 District and the Trustee may treat the Owner of any Bond whose name appears on the
Bond Register as the absolute Owner of that Bond for any and all purposes, and the District and the
Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on
the address of the Bondowner 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 Trustee of any change in the Bondowner's
address so that the Bond Register may be revised accordingly.
Section 2.9 Registration of Exchange or Transfer. Subject to the limitations of the
following paragraph, 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 Corporate Trust Office of
the Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the
Trustee and duly executed by the Bondowner or his or her duly authorized attorney.
Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like aggregate
principal amount of Bonds for other authorized denominations of the same maturity and issue. The
Trustee shall not collect from the Owner any charge for any new Bond issued upon any exchange or
transfer, but shall require the Bondowner 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
Bonds shall be surrendered for registration of transfer or exchange, the District shall execute and the
Trustee shall authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and
maturity, for a like aggregate principal amount.
Section 2.10 Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become
mutilated, the District, at the expense of the Bondowner, shall execute, and the Trustee shall
authenticate and deliver, a new Bond of like tenor, date, issue and maturity in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by the Trustee
pursuant to Section 10.1 hereof. If any Bond shall be lost, destroyed or stolen, evidence of such loss,
destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the
Trustee and, if any indemnity satisfactory to the Trustee shall be given, the District, at the expense of
the Bondowner, shall execute and the Trustee shall authenticate and deliver, a new Bond of like
tenor, maturity and issue, numbered and dated as the Trustee 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 mutilated, lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits
hereof with all other Bonds issued hereunder. The Trustee shall not treat both the original Bond and
any replacement Bond as being Outstanding for the purpose of determining the principal amount of
Bonds which may be executed, authenticated and delivered hereunder 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 which has been mutilated, lost, destroyed or stolen, and which has
matured, the Trustee may make payment with respect to such Bonds upon receipt of indemnification
satisfactory to the Trustee.
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Section 2.11 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any defect in any proceedings taken by the District and the
recital contained in the Bonds that the same are issued pursuant to the Act and other applicable laws
of the State shall be conclusive evidence of their validity and of the regularity of their issuance.
Section 2.12 Book-Entry System. The Bonds shall be initially issued in the form of a
separate single fully-registered Bond for each maturity (which may be typewritten). Upon initial
issuance, the ownership of each such Bond shall be registered in the registration books maintained by
the Trustee in the name of the Nominee, as nominee of the Depository. Except hereinafter as
provided, all of the Outstanding Bonds shall be registered in the registration books maintained by the
Trustee in the name of the Nominee.
With respect to the Bonds registered in the name of the Nominee, the District and the Trustee
shall have no responsibility or obligation to any Participant or to any Person on behalf of which such
a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence,
the District and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy
of the records of the Depository, the Nominee, or any Participant with respect to any ownership
interest in the Bonds, (ii)the delivery to any Participant or any other Person, other than an Owner as
shown in the registration books maintained by the Trustee, of any notice with respect to the Bonds,
(iii)the selection by the Depository and its Participants of the beneficial interests in the Bonds to be
redeemed in the event the District redeems the Bonds in part, or (iv)the payment to any Participant
or any other person, other than an Owner as shown in the registration books maintained by the
Trustee, of any amount with respect to principal of or interest on the Bonds. The District and the
Trustee may treat and consider the Person in whose name each Bond is registered in the registration
books maintained by the Trustee as the absolute Owner of such Bond for the purpose of payment of
principal and interest with respect to such Bond, for the purpose of giving notices with respect to
such Bond, for the purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Trustee shall pay all principal of and interest on the Bonds only to or upon
the order of the respective Owner, or his respective attorney duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and discharge the District's obligations with
respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid.
No Person other than an Owner shall receive a Bond evidencing the obligation of the District to make
payments of principal and interest pursuant to this Indenture. Upon delivery by the Depository to the
Owner, Trustee and the District of written notice to the effect that the Depository has determined to
substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect
to Record Dates, the term"Nominee" in this Indenture shall refer to such nominee of the Depository.
In order to qualify the Bonds the District elects to register in the name of the Nominee for the
Depository's book-entry system, the District shall execute and deliver the Representation Letter to
the Depository concurrently with the issuance and delivery of the Bonds to their respective original
purchasers. The execution and delivery of the Representation Letter shall not in any other way limit
the provisions of this Section or in any other way impose upon the District any obligation whatsoever
with respect to Persons having interests in the Bonds other than the Owners. In a separate agreement,
the Trustee shall have agreed to take all action necessary to ensure compliance with all
representations of the District in the Representation Letter with respect to the Trustee at all times. In
addition to the execution and delivery of the Representation Letter, the District shall take such other
actions, not inconsistent with this Indenture, as are reasonably necessary to qualify the Bonds for the
Depository's book-entry program.
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In the event (i)the Depository determines not to continue to act as securities depository for
the Bonds or (ii)the Depository shall no longer so act and gives notice to the Trustee of such
determination, then the District will discontinue the book-entry system with the Depository. If the
District determines to replace the Depository with another qualified securities depository, the District
shall prepare or direct the preparation of a new single, separate, fully-registered Bond for each of the
issues and maturities of the Bonds, registered in the name of such successor or substitute qualified
securities depository or its nominee. If the District fails to identify another qualified securities
depository to replace the Depository then the Bonds shall no longer be restricted to being registered
in the bond register in the name of the Nominee, but shall be registered in whatever name or names
Owners transferring or exchanging Bonds shall designate, in accordance with the provisions of
Section 2.9 of this Indenture.
Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is
registered in the name of the Nominee, all payments with respect to principal of and interest on such
Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in
the Representation Letter or as otherwise instructed by the Depository.
The initial Depository under this Section shall be The Depository Trust Company, New
York,New York("DTC"). The initial Nominee shall be Cede & Co., as Nominee of DTC.
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS AND NET TAXES
Section 3.1 Creation of Funds. There is hereby created and established and shall be
maintained by the Trustee the following funds and accounts:
(1) The Community Facilities District No. 1990-1 Special Tax Fund (the
"Special Tax Fund") in which there shall be established and created, a Debt Service Account and a
Reserve Account;
(2) The Community Facilities District No. 1990-1 Rebate Fund (the
"Rebate Fund") in which there shall be established a Rebate Account and an Alternative Penalty
Account;
(3) The Community Facilities District No. 1990-1 Costs of Issuance Fund
(the "Costs of Issuance Fund"); and
(4) The Community Facilities District No. 1990-1 Services Fund (the
"Services Fund").
The amounts on deposit in the foregoing funds and accounts shall be held by the Trustee; and
the Trustee shall invest and disburse the amounts in such funds and accounts in accordance with the
provisions of this Article III and shall disburse investment earnings thereon in accordance with the
provisions of Section 3.11 hereof.
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Section 3.2 Disposition of Bond Proceeds.
(a) The proceeds of the sale of the Bonds shall be received by the Trustee on
behalf of the District and deposited as follows:
(1) $ shall be transferred to the Escrow Bank for deposit into
the Escrow Fund pursuant to the terms of the Escrow Agreement, together with $ of
moneys held by the Prior Fiscal Agent under the Fiscal Agent Agreement which the District shall
direct the Prior Fiscal Agent to deposit in the Escrow Fund pursuant to the Escrow Agreement;
(2) $ representing the amount of Costs of Issuance with
respect to the Bonds shall be deposited in the Costs of Issuance Fund, and such amount shall be
applied to the payment of Costs of Issuance for the Bonds; and
(3) $ shall be deposited in the Reserve Account of the
Special Tax Fund.
The Trustee may, in its discretion, establish a temporary fund or account in its books and
records to facilitate such deposits or transfers.
Section 3.3 Deposits to and Disbursements from Special Tax Fund. The Director of
Finance shall, no later than the last day of each month during which the Special Taxes are
apportioned to the District, transfer the Special Taxes to the Trustee for deposit in the Special Tax
Fund for the Bonds, to be held in trust by the Trustee in the Special Tax Fund. The Trustee will then
transfer the money on deposit in the Special Tax Fund on the dates and in the amounts set forth in the
following Sections, in the following order of priority,to:
(1) The Director of Finance for deposit in the Administration Fund, the
amount of Administrative Expenses levied for in the current Fiscal Year up to the Administrative
Express Cap (plus Extraordinary Administrative Expenses in the event there are Extraordinary
Administrative Expenses); provided that no more than half of the amount of Administrative Expenses
up to half of the Administrative Expense Cap (plus Extraordinary Administrative Expenses in the
event there are Extraordinary Administrative Expenses) levied for in the current Fiscal Year shall be
deposited in the Administration Fund until the earlier of(i) the date moneys on deposit in the Debt
Service Account of the Special Tax Fund are sufficient to pay debt service on the Bonds on March 1
of such Fiscal Year, or(ii)March 2 of such Fiscal Year;
(2) The Debt Service Account of the Special Tax Fund;
(3) The Reserve Account of the Special Tax Fund;
(4) Administration Fund for Administrative Expenses not previously
deposited to the Administration Fund pursuant to this Section 3.3;
(5) Rebate Fund; and
(6) The Director of Finance for deposit in the Services Fund.
At the maturity of all Bonds and, after all principal and interest then due on the Bonds then
Outstanding has been paid or provided for and any amounts owed to the Trustee have been paid in
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full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any
lawful purpose.
Section 3.4 Administration Fund. There is hereby established as a separate fund to be
held by the Director of Finance the Administration Fund. Moneys in the Administration Fund may
be invested in any Authorized Investments, provided that the maturity or maturities thereof shall not
exceed 30 days from the date of purchase. Moneys on deposit in the Administration Fund shall be
withdrawn by the Director of Finance and paid to the City or its order upon receipt by the Director of
Finance of a Certificate of Authorized Officer stating the amount to be withdrawn, that such amount
is to be used to pay an Administrative Expense and the nature of the Administrative Expense.
Section 3.5 Debt Service Account of the Special Tax Fund. The principal of, and interest
on, the Bonds until maturity shall be paid by the Trustee from amounts transferred to the Debt
Service Account of the Special Tax Fund. For the purpose of assuring that the payment of principal
of and interest on, the Bonds will be made when due, at least one Business Day prior to each Interest
Payment Date, the Trustee shall make the following transfers to the Debt Service Account; provided,
however, that to the extent that deposits have been made in the Debt Service Account from the
proceeds of the sale of the Bonds, or otherwise, or to the extent that a transfer will be made from the
Reserve Account to the Debt Service Account in accordance with the last paragraph of Section 3.7
hereof, the transfer from the Special Tax Fund need not be made: an amount such that the balance in
the Debt Service Account one (1) Business Day prior to each Interest Payment Date shall be equal to
the installments of interest and principal due on the Bonds on said Interest Payment Date. Moneys in
the Debt Service Account shall be used for the payment of the interest and principal of the Bonds as
the same become due.
Section 3.6 [Reserved]
Section 3.7 Reserve Account of the Special Tax Fund. There shall be maintained in the
Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement.
Moneys in the Reserve Account 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 Debt Service Account of
the Special Tax Fund are insufficient therefor and for the purpose of making any required transfer to
the Rebate Fund pursuant to Section 3.8 upon written direction from the District; provided, however,
amounts in the Reserve Account may be applied to pay the principal and interest due on any Bonds
in the final Bond Year in which any Bonds are Outstanding. If the amounts in the Debt Service
Account of the Special Tax Fund are insufficient to pay the principal of or interest on the Bonds
when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund
when required, the Trustee shall withdraw from the Reserve Account for deposit in the Debt Service
Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such
purposes. Following any transfer to the Debt Service Account of the Special Tax Fund or to the
Rebate Fund as described above, the District shall then take the steps necessary to cause to be
deposited to the Reserve Account the amount needed to replenish the Reserve Account to the
Reserve Requirement by transferring such amount from Special Taxes held by the Treasurer or, if the
District so elects, by including such amount in the next annual Special Tax levy to the extent of the
permitted maximum Special Tax rates.
Notwithstanding anything herein to the contrary, whenever moneys are withdrawn from the
Reserve Account, after making the required transfers pursuant to Sections 3.5 and 3.6 above, the
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Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund the
amount needed to restore the amount of such account to the Reserve Requirement. Moneys in the
Special Tax Fund shall be deemed available for transfer to the Reserve Account only if the Trustee
determines that such amounts will not be needed to make the deposits required to be made to the
Debt Service Account of the Special Tax Fund. In no event shall amounts in the Reserve Account be
used to pay fees or expenses of the Trustee or its counsel.
Notwithstanding any provision herein to the contrary, moneys in the Reserve Account in
excess of the Reserve Requirement shall be withdrawn from the Reserve Account on the Business
Day before each Interest Payment Date and transferred to the Debt Service Account to be applied to
the interest on the Bonds on the next Interest Payment Date.
Section 3.8 Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the Rebate Fund and shall establish a separate
Rebate Account and Alternative Penalty Account therein. The District shall cause to be deposited in
the Rebate Fund such amounts as required under the Tax Certificate. All money at any time
deposited in the Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held
by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the
Rebate Fund shall be governed by this Section 3.8 and the Tax Certificate.
Without limiting the generality of the foregoing, the District agrees that there shall be
paid from time to time all amounts required to be rebated to the United States pursuant to 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, which the District covenants to pay or cause to be paid to the United
States at the times and in the amounts determined under the Tax Certificate. The Trustee agrees to
comply with all instructions given to it by the District in accordance with this covenant. The Trustee
shall conclusively be deemed to have complied with the provisions of this Section 3.8 if it follows
the instructions of the District and shall not be required to take any actions hereunder in the absence
of instructions from the District.
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of
the Rebate Fund with respect to the Bonds after payment in full of such issue and after making the
payments required to comply with this Section 3.8 and the Tax Certificate may be withdrawn by the
Trustee at the written direction of the District and utilized in any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this
Section or this Indenture to the contrary, the obligation to comply with the requirements of this
Section shall survive the defeasance and final payment of the Bonds.
(d) Amendment Without Consent of Owners. This Section 3.8 may be deleted or
amended in any manner without the consent of the Owners, provided that prior to such event there is
delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment
will not adversely affect the exclusion from gross income for federal income tax purposes of interest
on the Bonds issued on a tax exempt basis. Notwithstanding any provision of this Section, if the
District shall provide to the Trustee an opinion of a nationally recognized bond or tax counsel that
any specified action required under this Section 3.8 is no longer required or that some further or
different action is required to maintain the tax-exempt status of interest on the Bonds, the Trustee and
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the District may conclusively rely on such opinion in complying with the requirements of this
Section, and the covenants hereunder shall be deemed to be modified to that extent.
Section 3.9 Services Fund. After making the transfers required by Sections 3.3, 3.5, 3.6,
3.7 and 3.8 hereof, as soon as practicable after each September 1, the Trustee shall transfer all
remaining amounts in the Special Tax Fund not so transferred to the Services Fund, unless on or
prior to such date, it has received a Certificate of an Authorized Officer directing that certain
amounts be retained in the Special Tax Fund because the District has included such amounts as being
available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such
Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Services Fund will be
transferred by the Trustee as directed by the District in a Certificate of an Authorized Officer (i)to
the Administration Fund to pay Administrative Expenses to the extent that the amounts on deposit in
the Administration Fund are insufficient to pay Administrative Expenses, (ii)to the Interest Account,
the Principal Account to pay the principal of and interest on the Bonds when due in the event that
moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient
therefor; (iii)to the Reserve Account in order to replenish the Reserve Account to the Reserve
Requirement; (iv) to the Administration Fund to pay Administrative Expenses to the extent that the
amounts on deposit in the Administration Fund are insufficient to pay Administrative Expenses or
(v) to the District for any other lawful purpose of the District.
Moneys deposited in the Services Fund are not pledged to the repayment of the Bonds and
may be used by the District for any lawful purpose. In the event that the District reasonably expects
to use any portion of the moneys in the Services Fund to pay debt service on any Outstanding Bonds,
the District shall transfer such amounts to the Trustee and instruct in writing the Trustee to segregate
such amount into a separate subaccount; and the moneys on deposit in such subaccount of the
Services Fund shall be invested in Authorized Investments the interest on which is excludable from
gross income under Section 103 of the Code (other than bonds the interest on which is a tax
preference item for purposes of computing the alternative minimum tax of individuals and
corporations under the Code) or in Authorized Investments at a Yield not in excess of the Yield on
the Bonds, unless, in the opinion of Bond Counsel, investment at a higher Yield will not adversely
affect the exclusion from gross income for federal income tax purposes of interest on the Bonds then
Outstanding.
Section 3.10 Costs of Issuance Fund.
(a) The moneys in the Costs of Issuance Fund shall be applied exclusively to pay
the Costs of Issuance for the Bonds. Amounts for Costs of Issuance shall be disbursed from the
Costs of Issuance Fund by the Trustee only upon receipt of a sequentially numbered written
requisition, substantially in the form attached hereto as Exhibit B from the Director of Finance or
such other person as is designated in writing to the Trustee by the legislative body of the District.
(b) Upon the receipt of a Certificate of an Authorized Officer that all or a
specified portion of the amount remaining in the Costs of Issuance Fund is no longer needed to pay
Costs of Issuance, respectively, the Trustee shall transfer all or such specified portion of the moneys
remaining on deposit in such account to the Debt Service Account of the Special Tax Fund. Any
moneys remaining in the Cost of Issuance Fund on September 1, 2013 shall be transferred to the
Debt Service Account of the Special Tax Fund.
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Section 3.11 Investments. Moneys held in any of the Funds and Accounts under this
Indenture shall be invested by the Trustee at the written direction of the District in accordance with
the limitations set forth below only in Authorized Investments which shall be deemed at all times to
be a part of such Funds and Accounts. Any loss resulting from such Authorized Investments shall be
charged to the Fund or Account from which such investment was made, and any investment earnings
on a Fund or Account shall be applied as follows: (i) investment earnings on all amounts deposited
in the Costs of Issuance Fund shall be deposited in that Fund, (ii) investment earnings on all amounts
in the Rebate Fund shall be deposited in that Fund, (iii) investment earnings on all amounts deposited
in the Reserve Account of the Special Tax Fund shall be used to satisfy the Reserve Requirement and
any investment earnings not needed to satisfy the Reserve Requirement shall be withdrawn from the
Reserve Account one (1)Business Day before each Interest Payment Date and transferred to the Debt
Service Account as provided in Section 3.7 hereof, and (iv) all other investment earnings shall be
deposited in the Debt Service Account of the Special Tax Fund. Moneys in the Funds and Accounts
held under this Indenture may be invested by the Trustee, upon the written direction of the District,
from time to time, in Authorized Investments which written direction shall be made in accordance
with the following restrictions:
(a) Moneys in the Accounts within the Costs of Issuance Fund shall be invested
in Authorized Investments which will by their terms mature, as close as practicable to the date the
District estimates the moneys represented by the particular investment will be needed for withdrawal
from the Costs of Issuance Fund.
(b) Moneys in the Debt Service Account of the Special Tax Fund shall be
invested only in Authorized Investments which will by their terms mature or are available for
withdrawal without penalty, on such dates so as to ensure the payment of principal of and interest on
the Bonds as the same become due.
(c) One-half of the amount in the Reserve Account of the Special Tax Fund may
be invested only in Authorized Investments which mature not later than six (6) months from their
date of purchase by the Trustee, and one-half of such amount shall be invested in Authorized
Investments which mature not more than two (2) years from the date of purchase by the Trustee;
provided that such amounts may be invested in an investment or repurchase agreement so long as
such amounts may be withdrawn at any time, without penalty, for application in accordance with
Section 3.5 hereof; and provided that no such Authorized Investment of amounts in the Reserve
Account allocable to the Bonds shall mature later than the respective final maturity date of the Bonds
to which such amounts relate.
(d) Moneys in the Rebate Fund shall be invested only in Authorized Investments
of the type described in clause (a) of the definition thereof which by their terms will mature, as nearly
as practicable, on the dates such amounts are needed to be paid to the United States Government
pursuant to Section 3.8 hereof.
The Trustee, at the direction of the District, shall sell, or present for redemption, any
Authorized Investments so purchased whenever it may be necessary to do so in order to provide
moneys to meet any payment or transfer to such Funds and Accounts or from such Funds and
Accounts. For the purpose of determining at any given time the balance in any such Funds and
Accounts, any such investments constituting a part of such Funds and Accounts shall be valued at
their cost, except that amounts in the Reserve Account shall be valued at the market value thereof at
least semiannually on or before each Interest Payment Date. In making any valuations hereunder, the
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Trustee may utilize such computerized securities pricing services as may be available to it, including,
without limitation, those available through its regular accounting system, and conclusively rely
thereon. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible for
any loss from investments, sales or transfers undertaken in accordance with the provisions of this
Indenture.
The Trustee may act as principal or agent in the making or disposing of any investment and
shall be entitled to its customary fee for making such investment. The Trustee 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 7.4, the Trustee shall not be liable or responsible for any loss
resulting from such investment. For investment purposes, the Trustee may commingle the funds and
accounts established hereunder, but shall account for each separately. In the absence of written
investment direction the Trustee shall invest solely in Authorized Investments set forth in (d) of the
definition thereof.
The District acknowledges that regulations of the Comptroller of the Currency grant the
District the right to receive brokerage confirmations of security transactions to be effected by the
Trustee hereunder as they occur. The District specifically waives the right to receive such
confirmations to the extent permitted by applicable law and agrees that it will instead receive
periodic cash transaction statements which shall include detail for the investment transactions
effected by the Trustee hereunder; provided, however, that the District retains its right to receive
brokerage confirmation on any investment transaction requested by the District.
ARTICLE IV
[RESERVED]
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1 Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds against all claims and demands of all persons.
Section 5.2 Covenants. So long as any of the Bonds issued hereunder are Outstanding
and unpaid, the District makes the following covenants with the Bondowners under the provisions of
the Act and this Indenture (to be performed by the District or its proper officers, agents or
employees), which covenants are necessary and desirable to secure the Bonds and tend to make them
more marketable; provided, however, that said covenants do not require the District to expend any
funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
(a) Punctual Payment: Against Encumbrances. The District covenants that it will
receive all Gross Taxes in trust and will deposit the Gross Taxes with the Trustee, as provided in
Section 3.3, and the District shall have no beneficial right or interest in the amounts so deposited
except as provided by this Indenture. All such Gross Taxes shall be disbursed, allocated and applied
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solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from
all other money, funds, accounts or other resources of the District. Notwithstanding the provisions of
this Section, as set forth in Section 8.2, the District shall have the right to accept less than the
minimum bid on any delinquent parcel, and is indemnified from legal claim for Owners of the
Bonds, if the City Council determines that the acceptance of less than the minimum bid or another
action as described in Section 8.2 is in the best interest of the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond issued hereunder, thereon on the date, at the place and in the
manner set forth in the Bonds and in accordance with this Indenture to the extent that Net Taxes are
available therefor, and that the payments into the Funds and Accounts created hereunder will be
made, all in strict conformity with the terms of the Bonds and this Indenture, and that it will
faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and
of the Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge
upon any of the Gross Taxes, except as provided in this Indenture, and (except as set forth herein)
will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on
a parity with the Bonds. Nothing herein shall prevent the District from issuing or incurring
indebtedness which is payable from a pledge of Special Taxes which is subordinate in all respects to
the pledge of Net Taxes to repay the Bonds.
(b) Levy and Collection of Special Tax. Subject to the maximum Special Tax
rates, the District will comply with all requirements of the Act so as to assure the timely collection of
the Special Taxes, including without limitation, the enforcement of delinquent Special Taxes.
On or before each June 1, commencing June 1, 2013, the Trustee shall provide a
written notice to the District stating the amounts then on deposit in the various funds and accounts
established by the Trustee pursuant to this Indenture. The receipt of such notice by the District shall
in no way affect the obligations of the District under the following paragraphs. Upon receipt of a
copy of such notice, the District shall communicate with the Treasurer or other appropriate official of
the County of Orange to ascertain the relevant parcels on which the Special Taxes are to be levied,
taking into account any parcel splits during the preceding and then current year.
The District shall retain an Independent Financial Consultant to assist in the levy of
the Special Taxes each Fiscal Year, commencing Fiscal Year 2013-14, in accordance with the
Ordinance, such that the computation of the levy is complete before the final date on which the
Treasurer will accept the transmission of the Special Tax amounts for the parcels within the District
for inclusion on the next secured tax roll. Upon the completion of the computation of the amounts of
the levy, and approval by the legislative body of the District, the District shall prepare or cause to be
prepared, and shall transmit to the Treasurer, such data as the Treasurer requires to include the levy
of the Special Taxes on the next secured tax roll.
The District shall fix and levy the amount of Special Taxes within the District
required for the payment of principal of and interest on Outstanding Bonds becoming due and
payable during the ensuing year including any necessary replenishment or expenditure of the Reserve
Account for the Bonds, an amount equal to the estimated Administrative Expenses and any additional
amounts necessary for expenses incurred in connection with administration or enforcement of
delinquent Special Taxes. The District further covenants that it will take no actions that would
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discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy the
Special Tax for so long as the Bonds are Outstanding, including the initiation of proceedings under
the Act to reduce the Maximum Special Tax rates (the "Maximum Rates") on Taxable Property in
the District below the amounts which are necessary to pay Administrative Expenses and to provide
Special Taxes in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt
Service on the Outstanding Bonds. For purposes of this covenant, Developed Property is as defined
in the Rate and Method of Apportionment.
The Special Taxes shall be payable and collected in the same manner and at the same
time and in the same installment as the general taxes on real property are payable, and have the same
priority, become delinquent at the same times and in the same proportionate amounts and bear the
same proportionate penalties and interest after delinquency as do the general taxes on real property;
provided, the legislative body of the District may provide for direct collection of the Special Taxes in
certain circumstances.
The fees and expenses of the Independent Financial Consultant retained by the
District to assist in computing the levy of the Special Taxes hereunder and any reconciliation of
amounts levied to amount received, as well as the costs and expenses of the District (including a
charge for District staff time) in conducting its duties hereunder, shall be an Administrative Expense
hereunder.
(c) Commence Foreclosure Proceedings. Pursuant to Section 53356.1 of the Act,
the District hereby covenants with and for the benefit of the Bondowners that it will order, and cause
to be commenced, on or before October 1 of the Fiscal Year immediately following the Fiscal Year
in which a delinquency in the payment of a Special Tax occurs, and thereafter diligently prosecute to
judgment (unless such delinquency is theretofore brought current), an action in the superior court to
foreclose the lien of any Special Tax or installment thereof not paid when due; provided that the
District need not commence or pursue such proceedings with respect to any property owned by a
single property owner who is delinquent in the payment of Special Taxes in an amount less than
$5,000 if both (i)the aggregate amount of such delinquent Special Taxes does not exceed 5% of the
total Special Taxes due and payable for the Fiscal Year in question and (ii) the balance on deposit in
the Reserve Account of the Special Tax Fund is not less than the Reserve Requirement.
Special Taxes collected as a result of a foreclosure proceeding shall be deposited in
the Special Tax Fund and only inure to the benefit of the Bonds in the manner provided in
Section 3.2.
(d) Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net
Taxes or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the
security of the Bonds then Outstanding; provided however that nothing herein contained shall require
the District to make any such payments so long as the District in good faith shall contest the validity
of any such claims.
(e) Books and Accounts. The District will keep proper books of records and
accounts, separate from all other records and accounts of the District, in which complete and correct
entries shall be made of all transactions relating to the improvements constructed with the proceeds
of bonded indebtedness issued by the District, the levy of the Special Tax and the deposits to the
Special Tax Fund. Such books of records and accounts shall at all times during business hours be
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subject to the inspection 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.
(f) Federal Tax Covenants. Notwithstanding any other provision of this
Indenture, absent an opinion of Bond Counsel that the exclusion from gross income for federal
income tax purposes of interest on the Bonds issued on a tax-exempt basis will not be adversely
affected, the District covenants to comply with all applicable requirements of the Code necessary to
preserve such exclusion from gross income and specifically covenants, without limiting the
generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from
taking any action or make any use of the proceeds of the Bonds or of any other monies or property
which would cause the Bonds issued on a tax-exempt basis for federal income tax purposes to be
"private activity bonds" within the meaning of Section 141 of the Code.
(2) Arbitrage. The District will make no use of the proceeds of the Bonds
or of any other amounts or property, regardless of the source, or take any action or refrain from
taking any action which will cause the Bonds issued on a tax-exempt basis for federal income tax
purposes to be "arbitrage bonds" within the meaning of Section 148 of the Code.
(3) Federal Guaranty: The District will make no use of the proceeds of
the Bonds or take or omit to take any action that would cause the Bonds issued on a tax-exempt basis
for federal income tax purposes to be "federally guaranteed" within the meaning of Section 149(b) of
the Code.
(4) Information Reporting. The District will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section 149(e) of the
Code.
(5) Hedge Bonds. The District will make no use of the proceeds of the
Bonds or any other amounts or property, regardless of the source, or take any action or refrain from
taking any action that would cause the Bonds issued on 'a tax-exempt basis for federal income tax
purposes to be considered "hedge bonds" within the meaning of Section 149(g) of the Code unless
the District takes all necessary action to assure compliance with the requirements of Section 149(g)
of the Code to maintain the exclusion from gross income for federal income tax purposes of interest
on the Bonds.
