HomeMy WebLinkAboutFile 2 of 2 - Public Financing Authority 2010 Lease Revenue Council/Agency Meeting Held: D D
Deferred/Continued to:
*Appr ved ® Conditionally Approved ® Denied City le s Signat r
Council Meeting Date: May 3, 2010 Department ID Number: FN 10-015
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Counc'I Members/
Public Financing Authority Mem
SUBMITTED BY: Fred A. Wilson, City Administ
PREPARED BY: Bob Wingenroth, Director of ance
SUBJECT: Issuance of Huntington Beach Public Financing Authority 2010 Lease
Revenue Refunding Bonds 2010-Series A
Statement of Issue:
Staff has determined that a refunding of a portion ($14,795,000) of Huntington Beach Public
Financing Authority debt will benefit the City economically.
Financial Im pact:
General Fund debt service expenditures would also be reduced by an average of $65,000
per year through 2030. Approval of this Council Action will result in an estimated net present
value savings of approximately $993,862 over 21 years. All costs of the bond refunding will
be paid from bond proceeds.
Recommended Action: Motion to:
A. Approve Resolution No. 20 "A Resolution of the Huntington Beach Financing
Authority Authorizing the Issuance and Sale of Lease Revenue Bonds to Refund the
Outstanding Huntington Beach Public Financing Authority Lease Revenue Bonds, 1997
Series A (Public Facilities Project), and the Outstanding Huntington Beach Public
Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement
Financing Project), Approving Form and Authorizing Execution of Related Documents
and Approving Official Actions."
B. Approve Resolution No. 2010-37 "A Resolution of the City Council of Huntington
Beach Approving Proceedings by the Huntington Beach Public Financing Authority for
the Issuance and Sale of Lease Revenue Bonds to Refund the Outstanding Huntington
Beach Public Financing Authority Lease Revenue Bonds, 1997 Series A (Public
Facilities Project), and the Outstanding Huntington Beach Public Financing Authority
Lease Revenue Bonds, 2000 Series A (Capital Improvement Financing Project),
Approving Form and Authorizing Execution of Related Documents and Approving
Official Actions."
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: FN 10-015
Alternative Action(s):
Do not approve the resolutions and do not refinance the bonds.
Analysis:
The Huntington Beach Public Financing Authority (PFA) is an entity that was formed in 1988
to issue debt to finance public improvements and other capital purchases for the City of
Huntington Beach and the Redevelopment Agency of the City of Huntington Beach. The
PFA'S governing body is the City Council, which also adopts the PFA annual budget. The
PFA is financially dependent on the City for all its operations. Currently, the PFA has four
separate debt issues outstanding totaling $59,815,000.
On February 19, 2008, the City Council approved a similar action regarding the defeasance
of this debt. However, shortly after the City Council approved the action, national economic
conditions and the municipal bond market began to deteriorate, eliminating the City's
economic benefit for the defeasance. Thus, the transaction was not completed. Since then,
staff has continued to monitor the market for municipal securities. Recently, interest rates
and the municipal bond market have improved to the point where refunding the bonds once
again may be economically beneficial.
Below is a summary of the proposed transaction:
Original Issuance Amount Amount to be Economic
Bond Issue Amount Currently Refunded Benefit of
Outstanding Refinancing
1997 Lease $8,070,000 $2,770,000 $2,770,000 $199,165
Revenue Bonds
2000 Lease
Revenue Bonds 31,360,000 12,785,000 12,025,000 794,697
Series A
Total $39,430,000 $15,555,000 $14,795,000 $993,862
Existing Debt Proposed Difference/ Savings
New Debt
Average coupon 5.47% for 2000A bonds 4.51% 0.96% for 2000A bonds
rate of bonds and 5.50% for 1997 bonds and 0.99% for 1997 bonds
The City's economic benefit is the difference in the present value of cash flows for the new
debt compared to the old debt, or $993,862, which takes into account all of the expenditures
of the new debt. The City is not redeeming the full amount of the 2000 bonds, since the
interest rates on some of the certificates are low enough so that they would reduce the
potential savings if included in the refunding. The maturity dates of the new bonds closely
coincide with the maturity dates of the bonds that are being refunded.
The 1997 bonds originally were issued to pay for the City's 800 MHZ system and for
improvements to the area at the base of the Municipal Pier (Pier Plaza.) The 2000 bonds
were originally issued for South Beach improvements, the beach maintenance facility, an
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: FN 10-015
energy retrofit program, the refinancing of the Emerald Cove housing complex, and a
repayment of a loan from the Water Fund that originally funded the pier reconstruction.
Staff is recommending that the existing debt be refunded by the issuance of new debt, not to
exceed $16,500,000, Upon issuance of the new debt, the City will have no further obligation
to fund debt service on the original debt.
Staff is recommending that the bonds be sold through its underwriter, Piper Jaffrey through a
negotiated sale. This specific refunding is very sensitive to interest rates, and staff believes a
negotiated sale will better allow the City to customize the features of the bonds to meet
investor demands and the City's savings target than a competitive sale would. Piper Jaffray
was selected through a competitive process where seven different