(6) Miscellaneous. The District will take no action or refrain from taking
any action inconsistent with its expectations stated in the Tax Certificate executed on the Delivery
Date by the District in connection with the Bonds and will comply with the covenants and
requirements stated therein and incorporated by reference herein.
(7) Other Tax Exempt Issues. The District will not use proceeds of other
tax exempt securities to redeem any Bonds without first obtaining the written opinion of Bond
Counsel that doing so will not impair the exclusion from gross income for federal income tax
purposes of interest on the Bonds issued on a tax-exempt basis.
(g) Covenants to Defend. The District covenants that, in the event that any
initiative is adopted by the qualified electors in the District which purports to reduce the maximum
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Special Tax below the levels specified in Section 5.2(b) above or to limit the power of the District to
levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and
pursue legal action in order to preserve its ability to comply with such covenants.
(h) Limitation on Right to Tender Bonds. The District hereby covenants that it
will not adopt any policy pursuant to Section 53341.1 of the Act permitting the tender of Bonds in
full payment or partial payment of any Special Tax unless the District shall have first received a
certificate from an Independent Financial Consultant that the acceptance of such a tender will not
result in the District having insufficient Special Tax revenues to pay the principal of and interest on
the Bonds when due.
W Continuing Disclosure Covenant. The District hereby covenants and agrees
that it will comply with and carry out all of its obligations under the Continuing Disclosure
Agreement. Notwithstanding any other provision of this Indenture, failure of the District to comply
with its obligations under the Continuing Disclosure Agreement shall not be considered an event of
default under this Indenture, and the sole remedy, in the event of any failure of the District to comply
with the Continuing Disclosure Agreement shall be an action to compel performance.
0) Opinions. In the event that an opinion is rendered by Bond Counsel as
provided herein from a firm other than the firm which rendered the Bond Counsel opinion at closing,
such subsequent opinion by Bond Counsel shall also include the conclusions set forth in numbered
paragraphs 1, 2, 3 and 4 of the original Bond Counsel opinion.
(k) Further Assurances. The District shall make, execute and deliver any and all
such further agreements, instruments and assurances as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of this Indenture and for the better assuring
and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1 Supplemental Indentures or Orders Not Requiring Bondowner Consent. The
District may from time to time, and at any time, without notice to or consent of any of the
Bondowners, adopt Supplemental Indentures for any of the following purposes:
(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 Indenture or in any Supplemental Indenture, provided that
such action is not materially adverse to the interests of the Bondowners;
(b) to add to the covenants and agreements of and the limitations and the
restrictions upon the District contained in this Indenture, other covenants, agreements, limitations and
restrictions to be observed by the District which are not contrary to or inconsistent with this
Indenture as theretofore in effect or which further secure Bond payments;
(c) to modify, amend or supplement this Indenture 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, or to comply with the Code or regulations issued thereunder, and to add
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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 then
Outstanding;
(d) to modify, alter or amend the Rate and Method of Apportionment in any
manner so long as such changes do not reduce the maximum Special Taxes that may be levied in
each year on Developed Property (as defined in the Rate and Method of Apportionment) below the
amounts which are necessary to pay Administrative Expenses and to provide Special Taxes in an
amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the Bonds
Outstanding as of the date of such amendment;
(e) to modify, alter, amend or supplement this Indenture in any other respect
which is not materially adverse to the Bondowners; provided that any amendment or supplement to
this Indenture which will affect the Trustee's duties or protections set forth hereunder shall be
effective only upon written consent of the Trustee; or
Section 6.2 Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures set forth in Section 6.1, the Owners of not less than a
majority of in aggregate principal amount of the Bonds Outstanding shall have the right to consent to
and approve the adoption by the District of such Supplemental Indentures as shall be deemed
necessary or desirable by the District for the purpose of waiving, modifying, altering, amending,
adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture;
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 any Bond or the rate of interest thereon; (c) a preference or priority of any Bond
over any other Bond; or(d) a reduction in the aggregate principal amount of the Bonds the Owners of
which are required to consent to such Supplemental Indenture, without the consent of the Owners of
all Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee
shall, at the expense of the District, cause notice of the proposed Supplemental Indenture 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 Supplemental Indenture
and shall state that a copy thereof is on file at the office of the Trustee for inspection by all
Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of
such Supplemental Indenture when consented to and approved by the Owners of not less than a
majority in aggregate principal amount of the Bonds Outstanding as required by this Section.
Whenever at any time within one year after the date of the first mailing of such notice, the Trustee
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 Outstanding, which instrument or instruments
shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically
consent to and approve the adoption thereof by the District substantially in the form of the copy
referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when
duly adopted by the District, 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 Supplemental Indenture, Bonds which are owned by the
District or by any person directly or indirectly controlling or controlled by or under the direct or
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indirect common control with the District, shall be disregarded and shall be treated as though they
were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from°the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds in instances where such consent is required pursuant to the provisions of this
section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance
therewith, and the respective rights, duties and obligations under this Indenture of the District and all
Owners of Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder,
subject in all respects to such modifications and amendments.
Section 6.3 Notation of Bonds. Delivery of Amended Bonds. After the effective date of
any action taken as hereinabove provided, the District may determine that the Bonds may bear a
notation, by endorsement in form approved by the District, as to such action, and in that case upon
demand of the Owner of any Outstanding Bond at such effective date and presentation of his Bond
for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bonds. If the
District shall so determine, new Bonds so modified as, in the opinion of the District, shall be
necessary to conform to such action shall be prepared and executed, and in that case upon demand of
the Owner of any Outstanding Bond at such effective date such new Bonds shall be exchanged at the
office of the Trustee or at such additional offices as the Trustee may select and designate for that
purpose, without cost to each Owner of Outstanding Bonds, upon surrender of such Outstanding
Bonds.
ARTICLE VII
TRUSTEE
Section 7.1 Trustee. U.S. Bank National Association, having a corporate trust office in
Los Angeles, California, is hereby appointed Trustee for the District for the purpose of receiving all
money which the District is required to deposit with the Trustee hereunder and to allocate, use and
apply the same as provided in this Indenture. In the event that the District fails to deposit with the
Trustee any amount due hereunder when due, the Trustee shall provide telephonic notice to the
District and shall confirm the amount of such shortfall in writing to the extent such amount is known
to the Trustee.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or pay
by wire transfer as provided in Section 2.5 hereof, interest payments to the Bondowners and to
maintain the Bond Register. The Trustee is hereby authorized to pay the principal of the Bonds when
the same are duly presented to it for payment at maturity, to provide for the registration of transfer
and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds all
as provided in this Indenture, and to provide for the authentication of Bonds, and shall perform all
other duties assigned to or imposed on it as provided in this Indenture. The Trustee shall keep
accurate records of all funds administered by it and all Bonds paid, discharged and cancelled by it.
The Trustee shall deliver to the District a monthly accounting of the Funds and Accounts it holds
under this Indenture; provided, however, that the Trustee shall not be obligated to deliver such
accounting for any Fund or Account that has a balance of zero. The Trustee may establish such
Funds and Accounts as it deems necessary or appropriate to perform its obligations hereunder.
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The Trustee is hereby authorized to redeem the Bonds when duly presented for payment at
maturity. The Trustee shall cancel all Bonds upon payment thereof in accordance with the provisions
of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the
Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees and expenses of
independent accountants or counsel employed by it in the exercise and performance of its powers and
duties hereunder, and indemnify and save the Trustee, its officers, directors, employees and agents,
harmless from and against costs, claims, expenses and 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. The obligations of the District under this Section shall survive the discharge of the Bonds
and the resignation or removal of the Trustee.
Section 7.2 Removal of Trustee. The District may at any time at its sole discretion
remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a
written notice of its decision to remove the Trustee and may appoint a successor or successors
thereto; provided that any such successor shall be a bank or trust company 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. Any removal shall become effective only
upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as
a successor 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.
Section 7.3 Resignation of Trustee. The Trustee may at any time resign by giving written
notice to the District and by giving to the Owners notice of such resignation, which notice shall be
mailed to the Owners at their addresses appearing in the registration books in the office of the
Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a successor
Trustee by an instrument in writing. Any resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon acceptance of appointment by the successor
Trustee. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions
of this Section within thirty (30) days after the Trustee shall have given to the District and the
Owners written notice, the Trustee, at the expense of the District, or the District may apply to any
court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such
notice, if any, as such court may deem proper, appoint a successor Trustee, which successor shall be
acceptable to the District.
Section 7.4 Liability of Trustee. 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 District, and the Trustee assumes no responsibility for the correctness of the same
and makes no representations as to the validity or sufficiency of this Indenture or the Bonds and shall
incur no responsibility in respect thereof, other than in connection with its duties or obligations
specifically set forth herein, in the Bonds, or in the certificate of authentication assigned to or
imposed upon the Trustee. The Trustee shall be under no responsibility or duty with respect to the
issuance of the Bonds for value. The Trustee shall not be liable in connection with the performance
of its duties hereunder, except for its own negligence or willful misconduct.
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The Trustee shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, report, Bond or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Trustee may consult with counsel, who may
be counsel to the District, 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 Trustee 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 Indenture the Trustee 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 Trustee, be deemed to be conclusively proved and
established by a written certificate of the District, and such certificate shall be full warrant to the
Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof,
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as to it may seem reasonable.
The Trustee shall have no responsibility with respect to any information, statement, or recital
in any official statement, offering memorandum or any other disclosure material prepared or
distributed with respect to the Bonds.
No provision of this Indenture or any other document related hereto shall require the Trustee
to risk or advance its own funds or otherwise incur any financial liability in the performance of its
duties or the exercise of its rights hereunder.
The immunities extended to the Trustee also extend to its directors, officers, employees and
agents.
Section 7.5 Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the
Trustee without the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1 Events of Default. Any one or more of the following events shall constitute
an"Event of Default":
(a) Default in the due and punctual payment of the principal of any Bond when
and as the same shall become due and payable, whether at maturity as therein expressed, by
declaration or otherwise;
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(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) Except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this Indenture,
the Bonds, and such default shall have continued for a period of thirty (30) days after the District
shall have been given notice in writing of such default by the Trustee or the Owners of twenty-five
percent (25%) in aggregate principal amount of the Outstanding Bonds.
Section 8.2 Remedies of Owners. Following the occurrence of an Event of Default, any
Owner shall have the right for the equal benefit and protection of all Owners similarly situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his
rights against the District and any of the members, officers and employees of the District, and to
compel the District or any such members, officers or employees to perform and carry out their duties
under the Act and their agreements with the Owners as provided in this Indenture;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate
the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and
employees to account as the trustee of an express trust.
Nothing in this Article or in any other provision of this Indenture, the Bonds shall affect or
impair the obligation of the District, which is absolute and unconditional, to pay the interest on and
principal of the Bonds to the respective Owners thereof at the respective dates of maturity, as herein
provided, out of the Net Taxes 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 Indenture. The principal of the Bonds shall
not be subject to acceleration hereunder.
A waiver of any default or 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 Act or by this article may be enforced 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 District 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
Act or any other law.
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In case the moneys held by the Trustee after an Event of Default pursuant to Section 8.1(a) or
(b) shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then all
available amounts shall be applied to the payment of such principal and interest without preference or
priority of principal over interest, or interest over principal, or of any installment of interest over any
other installment of interest, ratably to the aggregate of such principal and interest.
ARTICLE IX
DEFEASANCE
Section 9.1 Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond the interest due thereon and the principal
thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture,
then the Owner of such Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as
set forth below, all covenants, agreements and other obligations of the District to the Owner of such
Bond under this Indenture shall thereupon cease, terminate and become void and be discharged and
satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to this Section, upon
payment of all amounts owed by the District to the Trustee hereunder, the Trustee shall execute and
deliver to the District all such instruments as may be desirable to evidence such discharge and
satisfaction, and the Trustee shall, after payment of amounts payable to the Trustee hereunder, pay
over or deliver to the District's general fund all money or securities held by it pursuant to this
Indenture 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 any one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such Bond, as
and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money which,
together with the amounts then on deposit in the Special Tax Fund are available for such purpose, is
fully sufficient to pay the principal of and interest on such Bond, as and when the same shall become
due and payable; or
(c) by depositing with the Trustee, or another escrow bank appointed by the
District, in trust, direct, noncallable Federal Securities, of the type defined in the definition thereof
set forth in Section 1.1 hereof, in which the District may lawfully invest its money, in such amount as
an Independent Financial Consultant shall determine will be sufficient, together with the interest to
accrue thereon and moneys then on deposit in the Special Tax Fund are available for such purpose,
together with the interest to accrue thereon, to pay and discharge the principal of and interest on such
Bond, as and when the same shall become due and payable;
If paid as provided above, then, at the election of the District, and notwithstanding that any
Outstanding Bonds shall not have been surrendered for payment, all obligations of the District under
this Indenture and any Supplemental Indenture with respect to such Bond shall cease and terminate,
except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond
not so surrendered and paid, all sums due thereon and except for the covenants of the District
contained in Section 5.2(f) relating to compliance with the Code. Notice of such election shall be
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filed with the Trustee not less than thirty (30) days prior to the proposed defeasance date. In
connection with a defeasance under (b) or (c) above, there shall be provided to the Trustee a
certificate of a certified public accountant stating its opinion as to the sufficiency of the moneys or
securities deposited with the Trustee or the escrow bank to pay and discharge the principal of and
interest on all Outstanding Bonds to be defeased in accordance with this Section, as and when the
same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the
opinion of the certified public accountant) to the effect that the Bonds being defeased have been
legally defeased in accordance with this Indenture and any applicable Supplemental Indenture. Upon
a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such
Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute
and deliver to the District all such instruments as may be desirable to evidence such release,
discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds, the
Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a
defeasance, which are not required for the purpose of paying and discharging the principal of or
interest on the Bonds when due and any fees and expenses of the Trustee remaining unpaid. The
Trustee shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the
Bondowners whose Bonds have been defeased, in the form directed by the District, stating that the
defeasance has occurred.
ARTICLE X
MISCELLANEOUS
Section 10.1 Cancellation of Bonds. All Bonds surrendered to the Trustee for payment
upon maturity shall upon payment therefor and any Bond purchased by the District as authorized
herein shall be cancelled forthwith and shall not be reissued. The Trustee shall destroy such Bonds,
as provided by law, and, upon written request from the District, furnish to the District a certificate of
such destruction.
Section 10.2 Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
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 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 Indenture (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 of any
such instrument and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any 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
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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. Neither the District nor the Trustee shall
be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District
to such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent
of the Owner of any Bond shall bind every future Owner of the same Bond in respect of anything
done or suffered to be done by the Trustee in pursuance of such request or consent.
Section 10.3 Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding and subject to the escheat laws of the State, any money held by the Trustee in trust
for the payment and discharge of any of the Outstanding Bonds which remain unclaimed for two (2)
years after the date when such Outstanding Bonds have become due and payable, if such money was
held by the Trustee at such date, or for two (2) years after the date of deposit of such money if
deposited with the Trustee after the said date when such Outstanding Bonds become due and
payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and
the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look
only to the District for the payment of such Outstanding Bonds; provided, however, that, before
being required to make any such payment to the District or the Trustee shall, at the expense of the
District, cause to be mailed to the registered Owners of such Outstanding Bonds at their addresses as
they appear on the registration books of the Trustee 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
District.
Section 10.4 Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District 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 exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined,
adversely to the Bondowners or the Trustee, then the District, the Trustee 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 Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5 Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Taxes which are subordinate to the pledge hereunder, or which is payable from the
general fund of the District or from taxes or any source other than the Net Taxes as defined herein.
Section 10.6 Further Assurances. The District 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 Indenture, and for the better assuring
and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
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Section 10.7 Severability. If any covenant, agreement or provision, or any portion thereof,
contained in this Indenture, or the application thereof to any person or circumstance, is held to be
unconstitutional, invalid or unenforceable, the remainder of this Indenture 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 Indenture, the Bonds issued pursuant
hereto shall remain valid and the Bondowners shall retain all valid rights and benefits accorded to
them under the laws of the State of California.
Section 10.8 Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid or personally delivered to the
Director of Finance of the City of Huntington Beach, 2000 Main Street, Huntington Beach,
California 92648, and all notices to the Trustee shall be mailed, first class, or personally delivered to
the Trustee at U.S. Bank National Association, 633 W. Fifth Street, 24th Floor, Los Angeles,
California 90071, Attention: Global Corporate Trust Services, Ref: City of Huntington Beach
Community Facilities District No. 1990-1.
Section 10.9 Action on Next Business Day. If the date for making any payment or the last
date for performance of any act or the exercising of any right, as provided in this Indenture, is not a
Business Day, such payment, with no interest accruing for the period from and after such nominal
date, may be made or act performed or right exercised on the next succeeding Business Day with the
same force and effect as if done on the nominal date provided therefore in this Indenture.
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SIGNED AND APPROVED as of the day and year first written above by the Director of
Finance of the City of Huntington Beach, acting on behalf of CITY OF HUNTINGTON BEACH
FACILITIES COMMUNITY FACILITIES DISTRICT NO. 1990-1 and attested to by the City Clerk
and U.S. BANK NATIONAL ASSOCIATION, in token of its acceptance of the duties of the Trustee
created hereunder, has caused this Indenture to be signed in its corporate name by its officer
identified below, all as of the day and year first above written.
By:
Director of Finance of the City of Huntington
Beach, for and on behalf of City of Huntington
Beach Community Facilities District No. 1990-1
ATTEST:
City Clerk of the City of Huntington Beach,
acting on behalf of City of Huntington Beach
Community Facilities District No. 1990-1
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
S-1
DOCSOC/1609243 v7/022273-0006
EXHIBIT A
[FORM OF BOND]
Unless this Bond certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC'), to the District or its agent for registration of transfer,
exchange, or payment, and any Bond certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VAL UE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
,COUNTY OF ORANGE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
INTEREST RATE MATURITY DATE DATED DATE CUSIP®NUMBER
% September 1, , 2013
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: AND NO/100 DOLLARS
CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 (the "District"), located in the City of Huntington Beach, County of Orange, State of California,
FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the
Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on
the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the
Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest
Payment Date (as hereinafter defined) next preceding the date of authentication hereof to which
interest has been paid or duly provided in full, unless (i)the date of authentication is an Interest
Payment Date in which event interest shall be payable from such date of authentication, (ii)the date
of authentication is after a Record Date (as hereinafter defined) 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 the first Record Date in which event interest shall be payable from the Dated
Date set forth above; 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 or, if no interest has been paid or made
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available for payment, interest on this Bond shall be payable from the Dated Date set forth above.
Interest will be paid semiannually on March 1 and September 1 (each, an "Interest Payment Date"),
commencing March 1, 2014, at the Interest Rate set forth above, until the Principal Amount hereof is
paid or made available for payment.
The principal of this Bond is payable to the Registered Owner hereof in lawful money of the
United States of America upon presentation and surrender of this Bond at the corporate trust office of
U.S. Bank National Association (the "Trustee"). Interest on this Bond shall be paid by check of the
Trustee mailed by first class mail, postage prepaid, or, upon request of any Registered Owner of at
least $1,000,000 of Bonds, by wire transfer to an account in the continental United States of the
Registered Owner hereof prior to the Record Date as of the close of business on the fifteenth day of
the month preceding an Interest Payment Date (the "Record Date") at such Registered Owner's
address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of "City of Huntington Beach Community
Facilities District No. 1990-1 2013 Special Tax Refunding Bonds" (the "Bonds") issued in the
aggregate principal amount of $ pursuant to the Mello-Roos Community
Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government
Code (the "Act"), for the purpose of refunding the District's 2001 Special Tax Refunding Bonds, and
paying certain costs related to the issuance of the Bonds and funding a reserve account. The issuance
of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the
City Council of the City of Huntington Beach, acting in its capacity as the legislative body of the
District (the "Legislative Body') on June 3, 2013, and a Bond Indenture dated as of July 1, 2013, by
and between the District and U.S. Bank National Association, as Trustee, executed in connection
therewith (the "Indenture"), and this reference incorporates the Indenture herein, and by acceptance
hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is
executed under and this Bond is issued under, and both are to be construed in accordance with, the
laws of the State of California.
Pursuant to the Act and the Indenture, the principal of and interest on this Bond are payable
solely from the portion of the annual special taxes authorized under the Act to be levied and collected
within the District and which are pledged to the repayment of the Bonds (the "Special Taxes"). Any
amounts for the payment hereof shall be limited to the Special Taxes pledged and collected or
foreclosure proceeds received following a default in payment of the Special Taxes and other amounts
on deposit in the Special Tax Fund, except to the extent that other provision for payment has been
made by the Legislative Body, as may be permitted by law. The District has covenanted for the
benefit of the owners of the Bonds that under certain circumstances it will commence and diligently
pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special
Tax installments levied for payment of principal and interest on the Bonds.
The Bonds are not subject to redemption prior to maturity.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully-registered form in the denomination of $5,000 or any
integral multiple of$5,000 and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations of the same issue and maturity, all as more fully set forth in the
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Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the corporate trust office of the Trustee, but only in the manner, subject
to the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any time, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
The principal of this Bond is not subject to acceleration.
If the District shall pay or cause to be paid to the Owner of this Bond the interest due hereon
and the principal hereof, at the times and in the manner stipulated herein and in the Indenture, or if
there has been deposited with the Trustee moneys or investment securities, which together with the
interest to accrue thereon without further investment, will be fully sufficient to pay and discharge the
principal of and interest on all Bonds Outstanding as and when the same shall become due and
payable, then the Owner of this Bond shall cease to be entitled to the pledge of Net Taxes under the
Indenture, and all covenants, agreements and other obligations of the District to the Owner of this
Bond under the Indenture shall thereupon cease, terminate and become void and be discharged and
satisfied.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF
HUNTINGTON BEACH OR OF THE CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1 FOR WHICH THE CITY OF HUNTINGTON BEACH OR
THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED,
GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED
HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM
THE PORTION OF THE SPECIAL TAXES PLEDGED UNDER THE INDENTURE BUT ARE
NOT A DEBT OF THE CITY OF HUNTINGTON BEACH, THE STATE OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
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IN WITNESS WHEREOF, the City of Huntington Beach Community Facilities District No.
1990-1 has caused this Bond to be dated as of the Dated Date, to be executed on behalf of the District
by the Mayor of the City of Huntington Beach by facsimile signature and attested by the facsimile
signature of the City Clerk.
Mayor of the City of Huntington Beach, for and
on behalf of City of Huntington Beach
Community Facilities District No. 1990-1
ATTEST:
City Clerk of the City of Huntington Beach,
acting on behalf of City of Huntington Beach
Community Facilities District No. 1990-1
[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson& Rauth, a
Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated
as of the date of the original delivery of,the Bonds. A signed copy is on file in my office.
City Clerk of the City of Huntington Beach, acting on behalf
of City of Huntington Beach Community Facilities District
No. 1990-1
[FORM OF ASSIGNMENT]
For value received,the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es)hereby irrevocably constitute(s) and appoint(s)
attorney,to transfer the same on the registration books of the Trustee with full power of substitution
in the premises.
Dated:
Signature Guarantee:
Notice: Signature(s) must be guaranteed by a Notice: The signature on this assignment must
qualified guarantor. 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.
A-5
DOCS OC/1609243 v7/022273-0006
EXHIBIT B
FORM OF REQUISITION FOR DISBURSEMENT OF
COSTS OF ISSUANCE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
The undersigned, a duly authorized representative of City of Huntington Beach Community
Facilities District No. 1990-1 (the "District"), hereby certifies to U.S. Bank National Association, as
trustee (the "Trustee") for purposes of disbursing funds from the Costs of Issuance Fund to pay Costs
of Issuance that:
(1) The Trustee is to pay to the payees set forth on Exhibit A hereto the amount set forth
next to each payee's name for the item described on Exhibit A hereto;
(2) The conditions to the release of these amounts from the Costs of Issuance Fund have
been satisfied; and
(3) There has not been filed with or served upon the District 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 payees named on Exhibit A hereto which has not been released or will
not be released simultaneously with the payment of such amounts, other than materialmen's or
mechanic's liens accruing by mere operation of law.
Dated: CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.
1990-1
By:
Authorized Officer
B-1
DOCSOC/1609243v7/022273-0006
EXHIBIT A
Payee Amount Due Purpose of Expenditure
B-2
DOC SOC/1609243 v7/022273-0006
Stradling Yocca Carlson &Rauth
Draft dated May 20, 2013
ESCROW AGREEMENT
By and Between
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
and
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Bank
Dated as of 1,2013
Relating to
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
DOC SOC/1609245v3/022273-0006
ESCROW AGREEMENT
THIS 2013 ESCROW AGREEMENT, dated as of 1, 2013 (the "Escrow
Agreement"), by and between the City.of Huntington Beach Community Facilities District No. 1990-
1 (the "District") and U.S. Bank National Association, as escrow bank (the "Escrow Bank"), is
entered into in accordance with Resolution No. of the City Council of the City of
Huntington Beach, acting as the legislative body of the District, adopted on , 2013 and a
Bond Indenture dated as of 1, 2013 between the District and U.S. Bank National
Association, as Trustee (the "Trustee") (the "Indenture"), to refund all of the outstanding bonds
issued pursuant to the Fiscal Agent Agreement by and between the District and U.S. Bank Trust
National Association, as fiscal agent (the "Prior Fiscal Agent"), dated as of November 1, 2001 (the
"Prior Fiscal Agent Agreement").
WITNESSETH.-
WHEREAS, pursuant to the Prior Fiscal Agent Agreement, the District has previously issued
its Series 2001 Special Tax Refunding Bonds (the "Refunded Bonds") in the aggregate principal
amount of $2,155,000, which are currently outstanding in the aggregate principal amount of
$965,000; and
WHEREAS, the District has determined to issue its 2013 Special Tax Refunding Bonds in
the aggregate principal amount of$ (the "Bonds") for the purpose of providing moneys
which will be used to optionally redeem all of the Refunded Bonds on September 1, 2013
(the "Redemption Date") at a redemption price equal to the outstanding aggregate principal amount
thereof, together with interest accrued on the Refunded Bonds through the Redemption Date, without
premium (the "Redemption Price"), as required under the Prior Fiscal Agent Agreement; and
WHEREAS, the District has taken action to cause to be issued or delivered to the Escrow
Bank for deposit in or credit to the escrow fund established and maintained by it (the "Escrow Fund")
moneys to be invested in non-callable Federal Securities (as defined herein) or held uninvested as
cash, in an amount necessary to refund all of the Refunded Bonds.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained,the District and the Escrow Bank agree as follows:
SECTION 1. Deposit of Moneys.
(a) The District hereby deposits with the Escrow Bank $ , comprised
of the net sale proceeds of the Bonds and other moneys held under the Prior Fiscal Agent Agreement
with respect to the Refunded Bonds, to be held in irrevocable escrow by the Escrow Bank separate
and apart from all other securities, investments or moneys on deposit with the Escrow Bank, in a
fund hereby created and established and to be known as the "Escrow Fund," and to be applied solely
as provided in this Escrow Agreement. Such moneys shall be invested in non-callable Federal
Securities (as defined herein) or held uninvested as cash and are at least equal to an amount sufficient
to pay when due the Redemption Price on the Redemption Date.
(b) As used herein, the term "Federal Securities" means the securities set forth in
Schedule A hereto, which constitute direct, non-callable, non-prepayable obligations issued by the
DOCSOC/1609245v3/022273-0006
United States Treasury or which are unconditionally guaranteed as to full and timely payment by the
United States of America. The District hereby directs the Escrow Bank to invest $ of
moneys in the Escrow Fund in the Federal Securities described on Schedule A hereto and to hold
$ of moneys in the Escrow Fund uninvested.
(c) The Escrow Bank hereby acknowledges receipt of the written Verification
Report of , certified public accountants, dated , 2013 relating to the
redemption of the Refunded Bonds on the Redemption Date (the "Verification Report").
SECTION 2. Use and Investment of Moneys. The Escrow Bank acknowledges receipt of
the moneys described in Section 1 and agrees:
(a) to purchase the Federal Securities listed in Schedule A hereto and hold the
balance of the Escrow Fund uninvested as cash; and
(b) to make the payments required under Section 3 hereof at the times set forth in
Section 3 hereof.
SECTION 3. Refunding of the Refunded Bonds. The District hereby directs the Escrow
Bank to complete any and all actions necessary to be taken by the Prior Fiscal Agent in connection
with the redemption of the Refunded Bonds pursuant to the Prior Fiscal Agent Agreement on the
Redemption Date.
SECTION 4. Performance of Duties. The Escrow Bank agrees to perform the duties set
forth herein.
SECTION 5. Indemnity. The District hereby assumes liability for, and hereby agrees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect,
save and keep harmless the Escrow Bank and its respective successors, assigns, directors, agents,
employees and servants, from and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees
and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or
asserted against, the Escrow Bank at any time (whether or not also indemnified against the same by
the District or any other person under any other agreement or instrument, but without double
indemnity) in any way relating to or arising out of the execution, delivery and performance of this
Escrow Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds
deposited therein, and any payment, transfer or other application of moneys by the Escrow Bank in
accordance with the provisions of this Escrow Agreement; provided, however, that the District shall
not be required to indemnify the Escrow Bank against the Escrow Bank's own negligence or willful
misconduct or the negligent or willful misconduct of the Escrow Bank's respective agents and
employees or the breach by the Escrow Bank of the terms of this Escrow Agreement. In no event
shall the District or the Escrow Bank be liable to any person by reason of the transactions
contemplated hereby other than to each other as set forth in this Section 5. The indemnities
contained in this Section 5 shall survive the termination of this Escrow Agreement.
SECTION 6. Responsibilities of the Escrow Bank. The Escrow Bank and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort,
contract or otherwise, in connection with the execution and delivery of this Escrow Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys deposited therein, or any payment,
2
DOCSOC/1609245 v3/022273-0006
transfer or other application of moneys or obligations by the Escrow Bank in accordance with the
provisions of this Escrow Agreement or by reason of any non-negligent act, non-negligent omission
or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The
recitals of fact contained in the "Whereas" clauses herein shall be taken as the statements of the
District, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow
Bank makes no representation as to the sufficiency of the deposit of moneys in the Escrow Fund to
accomplish the refunding of the Refunded Bonds on the Redemption Date or to the validity of this
Escrow Agreement as to the District and, except as otherwise provided herein, the Escrow Bank shall
incur no liability with respect thereto. The Escrow Bank shall not be liable in connection with the
performance of its duties under this Escrow Agreement except for its own negligence, willful
misconduct or default, and the duties and obligations of the Escrow Bank shall be determined by the
express provisions of this Escrow Agreement. The Escrow Bank may consult with counsel, who may
or may not be counsel to the District, and in reliance upon the written opinion of such counsel shall
have full and complete authorization and protection with respect to any action taken, suffered or
omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it
necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting
any action under this Escrow Agreement, such matter may be deemed to be conclusively established
by a certificate signed by an authorized officer of the District.
The liability of the Escrow Bank to make the payments required by this Escrow Agreement
shall be limited to the moneys in the Escrow Fund.
No provision of this Escrow Agreement shall require the Escrow Bank to expend or risk its
own funds or otherwise incur any financial liability in the performance or exercise of any of its duties
hereunder, or in the exercise of its rights or powers.
The Escrow Bank shall not be liable for the accuracy of any calculations provided herein.
Any company into which the Escrow Bank may be merged or converted or with which it may
be consolidated or any company resulting from any merger, conversion or consolidation to which it
shall be a party or any company to which the Escrow Bank may sell or transfer all or substantially all
of its corporate trust business shall be the successor to the Escrow Bank without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
The District shall pay the Escrow Bank full compensation for its duties under this Escrow
Agreement, including out-of-pocket costs such as publication costs, redemption or redemption
expenses, legal fees and other costs and expenses relating hereto. Under no circumstances shall
amounts deposited in the Escrow Fund be deemed to be available for said purposes.
The Escrow Bank may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with
due care, and shall not be responsible for any willful misconduct or negligence on the part of any
agent, attorney, custodian or nominee so appointed.
The Escrow Bank agrees to accept and act upon instructions or directions pursuant to this
Escrow Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods, provided, however, that, the Escrow Bank shall have received an incumbency
certificate listing persons designated to give such instructions or directions and containing specimen
signatures of such designated persons, which such incumbency certificate shall be amended and
3
DOCSOC/1609245v3/022273-0006
replaced whenever a person is to be added or deleted from the listing. If the District elects to give the
Escrow Bank e-mail or facsimile instructions (or instructions by a similar electronic method) and the
Escrow Bank in its discretion elects to act upon such instructions, the Escrow Bank's understanding
of such instructions shall be deemed controlling. The Escrow Bank shall not be liable for any losses,
costs or expenses arising directly or indirectly from the Escrow Bank's reliance upon and compliance
with such instructions notwithstanding such instructions conflict or are inconsistent with a
subsequent written instruction. The District agrees to assume all risks arising out of the use of such
electronic methods to submit instructions and directions to the Escrow Bank, including without
limitation the risk of the Escrow Bank acting on unauthorized instructions, and the risk of
interception and misuse by third parties.
SECTION 7. Irrevocable Instructions as to Notice. The Escrow Bank hereby
acknowledges that upon the funding of the Escrow Fund as provided in this Escrow Agreement, the
receipt of the Verification Report described in Section 1(c) of this Escrow Agreement and the
Irrevocable Instructions and Request to Fiscal Agent attached hereto as Schedule C it is in receipt of
the items constituting all of the conditions precedent to the redemption of the Refunded Bonds under
the Prior Fiscal Agent Agreement.
SECTION 8. Amendments. This Escrow Agreement is made for the benefit of the District
and the holders from time to time of the Bonds and it shall not be repealed, revoked, altered or
amended without the written consent of all such holders, the Escrow Bank and the District, as
defined in the Indenture; provided, however, but only after the receipt by the Escrow Bank of an
opinion of nationally recognized bond counsel that the exclusion from gross income of interest
evidenced and represented by the Bonds and the Bonds will not be adversely affected for federal
income tax purposes, the District and the Escrow Bank may, without the consent of, or notice to,
such holders, amend this Escrow Agreement or enter into such agreements supplemental to this
Escrow Agreement as shall not adversely affect the rights of such holders and as shall not be
inconsistent with the terms and provisions of this Escrow Agreement for any one or more of the
following purposes: (i) to cure any ambiguity or formal defect or omission in this Escrow
Agreement; (ii) to grant to, or confer upon, the Escrow Bank for the benefit of the holders of the
Refunded Bonds any additional rights, remedies, powers or authority that may lawfully be granted to,
or conferred upon, such holders or the Escrow Bank; and (iii)to include under this Escrow
Agreement additional funds, securities or properties. The Escrow Bank shall be entitled to rely
conclusively upon an unqualified opinion of nationally recognized bond counsel with respect to
compliance with this Section 8, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the holders of the Refunded Bonds or that any instrument
executed hereunder complies with the conditions and provisions of this Section 8.
SECTION 9. Term. This Escrow Agreement shall commence upon its execution and
delivery and shall terminate on the later to occur of either (i)the date upon which the Refunded
Bonds have been paid in accordance with this Escrow Agreement, or (ii) the date upon which no
unclaimed moneys remain on deposit with the Escrow Bank and all amounts owed to the Escrow
Bank shall have been paid in full. Any unclaimed money which remains in the Escrow Fund for
2 years from the date upon which the Refunded Bonds have been paid in accordance with this
Escrow Agreement shall be remitted by the Escrow Bank to the District.
SECTION 10. Compensation. The Escrow Bank shall receive its reasonable fees and
expenses as previously agreed to; provided, however, that under no circumstances shall the Escrow
Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the
4
DOCSOC/1609245v3/022273-0006
Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank under
this Escrow Agreement.
SECTION 11. Resignation or Removal of Escrow Bank.
(a) The Escrow Bank may resign by giving 30 days prior written notice in
writing to the District. The Escrow Bank may be removed (1) by (i) filing with the District and the
Escrow Bank an instrument or instruments executed by the holders of at least 51% in aggregate
principal amount of the Refunded Bonds then remaining unpaid, and (ii)the District delivering
written notice to the Escrow Bank, or (2) by a court of competent jurisdiction for failure to act in
accordance with the provisions of this Escrow Agreement upon application by the District or the
holders of 5% in aggregate principal amount of the Refunded Bonds then remaining unpaid.
(b) No resignation or removal of the Escrow Bank shall become effective until a
successor Escrow Bank has been appointed hereunder and until the cash held under this Escrow
Agreement are transferred to the new Escrow Bank. The District or the holders of a majority in
principal amount of the Refunded Bonds then remaining unpaid may, by an instrument or
instruments filed with the District, appoint a successor Escrow Bank who shall supersede any Escrow
Bank theretofore appointed by the District. If no successor Escrow Bank is appointed by the District
or the holders of such Refunded Bonds then remaining unpaid, within 45 days after notice of any
such resignation or removal, the holder of any such Refunded Bonds or any retiring Escrow Bank
may apply to a court of competent jurisdiction for the appointment of a successor Escrow Bank.
SECTION 12. Severability. If any one or more of the covenants or agreements provided in
this Escrow Agreement on the part of the District or the Escrow Bank to be performed should be
determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements
shall be null and void and shall be deemed separate from the remaining covenants and agreements
herein contained and shall in no way affect the validity of the remaining provisions of this Escrow
Agreement.
SECTION 13. Counterparts. This Escrow Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute
and be but one and the same instrument.
SECTION 14. Governing Law. This Escrow Agreement shall be construed under the laws
of the State of California.
SECTION 15. Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Escrow Agreement, shall be a legal
holiday or a day on which banking institutions in the city in which is located the principal office of
the Escrow Bank are authorized by law to remain closed, such payment may be made or act
performed or right exercised on the next succeeding day not a legal holiday or a day on which such
banking institutions are authorized by law to remain closed, with the same force and effect as if done
on the nominal date provided in this Escrow Agreement, and no interest shall accrue for the period
after such nominal date.
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DOC S OC/1609245 v3/022273-0006
SECTION 16. Assignment. This Escrow Agreement shall not be assigned by the Escrow
Bank or any successor thereto without the prior written consent of the District.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed by their duly authorized officers and attested as of the date and year first written above.
By:
Director of Finance of the City of Huntington
Beach, for and on behalf of City of Huntington
Beach Community Facilities District No. 1990-1
ATTEST:
City Clerk of the City of Huntington Beach,
acting on behalf of City of Huntington Beach
Community Facilities District No. 1990-1
[SIGNATURES CONTINUED ON NEXT PAGE.]
S-1
DOCSOC/1609245v3/022273-0006
[SIGNATURE PAGE CONTINUED.]
U.S. BANK NATIONAL ASSOCIATION, as Escrow
Bank
By:
Authorized Officer
S-2
DOCSOC/1609245v3/022273-0006
SCHEDULE A
FEDERAL SECURITIES
Type Principal Interest Rate Maturity Date Cash Receipt from SLGS
SLG $ % September 1, 2013 $
A-1
DOCSOC/1609245v3/022273-0006
SCHEDULE B
REDEMPTION PRICE OF REFUNDED BONDS
Payment For Refunded Bonds
Principal Redemption Required Deposit to
Payment Date Redeemed Interest Premium the Escrow Fund
September 1, 2013 $965,000 $ $ $
Cash deposited on , 2013 in the Escrow Fund in the amount of $ shall be
invested in the Federal Securities described in Schedule A. The cash receipt from such Federal
Securities on September 1, 2013 shall be $ $ of cash deposited on
2013 in the Escrow Fund shall be held uninvested in the Escrow Fund.
B-1
DOCSOC/1609245v3/022273-0006
SCHEDULE C
IRREVOCABLE INSTRUCTIONS AND REQUEST TO FISCAL AGENT
U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent
ESCROW AGREEMENT RELATING TO THE REFUNDING OF
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2001 SPECIAL TAX REFUNDING BONDS
(the "Refunded Bonds")
Ladies and Gentlemen:
As Fiscal Agent under that certain Fiscal Agent Agreement dated as of November 1, 2001,
between the District and U.S. Bank Trust National Association, the predecessor Fiscal Agent (the
"Fiscal Agent Agreement"), you are hereby notified of the irrevocable election of the City of
Huntington Beach Community Facilities District No. 1990-1 to redeem on September 1, 2013 all of
the outstanding Bonds (as such term is defined in the Fiscal Agent Agreement) issued pursuant to the
Fiscal Agent Agreement (the "Refunded Bonds").
You hereby confirm that you have previously mailed, as provided in the Fiscal Agent
Agreement, notice of redemption of the Refunded Bonds scheduled to be redeemed prior to maturity.
Such notice was substantially in the form required by the Fiscal Agent Agreement and a copy of
which is annexed hereto as Exhibit X.
C-1
DOC S OC/1609245 v3/022273-0006
You are hereby further irrevocably instructed to mail, as soon as practicable, a notice to the
holders of the Refunded Bonds (in the form annexed hereto as Exhibit Y) that the deposit of moneys
has been made with U.S. Bank National Association, as Escrow Bank, and that the projected
withdrawals from such escrow have been calculated to be adequate to pay the principal, redemption
price and interest due on said Refunded Bonds outstanding as such become due or are subject to
redemption.
By:
Director of Finance of the City of Huntington
Beach, for and on behalf of City of Huntington
Beach Community Facilities District No. 1990-1
Receipt acknowledged and consented to:
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Bank and Fiscal Agent
By:
Authorized Officer
C-2
DOC S OC/1609245 v3/022273-0006
EXHIBIT X
CONDITIONAL NOTICE OF FULL REDEMPTION
to the Holders of
City of Huntington Beach
Community Facilities District No. 1990-1
2001 Special Tax Refunding Bonds
CUSIP#s:
NOTICE IS HEREBY GIVEN, pursuant to the terms of the Fiscal Agent Agreement (the "Fiscal Agent
Agreement") as of November 1, 2001, between the City of Huntington Beach Community Facilities
District No. 1990-1, as Issuer, and U.S. Bank National Association, as successor-in-interest to U.S. Bank Trust
National Association, as Fiscal Agent,that all outstanding Bonds, in the aggregate principal amount of$965,000.00,
have been called for redemption in full on September 1, 2013 (the "Redemption Date") at a price of 100% of the
principal amount thereof (the "Redemption Price") together with interest accrued to the Redemption Date,
conditioned upon the successful issuance of refunding bonds on or about , 2013. If the successful
issuance of refunding bonds does not occur on or about 2013, the Fiscal Agent shall give written
notice to the Bondholders that the redemption of Bonds is cancelled and the notice of redemption is rescinded and
the Bonds will remain outstanding in accordance with the Fiscal Agent Agreement.
Payment of the Redemption Price on the Bonds called for redemption will become due and payable on the
Redemption Date upon presentation and surrender thereof in the following manner:
If by Mail: (REGISTERED BONDS) If by Hand or Overnight Mail:
U.S.Bank Corporate Trust Services U.S.Bank Corporate Trust Services
P.O.Box 64111 60 Livingston Avenue
St. Paul,MN 55164-0111 1st Floor—Bond Drop Window
St. Paul,MN 55107
800-934-6802
Subject to the terms of this Conditional Notice of Full Redemption, Bondholders are required to surrender their
Bonds to the Fiscal Agent at the address above on the Redemption Date and there will become due and payable on
each of the Bonds the principal amount thereof, together with interest accrued thereon. to the Redemption Date and
from and after such Redemption Date interest thereon shall cease to accrue.
Bondholders presenting their Bonds in person for same day payment must surrender their Bond(s)by 1:00 P.M. on
the Redemption Date and a check will be available for pick up after 2:OOP.M. Checks not picked up by 4:30 P.M.
will be mailed out to the Bondholder via first class mail. If payment of the Redemption Price is to be made to the
registered holder,you are not required to endorse the Bond to collect the prepayment.
REQUIREMENT INFORMATION
For a list of redemption and tender requirements please visit our website at www.usbank.com/corporatetrust and
click on the"Bondholder Information"link.
IMPORTANT NOTICE
Under Section 3406(a)(l) of the Internal Revenue Code, the paying agent making payment of interest or principal on
securities may be obligated to withhold a percentage of the payment to a holder who has failed to furnish the
registrar with a valid taxpayer identification number, certification that the number supplied is correct, and that the
holder is not subject to backup withholding. Holders of the Bonds who wish to avoid the application of these
provisions should submit either a completed IRS Form W-9 (use only if the holder is a US. person, including a
resident alien), or the appropriate Form W-8 (use only if you are neither a U.S. person or a resident alien), when
presenting the Bonds for payment. See IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign
Entities. Publication 515 and W-8 forms and instructions are available through the IRS website at www.irs.gov.
* The CUSIP numbers are included solely for the convenience of the Holders of the Bonds. Neither the Issuer nor
the Fiscal Agent shall be responsible for any error of any nature relating to such numbers.
Dated: ,2013 By: U.S.Bank National Association,as Fiscal Agent
X-1
DOCSOC/1609245v3/022273-0006
EXHIBIT Y
NOTICE OF DEFEASANCE OF
OUTSTANDING
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2001 SPECIAL TAX REFUNDING BONDS
(the "Refunded Bonds")
CUSIP NOS.
Notice is hereby given to the holders of the above-captioned Bonds (the "Refunded Bonds")
that (i)the Refunded Bonds will be redeemed and defeased; (ii)there has been deposited with The
Bank of U.S. Bank National Association, as Escrow Bank, moneys as permitted by that certain Fiscal
Agent Agreement dated as of November 1, 2001, between the District and U.S. Bank National
Association, as successor-in-interest to U.S. Bank Trust National Association, as Fiscal Agent (the
"Fiscal Agent") (the"Fiscal Agent Agreement"), relating to the Refunded Bonds, the principal of and
the interest with respect thereto will provide moneys which, together with such other moneys
deposited with the Escrow Bank, will be sufficient and available to redeem on September 1, 2013 the
Refunded Bonds at the applicable redemption price contained in the Fiscal Agent Agreement; and
(iii) the Escrow Bank has been irrevocably instructed to redeem such outstanding Refunded Bonds
on September 1, 2013.
At least 30 days, but not more than 60 days, prior to September 1, 2013, in accordance with
the terms of the Fiscal Agent Agreement, the Fiscal Agent has mailed a redemption notice for such
Refunded Bonds.
If you have any questions regarding this notice, please contact the Account Manager,
, at (_)
Dated this_day of , 2013.
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Y-1
DOC SOC/1609245 v3/022273-0006
Stradling Yocca Carlson&Rauth
Draft dated May 20,2013
a �
ti PRELIMINARY OFFICIAL STATEMENT DATED ,2013
aNEW ISSUE—BOOK-ENTRY-ONLY S&P Rated
In the opinion of Stradling Yocca Carlson&Rauth,a Professional Corporation,Newport Beach,California("Bond Counsel'),under existing
0
statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and
�c w requirements described herein,interest(and original issue discount)on the Bonds is excluded from gross income for federal income tax purposes and is
not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further
o opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See "TAX
EXEMPTION"herein with respect to other tax consequences with respect to the Bonds.
$965,000*
o CITY OF HUNTINGTON BEACH
ai *S COMMUNITY FACILITIES DISTRICT NO.1990-1
o -o 2013 SPECIAL TAX REFUNDING BONDS
Dated: Delivery Date Due: September 1,as shown below
The City of Huntington Beach Community Facilities District No. 1990-1 2013 Special Tax Refunding Bonds(the"Bonds")are being issued
o by the City of Huntington Beach Community Facilities District No. 1990-1 (the "District")to refund the District's outstanding 2001 Special Tax
❑ O Refunding Bonds(the"Refunded Bonds"),to fund a deposit to the Reserve Account securing the Bonds and to pay the costs of issuance of the Bonds.
oti See"THE REFUNDING PLAN"herein. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982,as
o amended(Sections 53311 et seq.of the Government Code of the State of Califomia),the Municipal Code of the City of Huntington Beach(the"City")
w a�
and that certain Bond Indenture(the"Indenture"),dated as of July 1,2013,by and between the District and U.S.Bank National Association,as trustee
� w (the"Trustee").
The Bonds are special obligations of the District and are payable from Net Taxes(as defined herein)derived from a certain annual Special Tax
(as defined herein)to be levied on taxable land within the District and from certain other funds pledged under the Indenture, all as further described
herein. The Special Taxis to be levied according to the rate and method of apportionment approved by City Council of the City and the qualified electors
within the District. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and APPENDIX A— "RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX"herein.
ti The Bonds are issuable in fully-registered form and when issued will be registered in the name of Cede&Co.,as nominee of The Depository
Trust Company,New York,New York("DTC"). Individual purchases of the Bonds maybe made in principal amounts of$5,000 and integral multiples
thereof and will be in book-entry form only. Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but
will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another
nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable commencing March 1,2014 and semiannually thereafter on each
September 1 and March 1. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants
Owho will remit such payments to the beneficial owners of the Bonds. See"THE BONDS—General Provisions"herein.
The Bonds are not subject to redemption prior to maturity.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF ORANGE, THE STATE OF
q ' CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET
TAXES,NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR
== '' SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE
as �
•� o DISTRICT PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY
co> DESCRIBED HEREIN.
° y Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the
ti o District to pay the principal of and interest on the Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK
o FACTORS"for a discussion of certain risk factors that should be considered,in addition to the other matters set forth herein,in evaluating the
investment quality of the Bonds.
This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this
.o issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.
72
O 67
w o MATURITY SCHEDULE
(See Inside Cover Page)
o The Bonds are offered when,as and if issued and accepted by the Underwriter,subject to approval as to their legality by Stradling Yocca
3 Carlson&Rauth,a Professional Corporation,Newport Beach,Califomia,Bond Counsel,and subject to certain other conditions. Stradling Yocca Carlson
.� &Rauth,a Professional Corporation,is serving as Disclosure Counsel to the District with respect to the Bonds. Certain legal matters will be passed on
c w o for the City and the District by Jennifer McGrath, Esq., City Attorney. Certain legal matters will be passed on by Jones Hall,A Professional Law
r Corporation,San Francisco,Califomia,as counsel to the Underwriter. It is anticipated that the Bonds in book-entry form will be available for delivery on
or about 2013.
s.
STIFEL
I~ •4 .�
Dated: —2013
'3 *Preliminary,subject to change.
w � N
O • �
H DOCSOC/1612479v6/022273-0006
MATURITY SCHEDULE
(Base CUSIPt:
Maturity Date Price or
(September 1) Principal Amount Interest Rate Yield C(ISIPt
t Copyright 2013, American Bankers Association. CUSIP data herein is provided by Standard and Poor's,
CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to
create a database and does not serve in any way as a substitute for the CUSIP Service. Neither the
District nor the Underwriter makes any representations as to the accuracy of CUSIP data herein.
DOC S OC/1612479v6/022273-0006
CITY OF HUNTINGTON BEACH
CITY COUNCIL
Connie Boardman,Mayor
Matthew Harper,Mayor Pro Tem
Joe Carchio,Council Member
Jill Hardy,Council Member
Jim Katapodis,Council Member
Joe Shaw,Council Member
Dave Sullivan,Council Member
CITY OFFICIALS
Fred Wilson,City Manager
Robert Hall,Assistant City Manager
Alisa Cutchen,City Treasurer
Joyce Zacks,Deputy City Treasurer
Lori Ann Farrell,Director of Finance
Joan L. Flynn,City Clerk
Jennifer McGrath,Esq.,City Attorney
Kellee Fritzal,Deputy Director of Economic Development
Sunny Han, Senior Administrative Analyst,Finance Department
BOND COUNSEL AND DISCLOSURE COUNSEL
Stradling Yocca Carlson&Rauth,
a Professional Corporation
Newport Beach,California
FINANCIAL ADVISOR
Public Financial Management,Inc.
Los Angeles,California
SPECIAL TAX CONSULTANT
Willdan Financial Services
Temecula,California
TRUSTEE/ESCROW BANK
U.S.Bank National Association
Los Angeles,California
VERIFICATION AGENT
Grant Thornton LLP
Minneapolis,Minnesota
DOCSOC/1612479v6/022273-0006
Except where otherwise indicated, all information contained in this Official Statement has been provided
by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the
District, the Trustee or the Underwriter to give any information or to make any representations in connection with
the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or
representations must not be relied upon as having been authorized by the City, the District, the Trustee or the
Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make
such an offer,solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or owners of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or
not expressly so described herein,are intended solely as such and are not to be construed as representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part
of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction,but the Underwriter does not guarantee the accuracy or completeness of such information.
The information and expressions of opinion herein are subject to change without notice and neither the
delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the City or any other parties described herein since the
date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such
documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is
hereby made to such documents on file with the City for further information in connection therewith.
Certain statements included or incorporated by reference in this Official Statement constitute "forward-
looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995,
Section 2 1 E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United
States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such
as a"plan," "expect," "estimate," "project," "budget" or similar words. Such forward-looking statements include,
but are not limited to certain statements contained in the information under the caption "THE COMMUNITY
FACILITIES DISTRICT."
The achievement of certain results or other expectations contained in such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or
achievements described to be materially different from any future results,performance or achievements expressed or
implied by such forward-looking statements. Except as set forth in the District's Continuing Disclosure Agreement,
a form of which is attached hereto as Exhibit E, neither the District nor the City plans to issue any updates or
revisions to the forward-looking statements set forth in this Official Statement.
A wide variety of other information, including financial information, concerning the City,is available from
publications and websites of the City and others. No such information is a part of or incorporated into this Official
Statement.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
DOC S OC/1612479v6/022273-0006
TABLE OF CONTENTS
Page
INTRODUCTION................................................................................................................................................I
DistrictFormation.............................................................................................................................................I
The Community Facilities District....................................................................................................................2
Forward Looking Statements............................................................................................................................2
Sources of Payment for the Bonds....................................................................................................................2
Descriptionof the Bonds..................................................................................................................................3
TaxExemption..................................................................................................................................................4
Professionals Involved in the Offering.............................................................................................................4
ContinuingDisclosure......................................................................................................................................4
BondOwners'Risks.........................................................................................................................................4
OtherInformation.............................................................................................................................................5
ESTIMATED SOURCES AND USES OF FUNDS............................................................................................5
THEREFUNDING PLAN...................................................................................................................................5
THEBONDS........................................................................................................................................................6
Authorityfor Issuance......................................................................................................................................6
Purposeof the Bonds........................................................................................................................................6
GeneralProvisions............................................................................................................................................6
DebtService Schedule......................................................................................................................................7
NoRedemption of the Bonds............................................................................................................................7
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS....................................................................7
SpecialTaxes....................................................................................................................................................8
Covenant Not to Reduce Special Tax Rates Unless Certain Conditions are Met...........................................10
ExistingLiens.................................................................................................................................................10
No Obligation of the City Upon Delinquency................................................................................................10
Special Taxes Are Not Within Teeter Plan.....................................................................................................10
Proceeds of Foreclosure Sales........................................................................................................................I 1
ReserveAccount.............................................................................................................................................I 1
Priority of Bonds and Pledge of Net Taxes.....................................................................................................12
NoAdditional Bonds......................................................................................................................................12
THE COMMUNITY FACILITIES DISTRICT.................................................................................................12
THE CITY OF HUNTINGTON BEACH..........................................................................................................16
SPECIALRISK FACTORS...............................................................................................................................16
Risks of Real Estate Secured Investments Generally.....................................................................................16
LimitedObligations........................................................................................................................................16
Insufficiencyof Special Taxes........................................................................................................................17
NaturalDisasters.............................................................................................................................................18
HazardousSubstances.....................................................................................................................................18
Payment of the Special Tax is not a Personal Obligation of the Owners........................................................18
PropertyValues...............................................................................................................................................19
Parity Taxes and Special Assessments ...........................................................................................................19
Disclosures to Future Purchasers....................................................................................................................19
SpecialTax Delinquencies..............................................................................................................................20
FDIC/Federal Government Interests in Properties..........................................................................................20
Bankruptcy and Foreclosure...........................................................................................................................21
Funds Invested in the County Investment Pool..............................................................................................22
NoAcceleration Provision..............................................................................................................................22
LimitedSecondary Market.............................................................................................................................22
Proposition218...............................................................................................................................................23
Ballot Initiatives and Legislative Measures....................................................................................................24
i
DOCSOC/1612479v6/022273-0006
TABLE OF CONTENTS
(continued)
Page
Lossof Tax Exemption...................................................................................................................................24
IRS Audit of Tax-Exempt Bond Issues..........................................................................................................24
Limitationson Remedies................................................................................................................................24
CONTINUINGDISCLOSURE..........................................................................................................................25
TAXEXEMPTION............................................................................................................................................25
LEGALOPINION..............................................................................................................................................27
ABSENCEOF LITIGATION............................................................................................................................27
RATING.............................................................................................................................................................27
UNDERWRITING.............................................................................................................................................27
FINANCIALINTERESTS.................................................................................................................................27
NEWLEGISLATION........................................................................................................................................28
ADDITIONALINFORMATION.......................................................................................................................28
APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX........................................A-1
APPENDIX B FORM OF OPINION OF BOND COUNSEL..............................................................................B-1
APPENDIX C GENERAL ECONOMIC AND DEMOGRAPHIC DATA FOR
THE CITY OF HUNTINGTON BEACH AND THE COUNTY OF ORANGE.........................C-1
APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE...........................................D-1
APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT.......................E-1
APPENDIX F BOOK-ENTRY-ONLY SYSTEM................................................................................................F-1
ii
DOCSOC/1612479v6/022273-0006
[INSERT REGIONAL MAP]
DOCSOC/1612479v6/022273-0006
[INSERT AERIAL MAP]
DOC SOC/1612479v6/022273-0006
$965,000*
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the
attached appendices (collectively, the "Official Statement"), is to provide certain information concerning the
issuance by City of Huntington Beach Community Facilities District No. 1990-1 (the "District") of its 2013
Special Tax Refunding Bonds in the aggregate principal amount of$965,000*(the`Bonds"). The proceeds of
the Bonds, together with certain existing funds of the District, will be used to defease all of the District's
outstanding 2001 Special Tax Refunding Bonds, originally issued in the aggregate principal amount of
$2,155,000 and now outstanding in the principal amount of$1,145,000(the"Refunded Bonds"). A portion of
the Bonds will be used to fund a deposit to the Reserve Account and to pay costs of issuance of the Bonds.
See"THE REFUNDING PLAN"and"ESTIMATED SOURCES AND USES OF FUNDS"herein.
The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982,
as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act"), the
provisions of Chapter 3.56 (commencing with 3.56.010) of the Municipal Code of the City of Huntington
Beach(the"City")and that certain Bond Indenture dated,as of July 1,2013 (the"Indenture"),by and between
the District and U.S. Bank National Association, as trustee (the"Trustee"). The Bonds are secured under the
Indenture by a pledge of and lien upon Net Taxes(as defined herein) and all moneys in the Special Tax Fund
as described in the Indenture.
This introduction is not a summary of this Official Statement. It is only a brief description of and
guide to, and is qualified by,more complete and detailed information contained in the entire Official Statement
and the documents summarized or described herein. A full review should be made of the entire Official
Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire Official
Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set
forth in"APPENDIX D—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
District Formation
The District was formed on June 25, 1990 pursuant to the Act. The Act was enacted by the State of
California(the"State")legislature to provide an alternative method of financing certain public capital facilities
and services, especially in developing areas of the State. Any local agency (as defined in the Act) may
establish a community facilities district to provide for and finance the cost of eligible public facilities and
services. Generally, the legislative body of the local agency which forms a community facilities district acts
on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an
election and compliance with the other provisions of the Act, a legislative body of a local agency may issue
bonds for a community facilities district and may levy and collect a special tax within such district to repay
such indebtedness.
Pursuant to the Act, on May 7, 1990, the City Council of the City (the "City Council"), adopted
resolutions stating its intention to form the District, to authorize the levy of a special tax on the taxable
property within the District, and 'incur bonded 'indebtedness within the District for the purpose of financing the
engineering, design, construction, and acquisition, of certain street, sewer, water, storm drain, utility,
landscaping, police and fire improvements and other public improvements within or serving the District.
Subsequent to a noticed public hearing on June 25, 1990, the City Council adopted Resolution No.6161 (the
"Resolution of Formation") which established the District, authorized the levy of a special tax within the
District and provided the rate and method of apportionment(the"Rate and Method"), and Resolution No.6174
1
DOCSOC/1612479v6/022273-0006
("Resolution to Incur Bonded Indebtedness") which determined the necessity to incur bonded indebtedness
within the District, and called an election within the District on the proposition of incurring bonded
indebtedness, levying a special tax and setting an appropriations limit. On July 12, 1990, a Notice of Special
Tax Lien was recorded in the office of County Recorder of the County of Orange (the "County") for the
District. Pursuant to the Resolution to Incur Bonded Indebtedness, the District issued its 1990 Special Tax
Bonds in the aggregate principal amount of$2,400,000(the"1990 Bonds")on August 9, 1990.
On October 15, 2001, the City Council adopted as resolution authorizing the issuance of refunding
bonds(the"2001 Bonds")to refund the 1990 Bonds. The 2001 Bonds were issued on November 14, 2001 in
the aggregate principal amount of$2,155,000.
The Bonds are being issued and delivered pursuant to the provisions of the Act,the Municipal Code of
the City, and the Indenture. The Bonds are being sold pursuant to a Bond Purchase Agreement between Stifel,
Nicolaus & Company, Incorporated, as underwriter(the "Underwriter") and the District. For more complete
information,see"THE BONDS—General Provisions"herein.
The Community Facilities District
The District is located generally at the junction of Ellis Avenue and Goldenwest Street in the City.
The District is located approximately 2 miles to the southwest of the 405 Freeway and approximately 1 mile to
the northeast of the Pacific coast.
The District is comprised of approximately 13 gross acres of taxable property. The District is fully
built out and consists of 115 single family detached residences with a Fiscal Year 2013 assessed value of
$137,704,062. See"THE COMMUNITY FACILITIES DISTRICT."
Forward Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute
"forward-looking statements"within the meaning of the United States Private Securities Litigation Reform Act
of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of
the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the
terminology used such as a"plan,""expect,""estimate,""project,""budget"or similar words. Such forward-
looking statements include, but are not limited to certain statements contained in the information under the
caption"THE COMMUNITY FACILITIES DISTRICT."
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES
OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL
STATEMENT.
Sources of Payment for the Bonds
As used in this Official Statement,the term"Special Tax" is that tax which has been authorized to be
levied against certain land within the District pursuant to the Act and in accordance with the Rate and Method.
See APPENDIX A—"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX"herein. Under
the Indenture, the principal of and interest on the Bonds are payable from Net Taxes and all amounts in the
Special Tax Fund (including the Debt Service Account, the Principal Account and the Reserve Account)
established under the Indenture. The "Net Taxes" are the Special Tax proceeds, including all proceeds from
2
DOCSOC/1612479v6/022273-0006
foreclosure sales for delinquent Special Taxes, remaining after payment of the Administrative Expense
Requirement(as defined below). The Bonds are secured only by the Net Taxes collected within the District.
Amounts in the Administration Fund and the Services Fund are not pledged to the repayment of the Bonds.
Special Taxes deposited into the Services Fund are used to pay the costs of certain police, fire protection and
paramedic services.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE
COUNTY OF ORANGE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION
THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO
OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS
ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF
THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM
NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY
DESCRIBED HEREIN.
The Net Taxes are the primary security for the repayment of the Bonds. In the event that the Special
Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are
amounts held by the Trustee in certain funds under the Indenture, including amounts held in the Reserve
Account of the Special Tax Fund. The District has covenanted for the benefit of the owners of the Bonds that
it will, under certain circumstances described herein, commence, or cause to be commenced, and diligently
prosecute to judgment (unless the delinquency is brought current), judicial foreclosure proceedings against
assessor's parcels with delinquent Special Taxes. See "SECURITY AND SOURCES OF PAYMENT FOR
THE BONDS—Proceeds of Foreclosure Sales"herein."
The District has covenanted not to issue additional indebtedness secured by the Special Taxes. Other
taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may
also be levied on the property within the District. See "SPECIAL RISK FACTORS — Parity Taxes and
Special Assessments"herein.
EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF
THE BONDS.
Description of the Bonds
The Bonds will be issued and delivered as fully-registered Bonds, registered in the name of Cede&
Co. as nominee of The Depository Trust Company,New York, New York ("DTC"), and will be available to
actual purchasers of the Bonds (the "Beneficial Owners") in the denominations of$5,000 or any integral
multiple thereof,under the book-entry system maintained by DTC, only through brokers and dealers who are
or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical
delivery of the Bonds. In the event that the book-entry-only system described herein is no longer used with
respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See
APPENDIX F—"BOOK-ENTRY-ONLY SYSTEM."
Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC.
Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such
payments to the Beneficial Owners is the responsibility of DTC Participants. See APPENDIX F—`BOOK-
ENTRY-ONLY SYSTEM."
For a more complete descriptions of the Bonds and the basic documentation pursuant to which the
Bonds are being sold and delivered, see"THE BONDS" and APPENDIX D—"SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE"herein.
3
DOC SOC/1612479v6/022273-0006
Tax Exemption
In the opinion of Stradling Yocca Carlson& Rauth, a Professional Corporation, Newport Beach,
California("Bond Counsel"),under existing statutes,regulations,rulings and judicial decisions, and assuming
certain representations and compliance with certain covenants and requirements described herein, interest on
the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference
for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In
the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income
tax. See"TAX EXEMPTION"herein.
Set forth in APPENDIX B is the opinion of Bond Counsel expected to be delivered in connection with
the issuance of the Bonds. For a more complete discussion of such opinion and certain other tax consequences
incidental to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, see
"TAX EXEMPTION"herein.
Professionals Involved in the Offering
U.S. Bank National Association, Los Angeles, California,will act as Trustee under the Indenture and
as Escrow Bank under the Escrow Agreement (each as defined herein). Stifel, Nicolaus & Company,
Incorporated,is the Underwriter of the Bonds. All proceedings in connection with the issuance and delivery of
the Bonds are subject to the approval of Stradling Yocca Carlson& Rauth, a Professional Corporation,
Newport Beach,California, Bond Counsel and Disclosure Counsel. Certain legal matters will be passed on for
the City and the District by the City Attorney, Jennifer McGrath,Esq. Certain legal matters will be passed on
for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California. Other
professional services have been performed by Willdan Financial Services, Temecula, California, as Special
Tax Consultant and Grant Thornton LLP,Minneapolis,Minnesota,as verification agent.
For information concerning whether certain of the above-mentioned professionals, advisors, counsel
and consultants may have a financial or other interest in the offering of the Bonds, see "FINANCIAL
INTERESTS"herein.
Continuing Disclosure
The District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking
Board's Electronic Municipal Market Access system available on the Internet at http://emma.msrb.org
("EMMA")certain annual financial information and operating data. The District will further agree to provide
notice of certain listed events. These covenants will be made in order to assist the Underwriter in complying
with Securities and Exchange Commission Rule 15c2-12(b)(5). See"CONTINUING DISCLOSURE"herein
and APPENDIX E hereto for a description of the specific nature of the annual reports to be filed by the District
and notices of listed events to be provided by the District. Within the last five years, [neither the City nor the
District has failed to timely comply with its prior continuing disclosure obligations under Rule 15c2-12(b)(5)
in all material respects.] See"CONTINUING DISCLOSURE."
Bond Owners'Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Bonds
when due. See the section of this Official Statement entitled"SPECIAL RISK FACTORS"for a discussion of
certain factors which should be considered, in addition to other matters set forth herein, in evaluating an
investment in the Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase
of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors.
See"SPECIAL RISK FACTORS"herein.
4
DOCSOC/1612479v6/022273-0006
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to
change.
Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such
descriptions and information do not purport to be comprehensive or definitive. All references herein to the
Indenture,the Bonds and the constitution and laws of the State as well as the proceedings of the City,acting as
the legislative body of the District, are qualified in their entirety by references to such documents, laws and
proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Indenture.
Copies of the Indenture and other documents and information are available for inspection and(upon
request and payment to the District of a charge for copying,mailing and handling)for delivery from the City at
2000 Main Street,Huntington Beach,California 92648,Attention: Director of Finance.
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the expected sources and uses of Bond proceeds, together with prior
funds on hand.
Sources of Funds
Principal Amount of Bonds $
[Less/Plus]: Original Issue[Discount/Premium]
Less: Underwriter's Discount
Plus: Prior Funds
Total Sources
Uses of Funds:
Escrow Fund to Redeem Refunded Bonds $
Reserve Account of the Special Tax Fund
Costs of Issuance Fund
Total Uses $
THE REFUNDING PLAN
A portion of the proceeds from the sale of the Bonds will be used along with other funds held by the
District to defease the Refunded Bonds. The District will enter into an Escrow Agreement with regard to the
Refunded Bonds (the "Escrow Agreement"), dated as of July 1, 2013, by and between the District and U.S.
Bank National Association, as prior trustee and as escrow bank(the"Escrow Bank"). An irrevocable escrow
fund will be established under the Escrow Agreement(the"Escrow Fund"). The moneys deposited with the
Escrow Bank will be sufficient to defease the remaining Refunded Bonds and redeem such Refunded Bonds on
October 1, 2013 (the"Redemption Date"). Moneys on deposit in the Escrow Fund will be held uninvested as
cash or invested in non-callable federal securities. The amounts in the Escrow Fund will be held by the
Escrow Bank and for the benefit of the owners of the Refunded Bonds and will be applied to redeem the
Refunded Bonds on October 1, 2013. Upon the establishment of the Escrow Fund as described above, the
Refunded Bonds will be discharged under the Indenture and the owners of the Refunded Bonds will have no
rights thereunder except to be paid the principal and interest due on the Refunded Bonds from amounts in the
Escrow Fund.
Grant Thornton LLP, Minneapolis, Minnesota, upon delivery of the Bonds,will deliver a verification
report relating to the sufficiency of moneys deposited into the Escrow Fund to pay the principal of, interest on
and the redemption price with respect to the Refunded Bonds on the Redemption Date.
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THE BONDS
Authority for Issuance
The Bonds in the aggregate principal amount of$965,000*are authorized to be issued by the District
under and subject to the terms of the Indenture,the Act and other applicable laws of the State of California.
Purpose of the Bonds
The Bonds are being issued to provide funds to (i)and redeem the Refunded Bonds on October 1,
2013, (ii)fund a deposit to the reserve account securing the Bonds, and(iii)pay the costs of issuance of the
Bonds. See`ESTIMATED SOURCES AND USES OF FUNDS"and"THE REFUNDING PLAN"herein.
General Provisions
The Bonds will be issued and delivered in the aggregate principal amount of$965,000*, initially in
book-entry form and will bear interest at the rates per annum and will mature on the dates set forth on the
cover page hereof. Individual purchases of the Bonds may be made in principal amounts of$5,000 and any
integral multiple thereof. The Bonds will be dated the Delivery Date and interest will be payable thereon on
September 1 and March I of each year, commencing March 1, 2014 (individually, an "Interest Payment
Date"). Interest on the Bonds will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication of that Bond,unless(i)the date of authentication is an Interest Payment Date, in which event it
shall bear interest from such date,(ii)the date of authentication is after the 15th day of the month,regardless of
whether such day is a Business Day but prior to the immediately succeeding Interest Payment Date(a"Record
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 the first Record
Date, in which event interest shall be payable from the Delivery Date;provided,however,that if at the time of
authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest
Payment Date to which the interest has been paid or made available for payment,or if no interest has been paid
or made available for payment on that Bond, interest on that Bond shall be payable from the Delivery Date.
The Bonds are issued as fully-registered bonds and will be registered in the name of Cede& Co., as
nominee DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be
purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. See
APPENDIX F—"BOOK-ENTRY-ONLY SYSTEM."
Preliminary,subject to change.
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Debt Service Schedule
The Special Tax is to be levied against the property within the District and collected according to the
Rate and Method. See APPENDIX A — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL
TAX." The District has covenanted to levy the Special Tax each year in time to have it placed on the secured
property tax roll of the County. Actual collections of the Special Tax will depend on the Special Tax
delinquencies. See"THE COMMUNITY FACILITIES DISTRICT—Delinquency History".
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
DEBT SERVICE SCHEDULE
Period Ending Total
September 1 Principal Interest Debt Service
2014
2015
2016
2017
2018
2019
2020
Totals
Source: The Underwriter.
No Redemption of the Bonds
The Bonds are not subject to redemption prior to maturity.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
As described below, the principal of and interest on the Bonds are payable from Net Taxes and all
amounts in the Special Tax Fund (including the Debt Service Account and the Reserve Account) established
under the Indenture. Amounts in the Administration Fund and the Services Fund are not pledged to the
repayment of the Bonds. The Net Taxes are the Special Tax proceeds,including all proceeds from foreclosure
sales for delinquent Special Taxes,remaining after payment of the Administrative Expense Requirement. The
Bonds are secured only by the Net Taxes collected within the District.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE
COUNTY OF ORANGE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION
THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO
OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS
ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF
THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM
NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY
DESCRIBED HEREIN.
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Special Taxes
General.
In accordance with the provisions of the Act, the City Council established the District on June 25,
1990 for the purpose of financing the engineering, design, construction, and acquisition, of certain street,
sewer, water, storm drain, utility, landscaping, police and fire improvements and other public improvements
within or serving the District, as provided in the Resolution of Formation. The Resolution of Formation and
the Resolution to Incur Bonded Indebtedness authorized the District to submit a proposition to the qualified
electors of the District to authorize the issuance of bonds and the annual levy and collection of the Special Tax
pursuant to the terms and conditions of the Act. The levy of the Special Tax and the Rate and Method were
approved by the qualified electors within the District on June 25, 1990. The Rate and Method approved by the
City Council and the qualified electors is set forth in APPENDIX A hereto.
The City Council, as the legislative body of the District, has covenanted in the Indenture to levy
Special Taxes up to the maximum rates permitted under the Rate and Method in an amount anticipated to be
sufficient, together with any moneys on deposit in the Special Tax Fund established under the Indenture
(including such amounts deposited in the Reserve Account for the payment of debt service on the Bonds in the
final Bond Year) and anticipated to be available in the next succeeding Bond Year, to pay in the following
amounts: (i)Administrative Expenses due or coming due equal to the Administrative Expense Requirement,
the principal of and interest on the Bonds, and (ii)the amount, if any, necessary to replenish the Reserve
Account for the Bonds to an amount equal to the Reserve Requirement established by the Indenture. See the
subcaption "— Reserve Account' below. Notwithstanding the foregoing, the Special Taxes levied in any
Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method for the District.
See APPENDIX A—"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" hereto. There
is no assurance that the Special Tax proceeds will,in all circumstances,be adequate to pay the principal of and
interest on the Bonds when due. See"SPECIAL RISK FACTORS—Insufficiency of Special Taxes."
Rate and Method of Apportionment of Special Tax.
The District is legally authorized and has covenanted to cause the levy of the Special Taxes in an
amount determined according to the Rate and Method,which the City Council and the qualified electors of the
District have approved. The Rate and Method apportions the total amount of Special Taxes to be collected
among the taxable parcels in the District as more particularly described herein. The District adopted the Rate
and Method following public hearings and elections conducted pursuant to the provisions of the Act. The full
text of the Rate and Method is set forth in APPENDIX A hereto.
The Rate and Method classifies property that is not exempt from the Special Tax as either"Developed
Parcels" or "Undeveloped Parcels". Developed Parcels consists of all parcels in the District, not otherwise
exempt from the Special Tax, which are not greater than 50,000 square feet in total square footage, and for
which a building permit for a single family dwelling has been issued as of March 1 of the Fiscal Year
preceding the Fiscal Year for which Special Taxes are being levied. Undeveloped Parcels consist of all parcels
in the District,not otherwise exempt from the Special Tax,and not classified as Developed Parcels.
As of Fiscal Year 2012-13, all taxable property within the District("Taxable Property") is classified
as Developed Parcels. The assigned Special Tax rates for Fiscal Year 2012-13 for residential property was
$1,946.12 per unit, which includes a$590.80 Services Credit levy. All Taxable Property is taxed pursuant to
the Rate and Method. See APPENDIX A—"RATE AND METHOD OF APPORTIONMENT OF SPECIAL
TAX"hereto.
The amount of Special Tax that the District may levy is limited by the Maximum Special Tax rate set
forth in the Rate and Method. Under the Rate and Method the Maximum Special Tax for all the Taxable
Property in the District combined is$264,000. For each Developed Parcel,the assigned portion of the Special
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Tax is calculated using the following formula: ((Maximum Special Tax — Total Special Tax Levied on
Undeveloped Parcels)x (I/Total Number of Developed Parcels))— Services Credit. The"Services Credit" is
an amount equal to any proceeds of the Special Tax levied within the District which have been allocated by the
City to the payment of police and fire protection services and/or paramedic services authorized under the Act
which have not been expended for such purpose by the last day of the prior Fiscal Year.
UNDER NO CIRCUMSTANCES MAY THE SPECIAL TAX ON ANY ASSESSOR'S PARCEL
EXCEED THE MAXIMUM RATES AS SET FORTH IN APPENDIX A HERETO. See APPENDIX A—
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX"hereto.
In connection with the issuance of the Bonds, Willdan Financial Services, the District's Special Tax
Consultant, will certify that the Maximum Special Tax that may be levied on assessor's parcels within the
District(excluding the Services Credit)will be at least equal to 110%of maximum annual debt service on the
Bonds plus the Administrative Expense Requirement. Actual collections of the Special Tax will depend on the
amount of Special Tax delinquencies.
The Rate and Method does not provide for the voluntary prepayment of the Special Tax for a parcel in
whole or in part.
Collection of Special Taxes and Flow of Funds.
The Special Taxes will be levied and collected by the County Treasurer in the same manner and at the
same time as ad valorem property taxes. The Director of Finance will,no later than the last day of each month
during which the Special Taxes are apportioned to the District, transfer Special Taxes to the Trustee to be
deposited in the Special Tax Fund. On the dates specified in the Indenture and if there are sufficient amounts
available in the Special Tax Fund for such purposes,the Trustee shall make the following transfers and in the
priority as follows:
First: To the Director of Finance for deposit in the Administration Fund, the amount of
Administrative Expenses levied for in the current Fiscal Year up to the Administrative
Express Cap (plus Extraordinary Administrative Expenses in the event there are
Extraordinary Administrative Expenses); provided that no more than half of the amount
of Administrative Expenses up to half of the Administrative Expense Cap (plus
Extraordinary Administrative Expenses in the event there are Extraordinary
Administrative Expenses) levied for in the current Fiscal Year shall be deposited in the
Administration Fund until the earlier of(i) the date moneys on deposit in the Debt
Service Account of the Special Tax Fund are sufficient to pay debt service on the Bonds
on March 1 of such Fiscal Year, or(ii)March 2 of such Fiscal Year;
Second: To the Debt Service Account, an amount such that the balance in the Debt Service
Account one Business Day prior to each Interest Payment Date shall be equal to the
principal of, and interest on the Bonds, on said Interest Payment Date. Moneys in the
Debt Service Account shall be used for the payment of the interest and principal of the
Bonds as the same become due;
Third: To the Reserve Account of the Special Tax Fund to the extent necessary to replenish the
Reserve Account to the Reserve Requirement;
Fourth: To the Administration Fund for Administrative Expenses not previously deposited to the
Administration Fund;
Fifth: To the Rebate Fund established by the Indenture for payment to the United States
pursuant to the Indenture;and
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Sixth: To the Director of Finance for deposit into the Services Fund established by the
Indenture such remaining amounts in the Special Tax Fund after making the foregoing
transfers on September 1.
Although the Special Taxes will constitute liens on taxed parcels within the District, such taxes do not
constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for
taxes and assessments already exist on the property located within the District and others could come into
existence in the future in certain situations without the consent or knowledge of the District or the landowners
therein. See " — Existing Liens" below and "SPECIAL RISK FACTORS — Parity Taxes and Special
Assessments"herein. There is no assurance that the property owners in the District will be financially able to
pay the annual Special Taxes or that they will pay such taxes even if financially able to do so. See the portion
of this Official Statement entitled"SPECIAL RISK FACTORS."
Covenant Not to Reduce Special Tax Rates Unless Certain Conditions are Met
The District has covenanted in the Indenture that it will not take any actions that would discontinue or
cause the discontinuance of the Special Tax levy or the District's authority to levy the Special Tax so long as
the Bonds are Outstanding, including the initiation of proceedings under the Act to reduce the maximum
Special Tax rates on then existing Developed Parcels below the amounts which are necessary to pay
Administrative Expenses and to provide Special Taxes in an amount equal to 110%of annual debt service on
the Outstanding Bonds. The District has further covenanted that in the event an initiative is adopted which
purports to reduce maximum Special Tax rates or to limit the power of the District to levy Special Taxes for
the purposes set forth above, it will commence and pursue legal action seeking to preserve its ability to comply
with its covenants. There are no California court cases interpreting the enforceability of the foregoing
covenants in light of Article XIIIC. See"SPECIAL RISK FACTORS—Proposition 218."
Existing Liens
The lots within the District are subject to additional indebtedness as set forth under the heading"THE
COMMUNITY FACILITIES DISTRICT—Direct and Overlapping Indebtedness"herein.
The lien for the Special Taxes is co-equal to the lien for the overlapping assessments and special taxes
and the lien for general property taxes. See "THE COMMUNITY FACILITIES DISTRICT— Direct and
Overlapping Indebtedness."
Except as disclosed in this Official Statement,the District is unaware of any present or contemplated
assessment district or community facilities district that includes property within the District. The District has
no control, and the City has only limited control, over the amount of additional indebtedness that may be
issued in the future by other public agencies,the payment of which,through the levy of a tax or an assessment,
will be on a parity with the Special Taxes.
No Obligation of the City Upon Delinquency
The City is under no obligation to transfer any funds of the City into the Special Tax Fund for
payment of the principal of or interest on the Bonds if a delinquency occurs in the payment of any Special
Taxes. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —Proceeds of Foreclosure
Sales"for a discussion of the District's obligation to foreclosure Special Tax liens upon delinquencies.
Special Taxes Are Not Within Teeter Plan
The Special Taxes are not encompassed within the alternate procedure for the distribution of certain
property tax levies on the secured roll pursuant to Chapter 3, Part 8, Division 1 of the California Revenue and
Taxation Code(Section 4701 et seq.), commonly referred to as the"Teeter Plan." The County of Orange has
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adopted a Teeter Plan under which a tax distribution procedure is implemented and secured roll taxes are
distributed to taxing agencies with the County on the basis of the tax levy,rather than on the basis of actual tax
collections. However,the City has not elected to have the District participate in the County's Teeter Plan.
Proceeds of Foreclosure Sales
The net proceeds received following a judicial foreclosure sale of land within the District resulting
from a property owner's failure to pay the Special Tax when due are pledged to the payment of principal of
and interest on the Bonds. See"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Special
Taxes—Collection of Special Taxes and Flow of Funds"herein.
Pursuant to Section 53356.1 of the Act, the District has covenanted that it will order, and cause to be
commenced, on or before October 1 of the Fiscal Year immediately following the Fiscal Year in which a
delinquency in the payment of a Special Tax occurs, and thereafter diligently prosecute to judgment(unless
such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any
Special Tax or installment thereof not paid when due. Notwithstanding the foregoing, the District is not
required commence or pursue such proceedings with respect to any property owned by a single property owner
who is delinquent in the payment of Special Taxes in an amount less than $5,000 if both (i) the aggregate
amount of such delinquent Special Taxes does not exceed 5% of the total Special Taxes due and payable for
the Fiscal Year in question and(ii)the balance on deposit in the Reserve Account of the Special Tax Fund is
not less than the Reserve Requirement.
If foreclosure is necessary and other funds (including amounts in the Reserve Account of the Special
Tax Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure
proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are
subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions,
involvement by agencies of the federal government and other factors beyond the control of the District. See
"SPECIAL RISK FACTORS—Bankruptcy and Foreclosure" herein. Moreover, no assurances can be given
that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that
the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See "SPECIAL
RISK FACTORS—Land Values"herein. Although the Act authorizes the District to cause such an action to
be commenced and diligently pursued to completion, the Act does not impose on the District or the City any
obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other
purchaser at such sale. The Act provides that, in the case of a delinquency,the Special Tax will have the same
lien priority as is provided for ad valorem taxes.
Reserve Account
In order to further secure the payment of principal of and interest on the Bonds, upon delivery of the
Bonds, the District will deposit in the Reserve Account an amount equal to the Reserve Requirement with
respect to the Bonds. Thereafter,the District is required, subject to the limits on the levy of the Special Tax,to
deposit and to maintain the Reserve Requirement in the Reserve Account at all times while any of the Bonds
are outstanding. The Reserve Requirement for the Bonds is defined as the amount equal to the lowest of-
(i) 10% of the original proceeds of the Bonds; (ii)maximum annual principal and interest requirements on all
Bonds outstanding or (iii) 125% of the average annual principal and interest requirements on all Bonds
outstanding. See APPENDIX D — "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"
herein. Subject to the limits on the maximum annual Special Tax which may be levied within the District, as
described in APPENDIX A,the District has covenanted to levy Special Taxes in an amount that is anticipated
to be sufficient, in light of the other intended uses of the Special Tax proceeds,to maintain the balance in the
Reserve Account at the Reserve Requirement while any Bonds are outstanding. Amounts in the Reserve
Account are to be applied to the payment of(i)redemption of the Bonds in whole or in part,(ii)debt service on
the Bonds to the extent other moneys are not available therefor, and(iii)the principal and interest due on the
final maturity of the Bonds. In addition, moneys in the Reserve Account may be used to make any required
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transfer to the Rebate Fund. See APPENDIX D — "SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE" herein for a description of additional requirements. In no event shall amounts in the Reserve
Account be used to pay fees or expenses of the Trustee or its counsel.
Priority of Bonds and Pledge of Net Taxes
The District has pledged and assigned to the Trustee all Net Taxes (Special Taxes remaining after
setting aside and depositing amounts sufficient to pay the Administrative Expenses in the Administration
Fund)for the payment of principal of,premium,if any, and interest on the Bonds. Pursuant to the Act and the
Indenture, the Bonds shall be and are equally secured by a pledge of and lien upon the Net Tines, and certain
other amounts on deposit in the Special Tax Fund and the Reserve Account of the Special Tax Fund. So long
as any of such Bonds are Outstanding and unpaid,the Net Taxes and the interest thereon may be used only as
provided in the Indenture unless the Bondowners authorize other uses of such Net Taxes pursuant to the
provisions of the Indenture. Nothing in the Indenture or in any Supplemental Indenture shall preclude the
redemption prior to maturity of any Bonds subject to call and redemption or the payment of the Bonds from
proceeds of refunding bonds issued under the Act or under any other law of the State.
Amounts in the Administration Fund and the Services Fund are not pledged to the repayment of the
Bonds.
No Additional Bonds
The District has covenanted in the Indenture not to issue any additional bonds secured by the Special
Taxes.
THE COMMUNITY FACILITIES DISTRICT
General
The District is located generally at the junction of Ellis Avenue and Goldenwest Street and is
approximately 2 miles from the beach. The District consists of approximately 13 gross acres of taxable
property. The District consists of 115 completed single family detached residences, the majority of which
were built in 199_through 199
Estimated Direct and Overlapping Indebtedness
Within the boundaries of the District are numerous overlapping local agencies providing public
services. Some of these local agencies have outstanding bonds which are secured by taxes and assessments on
the parcels within the District and others have authorized but have not yet issued bonds which, if issued, will
be secured by taxes and assessments levied on parcels within the District. Table 1 below sets forth the existing
authorized indebtedness payable from taxes and assessments that may be levied on the parcels of Developed
Property within the District,prepared by California Municipal Statistics Inc., and dated February 26,2013 (the
"Debt Report"). The Debt Report is included for general information purposes only. The District believes the
information is current as of its date,but neither the District nor the Underwriter makes any representation as to
its completeness or accuracy. Other public agencies may issue additional indebtedness at any time,without the
consent or approval of the District. See "SPECIAL RISK FACTORS —Parity Taxes and Special
Assessments."
The Debt Report generally includes long term obligations sold in the public credit markets by public
agencies whose boundaries overlap the boundaries of the District in whole or in part. In many cases long term
obligations issued by a public agency are payable only from the general fund or other revenues of such public
agency. Additional indebtedness could be authorized by other public agencies at any time.
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TABLE 1
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
DIRECT AND OVERLAPPING DEBT
AS OF FEBRUARY 26,2013
2012-13 Assessed Valuation: $137,704,062 (Land and Improvements)
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 3/1/13
Metropolitan Water District General Obligation Bonds 0.007% $ 10,831
Coast Community College District General Obligation Bonds 0.135 414,138
Huntington Beach Union High School District General Obligation Bonds 0.335 745,408
Huntington Beach City School District General Obligation Bonds 0.897 212,653
City of Huntington Beach Community Facilities District No.1990-1 100. 13 5,000
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $2,528,030
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations 0.032% $ 69,047
Orange County Pension Obligations 0.032 113,560
Orange County Office of Education Certificates of Participation 0.032 5,159
Coast Community College District General Fund Obligations 0.135 27,240
Huntington Beach Union High School District Certificates of Participation 0.335 201,456
Huntington Beach School District Certificates of Participation 0.897 149,799
City of Huntington Beach General Fund Obligations 0.458 213,977
City of Huntington Beach Judgment Obligations 0.458 15,911
Municipal Water District of Orange County Water Facilities Corporation 0.039 3,878
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $800,027
Less: MWDOC Water Facilities Corporation(100%supported by revenues) 3,878
TOTAL NET OVERLAPPING GENERAL FUND DEBT $796,149
GROSS COMBINED TOTAL DEBT $3,328,057 c2)
NET COMBINED TOTAL DEBT $3,324,179
(1) Includes the Refunded Bonds;excludes Mello-Roos Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and non-bonded capital lease
obligations.
Ratios to 2012-13 Assessed Valuation:
Direct Debt($1,145,000).................................................................0.83%
Total Direct and Overlapping Tax and Assessment Debt..................1.84%
Gross Combined Total Debt..............................................................2.42%
Net Combined Total Debt.................................................................2.41%
Source: California Municipal Statistics,Inc.
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Estimated Assessed Value-to-Lien Ratios
The assessed value of the taxable parcels within the District for Fiscal Year 2012-13 is$137,704,062.
The estimated assessed value-to-lien ratio of the Taxable Property within the District based upon the principal
amount of the Bonds (but excluding any general obligation bonds), and the assessed values included on the
2012-13 Assessor's roll is over 142.70*-to-1. Because a parcel's assessed value generally represents the lower
of its acquisition cost and adjustments for inflation (but not more than 2% per year) or new construction, it
may not be indicative of the parcel's market value. No assurance can be given that any of the assessed value-
to-lien ratio for the District will be maintained during the period of time that the Bonds are outstanding. The
District does not have any control over future property values or the amount of additional indebtedness that
may be issued in the future by other public agencies,the payment of which is made through the levy of a tax or
an assessment with a lien on a parity with the Special Taxes. See "SPECIAL RISK FACTORS—Property
Values."
The following Table 2 below summarizes the assessed value of the Taxable Property within the
District for Fiscal Years 2006-07 through 2012-13.
TABLE 2
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
ASSESSED VALUES OF TAXABLE PROPERTY
FISCAL YEAR 2006-07 THROUGH 2O12-13
Percentage Change
in Assessed Value from
Fiscal Year Assessed Value Previous Fiscal Year
2006-07 $ 125,598,458 N/A
2007-08 132,431,628 5.44%
2008-09 135,085,531 2.00
2009-10(') 134,096,441 (0.73)
2010-11(') 132,5 89,262 (1.12)
2011-12 134,165,296 1.19
2012-13 137,704,062 2.64
According to the Orange County Assessor's Office, there was an economic adjustment in the County due to a decline in
market value thus reducing the assessed values.
Source: Orange County Secured Rolls,as compiled by Willdan Financial
Preliminary,subject to change.
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Additionally, Table 3 below sets forth the stratification of value-to-liens of the parcels of Taxable
Property within the District based on Fiscal Year 2012-13 assessed value and such parcels' respective shares of
the principal amount of the Bonds (allocated to each parcel based upon its respective share of the total
projected Special Tax levy for Fiscal Year 2012-13).
TABLE 3
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
FISCAL YEAR 2012-13
ASSESSED VALUES AND VALUE-TO-LIEN RATIOS
Fiscal Year Percentage
Number of Bond Value-to-Lien 2012-13 Special Share of
Parcels Assessed Values Lien*0) Ratio Tax Levy(2) Special Tax
Total 115 $137,704,062 $2,348,030 142.70 $223,804 100.00%
t Preliminary,subject to change.
Excludes Metropolitan Water District GO Bonds,Coast Community College District GO Bonds,Huntington Beach Union
High School GO Bonds,and Huntington Beach City School District GO Bonds which if included would reduce the value-
to-lien ratio to 58.65* to 1. See Table 1 "Direct and Overlapping as of February 26, 2013" for a description of the
overlapping debt.
(2) Includes Special Taxes for Services.
Source: Detailed and Overlapping Debt Reports provided by California Municipal Statistics, Inc.; Orange County 2012-13
Secured Roll,as compiled by Willdan Financial Services.
Delinquency History
Table 4 below summarizes the Special Tax levies and delinquencies for the Taxable Property within
the District for Fiscal Years 2008-09 through Fiscal Year 2012-13.
TABLE 4
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
SPECIAL TAX LEVIES AND DELINQUENCIES
FISCAL YEAR 2008-09 THROUGH 2O12-13
Delinquencies as of September 30 of Fiscal Year Delinquencies as of May 7,2013
Remaining Remaining Remaining
Fiscal Amount Parcels Parcels Amount Percent Parcels Amount Percent
Year Levied" Levied Delinquent Delinquent" Delinquent Delinquent Delinquent Delinquent
2008-09 $167,440.00 115 5 $5,096 3.04% 0 $ 0 0.00%
2009-10(3) 145,675.10 115 0 0 0.00 0 0 0.00
2010-11 96,041.10 115 1 835 0.87 0 0 0.00
2011-12 176,656.10 115 1 1,536 0.87 0 0 0.00
2012-13 223,803.80 115 N/A N/A N/A 4 4,865 2.17
(1) The fluctuation in the amount levied in each Fiscal Year is due to a variance in the Services Credit and the application of surplus funds from the prior Fiscal
Year.
(2) Amount does not include any penalties,interest or fees.
(3) Delinquency information as of October 5 for this Fiscal Year only.
Source: Orange County Tax Collector,as compiled by Willdan Financial Services.
Top Special Taxpayers
All taxable parcels in the District are owned by individual property owners,each representing no more
than 1%of the total Fiscal Year 2012-13 Special Tax levy.
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THE CITY OF HUNTINGTON BEACH
Under the Law, the City Council of the City is authorized to establish and act as the legislative body
for community facilities districts. However, the City has no obligations in connection with the District or the
2013 Bonds, other than with respect to the collection and enforcement of the Special Tax to the limited extent
set forth in the Indenture. See Appendix C hereto for general information regarding the City.
SPECIAL RISK FACTORS
The purchase of the Bonds involves significant risks and, therefore, the Bonds are not suitable
investments for many investors. The following is a discussion of certain risk factors which should be
considered,in addition to other matters set forth herein,in evaluating the investment quality of the Bonds. The
Bonds have not been rated by a rating agency. This discussion does not purport to be comprehensive or
definitive and does not purport to be a complete statement of all factors which may be considered as risks in
evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could
adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when
due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual
payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed
herein could adversely affect the value of the property in the District. See "— Property Values" and "—
Limited Secondary Market"below.
Risks of Real Estate Secured Investments Generally
The Bondowners will be subject to the risks generally incident to an investment secured by real estate,
including, without limitation, (i)adverse changes in local market conditions, such as changes in the market
value of real property in the vicinity of the District,the supply of or demand for competitive properties in such
area, and the market value of residential property or commercial buildings and/or sites in the event of sale or
foreclosure; (ii)changes in real estate tax rates and other operating expenses, governmental rules (including,
without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal
policies; (iii)natural disasters (including, without limitation, earthquakes, wildfires and floods), which may
result in uninsured losses;(iv)adverse changes in local market conditions;and(v)increased delinquencies due
to rising mortgage costs and other factors.
No assurance can be given that the individual property owners will pay Special Taxes in the future or
that they will be able to pay such Special Taxes on a timely basis. See "SPECIAL RISK FACTORS —
Bankruptcy and Foreclosure" below, for a discussion of certain limitations on the District's ability to pursue
judicial proceedings with respect to delinquent parcels.
Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City. Except with
respect to the Special Taxes,neither the credit nor the taxing power of the District or the City is pledged for the
payment of the Bonds or the interest thereon, and, except as provided in the Indenture,no Owner of the Bonds
may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or
District property. The principal of, premium,if any, and interest on the Bonds are not a debt of the City or a
legal or equitable pledge,charge,lien or encumbrance upon any of the City's or the District's property or upon
any of the City's or the District's income, receipts or revenues, except the Special Taxes and other amounts
pledged under the Indenture.
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Insufficiency of Special Taxes
The principal source of payment of principal of and interest on the Bonds is the proceeds of the annual
levy and collection of the Special Tax against property within the District. The annual levy of the Special Tax
is subject to the maximum tax rates authorized. The levy cannot be made at a higher rate even if the failure to
do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other
available funds,will not be sufficient to pay debt service on the Bonds. Other funds which might be available
include funds derived from the payment of penalties on delinquent Special Taxes and funds derived from the
tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent.
The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of
particular Taxable Property and the amount of the levy of the Special Tax against such parcels. Thus, there
will rarely, if ever,be a uniform relationship between the value of such parcels and the proportionate share of
debt service on the Bonds,and certainly not a direct relationship.
The Special Tax levied in any particular tax year on a Taxable Property is based upon the revenue
needs and application of the Rate and Method. Application of the Rate and Method will, in turn,be dependent
upon certain development factors with respect to each Taxable Property by comparison with similar
development factors with respect to the other Taxable Property within the District. Thus, in addition to annual
variations of the revenue needs from the Special Tax,the following are some of the factors which might cause
the levy of the Special Tax on any particular Taxable Property to vary from the Special Tax that might
otherwise be expected:
(1) Failure of the owners of Taxable Property to pay the Special Tax and delays in the
collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent
parcels, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property,
subject to any limits imposed by the Act and the maximum special tax amount;and
(2) Reduction in the amount of Taxable Property, for such reasons as acquisition of
Taxable Property by a government and failure of the government to pay the Special Tax based upon a
claim of exemption or, in the case of the federal government or an agency thereof, immunity from
taxation,thereby resulting in an increased tax burden on the remaining parcels of Taxable Property.
If for any reason property within the District becomes exempt from taxation by reason of ownership
by a non-taxable entity such as the federal government or another public agency, subject to the limitations of
the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within
the District. This would result in the owners of such property paying a greater amount of the Special Tax and
could have an adverse impact upon the ability and willingness of the owners of such property to pay the
Special Tax when due.
Except as set forth above under"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
—Special Taxes"herein,the Indenture provides that the Special Tax is to be collected in the same manner as
ordinary ad valorem property taxes are collected and, except as provided in the special covenant for
foreclosure described in "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —Proceeds of
Foreclosure Sales" and in the Act, is subject to the same penalties and the same procedure, sale and lien
priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to these procedures, if
taxes are unpaid for a period of five years or more,the property is subject to sale by the County.
In the event that sales or foreclosures of property are necessary,there could be a delay in payments to
owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the
District of the proceeds of sale if the Reserve Account is depleted. See "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS—Proceeds of Foreclosure Sales."
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Natural Disasters
Like other areas of Southern California, property in the District is subject to the risk of major
earthquake damage. Although the Huntington Beach area has not experienced any major earthquakes in the
past 50 years, the Newport-Inglewood fault, at its closest, is approximately two miles from the District.
Additional faults within the City that may be geologically active are the North Branch, Bolsa-Fairview, and
South Branch Faults, all of which are within the Newport-Inglewood Fault Zone. The District is
approximately 2 miles northwest of this fault zone. A significant earthquake along any of the foregoing faults
is possible during the period the Bonds will be outstanding. The most recent major earthquake was in 1933,
with a magnitude of 6.3 on the Richter scale and an epicenter in the Huntington Harbor area, approximately
one mile from the boundary of the District.
In the event of a severe earthquake, fire, flood, landslide, high winds or other natural disaster, there
may be significant damage to both property and infrastructure in the District. As a result, a substantial portion
of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition,the value
of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting
proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In
general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel
relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund
Act," is the most well-known and widely applicable of these laws, but State laws with regard to hazardous
substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to
remedy a hazardous substance condition of property whether or not the owner or operator has anything to do
with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be
affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of
remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the
condition just as is the seller.
The value of the property within the District, as set forth in the various tables herein, does not reflect
the presence of any hazardous substance or the possible liability of the owner(or operator)for the remedy of a
hazardous substance condition of the property. The District has not independently verified, but is not aware,
that any owner(or operator)of any of the parcels within the District has such a current liability with respect to
any such parcel. However, it is possible that such liabilities do currently exist and that the District is not aware
of them.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting
from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not
been released or the release of which is not presently threatened, or may arise in the future resulting from the
existence, currently on the parcel of a substance not presently classified as hazardous but which may in the
future be so classified. Such liabilities may arise not simply from the existence of a hazardous substance but
from the method of handling it. All of these possibilities could significantly affect the value of a parcel and the
willingness or ability of the owner of any parcel to pay the Special Tax installments.
Payment of the Special Tax is not a Personal Obligation of the Owners
An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special
Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel
is not sufficient,taking into account other liens imposed by public agencies,to secure fully the Special Tax,the
District has no recourse against the owner.
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Property Values
The value of the property within the District is a critical factor in determining the investment quality
of the Bonds. If a property owner is delinquent in the payment of Special Taxes,the District's only remedy is
to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the
Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as
earthquakes,fires, floods,landslides or stricter land use regulations,delays in development or other events will
adversely impact the security underlying the Special Taxes. See "THE COMMUNITY FACILITIES
DISTRICT—Estimated Assessed Value-to-Lien Ratios."
The assessed values set forth in this Official Statement do not represent market values arrived at
through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current
owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an
increase of more than 2%per fiscal year. No assurance can be given that a parcel could actually be sold for its
assessed value.
Prospective purchasers of the Bonds should not assume that the land within the District could be sold
for its assessed value at a foreclosure sale for delinquent Special Taxes. Additionally, value-to-lien ratios of
individual parcels vary greatly.
No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes
offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent
Special Taxes. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Proceeds of
Foreclosure Sales."
Parity Taxes and Special Assessments
Property within the District is subject to taxes and assessments imposed by public agencies also
having jurisdiction over the land within the District. See "THE COMMUNITY FACILITIES DISTRICT—
Direct and Overlapping Indebtedness."
The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land
on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and
special assessments levied by other agencies and is co-equal to and independent of the lien for general property
taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all
existing and future private liens imposed on the property except,possibly, for liens or security interests held by
an agency of the federal government. See "FDIC/Federal Government Interests in Properties" and "—
Bankruptcy and Foreclosure"below.
Neither the District nor the City, however, has control over the ability of other entities and
districts to issue indebtedness secured by special taxes,ad valorem taxes or assessments payable from all
or a portion of the property within the District. In addition, the landowners within the District may,
without the consent or knowledge of the District, petition other public agencies to issue public
indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad
valorem taxes or assessments may have a lien on such property on a parity with the Special Taxes and
could reduce the estimated value-to-lien ratios for the property within the District described herein. See
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "THE COMMUNITY
FACILITIES DISTRICT—Direct and Overlapping Indebtedness."
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax even if the value is sufficient
may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time
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the owner purchased the parcel,was informed of the amount of the Special Tax on the parcel,was informed of
the maximum tax rate and the risk of such a levy and the ability of such owner to pay the Special Tax as well
as pay other expenses and obligations. The City has caused a Notice of Special Tax Lien to be recorded in the
Office of the Recorder for the County against each parcel. While title companies normally refer to such
notices in title reports, there can be no guarantee that such reference will be made or, if made, that a
prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within
the District or lending of money thereon.
The Act requires the subdivider(or its agent or representative)of a subdivision to notify a prospective
purchaser or long-term lessor of any lot,parcel,or unit subject to a Mello-Roos special tax of the existence and
maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section
1102.6b requires that in the case of transfers other than those covered by the above requirement,the seller must
at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format
prescribed by statute. Failure by an owner of the property to comply with the above requirements,or failure by
a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely
affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of
principal of, and interest on,the Bonds are derived, are customarily billed to the properties within the District
on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such
Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do
ad valorem property tax installments.
See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Proceeds of Foreclosure
Sales," for a discussion of the provisions which apply,and procedures which the District is obligated to follow
under the Indenture, in the event of delinquencies in the payment of Special Taxes. See "FDIC/Federal
Government Interests in Properties"below, for a discussion of issues raised when a federal government agency
has an interest in a delinquent parcel and limitations on the District's ability to foreclose on the lien of the
Special Taxes in certain circumstances.
FDIC/Federal Government Interests in Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments
may be limited with regard to properties in which the Federal Deposit Insurance Corporation(the"FDIC"),the
Drug Enforcement Agency,the Internal Revenue Service,or other federal agency has or obtains an interest.
The supremacy clause of the United States Constitution reads as follows: "This Constitution, and the
Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be
made,under the Authority of the United States,shall be the supreme Law of the Land;and the Judges in every
State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary
notwithstanding."
This means that, unless Congress has otherwise provided, if a federal governmental entity owns a
parcel that is subject to Special Taxes within the District but does not pay taxes and assessments levied on the
parcel(including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to
collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest
in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the
property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent
taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage
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interest. hi Rust v.Johnson(9th Circuit; 1979)597 F.2d 174,the United States Court of Appeal,Ninth Circuit
held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of
this doctrine,and not a private entity,and that, as a result, an exercise of state power over a mortgage interest
held by FNMA constitutes an exercise of state power over property of the United States.
The District has not undertaken to determine whether any federal governmental entity currently has,or
is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special
Taxes within the District, and therefore expresses no view concerning the likelihood that the risks described
above will materialize while the Bonds are outstanding.
FDIC. In the event that any financial institution making any loan which is secured by real property
within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default,
resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and
penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.
The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy
Statement")provides that property owned by the FDIC is subject to state and local real property taxes only if
those taxes are assessed according to the property's value, and that the FDIC is immune from real property
taxes assessed on any basis other than property value. According to the Policy Statement,the FDIC will pay
its property tax obligations when they become due and payable and will pay claims for delinquent property
taxes as promptly as is consistent with sound business practice and the orderly administration of the
institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will
pay claims for interest on delinquent property taxes owed at the rate provided under state law,to the extent the
interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of
fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including
interest)on FDIC-owned property are secured by a valid lien(in effect before the property became owned by
the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the
FDIC is subject to levy,attachment,garnishment, foreclosure or sale without the FDIC's consent. In addition,
the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without
the FDIC's consent.
The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including
special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that
the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it
purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a
special tax formula which determines the special tax due each year are specifically identified in the Policy
Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth
Circuit issued a ruling on August 28,2001 in which it determined that the FDIC,as a federal agency,is exempt
from Mello-Roos special taxes.
The District is unable to predict what effect the application of the Policy Statement would have in the
event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has
or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial
foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure
sale. Such an outcome could cause a draw on the Reserve Account and perhaps,ultimately, if enough property
were to become owned by the FDIC,a default in payment on the Bonds.
Bankruptcy and Foreclosure
Bankruptcy,insolvency and other laws generally affecting creditors'rights could adversely impact the
interests of owners of the Bonds in at least two ways. First, the payment of property owners' taxes and the
ability of the District to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue
judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting
creditors' rights (such as the Soldiers' and Sailors' Relief Act of 1940) or by the laws of the State relating to
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judicial foreclosure. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Proceeds of
Foreclosure Sales." In addition, the prosecution of a foreclosure could be delayed due to many reasons,
including crowded local court calendars or lengthy procedural delays.
Secondly,the Bankruptcy Code might prevent moneys on deposit in the Special Tax Fund from being
applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or
against a landowner in the District and if the court found that any of such landowners had an interest in such
moneys within the meaning of Section 541(a)(1)of the Bankruptcy Code.
Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the
amount and priority of any Special Tax lien could be modified if the value of the property falls below the value
of the lien. If the value of the property is less than the lien, such excess amount could be treated as an
unsecured claim by the bankruptcy court. In addition,bankruptcy of a property owner could result in a delay
in procuring Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or
default in payment of the principal of, and interest on, the Bonds and the possibility of delinquent tax
installments not being paid in full.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including
Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal
instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights
of creditors generally.
Funds Invested in the County Investment Pool
On January 24, 1996, the United States Bankruptcy Court for the Central District of California held
that a State statute providing for a priority of distribution of property held in trust conflicted with, and was
preempted by, federal bankruptcy law. In that case, the court addressed the priority of the disposition of
moneys held in a county investment pool upon bankruptcy of the county. Following payment of the Special
Taxes to the District, such funds may be invested in the name of the City or the District for a period of time in
the County investment pool. In the event of a petition of or the adjustment of County debts under Chapter 9 of
the Federal Bankruptcy Code,a court might hold that the Bond Owners do not have a valid and/or prior lien on
the Special Taxes or debt service payments where such amounts are deposited in the County investment pool
and may not provide the Bond Owners with a priority interest in such amounts. In that circumstance, unless
the Bond Owners could "trace" the funds that have been deposited in the County investment pool, the Bond
Owners would be unsecured(rather than secured)creditors of the County. There can be no assurance that the
Bond Owners could successfully so trace the Special Taxes or debt service payments.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the terms of the Bonds or the Indenture or in the event interest on the
Bonds becomes included in gross income for federal income tax purposes. See APPENDIX D —
"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" and "— Limitations on Remedies"
herein.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that such Bonds can be sold for any particular price. Although the District has committed to
provide certain statutorily required financial and operating information, there can be no assurance that such
information will be available to Bondowners on a timely basis. See "INTRODUCTION — Continuing
Disclosure" and APPENDIX E — "FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE
DISTRICT." Any failure to provide annual financial information, if required, does not give rise to monetary
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damages but merely an action for specific performance. Occasionally,because of general market conditions,
lack of current information, the absence of a credit rating for the Bonds or because of adverse history or
economic prospects connected with a particular issue, secondary marketing practices in connection with a
particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made
will depend upon then prevailing circumstances. Such prices could be substantially different from the original
purchase price.
Proposition 218
An initiative measure entitled the"Right to Vote on Taxes Act"(the"Initiative")was approved by the
voters of the State at the November 5, 1996, general election. The Initiative added Article XIIIC and
Article XIIID to the California Constitution. According to the"Title and Summary" of the Initiative prepared
by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes
and property-related assessments, fees and charges." The provisions of the Initiative have not yet been
interpreted by the courts, although a number of lawsuits have been filed requesting the courts to interpret
various aspects of the Initiative. The initiative could potentially impact the Special Taxes otherwise available
to the District to pay the principal of and interest on the Bonds as described below.
Among other things, Section 3 of Article XIIIC states that "...the initiative power shall not be
prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge."
The Act provides for a procedure, which includes notice,hearing,protest and voting requirements to alter the
rate and method of an existing special tax. However, the Act prohibits a legislative body from adopting any
resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any
debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of
the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed
into law by the Governor of the State enacting Government Code Section 5854,which states that:
Section 3 of Article XIIIC of the California Constitution, as adopted at the
November 5, 1996, general election, shall not be construed to mean that any
owner or beneficial owner of a municipal security,purchased before or after
that date, assumes the risk of, or in any way consents to, any action by
initiative measure that constitutes an impairment of contractual rights
protected by Section 10 of Article I of the United States Constitution.
Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred
on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely
retirement of the Bonds.
It may be possible,however, for voters or the District or the City acting as the legislative body of the
District to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the
Bonds,but which does reduce the maximum amount of Special Taxes that may be levied in any year below the
existing levels. Furthermore,no assurance can be given with respect to the future levy of the Special Taxes in
amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance
can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the
maximum extent that the law permits it to do so,the District has covenanted that it will not initiate proceedings
under the Act to reduce the maximum Special Tax rates on parcels of Developed Parcels within the District to
less than an amount projected to equal to 110% of annual debt service each year on the Outstanding Bonds
plus the Administrative Expense Requirement. In connection with the foregoing covenant, the District has
made a legislative finding and determination that any elimination or reduction of Special Taxes below the
foregoing level would interfere with the timely retirement of the Bonds. The District also has covenanted that,
in the event an initiative is adopted which purports to alter the Rate and Method, it will commence and pursue
legal action in order to preserve its ability to comply with the foregoing covenant. However,no assurance can
be given as to the enforceability of the foregoing covenants.
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The interpretation and application of the Initiative will ultimately be determined by the courts with
respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty
the outcome of such determination or the timeliness of any remedy afforded by the courts. See"—Limitations
on Remedies."
Ballot Initiatives and Legislative Measures
Articles XIIIA, XIIIB, XIIIC and XIIID were adopted pursuant to measures qualified for the ballot
pursuant to California's constitutional initiative process and the State Legislature has in the past enacted
legislation which has altered the spending limitations or established minimum funding provisions for particular
activities. On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative
can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the
referendum requirements does not apply to initiatives. From time to time, other initiative measures could be
adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or
legislation might place limitations on the ability of the State,the City,or local districts to increase revenues or
to increase appropriations.
Loss of Tax Exemption
As discussed under the caption "TAX EXEMPTION," the interest on the Bonds could become
includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a
result of acts or omissions of the District or the City in violation of certain provisions of the Internal Revenue
Code of 1986, as amended(the"Code")and the covenants of the Indenture. In order to maintain the exclusion
from gross income for federal income tax purposes of the interest on the Bonds,the District has covenanted in
the Indenture not to take any action, or fail to take any action, if such action or failure to take such action
would adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the
Code. Should such an event of taxability occur,the Bonds are not subject to early redemption and will remain
outstanding to maturity or until redeemed under the provisions of the indenture relating to special mandatory
redemption from Special Tax prepayments.
Future legislative proposals,if enacted into law,clarification of the Code or court decisions may cause
interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to state
income taxation,or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status
of such interest. The introduction or enactment of any such future legislative proposals, clarification of the
Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective
purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or
state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. No assurance
can be given that subsequent to the issuance of the Bonds such changes or interpretations will not occur. See
"TAX EXEMPTION"below.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond
issues,including both random and targeted audits. It is possible that the Bonds will be selected for audit by the
Internal Revenue Service. It is also possible that the market value of the Bonds might be affected as a result of
such an audit of the Bonds(or by an audit of similar bonds).
Limitations on Remedies
Remedies available to the Owners may be limited by a variety of factors and may be inadequate to
assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the
Bonds.
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Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the
extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium, or others similar laws affecting generally the enforcement of creditors' rights, by
equitable principles and by the exercise of judicial discretion. Additionally, the Bonds are not subject to
acceleration in the event of the breach of any covenant or duty under the Indenture. The lack of availability of
certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights
of the Owners.
CONTINUING DISCLOSURE
Pursuant to a Continuing Disclosure Agreement(the"Disclosure Agreement")with Willdan Financial
Services, as disclosure dissemination agent,the District has agreed to provide, or cause to be provided, to the
Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be
found on the Internet at www.emma.msrb.org, on an annual basis certain financial information and operating
data concerning the District. The District has further agreed to provide notice to EMMA of certain listed
events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12
adopted by the Securities and Exchange Commission. See APPENDIX E hereto for a description of the
specific nature of the annual reports to be filed by the District and notices of listed events to be provided by the
District. [Within the last five years,neither the District nor the City has failed to timely comply with its prior
continuing disclosure obligations under Rule 15c2-12(b)(5)in all material respects.] [Confirm]The full text of
the form of Disclosure Agreement is set forth in APPENDIX E.
TAX EXEMPTION
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California("Bond Counsel"),under existing statutes,regulations,rulings and judicial decisions,and assuming
the accuracy of certain representations and compliance with certain covenants and requirements described
herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income
tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum
tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original
issue discount)on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that,
with respect to corporations, interest on the Bonds may be included as an adjustment in calculation of
alternative minimum taxable income, which may affect the alternative minimum tax liability of such
corporations.
In the opinion of Bond Counsel, the difference between the issue price of a Bond (the first price at
which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption
price at maturity of such Bond constitutes original issue discount. Original issue discount accrues under a
constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash
attributable to such excludable income. The amount of original issue discount deemed received by a
Beneficial Owner will increase the Beneficial Owner's basis in the applicable Bond. The amount of original
issue discount that accrues to the Beneficial Owner of the Bonds is excluded from the gross income of such
Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals and corporations, and is exempt from State of California
personal income tax.
Bond Counsel's opinion as to the exclusion from gross income for federal income tax purposes of
interest on the Bonds (including any original issue discount) is based upon certain representations of fact and
certifications made by the District,the Underwriters and others and is subject to the condition that the District
complies with all requirements of the Internal Revenue Code of 1986, as amended(the"Code")that must be
satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds (including any original
issue discount)will not become includable in gross income for federal income tax purposes. Failure to comply
with such requirements of the Code might cause interest on the Bonds(including any original issue discount)
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to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
The District will covenant to comply with all such requirements.
The amount by which a Beneficial Owner's original basis for determining loss on sale or exchange in
the applicable Bond(generally, the purchase price) exceeds the amount payable on maturity (or on an earlier
call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code;
such amortizable bond premium reduces the Beneficial Owner's basis in the applicable Bond(and the amount
of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as
a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a
Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the
original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax
advisors as to the treatment,computation and collateral consequences of amortizable bond premium.
The Internal Revenue Service(the"IRS")has initiated an expanded program for the auditing of tax-
exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected
for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such
an audit of the Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an
audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation
thereof)subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross
income of interest(and original issue discount)on the Bonds or their market value.
Bond Counsel's opinion may be affected by actions taken (or not taken) or events occurring (or not
occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person,
whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the
Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided
with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income for federal
income tax purposes of interest (and original issue discount)with respect to any Bond if any such action is
taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson&Rauth,a Professional
Corporation.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS, THERE MIGHT BE FEDERAL, STATE
OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY INTERPRETATIONS OF
FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX
TREATMENT OF THE BONDS OR THE MARKET VALUE OF THE BONDS. LEGISLATIVE
CHANGES HAVE BEEN PROPOSED IN CONGRESS, WHICH, IF ENACTED, WOULD RESULT IN
ADDITIONAL FEDERAL INCOME TAX BEING IMPOSED ON CERTAIN OWNERS OF TAX-EXEMPT
STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THE INTRODUCTION OR ENACTMENT
OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY
OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT, SUBSEQUENT TO THE ISSUANCE OF
THE BONDS, SUCH CHANGES(OR OTHER CHANGES)WILL NOT BE INTRODUCED OR ENACTED
OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE BONDS, ALL
POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE
STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS,AND
THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.
Although Bond Counsel has rendered an opinion that interest on the Bonds (including any original
issue discount) is excluded from gross income for federal income tax purposes provided that the District
continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds
(including any original issue discount) may otherwise affect the tax liability of the recipient. Bond Counsel
expresses no opinion regarding any such tax consequences. Accordingly, all potential purchasers should
consult their tax advisors before purchasing any of the Bonds.
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Should interest on the Bonds (including any original issue discount) become includable in gross
income for federal income tax purposes, the Bonds are not subject to early redemption and will remain
outstanding until maturity or until redeemed in accordance with the Indenture.
The proposed form of Bond Counsel's opinion with respect to the Bonds is attached as APPENDIX B.
LEGAL OPINION
The legal opinions of Stradling Yocca Carlson&Rauth, a Professional Corporation,Newport Beach,
California,approving the validity of the Bonds in substantially the form set forth as APPENDIX B hereto,will
be made available to purchasers at the time of original delivery. Certain legal matters will be passed upon for
the City and the District by the City Attorney, Jennifer McGrath, Esq. and by Stradling Yocca Carlson&
Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain legal matters
will be passed on for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco,
California.
ABSENCE OF LITIGATION
No litigation is pending or threatened concerning the validity of the Bonds and a certificate of the
District to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds.
Neither the City nor the District is aware of any litigation pending or threatened which questions the existence
of the District or the City or contests the authority of the District to levy and collect the Special Taxes or to
issue and retire the Bonds.
RATING
The District expects that Standard and Poor's Ratings Services, a division of The McGraw-Hill
Companies,Inc. ("S&P")will assign the Bonds an underlying rating of" ." S&P's rating reflects only the
views of S&P, and an explanation of the significance of such ratings may be obtained from Standard&Poor's
Ratings Service, 55 Water Street, 38th Floor, New York, New York 10041, (212) 438 2074. The District
makes no representation as to the appropriateness of the rating. Further, there is no assurance that the rating
will continue for any given period of time or that they will not be revised downward or withdrawn entirely by
S&P, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of
such rating may have an adverse effect on the trading value and the market price of the Bonds.
UNDERWRITING
The Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the
Bonds at a price of$ (being$ aggregate principal amount thereof, [less net original
issue discount] [plus net original issue premium] of $ , and less underwriter's discount of
$ ). The purchase contract relating to the Bonds provides that the Underwriter will purchase all of
the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and
conditions set forth in such purchase contract,the approval of certain legal matters by counsel and certain other
conditions.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the
offering price stated on the inside cover page hereof. The offering price may be changed from time to time by
the Underwriter.
FINANCIAL INTERESTS
The fees being paid to the Underwriter,Bond Counsel,Disclosure Counsel,Jones Hall,A Professional
Law Corporation, as counsel to the Underwriter, the Financial Advisor, the Trustee and the Escrow Bank are
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DOC SOC/1612479v6/022273-0006
contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the
Underwriter on matters unrelated to the Bonds.
NEW LEGISLATION
The District is not aware of any significant pending legislation which would have material adverse
consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when
due.
ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.
Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement
do not purport to be complete, and reference is made to such documents for full and complete statements and
their provisions. Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated,are intended as such and not as representatives of fact.
The execution and delivery of this Official Statement by the Finance Director of the City has been
duly authorized by the City Council of the City of Huntington Beach acting in its capacity as the legislative
body of the District.
CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1
By:
Finance Director of the City of Huntington Beach,
which is acting in its capacity as the legislative body of
City of Huntington Beach Community Facilities District
No. 1990-1
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APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
The Special Tax is to be levied by the City on behalf of the District each Fiscal Year on all parcels
within the District in an amount equal to the maximum Special Tax,less any Services Credit,as such terms are
defined below. On March 1 of each year all taxable Parcels within the District shall be categorized either as
Developed Parcels or Undeveloped Parcels, and shall be subject to a Special Tax in accordance with the Rate
and Method of Apportionment specified below.
Undeveloped Parcels
A Special Tax shall be levied on each Undeveloped Parcel as follows:
(Taxable Sq_Ft.of Parcel X Maximum) — Services = Special
(Taxable Sq.Ft.of District Special Tax) Credit Tax
Developed Parcels
A Special Tax shall be levied on each Developed Parcel as follows:
1 )
(Maximum — Total Special Tax Levied X Total Number of) — Services = Special
(Special Tax on Undeveloped Parcels Developed Parcels) Credit Tax
Definitions
Developed Parcel (1)is any Parcel that is within the boundaries of the District based on the latest available
equalized rolls of the County of Orange as of March 1 of the applicable year which is not exempt from the
Special Tax pursuant to Section 53311, et seq. of the California Government Code, (2)is not greater than
50,000 square feet in total square footage and(3)with respect to which a building permit for a single family
dwelling has been issued as of March 1 of the current year.
Fiscal Year means the period starting on July 1 and ending the following June 30.
Maximum Special Tax is an amount for any Fiscal Year equal to$264,000.
Services Credit is an amount equal to any proceeds of the Special Tax levied within the District which has
been allocated by the City to the payment of police and fire protection services and/or paramedic services
authorized under the Act which have not been expended for such purpose by the last day of the prior Fiscal
Year.
Taxable Square Footage of Parcels is all of the area within any Parcel within the District which is not
exempt from the Special Tax pursuant to Section 53311,et. seq.of the California Government Code.
Total Taxable Square Footage of the District means the aggregate Taxable Square Footage for all Parcels
within the District.
Undeveloped Parcel is any Parcel within the boundaries of the District(based on the latest equalized rolls of
the County of Orange as of March 1 of each year)which is not a Developed Parcel,and is not exempt from the
Special Tax under the provisions of the Act.
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APPENDIX B
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City Council of the City of Huntington Beach
Huntington Beach,California
Re: $ City of Huntington Beach Community Facilities District No. 1990-1 2013
Special Tax Refunding Bonds
Ladies and Gentlemen:
We have examined the Constitution and the laws of the State of California, a certified record of the
proceedings of the City of Huntington Beach(the"City")taken in connection with the formation of the City of
Huntington Beach Community Facilities District No. 1990-1 (the "District") and the authorization and
issuance of the District's 2013 Special Tax Refunding Bonds in the aggregate principal amount of$
(the"Bonds") and such other information and documents as we consider necessary to render this opinion. In
rendering this opinion, we have relied upon certain representations of fact and certifications made by the
District,the initial purchasers of the Bonds and others. We have not undertaken to verify through independent
investigation the accuracy of the representations and certifications relied upon by us.
The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as
amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of
California)and Resolution No. 1213-29(the"Resolution of Issuance"), adopted by the City Council(the"City
Council") of the City on , 2013, and by a Bond Indenture dated as of July 1, 2013 (the
"Indenture"), by and between the District and U.S. Bank National Association, as trustee. All capitalized
terms not defined herein shall have the meanings set forth in the Indenture.
The Bonds are dated the date of delivery and mature on the dates and in the amounts set forth in the
Indenture. The Bonds bear interest payable semiannually on each September 1 and March 1, commencing on
September 1, 2013, at the rates per annum set forth in the Indenture. The Bonds are registered Bonds in the
form set forth in the Indenture redeemable in the amounts, at the times and in the manner provided for in the
Indenture.
Based upon our examination of the foregoing,and in reliance thereon and on all matters of fact as we
deem relevant under the circumstances,and upon consideration of applicable laws,we are of the opinion that:
(1) The Bonds have been duly and validly authorized by the District and are legal, valid and
binding limited obligations of the District, enforceable in accordance with their terms and the terms of the
Indenture, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other laws affecting creditors' rights generally, by the
exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases
and by limitations on remedies against public agencies in the State of California. The Bonds are limited
obligations of the District but are not a debt of the City, the State of California or any other political
subdivision thereof within the meaning of any constitutional or statutory limitation,and, except for the Special
Taxes, neither the faith and credit nor the taxing power of the City, the State of California, or any of its
political subdivisions is pledged for the payment thereof.
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(2) The Indenture has been duly executed and delivered by the City Council on behalf of the
District. The Indenture creates a valid pledge of,and the Bonds are secured by the Net Taxes and the amounts
on deposit in certain funds and accounts established under the Indenture, as and to the extent provided in the
Indenture. The Indenture is enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other similar laws
affecting creditors' rights generally,by the exercise of judicial discretion in accordance with general principles
of equity or otherwise in appropriate cases and by limitations on remedies against public agencies in the State
of California;provided,however,we express no opinion as to the enforceability of the covenant of the District
contained in the Indenture to levy Special Taxes for the payment of Administrative Expenses or as to any
indemnification,penalty,contribution,choice of law,choice of forum or waiver provisions contained therein.
(3) Under existing statutes,regulations,rulings and judicial decisions, interest(and original issue
discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of
tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and
corporations; however, it should be noted that, with respect to corporations, such interest (and original issue
discount)will be included as an adjustment in the calculation of alternative minimum taxable income, which
may affect the alternative minimum tax liability of corporations.
(4) Interest(and original issue discount)on the Bonds is exempt from State of California personal
income tax.
(5) The difference between the issue price of a Bond(the first price at which a substantial amount
of the Bonds of a maturity are to be sold to the public)and the stated redemption price at maturity with respect
to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield
method, and original issue discount will accrue to a Bond owner before receipt of cash attributable to such
excludable income. The amount of original issue discount deemed received by a Bond owner will increase the
Bond owner's basis in the applicable Bond. Original issue discount that accrues for the Bond owner is
excluded from the gross income of such owner for federal income tax purposes, is not an item of tax
preference for purposes of calculating the federal alternative minimum tax imposed on individuals or
corporations(as described in paragraph(3)above)and is exempt from State of California personal income tax.
(6) The amount by which a Bond owner's original basis for determining loss on sale or exchange
in the applicable Bond(generally the purchase price)exceeds the amount payable on maturity(or on an earlier
call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code;
such amortizable Bond premium reduces the Bond owner's basis in the applicable Bond(and the amount of
tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a
result of the amortization of Bond premium may result in a Bond owner realizing a taxable gain when a Bond
is sold by the owner for an amount equal to or less (under certain circumstances)than the original cost of the
Bond to the owner.
The opinion expressed in paragraphs (3) and (5) above as to the exclusion from gross income for
federal income tax purposes of interest(and original issue discount) on the Bonds is subject to the condition
that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and
original issue discount)will not become includable in gross income for federal income tax purposes. Failure to
comply with such requirements of the Code might cause interest(and original issue discount)on the Bonds to
be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
The District has covenanted to comply with all such requirements. Except as set forth in paragraphs(3), (4),
(5)and(6)above,we express no opinion as to any tax consequences related to the Bonds.
Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax
Certificate executed by the District and other documents related to the Bonds may be changed and certain
actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in
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DOCSOC/1612479v6/022273-0006
such documents. We express no opinion as to the effect on the exclusion from gross income for federal
income tax purposes of interest(and original issue discount) on any Bond if any such change occurs or action
is taken or omitted upon advice or approval of bond counsel other than Stradling Yocca Carlson & Rauth, a
Professional Corporation.
We are admitted to the practice of law only in the State of California and our opinion is limited to
matters governed by the laws of the State of California and federal law. We assume no responsibility with
respect to the applicability or the effect of the laws of any other jurisdiction and express no opinion as to the
enforceability of the choice of law provisions contained in the Indenture.
The opinions expressed herein are based upon an analysis of existing statutes,regulations,rulings and
judicial decisions and cover certain matters not directly addressed by such authorities.
We call attention to the fact that the foregoing opinions may be affected by actions taken (or not
taken)or events occurring(or not occurring)after the date hereof. We have not undertaken to determine,or to
inform any person, whether such actions or events are taken(or not taken)or do occur(or do not occur). Our
engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to
update the matters set forth herein.
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official
Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the owners
of the Bonds with respect to matters contained in the Official Statement or other offering material.
Respectfully submitted,
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APPENDIX C
GENERAL ECONOMIC AND DEMOGRAPHIC DATA FOR
THE CITE'OF HUNTINGTON BEACH AND THE COUNT'OF ORANGE
The following economic data for the City of Huntington Beach (the "City') and the County of
Orange (the "County') is presented for information purposes only. The Bonds are not a debt or
obligation of the City or the County.
General
The City of Huntington Beach is a seaside city located in the County. The City is famous for an 8.5
miles stretch of beach that is complemented by a mild climate and surf culture that has earned the Huntington
Beach the title, "Surf City, USA." Incorporated in 1909, the City has a council/administrator form of
government. The City Council is comprised of seven members elected biannually at large to four-year terms
and the Mayor is selected by the Council Members to one-year term. The City Council appoints the City
Administrator who is responsible for the day-to-day administration of Huntington Beach's business and the
coordination of all departments.
Orange County is third largest county in California and is located adjacent to the Pacific Ocean
and the Counties of Los Angeles, San Bernardino,Riverside and San Diego. The County is located in the
most heavily populated region of California, necessitating easy access to road, rail, air and sea
transportation. The County is also a major Southern California tourist center with a large number of
amusement parks and recreational and entertainment activities. The County's Pacific Coast shoreline
includes five state beaches and parks,five Municipal beaches and five County beaches.
Orange County is a general law county and governed by a five-member Board of Supervisors,
each of whom serves for four-year terms. The County provides a wide range of services to its residents,
including police, medical and health services, senior citizen assistance, library services, judicial
institutions (including support programs), airport service, roads, solid waste management, harbors,
beaches and parks, life guard services and a variety of public assistance programs.
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DOCSOC/1612479v6/022273-0006
Population
The following table summarizes population estimates for the City, County and State from 2001
through 2013.
POPULATION ESTIMATES
The City of Huntington Beach,Orange County and the State of California
2001-2013�')
Year Huntington Beach Orange County California
2001 190,860 2,871,926 34,430,970
2002 191,802 2,902,207 35,063,959
2003 192,650 2,927,118 35,652,700
2004 193,069 2,948,135 36,199,342
2005 192,581 2,956,847 36,676,931
2006 191,653 2,956,334 37,087,005
2007 190,813 2,960,659 37,463,609
2008 190,018 2,974,321 37,871,509
2009 190,079 2,990,805 38,255,508
2010 190,136 3,008,855 37,223,900
2011 190,355 3,028,846 37,427,946
2012 192,524 3,055,792 37,678,563
2013 193,616 3,081,804 37,966,471
January 1 data.
Source: California State Department of Finance,Demographic Research Unit. March 2010 Benchmark.
Income
The following tables show the personal income and per capita personal income for the County,
State of California and United States from 2005 through 2011.
PERSONAL INCOME
County of Orange,State of California,and United States
2005-2011
(Dollars in Thousands)
Year County of Orange California United States
2005 $139,408,948 $1,387,661,013 $10,476,669,000
2006 150,598,354 1,495,533,3 88 11,256,516,000
2007 153,446,641 1,566,400,134 11,900,562,000
2008 155,925,156 1,610,697,843 12,3 80,225,000
2009 146,052,466 1,526,531,3 67 12,168,161,000
2010 150,467,328 1,587,403,857 12,3 53,577,000
2011 154,131,535 1,676,564,972 12,981,740,848
Source: U.S.Department of Commerce,Bureau of Economic Analysis.
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PER CAPITA PERSONAL INCOME(')
County of Orange, State of California,and United States
2005-2011
County of
Year Orange California United States
2005 $47,417 $38,767 $35,424
2006 51,359 41,567 37,698
2007 52,342 43,240 39,461
2008 52,720 43,853 40,674
2009 48,624 42,395 39,635
2010 48,760 42,514 39,937
2011 50,440 44,481 41,663
Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S.
Bureau of the Census. All dollar estimates are in current dollars(not adjusted for inflation).
Source: U.S.Department of Commerce,Bureau of Economic Analysis.
Employment
The following table summarizes the labor force, employment and unemployment figures over the
past five years for the City,County and State of California.
CIVILIAN LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT
City of Huntington Beach,Orange County,State of California and the United States
2008-2012")
Unemployment
Area Labor Force Employmen& Unemployment(') Rate(4)
2008 City of Huntington Beach 123,700 118,400 5,300 4.3%
Orange County 1,618,100 1,532,800 85,300 5.3
State of California 18,191,000 16,883,400 1,313,200 7.2
2009 City of Huntington Beach 120,600 111,900 8,700 7.2%
Orange County 1,588,800 1,448,200 140,600 8.9
State of California 18,204,200 16,141,500 2,086,200 11.3
2010 City of Huntington Beach 120,600 111,300 9,400 7.8%
Orange County 1,591,000 1,440,400 150,700 9.5
State of California 18,176,200 15,916,300 2,264,900 12.4
2011 City of Huntington Beach 121,800 113,100 8,600 7.1%
Orange County 1,603,700 1,464,400 139,300 8.7
State of California 18,172,000 16,185,100 2,158,300 10.9
2012 City of Huntington Beach 123,200 115,600 7,600 6.2%
Orange County 1,618,700 1,496,00 122,700 7.6
State of California 18,494,900 16,560,300 1,934,500 10.5
(1) Data is based on annual averages,unless otherwise specified,and is not seasonally adjusted.
(2) Includes persons involved in labor-management trade disputes.
(3) Includes all persons without jobs who are actively seeking work.
(4) The unemployment rate is computed from un-rounded data;therefore,it may differ from rates computed from rounded
figures in this table.
Source: U.S.Department of Labor-Bureau of Labor Statistics,California Employment Development Department. March
2012 Benchmark.
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Industry
The following table summarizes employment figures by industry for the Santa-Ana-Anaheim-
Irvine Metropolitan Division,which is located entirely within the County.
INDUSTRY EMPLOYMENT& LABOR FORCE ANNUAL AVERAGES
Santa Ana-Anaheim-Irvine MD
(Orange County)
2008-2012
2008 2009 2010 2011 2012
Farming 4,600 3,800 3,700 3,200 2,700
Mining and Logging 600 500 500 500 500
Construction 91,200 74,200 68,000 68,300 71,300
Manufacturing 174,100 154,800 150,400 153,600 157,800
Wholesale Trade 86,700 79,400 77,600 77,900 76,700
Retail Trade 155,600 142,300 140,100 141,600 142,200
Transportation,Warehousing and Utilities 29,300 27,800 26,700 27,500 27,700
Information 30,100 27,300 24,800 23,800 24,200
Financial Activities 113,100 105,100 103,500 103,900 108,100
Professional and Business Services 266,600 240,200 243,500 246,700 255,900
Education and Health Services 150,700 152,100 155,500 158,700 163,400
Leisure and Hospitality 176,400 169,100 168,600 173,200 180,500
Other Services 46,500 42,600 42,200 42,800 44,300
Government 160,800 156,600 152,300 149,600 147,800
Total: 1,486,200 1,3 75,900 1,357,400 1,371,300 1,403,000
Note: Items may not add to total due to independent rounding.
Source: California Employment Development Department,Labor Market Information Division.March 2012 Benchmark.
Largest Employers
The following table presents the largest employers in the City during calendar year 2011.
Name of Business No.Employed %of Total
Boeing 4,609 4.17%
Quiksilver 1,230 1.11
Cambro MFG Co. 951 0.86
Hyatt Regency Huntington Beach 641 0.58
C&D Aerospace 555 0.50
Huntington Beach Hospital 503 0.45
Rainbow Disposal 408 0.37
Huntington Beach Healthcare 381 0.34
Waterfront Hilton Beach Resort 343 0.31
Cleveland Golf/Srixon 280 0.25
Total of top 10 9,901 8.95
all others 100,699 91.05
Total employment(public and private) 110,600 100.00%
Source: City of Huntington Beach,Comprehensive Annual Financial Report for Fiscal Year Ended September 30,2011.
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LARGEST EMPLOYERS
Orange County
2013
Name of Business Location Type of Business
Allergan Inc. Irvine Drug Millers(Mfrs)
Anaheim City Hall Anaheim City Government-Executive Offices
Blogtagon Social Media Fountain Valley Internet Service
Boeing Co. Huntington Beach Aircraft Manufacturer
Boeing Co. Seal Beach Aerospace Industries
Broadcom Corp Irvine Semiconductors&Related Devices(Mfrs)
California State-Fullerton Fullerton Schools-Universities&Colleges Academic
Disneyland Resort Anaheim Anaheim Amusement&Theme Parks
Emplicity Irvine Employment Contractors-Temporary Help
First American Title Ins Co. Santa Ana Title Companies
First Team San Clemente Real Estate San Clemente Real Estate
Fountain Valley Regional Hospital Fountain Valley Hospitals
Hoag Hospital Newport Beach Hospitals
Jones Lang La Salle Brea Real Estate Management
Pacifi Care Cypress Health Plans
Puro Clean Anaheim Water Damage Restoration-Residential
Quiksilver Eyeware USA Huntington Beach Optical Goods-Retail
Saddleback Memorial Hospital Laguna Hills Hospitals
St.John Knits Int'l Inc. Irvine Women's Apparel-Retail
St.Jude Medical Ctr. Fullerton Hospitals
St.Jude Medical Ctr. Brea Hospitals
Tenet Healthcare Fountain Valley Hospitals
UC Irvine Healthcare Orange Hospitals
University of CA-Irvine Irvine Schools-Universities&Colleges Academic
Walt Disney Parks&Resorts Anaheim Amusement&Theme Parks
Source: California Employment Development Department, Labor Market Information Division. Major Employers in Orange
County.
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Building Activity
The following tables summarize building permits and valuations for the City and the County
during calendar years 2007 through 2011.
BUILDING PERMITS AND VALUATIONS
City of Huntington Beach
2007-2011
2007 2008 2009 2010 2011
Valuation(In$000's)
Residential $ 61,640 $ 39,114 $26,788 $33,567 $44,375
Nonresidential 66,821 66,477 31,221 42,546 102,623
Total Valuation(') $128,461 $105,591 $58,009 $76,113 146,998
New Dwelling Units(#)
Single-Family 50 20 9 4 24
Multi-Family 4 0 0 16 45
Total: 54 20 9 20 69
Total may not add up due to rounding.
Source: Construction Industry Research Board.
BUILDING PERMITS AND VALUATIONS
Orange County
2007-2011
2007 2008 2009 2010 2011
Valuation(In$000's)
Residential $1,792,269 $1,037,710 $ 855,193 $1,029,406 $1,236,970
Nonresidential 2,005,197 1,439,121 952,485 1,115,928 1,300,021
Total Valuation(' $3,797,466 $2,476,831 $1,807,678 $2,181,334 $2,536,992
New Dwelling Units(#)
Single-Family 2,182 1,295 1,376 1,553 1,898
Multi-Family 4,890 1,864 824 1,538 2,909
Total: 7,072 3,159 2,200 3,091 4,807
Total may not add up due to rounding.
Source: Construction Industry Research Board.
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Taxable Sales
The history of taxable transactions in the City and the County from 2007 through a portion of
2011 is shown in the following tables.
TAXABLE SALES
Huntington Beach
2007-2011(')
Retail Retail and Food Total Outlets
Year Permits Taxable Transactions Total Permits Taxable Transactions
2007 2,985 $2,096,249 7,177 $2,631,199
2008 3,105 1,916,823 7,127 2,563,546
2009 4,274 1,673,149 6,582 2,247,735
2010 4,563 1,723,952 6,847 2,366,485
2011 4,701 1,503,676 6,968 1,926,938
(�) Reflects taxable transactions through the first three quarters of calendar year 2011.
Source: "Taxable Sales in California(Sales&Use Tax),"California Board of Equalization.
TAXABLE SALES
Orange County
2007-2011(')
Retail Retail and Food Total Outlets
Year Permits Taxable Transactions Total Permits Taxable Transactions
2007 44,093 $38,988,227 99,088 $57,293,471
2008 45,705 35,768,595 97,612 53,606,829
2009 56,259 31,162,619 90,231 45,712,784
2010 58,076 23,690,727 92,407 34,828,607
2011(') 58,795 25,942,598 92,207 37,828,876
Reflects taxable transactions through the first three quarters of calendar year 2011.
Source: "Taxable Sales in California(Sales&Use Tax),"California Board of Equalization.
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
[TO COME]
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APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT
This Continuing Disclosure Agreement(the"Disclosure Agreement'),dated as of ,2013,
is executed and delivered by City of Huntington Beach Community Facilities District No. 1990-1 (the
"Issuer")and Willdan Financial Services,as dissemination agent, in connection with the issuance and delivery
by the Issuer of the above-captioned bonds(the`Bonds"). The Bonds are being issued pursuant to Resolution
No. that certain Bond Indenture (the "Indenture"), dated as of , 2013, by and between
the Issuer and U.S.Bank National Association,as trustee(the"Trustee"). The Issuer covenants as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Issuer, for the benefit of the Owners and Beneficial Owners of the Bonds and in order to
assist the Participating Underwriter in complying with the Rule(as defined below).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to
any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section,the following
capitalized terms shall have the following meanings:
"Annual Report' shall mean any Annual Report provided by the Issuer pursuant to, and as described
in,Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which(a)has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or(b)is treated as the owner of any Bonds for federal income
purposes.
"Disclosure Representative"shall mean the City Manager of the City,the Finance Director of the City
or his or her designee, or such other officer or employee as the City shall designate in writing to the
Dissemination Agent from time to time.
"Dissemination Agent' shall mean, initially, Willdan Financial Services, or any successor
Dissemination Agent designated in writing by the Issuer which has filed with the then current Dissemination
Agent a written acceptance of such designation.
"EMMA"shall mean the Electronic Municipal Market Access system of the MSRB.
"Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Agreement.
"MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated
under the Rule as the repository for filings made pursuant to the Rule.
"Participating Underwriter"shall mean Stifel,Nicolaus&Company, Incorporated.
"Repository"shall mean the MSRB or any other entity designated or authorized by the Securities and
Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or
the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic
Municipal Market Access(EMMA)website of the MSRB,currently located at http://emma.msrb.org.
"Rule" shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,as the same maybe amended from time to time.
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"Tax-exempt'shall mean that interest on the Bonds is excluded from gross income for federal income
tax purposes, whether or not such interest is includable as an item of tax preferences or otherwise includable
directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax
or environmental tax.
SECTION 3. Provision of Annual Reports.
(a) Not later than nine months after the end of the City's fiscal year (which shall be
July I of each year, so long as the City's fiscal year ends on September 30), commencing with the report for
the report for the 2012-13 fiscal year (which is due not later than July 1, 2014), the Issuer shall provide, or
shall cause the Dissemination Agent to provide, to the Repository an Annual Report which is consistent with
the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may include by reference other information as
provided in Section 4 of this Disclosure Agreement;provided that the audited financial statements of the Issuer
may be submitted separately from and later than the balance of the Annual Report if they are not available by
the date required above for the filing of the Annual Report.
An Annual Report shall be provided at least annually notwithstanding any fiscal year
longer than 12 calendar months. The Issuer's fiscal year is currently effective from October I to the
immediately succeeding September 30 of the following year. The Issuer will promptly notify the Repository
of a change in the fiscal year dates.
(b) In the event that the Dissemination Agent is an entity other than the Issuer, then the
provisions of this Section 3(b)shall apply. Not later than fifteen(15)Business Days prior to the date specified
in subsection(a)for providing the Annual Report to the Repository,the Issuer shall provide the Annual Report
to the Dissemination Agent. If by fifteen(15)Business Days prior to such date the Dissemination Agent has
not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to determine if the
Issuer will be filing the Annual Report in compliance with subsection(a). The Issuer shall provide a written
certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual
Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may
conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such
Annual Report.
(c) If the Issuer is the Dissemination Agent and the Issuer is unable to provide to the
Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice to the
Repository in substantially the form attached to this Disclosure Agreement as Exhibit A. If the Dissemination
Agent is other than the Issuer and if the Dissemination Agent is unable to verify that an Annual Report has
been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall send a
notice to the Repository, in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of the Repository if other than the MSRB;and
(ii) promptly after receipt of the Annual Report, file a report with the Issuer
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement,stating the date it
was provided.
(e) Notwithstanding any other provision of this Disclosure Agreement, all filings shall
be made in accordance with the MSRB's EMMA system or in another manner approved under the Rule.
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SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or include by
reference:
(a) Financial Statements. The audited financial statements of the City for the most
recent fiscal year of the Issuer then ended. If the audited financial statements are not available by the time the
Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of
the Issuer in a format similar to the audited financial statements, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available. Audited financial statements of
the Issuer shall be audited by such auditor as shall then be required or permitted by State law or the Indenture.
Audited financial statements shall be prepared in accordance with generally accepted accounting principles as
prescribed for governmental units by the Governmental Accounting Standards Board;provided,however,that
the Issuer may from time to time, if required by federal or state legal requirements, modify the basis upon
which its financial statements are prepared. In the event that the Issuer shall modify the basis upon which its
financial statements are prepared, the Issuer shall provide a notice of such modification to the Repository,
including a reference to the specific federal or State law or regulation specifically describing the legal
requirements for the change in accounting basis.
(b) Financial and Operating Data. The Annual Report shall contain or incorporate by
reference the following information:
(i) the principal amount of Bonds outstanding as of September 30 of each year;
(ii) the balance in each fund under the Indenture as of the September 30
preceding the filing of the Annual Report, including the Reserve Account and a statement of the Reserve
Requirement;
(iii) any changes to the Rate and Method approved or submitted to the electors
for approval prior to the filing of the Annual Report;
(iv) the status of any foreclosure actions being pursued by the District with
respect to delinquent Special Taxes as of May 1 of each year;
(v) the identity of any property owner whose delinquent special taxes represent
more than 5%of the amount levied and the number of lots, assessed value, delinquency amount value-to-lien
ratios,prior delinquencies and foreclosure status of the applicable properties as of May 1 of each year;
(vi) information regarding the percentage of delinquency,if any,in the collection
of special taxes levied on property in the District for the Fiscal Year preceding the Annual Report date in the
form set forth in Table 4,the number of parcels delinquent, amount delinquent compared to the total levy and
the assessed value of each delinquent parcel as of May 1 of each year;and
(vii) any information not already included under (i)through (vii)above that the
Issuer is required to file in its annual report to the California Debt and Investment Advisory Commission
pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982,as amended.
In addition to any of the information expressly required to be provided under paragraphs
(a)or (b)of this Section, the District shall provide such further information, if any, as may be necessary to
make the specifically required statements set forth in clauses(i)to(vii), in the light of the circumstances under
which they were made,not misleading.
(c) Any or all of the items listed in (a)or (b)above may be included by specific
reference to other documents, including official statements of debt issues of the Issuer or related public
entities,which have been submitted to the Repository. If the document included by reference is a final official
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statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so
included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination
Agent to give, notice of the occurrence of any of the following events with respect to the Bonds in a timely
manner not more than ten(10)business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers,or their failure to perform;
5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or
final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-
TEB);
6. tender offers;
7. defeasances;
8. ratings changes;and
9. bankruptcy,insolvency,receivership or similar proceedings.
Note: for the purposes of the event identified in subparagraph(9), the event is considered to
occur when any of the following occur: the appointment of a receiver, trustee or similar
officer for an obligated person in a proceeding under the United States Bankruptcy Code or in
any other proceeding under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or business of the obligated
person, or if such jurisdiction has been assumed by leaving the existing governmental body
and officials or officers in possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the obligated person.
(b) Pursuant to the provisions of this Section 5,the Issuer shall give, or cause to be given,notice
of the occurrence of any of the following events with respect to the Bonds,if material:
1. unless described in paragraph 5(a)(5)above,notices or determinations by the Internal
Revenue Service with respect to the tax status of the Bonds or other material events
affecting the tax status of the Bonds;
2. the consummation of a merger, consolidation or acquisition involving an obligated
person or the sale of all or substantially all of the assets of the obligated person,other
than in the ordinary course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive agreement relating to any
such actions,other than pursuant to its terms;
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3. appointment of a successor or additional trustee or the change of the name of a
trustee;
4. nonpayment related defaults;
5. modifications to the rights of Owners of the Bonds;
6. notices of redemption;and
7. release,substitution or sale of property securing repayment of the Bonds.
(c) Upon the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as soon as
possible determine if such event would be material under applicable federal securities laws.
(d) If the Issuer determines that knowledge of the occurrence of a Listed Event under Section
5(b)would be material under applicable federal securities laws,the Issuer shall file a notice of such occurrence
with the Repository in a timely manner not more than 10 business days after the event.
(e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the
responsibility of the Issuer and that the Dissemination Agent shall not be responsible for determining whether
the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the
Rule.
SECTION 6. Termination of Reporting Obligation. The obligations of the Issuer and the
Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the
Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under
Section 5(a).
SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may
discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent. The
initial Dissemination Agent shall be Willdan Financial Services. The Dissemination Agent may resign by
providing (i)thirty days written notice to the Issuer, and(ii)upon appointment of a new Dissemination Agent
hereunder.
SECTION 8. Amendment.
(a) This Disclosure Agreement may be amended, by written agreement of the parties,
without the consent of the Owners,if all of the following conditions are satisfied: (1)such amendment is made
in connection with a change in circumstances that arises from a change in legal (including regulatory)
requirements, a change in law, or a change in the identity,nature or status of the Issuer or the type of business
conducted thereby,(2)this Disclosure Agreement as so amended would have complied with the requirements
of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances, (3) the Issuer shall have delivered to the
Dissemination Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities
laws, addressed to the Issuer and the Participating Underwriter, to the same effect as set forth in clause (2)
above,(4)the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond
counsel or counsel expert in federal securities laws, addressed to the Issuer, to the effect that the amendment
does not materially impair the interests of the Owners or Beneficial Owners, or such amendment shall have
been approved by the Owners in the same manner as an amendment to the Indenture, and(5)the Issuer shall
have delivered copies of such opinion and amendment to the Repository.
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(b) This Disclosure Agreement also may be amended by written agreement of the parties
upon obtaining consent of Owners in the same manner as provided in the Indenture for amendments to the
Indenture with the consent of the Owners of the Bonds; provided that the conditions set forth in
Section 8(a)(1),(2)and(3)have been satisfied.
(c) To the extent any amendment to this Disclosure Agreement results in a change in the
type of financial information or operating data provided pursuant to this Disclosure Agreement, the first
Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and
the impact of the change in the type of operating data or financial information being provided.
(d) If an amendment is made to the basis on which financial statements are prepared,the
Annual Report for the year in which the change is made shall present a comparison between the financial
statements or information prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent
reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the
change in the accounting principles on the presentation of the financial information.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Issuer from disseminating any other information,using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement,
the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in
any future Annual Report or notice of occurrence of a Listed Event.
The District acknowledges and understands that other state and federal laws, including but not limited
to the Securities Act of 1933 and Rule lOb-5 promulgated under the Securities Exchange Act of 1934, as
amended may apply to the District, and that under some circumstances compliance with this Disclosure
Agreement,without additional disclosures or other action,may not fully discharge all duties and obligations of
the District under such laws.
SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agent to comply
with any provision of this Disclosure Agreement,any Owner or Beneficial Owner of the Bonds may take such
actions as may be necessary and appropriate, including seeking mandate or specific performance by court
order, to cause the Issuer and/or the Dissemination Agent to comply with their respective obligations under
this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of
Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure
of the Issuer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to
compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer
agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents,
harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or
performance of their powers and duties hereunder, including the costs and expenses(including attorneys' fees)
of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's
negligence or willful misconduct. Any Dissemination Agent other than the Issuer shall be paid
(i)compensation by the Issuer for its services provided hereunder in accordance with a schedule of fees to be
mutually agreed to; and(ii)all expenses,legal fees and advances made or incurred by the Dissemination Agent
in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to
review any information provided to it by the Issuer pursuant to this Disclosure Agreement. The obligations of
the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of
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the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking
any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination
Agent shall not be liable under any circumstances for monetary damages to any person for any breach under
this Disclosure Agreement.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Issuer, the Dissemination Agent,the Participating Underwriter and Owners and Beneficial Owners from time
to time of the Bonds,and shall create no rights in any other person or entity.
SECTION 13. Counterparts. This Disclosure Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
SECTION 14. Governing Law. This Disclosure Agreement shall be construed and governed in
accordance with the laws of the State of California.
SECTION 15. Notices. Any notice or communications to be among any of the parties to this
Disclosure Agreement may be given as follows:
To the Issuer: City of Huntington Beach Community Facilities District No.
1990-1
c/o City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
Attention: Director of Finance
Telephone: (714)536-5630
Facsimile:
To the Trustee: U.S.Bank National Association
633 West 5th Street,24th Floor
Los Angeles,California 90071
Attention: Corporate Trust Services
Telephone: (213)615-6024
Facsimile: (213)615-6199
To the Dissemination Agent: Willdan Financial Services
27368 Via Industria,Suite 110
Temecula,California 92590
Telephone: (951)587-3500
Facsimile: (951)587-3510
To the Participating Underwriter: Stifel,Nicolaus&Company,Incorporated
One Ferry Building
San Francisco,California 94111
Attention: Municipal Research Department
Telephone: (415)445-2602
Facsimile: (415)445-2395
Any person may,by written notice to the other persons listed above, designate a different address or telephone
number(s)to which subsequent notices or communications should be sent.
SECTION 16. Future Determination of Obligated Persons. In the event the Securities Exchange
Commission amends, clarifies or supplements the Rule in such a manner that requires any landowner within
the District to be an obligated person as defined in the Rule, nothing contained herein shall be construed to
require the District to meet the continuing disclosure requirements of the Rule with respect to such obligated
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person and nothing in this Disclosure Agreement shall be deemed to obligate the District to disclose
information concerning any owner of land within the District except as required as part of the information
required to be disclosed by the District pursuant to Section 4 and Section 5 hereof. The validity,interpretation
and performance of this Disclosure Agreement shall be governed by the laws of the State of California.
SECTION 17. Severability. In case any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
SECTION 18. Merger. Any person succeeding to all or substantially all of the Dissemination
Agent's corporate trust business shall be the successor Dissemination Agent without the filing of any paper or
any further act.
CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1
By:
Its: Finance Director of the City of Huntington Beach,
which is acting in its capacity as the legislative
body of City of Huntington Beach Community
Facilities District No. 1990-1
WILLDAN FINANCIAL SERVICES,as Dissemination
Agent
By:
Its: Authorized Officer
E-8
DOC SOC/1612479v6/022273-0006
EXHIBIT A
NOTICE TO THE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.
1990-1
Name of Bond Issue: $ CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES
DISTRICT NO. 1990-1 2013 SPECIAL TAX REFUNDING BONDS
Date of Issuance: ,2013
NOTICE IS HEREBY GIVEN that City of Huntington Beach Community Facilities District No.
1990-1 (the"Issuer") has not provided an Annual Report with respect to the above-named Bonds as required
by Section 3 of the Continuing Disclosure Agreement, dated as of ,2013. [The Issuer anticipates
that the Annual Report will be filed by ]
Dated:
WILLDAN FINANCIAL SERVICES,as Dissemination
Agent
cc: City of Huntington Beach
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DOCSOC/1612479v6/022273-0006
APPENDIX F
BOOK-ENTRY-ONLY SYSTEM
The information in this section concerning DTC and DTC's book-entry only system has been obtained from
sources that the District believes to be reliable, but the District takes no responsibility for the completeness or
accuracy thereof. The following description of the procedures and record keeping with respect to beneficial
ownership interests in the Bonds,payment ofprincipal,premium, ifany, accreted value and interest on the Bonds to
DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds
and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based
solely on information provided by DTC to the District which the District believes to be reliable, but the District and
the Underwriter do not and cannot make any independent representations concerning these matters and do not take
responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants
nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead
confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company ("DTC"), New York,New York, will act as securities depository for the
Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-
registered Bond will be issued for each annual maturity of the Bonds,each in the aggregate principal amount of such
maturity,and will be deposited through the facilities of DTC.
DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New
York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a"clearing corporation"within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic computerized book-
entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust&Clearing Corporation("DTCC"). DTCC is the holding company for DTC,National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC
is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). DTC has a Standard&Poor's rating of"AA+."The DTC Rules applicable to its Participants are on
file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond
(`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their
ownership interests in Bonds,except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers,all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede &Co. or such
other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts
F-1
DOC SOC/1612479v6/022273-0006
such Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to
the Bond documents. For example,Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being prepaid,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be
redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures,
DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the
record date(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts upon DTC's receipt of funds and corresponding detail information from the District or the
Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC,the Trustee, or the District, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend
payments to Cede&Co.(or such other nominee as may be requested by an authorized representative of DTC)is the
responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered,through its Participant,to
the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's
interest in the Bonds, on DTC's records, to the Trustee. The requirement for physical delivery of Bonds in
connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in
the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered
Bonds to the Trustee's DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving
reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository
is not obtained,physical certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a
successor securities depository). In that event,Bonds will be printed and delivered to DTC.
THE TRUSTEE,AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS,WILL
SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE
VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE
BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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DOCSOC/1612479v6/022273-0006
Jones Hall,A Professional Law Corporation 3-21-13
4-15-13
BOND PURCHASE AGREEMENT
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
, 2013
City of Huntington Beach
Community Facilities District No. 1990-1
c/o City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), acting not as a fiduciary
or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this
"Purchase Contract") with City of Huntington Beach Community Facilities District No. 1990-1
(the"Issuer"), which, upon your acceptance of this offer, will be binding upon the Issuer and the
Underwriter. Capitalized terms used in this Purchase Contract and not otherwise defined herein
have the meanings given to such terms in the Bond Indenture described below.
This offer is made subject to the acceptance by the Issuer of this Purchase Contract on
or before 5:00 p.m. on the date set forth above.
1. Upon the terms and conditions and in reliance upon the respective
representations, warranties and covenants herein, the Underwriter hereby agrees to purchase
from the Issuer, and the Issuer hereby agrees to sell to the Underwriter, all (but not less than all)
of the above-captioned bonds (the "Bonds") at a purchase price (the "Purchase Price") of
$ (equal to the par amount of the Bonds ($ ) less a net original issue
discount of$ , less an Underwriter's discount of
The Bonds will be issued by the Issuer under the authority of the Mello-Roos Community
Facilities Act of 1982 (constituting Section 53311 et seq. of the California Government Code)
(the "Act"), the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal
Code of the City of Huntington Beach (the "Municipal Code"), and Resolution No. (the
"Bond Resolution") adopted on , 2013 by the City Council (the "City Council") of the
City of Huntington Beach (the"City"), acting as the legislative body of the Issuer.
The special taxes that will provide a source of payment for the Bonds (the "Special
Taxes") are being levied pursuant to (i) Resolution No. 6161, adopted by the City Council on
June 25, 1990 (the "Resolution of Formation"), which established the Issuer and authorized
the levy of a special tax within the Issuer (ii) a two-thirds vote of the qualified electors at an
election held in the boundaries of the Issuer on , 1990, and (iii) Ordinance No.
enacted by the City Council on , 1990 (the "Ordinance"), pursuant to which the Special
Taxes were levied on the taxable property in the boundaries of the Issuer. Together, the Bond
Resolution, the Resolution of Formation and the Ordinance are referred to as the "Resolutions
and the Ordinance" in this Purchase Contract.
The Bonds will be issued pursuant to the terms of a Bond Indenture, dated as of
1, 2013 (the "Bond Indenture"), by and between the Issuer and U.S. Bank National
Association, as trustee (the "Trustee").
The proceeds of the sale of the Bonds will be applied in accordance with the Bond
Indenture to (i) refund in full the City of Huntington Beach Community Facilities District No.
1990-1 2001 Special Tax Refunding Bonds (the "Prior Bonds"); (ii) fund a debt service reserve
fund for the Bonds; and (iii) pay costs of issuing the Bonds.
The refunding of the Prior Bonds will be accomplished as described in an Escrow
Agreement, dated as of 1, 2013 (the "Escrow Agreement"), by and between the Issuer
and U.S. Bank National Association, as escrow bank (the"Escrow Bank").
2. The Bonds will mature on the dates and in the principal amounts, and will bear
interest at the rates, as set forth in Exhibit B hereto. The Underwriter agrees to make a bona
fide public offering of all of the Bonds at the offering prices set forth on Exhibit B hereto. The
Bonds will be subject to redemption as set forth on Exhibit B.
3. The Issuer agrees to deliver to the Underwriter as many copies of the Official
Statement dated the date hereof relating to the Bonds (as supplemented and amended from
time to time, the "Final Official Statement") as the Underwriter shall reasonably request as
necessary to comply with paragraph (b)(4) of Rule 15c2-12 under the Securities Exchange Act
of 1934, as amended (the "Rule"). The Issuer agrees to deliver such Final Official Statements
within seven (7) business days after the execution hereof, or such earlier date identified by the
Underwriter to be necessary to allow the Underwriter to meet its obligations under the Rule and
Rule G-32 of the Municipal Securities Rulemaking Board ("MSRB"). The Underwriter agrees to
file the Final Official Statement with the MSRB on or as soon as practicable after the Closing
Date (defined below). The Underwriter agrees to deliver a copy of the Final Official Statement
to each of its customers purchasing Bonds no later than the settlement date of the transaction.
The Issuer has authorized and approved the Preliminary Official Statement dated ,
2013 relating to the Bonds (the "Preliminary Official Statement") and the Final Official
Statement and consents to their distribution and use by the Underwriter in connection with the
offer and sale of the Bonds. The Issuer deems such Preliminary Official Statement final as of its
date for purposes of the Rule, except for information allowed by the Rule to be omitted, and has
executed a certificate to that effect in the form of Exhibit C.
In connection with issuance of the Bonds, and in order to assist the Underwriter in
complying with the Rule, the Issuer will execute a Continuing Disclosure Agreement dated as of
1, 2013 (the "Continuing Disclosure Agreement'), by and between the Issuer and
Willdan Financial Services, as dissemination agent (the "Dissemination Agent"). The form of
the Continuing Disclosure Agreement is attached as Appendix E to the Final Official Statement.
2
4. The Issuer represents and warrants to the Underwriter that:
(a) The Issuer is a community facilities district duly organized and validly
existing under the laws of the State of California (the "State"), including the Act and the
Municipal Code. The Issuer has the full legal right, power and authority, among other
things, (i) upon satisfaction of the conditions in this Purchase Contract and the Bond
Indenture, to issue the Bonds for the purpose specified in Section 1 hereof, (ii) to secure
the Bonds in the manner contemplated in the Bond Indenture and (iii) to levy the Special
Taxes according to the rate and method of apportionment of special taxes for the Issuer
(the"Rate and Method").
(b) The City Council has the full legal right, power and authority to adopt the
Resolutions and the Ordinance, and the Issuer has the full legal right, power and
authority (i) to enter into this Purchase Contract, the Bond Indenture, the Escrow
Agreement and the Continuing Disclosure Agreement (such documents are collectively
referred to herein as the"Issuer Documents"), (ii) to issue, sell and deliver the Bonds to
the Underwriter as provided herein, and (iii) to carry out and consummate all other
transactions on its part contemplated by each of the Issuer Documents and the
Resolutions and the Ordinance, and the Issuer and the City Council have complied with
all provisions of applicable law, including the Act and the Municipal Code, in all matters
relating to such transactions.
(c) The Issuer has duly authorized (i) the execution and delivery by the
Issuer and the execution, delivery and due performance by the Issuer of its obligations
under the Issuer Documents, (ii) the distribution and use of the Preliminary Official
Statement and execution, delivery and distribution of the Final Official Statement, and
(iii) the taking of any and all such action as may be required on the part of the Issuer to
carry out, give effect to and consummate the transactions on its part contemplated by
such instruments. All consents or approvals necessary to be obtained by the Issuer in
connection with the foregoing have been received, and the consents or approvals so
received are still in full force and effect.
(d) The Resolutions and the Ordinance have been duly adopted by the City
Council, acting as legislative body of the Issuer, and are in full force and effect; and the
Issuer Documents, when executed and delivered by the Issuer and the other party
thereto, will constitute legal, valid and binding obligations of the Issuer enforceable
against the Issuer in accordance with its terms, except as enforceability thereof may be
limited by bankruptcy, insolvency or other laws affecting creditors' rights generally.
(e) When delivered to the Underwriter, the Bonds will have been duly
authorized by the City Council, acting as legislative body of the Issuer, and duly
executed, issued and delivered by the Issuer and will constitute legal, valid and binding
obligations of the Issuer enforceable against the Issuer in accordance with their
respective terms, except as enforceability thereof may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally, and will be entitled to the
benefit and security of the Bond Indenture.
(f) The information relating to the Issuer contained in the Preliminary Official
Statement is, and as of the Closing Date such information in the Final Official Statement
will be, true and correct in all material respects, and neither the Preliminary Official
Statement nor the Final Official Statement will as of the Closing Date contain any untrue
3
or misleading statement of a material fact relating to the Issuer or omit to state any
material fact relating to the Issuer necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(g) If, at any time prior to the date twenty-five (25) days following the later of
the Closing (as described in Section 6 below) or the date the Underwriter no longer
retains, directly or as a member of an underwriting syndicate, an unsold balance of the
Bonds for sale to the public, which date, if other than the date of the Closing, shall be
provided to the Issuer by written notice of the Underwriter (the "End of the
Underwriting Period"), any event of which the Issuer has knowledge shall occur which
might or would cause the Final Official Statement to contain an untrue statement of a
material fact or to omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading, the Issuer will promptly notify the Underwriter in writing
of the circumstances and details of such event. If, as a result of such event or any other
event, it is necessary, in the opinion of the Underwriter, the Issuer or their respective
counsel, to amend or supplement the Final Official Statement in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, the Issuer will forthwith cooperate with the Underwriter in the prompt
preparation and furnishing to the Underwriter of a reasonable number of copies of an
amendment of or a supplement to the Final Official Statement, in form and substance
reasonably satisfactory to the Underwriter, which will so amend or supplement the Final
Official Statement so that, as amended or supplemented, it will not contain any untrue
statement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.
(h) None of the adoption of the Resolutions and the Ordinance, the execution
and delivery of the Issuer Documents or the Final Official Statement, the consummation
of the transactions on the part of the Issuer contemplated herein or therein and the
compliance by the Issuer with the provisions hereof or thereof will conflict with, or
constitute on the part of the Issuer, a material violation of, or a material breach of or
default under, (i) any indenture, mortgage, commitment, note or other agreement or
instrument to which the Issuer is a party or by which it is bound, (ii) any provision of the
State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or
decree to which the Issuer (or the members of the City Council or any of its officers in
their respective capacities as such) is subject, that would have a material adverse affect
on the ability of the Issuer to perform its obligations under the Issuer Documents.
(i) The Issuer has never been in default at any time, as to principal of or
interest on any obligation which it has issued, including those which it has issued as a
conduit for another entity, which default may have an adverse effect on the ability of the
Issuer to consummate the transactions on its part under the Issuer Documents, except
as specifically disclosed in the Final Official Statement; and other than the Bond
Indenture, the Issuer has not entered into any contract or arrangement of any kind which
might give rise to any lien or encumbrance on the Special Taxes following issuance of
the Bonds.
0) Except as is specifically disclosed in the Final Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, pending with respect to which the Issuer has been served
4
with process or known by the official of the Issuer executing this Purchase Contract to be
threatened, which in any way questions the powers of the City Council or the Issuer
referred to in paragraph (b) above, or the validity of any proceeding taken by the City
Council in connection with the issuance of the Bonds, or wherein an unfavorable
decision, ruling or finding could materially adversely affect the transactions on the part of
the Issuer contemplated by this Purchase Contract, or of any other Issuer Document, or
which, in any way, could adversely affect the validity or enforceability of the Resolutions,
the Ordinance, the Bond Indenture, the Escrow Agreement, the Bonds or this Purchase
Contract or, to the knowledge of the official of the Issuer executing this Purchase
Contract, which in any way questions the exclusion from gross income of the recipients
thereof of the interest on the Bonds for federal income tax purposes or in any other way
questions the status of the Bonds under State tax laws or regulations.
(k) Any certificate signed by an official of the Issuer authorized to execute
such certificate and delivered to the Underwriter in connection with the transactions
contemplated by the Issuer Documents shall be deemed a representation and warranty
by the Issuer to the Underwriter as to the truth of the statements therein contained.
(1) The Issuer has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
(m) The Bonds will be paid from Special Taxes received by the Issuer and
moneys held in certain funds and accounts established under the Bond Indenture and
pledged thereunder to the payment of the Bonds.
(n) The Special Taxes may lawfully be levied in accordance with the Rate
and Method, and the Ordinance, and, when levied, will be secured by a lien on the
property on which they are levied.
(o) The Bond Indenture creates a valid pledge of and first lien upon the
Special Taxes deposited thereunder, and the moneys in certain funds and accounts
established pursuant to the Bond Indenture, subject in all cases to the provisions of the
Bond Indenture permitting the application thereof for the purposes and on the terms and
conditions set forth therein.
(p) Except as disclosed in the Preliminary Official Statement and the Final
Official Statement, the Issuer has not failed in any material respect to comply with any
undertaking of the Issuer under the Rule in the previous five years.
(q) The Issuer acknowledges and agrees that: (i) the purchase and sale of
the Bonds pursuant to this Purchase Contract is an arm's length, commercial transaction
between the Issuer and the Underwriter, (ii) in connection with such transaction, the
Underwriter is acting solely as a principal and is not acting as a municipal advisor,
financial advisor or fiduciary to the Issuer; (iii) the Underwriter has not assumed any
advisory or fiduciary responsibility to the Issuer with respect to the transaction`
contemplated hereby and the discussions, undertakings and proceedings leading thereto
(irrespective of whether the Underwriter has provided other services or is currently
providing other services to the Issuer on other matters) or any other obligation to the
Issuer except the obligations expressly set forth in this Purchase Contract and (iv) the
Issuer has consulted its own legal, accounting, tax, financial and other advisors, as
5
applicable, to the extent it has deemed appropriate in connection with the transaction
contemplated herein.
5. The Issuer covenants with the Underwriter that the Issuer will cooperate with the
Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for
offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as
the Underwriter may reasonably request; provided, however, that the Issuer shall not be
required to consent to suit or to service of process, or to qualify to do business, in any
jurisdiction. The Issuer consents to the use by the Underwriter of the Issuer Documents, the
Preliminary Official Statement and the Final Official Statement in the course of its compliance
with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of
the Bonds.
6. At 9:00 a.m. on 2013 (the "Closing Date") or at such other time and/or
date as shall have been mutually agreed upon by the Issuer and the Underwriter, the Issuer will
deliver or cause to be delivered to the Underwriter the Bonds in definitive form duly executed
and authenticated by the Fiscal Agent together with the other documents mentioned in Section
8 hereof; and the Underwriter will accept such delivery and pay the Purchase Price of the Bonds
by delivering to the Fiscal Agent for the account of the Issuer a check payable in federal funds
or making a wire transfer in federal funds payable to the order of the Fiscal Agent.
The activities relating to the final execution and delivery of the Bonds and the Bond
Indenture and the payment therefor and the delivery of the certificates, opinions and other
instruments as described in Section 8 of this Purchase Contract shall occur at the offices of
Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California
("Bond Counsel"). The payment for the Bonds and simultaneous delivery of the Bonds to the
Underwriter is herein referred to as the "Closing." The Bonds will be delivered as fully
registered, book-entry only Bonds initially in denominations equal to the principal amount of
each maturity thereof. The Bonds will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company, and will be made available for checking by the Underwriter at
such place as the Underwriter and the Fiscal Agent shall agree not less than 24 hours prior to
the Closing.
7. The Underwriter shall have the right to cancel its obligations to purchase the
Bonds if between the date hereof and the date of Closing:
(a) the House of Representatives or the Senate of the Congress of the
United States, or a committee of either, shall have pending before it, or shall have
passed or recommended favorably, legislation introduced previous to the date hereof,
which legislation, if enacted in its form as introduced or as amended, would have the
purpose or effect of imposing federal income taxation upon revenues or other income of
the general character to be derived by the Issuer or by any similar body under the Bond
Indenture or upon interest received on obligations of the general character of the Bonds,
or of causing interest on obligations of the general character of the Bonds, to be
includable in gross income for purposes of federal income taxation, and such legislation,
in the Underwriter's opinion, materially adversely affects the market price of the Bonds;
or
(b) a tentative decision with respect to legislation shall be reached by a
committee of the House of Representatives or the Senate of the Congress of the United
States, or legislation shall be favorably reported or re-reported by such a committee or
6
be introduced, by amendment or otherwise, in or be passed by the House of
Representatives or the Senate, or recommended to the Congress of the United States
for passage by the President of the United States, or be enacted or a decision by a
federal court of the United States or the United States Tax Court shall have been
rendered, or a ruling, release, order, circular, regulation or official statement by or on
behalf of the United States Treasury Department, the Internal Revenue Service or-other
governmental agency shall have been made or proposed to be made having the
purpose or effect, or any other action or event shall have occurred which has the
purpose or effect, directly or indirectly, of adversely affecting the federal income tax
consequences of owning the Bonds, including causing interest on the Bonds to be
included in gross income for purposes of federal income taxation, or imposing federal
income taxation upon revenues or other income of the general character to be derived
by the Issuer under the Bond Indenture or upon interest received on obligations of the
general character of the Bonds, or the Bonds and also including adversely affecting the
tax-exempt status of the Issuer under the Code, which, in the opinion of the Underwriter,
materially adversely affects the market price of or market for the Bonds; or
(c) legislation shall have been enacted, or actively considered for enactment
with an effective date prior to the Closing, or a decision by a court of the United States
shall have been rendered, the effect of which is that the Bonds, including any underlying
obligations, or the Bond Indenture, as the case may be, is not exempt from the
registration, qualification or other requirements of the Securities Act of 1933, as
amended and as then in effect, the Securities Exchange Act of 1934, as amended and
as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect;
or
(d) a stop order, ruling, regulation or official statement by the Securities and
Exchange Commission or any other governmental agency having jurisdiction of the
subject matter shall have been issued or made or any other event occurs, the effect of
which is that the issuance, offering or sale of the Bonds, including any underlying
obligations, or the execution and delivery of the Bond Indenture as contemplated hereby
or by the Final Official Statement, is or would be in violation of any provision of the
federal securities laws, including the Securities Act of 1933, as amended and as then in
effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the
Trust Indenture Act of 1939, as amended and as then in effect; or
(e) any event shall have occurred or any information shall have become
known to the Underwriter which causes the Underwriter to reasonably believe that the
Final Official Statement includes an untrue statement of a material fact, or omits to state
any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Issuer fails to amend or
supplement such Final Official Statement to cure such omission or misstatement
pursuant to Section 4(g); or
(f) there shall have occurred any outbreak of hostilities or any national or
international calamity or crisis, including a financial crisis, the effect of which on the
financial markets of the United States is such as, in the reasonable judgment of the
Underwriter, would materially adversely affect the market for or market price of the
Bonds; or
7
(g) there shall be in force a general suspension of trading on the New York
Stock Exchange, the effect of which on the financial markets of the United States is such
as, in the reasonable judgment of the Underwriter, would materially adversely affect the
market for or market price of the Bonds; or
(h) a general banking moratorium shall have been declared by federal, New
York or State authorities; or
0) any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the Issuer; or
Q) additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority or by
any national securities exchange which adversely affects the Underwriter's ability to sell
the Bonds; or
(k) the New York Stock Exchange or other national securities exchange, or
any governmental authority, shall impose, as to the Bonds or obligations of the general
character of the Bonds, any material restrictions not now in force, or increase materially
those now in force, with respect to the extension of credit by, or the charge to the net
capital requirements of, the Underwriter; or
(1) an amendment to the federal or State constitution shall be enacted or
action taken by any federal or State court, legislative body, regulatory body or other
authority materially adversely affecting the tax status of the Issuer, its property, income
or securities (or interest thereon), the validity or enforceability of the Special Tax or the
ability of the Issuer to issue the Bonds and levy the Special Tax as contemplated by the
Bond Indenture, the Rate and Method and the Final Official Statement; or
(m) any rating on the Bonds shall have been downgraded or withdrawn by a
national rating service, which, in the Underwriter's reasonable opinion, materially
adversely affects the marketability of the Bonds or the sale, at the contemplated offering
prices, by the Underwriter of the Bonds.
8. The obligation of the Underwriter to purchase the Bonds shall be subject (a) to
the performance by the Issuer of its obligations to be performed by it hereunder at and prior to
the Closing, (b) to the accuracy as of the date hereof and as of the time of the Closing of the
representations and warranties of the Issuer herein, and (c) to the following conditions, including
the delivery by the Issuer of such documents as are enumerated herein in form and substance
satisfactory to the Underwriter:
(a) At the time of Closing, (i) the Final Official Statement, this Purchase
Contract, the Continuing Disclosure Agreement, the Escrow Agreement and the Bond
Indenture shall be in full force and effect and shall not have been amended, modified or
supplemented except as may have been agreed to by the Underwriter, and (ii) the Issuer
shall have duly adopted and there shall be in full force and effect such resolutions and
ordinances (including, but not limited to, the Resolutions and the Ordinance) as, in the
opinion of Bond Counsel, shall be necessary in connection with the transactions
contemplated hereby.
8
(b) Receipt of the Bonds, executed by the Issuer and authenticated by the
Fiscal Agent, at or prior to the Closing. The terms of the Bonds, when delivered, shall in
all instances be as described in Final Official Statement.
(c) At or prior to the Closing, the Underwriter shall receive the following
documents in such number of counterparts as shall be mutually agreeable to the
Underwriter and the Issuer:
(i) A final approving opinion of Bond Counsel dated the date of
Closing in the form attached to the Final Official Statement as Appendix B.
(ii) A letter or letters of Bond Counsel addressed to the Underwriter,
which includes a statement to the effect that Bond Counsel's final approving
opinion may be relied upon by the Underwriter to the same extent as if such
opinion were addressed to the Underwriter, and further provides:
(A) the statements contained in the Official Statement on the
cover page and under the captions "INTRODUCTION," "THE BONDS"
(other than information relating to DTC and its book-entry only system, as
to which no opinion need be expressed), "SECURITY AND SOURCES
OF PAYMENT FOR THE BONDS," and "TAX EXEMPTION," and in
Appendices B and D thereto, are accurate insofar as such statements
expressly summarize certain provisions of the Bonds, the Bond Indenture
and Bond Counsel's opinion concerning certain federal tax matters
relating to the Bonds;
(B) this Purchase Contract constitutes the legal, valid and
binding obligation of the Issuer enforceable against the Issuer in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws affecting enforcement of
creditors' rights in general and to the application of equitable principles if
equitable remedies are sought; and
(C) the Bonds are not subject to the registration requirements
of the Securities Act of 1933, as amended, and the Bond Indenture is
exempt from qualification pursuant to the Trust Indenture Act of 1939, as
amended.
(iii) A letter of Stradling Yocca Carlson & Rauth, a Professional
Corporation ("Disclosure Counsel"), addressed to the Issuer and the_
Underwriter, to the effect that:
(A) during the course of serving as Disclosure Counsel in
connection with the issuance of the Bonds and without having undertaken
to determine independently or assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Final Official Statement, no information came to the attention of the
attorneys in such firm rendering legal services in connection with the
issuance of the Bonds that would lead them to believe that the Final
Official Statement (excluding therefrom the financial statements, any
financial or statistical data, or forecasts, charts, numbers, estimates,
9
projections, assumptions or expressions of opinion included in the Official
Statement, information regarding DTC, and the appendices to the Official
Statement, as to which no opinion need be expressed), as of the date
thereof or the Closing Date, contains any untrue statement of a material
fact or omits to state a material fact required to 'be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(B) the Bonds are exempt from registration pursuant to the
Securities Act of 1933, as amended.
(iv) A letter of Jones Hall, A Professional Law Corporation
("Underwriter's Counsel'), addressed to the Underwriter, in form and substance
acceptable to the Underwriter.
(v) The Final Official Statement executed on behalf of the Issuer by a
duly authorized officer of the Issuer.
(vi) Certified copies of the Resolutions and the Ordinance.
(vii) Evidence of recordation in the real property records of the County
of Orange of the Notice of Special Tax Lien in the form required by the Act.
(viii) A certificate, in form and substance as set forth in Exhibit A
hereto, of the Issuer, dated as of the Closing Date.
(ix) Evidence that Federal Form 8038 has been executed by the
Issuer and will be filed with the Internal Revenue Service.
(x) Executed copies of the Bond Indenture, the Escrow Agreement
and the Continuing Disclosure Agreement.
(xi) A tax certificate in form satisfactory to Bond Counsel.
(xii) An opinion, dated the Closing Date and addressed to the
Underwriter, of the City Attorney, to the effect that:
(A) the Issuer is duly organized and validly existing as a community
facilities district under and by virtue of the Constitution and laws of the
State, with full legal right, power and authority to adopt the Resolutions
and the Ordinance;
(B) the Resolutions and the Ordinance were each duly adopted at a
meeting of the City Council, acting as legislative body of the Issuer, which
was called and held pursuant to law and with all public notice required by
law and at which a quorum was present and acting throughout, and the
Resolutions and the Ordinance are in full force and effect and have not
been amended or repealed, except as set forth therein;
(C) the Escrow Agreement and the Continuing Disclosure Agreement
were duly authorized, executed and delivered by the Issuer, and
10
constitute the legal, valid and binding obligations of the Issuer
enforceable against the Issuer in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting enforcement of creditors' rights in general and to the application
of equitable principles if equitable remedies are sought.
(D) no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, regulatory agency, public board or body is
pending with respect to which the Issuer has been served with process or
to the knowledge of the City Attorney, is threatened, in any way affecting
the existence of the Issuer or the titles of the Issuer's officials to their
respective offices, or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds or the application of the proceeds thereof in
accordance with the Bond Indenture, or the collection or application of the
Special Taxes to pay the principal of and interest on the Bonds, or in any
way contesting or affecting the validity or enforceability of the Bonds, the
Issuer Documents or any action of the Issuer contemplated by any of said
documents, or in any way contesting the completeness or accuracy of the
Final Official Statement or the powers of the Issuer or its authority with
respect to the Bonds, the Issuer Documents or any action on the part of
the Issuer contemplated by any of said documents, wherein an
unfavorable decision, ruling, or finding could materially adversely affect
the validity or enforceability of the Bonds or the Issuer Documents;
(E) the execution and delivery of the Bonds and the Issuer
Documents, and compliance with the provisions of each, will not conflict
with or constitute a breach of or default under any loan agreement, note,
ordinance, resolution, indenture, contract, agreement or other instrument
of which the Issuer is a party or is otherwise subject or bound, a
consequence of which could be to materially and adversely affect the
ability of the Issuer to perform its obligations under the Bonds or the
Issuer Documents;
(F) all approvals, consents, authorization, elections and orders of or
filings or registrations with any governmental authority, board, agency or
commission having jurisdiction which would constitute a condition
precedent to, or the absence of which would materially adversely affect,
the ability of the Issuer, to perform its obligations under the Bonds or the
Issuer Documents, have been obtained or made, as the case may be,
and are in full force and effect; and
(G) based upon the information made available to the City Attorney in
the course of its participation in the transaction and without having
undertaken to determine independently or assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Final Official Statement, nothing has come to the attention of the City
Attorney which has led the City Attorney to believe that the Final Official
Statement (excluding therefrom the financial and statistical data included
in the Final Official Statement, as to which no opinion need be expressed)
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements
11
therein, in light of the circumstances under which they were made, not
misleading in any material respect.
(xi ii) In connection with printing and distribution of the Preliminary
Official Statement, an executed certificate of the Issuer in the form attached
hereto as Exhibit C.
(xiv) A certificate in form and substance as set forth in Exhibit D hereto
of the Fiscal Agent/Escrow Bank and an opinion of its counsel in form and
substance satisfactory to the Underwriter.
(xv) A certificate in form and substance as set forth in Exhibit E hereto,
of Willdan Financial Services, in its capacity as special tax consultant ("Special
Tax Consultant"), dated as of the Closing Date.
(xvi) A certificate in form and substance as set forth in Exhibit F hereto,
of Willdan Financial Services, in its capacity as Dissemination Agent, dated as of
the Closing Date.
(xvii) A defeasance opinion of Bond Counsel with respect to the Prior
Bonds.
(xviii) Certificates of Willdan Financial Services and Harrell & Company
Advisors, LLC, in substantially the form of Exhibit G, to the collective effect that,
except as set forth in the Preliminary Official Statement and the Final Official
Statement, the Issuer, the City, the Huntington Beach Public Financing Authority,
other community facilities districts established by the City and any other related
entities have not failed to comply in all material respects with any continuing
disclosure undertakings during the past five years.
(xix) A Certificate of Representations and Warranties of the City, dated
as of the date of this Purchase Contract (the "City Pricing Certificate"), in
substantially the form of Exhibit H, with only such changes therein as shall have
been accepted by the Underwriter on or prior to the date of this Purchase
Contract.
(xx) A certificate dated the Closing Date and signed by the City
Manager of the City certifying that the representations and warranties of the City
contained in the City Pricing Certificate are true and correct in all material
respects on and as of the Closing Date, with the same effect as if made on the
Closing Date, except that all references therein to the Preliminary Official
Statement shall be deemed to be references to the Official Statement.
(xxi) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Underwriter or Bond Counsel may
reasonably request to evidence compliance by the Issuer with legal
requirements, the truth and accuracy, as of the time of Closing, of the respective
representations of the Issuer herein contained and the due performance or
satisfaction by the Issuer at or prior to such time of all agreements then to be
performed and all conditions then to be satisfied.
12
If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriter
contained in this Purchase Contract, or if the obligations of the Underwriter to purchase and
accept delivery of the Bonds shall be terminated for any reason permitted by this Purchase
Contract, this Purchase Contract shall terminate and neither the Underwriter nor the Issuer shall
be under further obligation hereunder; except that the respective obligation_s to pay expenses,
as provided in Section 11 hereof shall continue in full force and effect.
9. The obligations of the Issuer to issue and deliver the Bonds on the Closing Date
shall be subject, at the option of the Issuer, to the performance by the Underwriter of its
obligations to be performed hereunder at or prior to the Closing Date, and to the delivery by
Bond Counsel of the opinion described in Section 8(c)(i) and by Disclosure Counsel of the letter
described in Section 8(iii).
10. All representations, warranties and agreements of the Issuer hereunder shall
remain operative and in full force and effect, regardless of any investigations made by or on
behalf of the Underwriter, and shall survive the Closing.
11. The Issuer shall pay or cause to be paid all expenses incident to the performance
of its obligations under this Purchase Contract, including, but not limited to, delivery of the
Bonds, costs of printing the Bonds, the Preliminary Official Statement and the Final Official
Statement, any amendment or supplement to the Preliminary Official Statement or Final Official
Statement and this Purchase Contract, fees and disbursements of Bond Counsel and
Disclosure Counsel, the financial advisor and other consultants engaged by the Issuer, including
the fees and expenses of the Special Tax Consultant, the California Debt Investment and
Advisory Commission fee, fees of the Fiscal Agent and the Escrow Bank, and fees and
disbursements in connection with the qualification of the Bonds for sale under the securities or
"Blue Sky" laws of the various jurisdictions and the preparation of"Blue Sky" memoranda.
The Underwriter shall pay all advertising expenses in connection with the public offering
of the Bonds, and all other expenses incurred by it in connection with its public offering and
distribution of the Bonds, including fees and expenses of its counsel, if any.
12. Any notice or other communication to be given to the Issuer under this Purchase
Contract may be given by delivering the same in writing at its address set forth above, and any
notice or other communication to be given to the Underwriter under this Purchase Contract may
be given by delivering the same in writing to the following: Stifel, Nicolaus & Company,
Incorporated, One Ferry Building, San Francisco, CA 94111, Attention: Sara Brown.
13. This Purchase Contract is made solely for the benefit of the Issuer and the
Underwriter (including the successors or assigns of the Underwriter) and no other person,
including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue
hereof.
14. This Purchase Contract shall be governed by and construed in accordance with
the laws of the State applicable to contracts made and performed in the State.
13
Issuer. 15. This Purchase Contract shall become effective upon acceptance hereof by the
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Authorized Representative
Accepted and agreed to as of
the date first above written and the time set
forth below:
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.
1990-1
By:
Authorized Representative
Time:
14
EXHIBIT A
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
ISSUER CLOSING CERTIFICATE
I, the undersigned, hereby certify that I am the of the City of Huntington Beach,
the City Council of which is the legislative body for City of Huntington Beach Community
Facilities District No. 1990-1 (the "Issuer"), a community facilities district duly organized and
existing under the laws of the State,of California (the "State") and that as such, I am authorized
to execute this Certificate on behalf of the Issuer in connection with the issuance of the above-
referenced bonds (the"Bonds").
I hereby further certify on behalf of the Issuer that:
(A) no litigation is pending with respect to which the Issuer has been served
with process or, to my best knowledge after reasonable inquiry, threatened (1) to restrain
or enjoin the issuance of any of the Bonds or the collection of Special Taxes pledged
under the Bond Indenture; (2) in any way contesting or affecting the authority for the
issuance of the Bonds or the validity or enforceability of the Bonds, the Bond Indenture,
the Escrow Agreement, the Continuing Disclosure Agreement or the Purchase Contract;
or (3) in any way contesting the existence or powers of the Issuer;
(B) the representations and warranties made by the Issuer in the Issuer
Documents are true and correct in all material respects on the Closing Date, with the
same effect as if made on the Closing Date;
(C) no event has occurred since the date of the Final Official Statement that,
as of the Closing Date, would cause any statement or information contained in the Final
Official Statement to be incorrect or incomplete in any material respect or would cause
the information in the Final Official Statement to contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make such statements
therein, in the light of the circumstances under which they were made, not misleading;
and
(D) as of the date hereof, the Bond Indenture is in full force and effect in
accordance with its terms and has not been amended, modified or supplemented except
in such case as may have been agreed to by the Underwriter; and
(E) the Issuer has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied under the Issuer Documents prior to
issuance of the Bonds.
Capitalized terms used in this Certificate and not defined herein shall have the same
meaning set forth in the Bond Purchase Agreement dated 2013, between the Issuer
and Stifel, Nicolaus & Company, Incorporated
A-1
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
set forth below.
Dated: [Closing Date]
CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1
By:
Authorized Representative
A-2
EXHIBIT B
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
Serial Bonds
Maturity Principal Interest
Date Amount Rate Yield Price
Term Bond
Redemption Provisions
[to come]
B-1
EXHIBIT C
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
RULE 15C2-12 CERTIFICATE
The undersigned hereby certifies and represents that she is the duly elected and acting
of the City of Huntington Beach (the "Issuer"), the City Council of which is the
legislative body of the City of Huntington Beach Community Facilities District No. 1990-1 (the
"Issuer"), and is duly authorized to execute and deliver this Certificate and further hereby
certifies on behalf of the Issuer as follows:
(1) This Certificate is delivered in connection with the offering and sale of the
above-referenced bonds (the "Bonds") in order to enable the underwriter of the Bonds to
comply with Securities and Exchange Commission Rule 15c2-12 under the Securities
Exchange Act of 1934, as amended (the "Rule").
(2) In connection with the offering and sale of the Bonds, there has been
prepared a Preliminary Official Statement, setting forth information concerning the Bonds
and the Issuer(the"Preliminary Official Statement").
(3) As used herein, "Permitted Omissions" shall mean the offering price(s),
interest rate(s), selling compensation, aggregate principal amount, principal amount per
maturity, delivery dates, ratings and other terms of the Bonds depending on such
matters, all with respect to the Bonds.
(4) The Preliminary Official Statement is, except for the Permitted Omissions,
deemed final within the meaning of the Rule.
IN WITNESS WHEREOF, I have hereunto set my hand as of 2013.
CITY OF HUNTINGTON BEACH COMMUNITY
FACILITIES DISTRICT NO. 1990-1
By:
Authorized Representative
C-1
EXHIBIT D
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
CERTIFICATE OF TRUSTEE/ESCROW BANK
The undersigned hereby states and certifies that the undersigned is an authorized officer
of U.S. Bank National Association, (the "Bank"), which is acting (A) as trustee (the "Trustee")
under that certain Bond Indenture, dated as of 1, 2013 (the "Bond Indenture"), by and
between the City of Huntington Beach Community Facilities District No. 1990-1 (the "Issuer")
and the Bank, and (B) as escrow bank (the "Escrow Bank") under the Escrow Agreement,
dated as of 1, 2013 (the "Escrow Agreement"), between the Issuer and the Bank, and
as such, is familiar with the following facts and is authorized and qualified to certify the following
facts on behalf of the Bank:
(1) The Bank is duly organized and existing as a national banking association
under the laws of the United States of America, having the full power and authority to
enter into and perform its duties under the Bond Indenture and the Escrow Agreement.
(2) The Bond Indenture and the Escrow Agreement have been duly authorized,
executed and delivered by the Bank, and are legal, valid and binding agreements of the
Bank enforceable upon the Bank in accordance with their respective terms.
(3) The Bonds have been authenticated by a duly authorized representative of
the Bank in accordance with the Bond Indenture.
(4) To the best knowledge of the Bank, after due inquiry, there is no action, suit,
proceeding or investigation, at law or in equity, before or by any court or governmental
agency, public board or body pending against the Bank or threatened against the Bank
which in the reasonable judgment of the Bank would affect the existence of the Bank or
in any way contesting or affecting the validity or enforceability of the Bond Indenture or
the Escrow Agreement or contesting the powers of the Bank or its authority to enter into
and perform its obligations under the Bond Indenture and the Escrow Agreement.
Dated: [closing date] U.S. BANK NATIONAL ASSOCIATION
By
Authorized Officer
D-1
EXHIBIT E
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
CERTIFICATE OF SPECIAL TAX CONSULTANT
Willdan Financial Services (the "Special Tax Consultant") has been retained as Special
Tax administrator for the City of Huntington Beach Community Facilities District No. 1990-1 (the
"Issuer") and has reviewed the Rate and Method of Apportionment of Special Tax for the Issuer
(the "Rate and Method"), a copy of which is set forth in Appendix A to the Official Statement,
dated 2013 (the "Official Statement') relating to the above-captioned bonds (the
"Bonds").
Based upon such review, the Special Tax Consultant hereby certifies that the Special
Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method on the
date hereof, would generate % debt service coverage on the Bonds, provided that the
annual debt service figures on the attached debt service schedule, which were relied upon by
Special Tax Consultant, are substantially true and correct.
Although the Special Tax if collected in the maximum amounts pursuant to the Rate and
Method, would generate the debt service coverage described in the previous paragraph, no
representation is made herein as to actual amounts that will be collected in future years.
All information with respect to the Rate and Method in the Official Statement and all
other information sourced to the Special Tax Consultant is true and correct as of the date of the
Official Statement and as of the date hereof, and a true and correct copy of the Rate and
Method is attached to the Official Statement as Appendix A.
Dated: 2013
WILLDAN FINANCIAL SERVICES
By:
Authorized Officer
E-1
EXHIBIT F
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
CERTIFICATE OF DISSEMINATION AGENT
The undersigned hereby states and certifies that the undersigned is an authorized officer
of Willdan Financial Services, as dissemination agent (the "Dissemination Agent") pursuant to
a Continuing Disclosure Agreement dated as of 1, 2013 (the "Continuing Disclosure
Agreement"), by and between the Issuer and the Dissemination Agent, and as such, is familiar
with the following facts and is authorized and qualified to certify the following facts on behalf of
the Dissemination Agent:
(1) The Dissemination Agent has the full power and authority to enter into and
perform its duties under the Continuing Disclosure Agreement.
(2) The Continuing Disclosure Agreement has been duly authorized, executed
and delivered by the Dissemination Agent, and is a legal, valid and binding agreement of
the Dissemination Agent enforceable upon the Dissemination Agent in accordance with
its terms.
(3) To the best knowledge of the Dissemination Agent, after due inquiry, there is
no action, suit, proceeding or investigation, at law or in equity, before or by any court or
governmental agency, public board or body pending against the Dissemination Agent or
threatened against the Dissemination. Agent which in the reasonable judgment of the
Dissemination Agent would affect the existence of the Dissemination Agent or in any
way contesting or affecting the validity or enforceability of the Continuing Disclosure
Agreement or contesting the powers of the Dissemination Agent or its authority to enter
into and perform its obligations under the Continuing Disclosure Agreement.
Dated: [closing date] WILLDAN FINANCIAL SERVICES
By
Authorized Officer
F-1
EXHIBIT G
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
CERTIFICATE REGARDING CONTINUING DISCLOSURE
The undersigned hereby states and certifies that:
(i) I am an authorized representative of which acts as
dissemination agent (the "Dissemination Agent") in connection with the continuing
disclosure undertakings (the "Previous Undertakings") of the issuer (the "Issuer") of the
bonds listed on Schedule 1 (the "Listed Bonds") pursuant to Rule 15c2-12 promulgated
under the Securities Exchange Act of 1934 (the "Rule"), and as such, I am familiar with
the facts herein certified and am authorized and qualified to certify the same; and
(ii) in our capacity as Dissemination Agent, we have reviewed the Previous
Undertakings, and all annual filings and other event filings (if any) made pursuant
thereto, and conclude that in the previous five years, [Option #1: the Issuer has filed
each annual report in a complete and timely manner, and all event filings required to be
made pursuant to the Rule have also been made in a timely manner pursuant to the
Rule] [Option #2: the information in the Official Statement under the heading
"CONTINUING DISCLOSURE" is accurate with respect to the Issuer's filing history for
the previous five years].
Dated:
[NAME OF CERTIFYING PARTY]
By:
Authorized Officer
G-1
Schedule 1
Issuer Name of Bonds
G-2
EXHIBIT H
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 1990-1
2013 SPECIAL TAX REFUNDING BONDS
CERTIFICATE OF REPRESENTATIONS
AND WARRANTIES OF THE CITY
2013
To: Stifel, Nicolaus & Company, Incorporated
One Ferry Building
San Francisco, CA 94111
Ladies and Gentlemen:
We are delivering to you this certificate in connection with the issuance and sale of the
captioned bonds (the "Bonds") and pursuant to the Bond Purchase Agreement, dated the date
hereof (the "Purchase Agreement"), by and between you and City of Huntington Beach
Community Facilities District No. 1990-1 (the "Issuer"). All capitalized terms used herein
without definition shall have the meanings assigned to such terms in the Purchase Agreement.
The undersigned, in his capacity as an officer of the City of Huntington Beach (the
"City") and not in his individual capacity, on behalf of the City, represents and warrants to you
that:
(1) The City is duly organized and validly existing as a municipal corporation and
charter city under the Constitution and laws of the State of California and the City Council has
duly and validly adopted each of the Resolutions and Ordinance and authorized the formation of
the Issuer pursuant to the Act.
(2) The information contained in the Preliminary Official Statement (other than
information provided by Willdan Financial Services, the County of Orange and information
relating to The Depository Trust Company and its book-entry only system, as to which no view
is expressed) is, as of the date thereof and as of the date hereof, true and correct in all material
respects and does not, as of the date thereof and as of the date hereof, contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading.
(3) Except as is specifically disclosed in the Preliminary Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,
public board or body, pending with respect to which the City has been served with process or is
known to have been threatened, which in any way questions the powers of the City Council to
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adopt the Resolutions and the Ordinance, or the validity of any proceeding taken by the City
Council in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling
or finding could materially adversely affect the transactions contemplated by the Purchase
Contract, or of any other Issuer Document, or which, in any way, could adversely affect the
validity or enforceability of the Resolutions, the Ordinance, the Bond Indenture, the Escrow
Agreement, the Bonds or the Purchase Contract.
(4) Any certificate signed by an official of the City authorized to execute such
certificate and delivered to the Underwriter in connection with the transactions contemplated by
the Issuer Documents shall be deemed a representation and warranty by the City to the
Underwriter as to the truth of the statements therein contained.
(5) Except as disclosed in the Preliminary Official Statement, the City has not failed
in any material respect to comply with any undertaking of the Issuer under the Rule in the
previous five years.
CITY OF HUNTINGTON BEACH
By:
Authorized Representative
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Res. No. 2013-18
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on May 20, 2013 by the following vote:
AYES: Sullivan, Hardy, Harper, Carchio, Shaw, Katapodis
NOES: None
ABSENT: Boardman
ABSTAIN: None
Ci Clerk and ex-officiolVierk of the
City Council of the City of
Huntington Beach, California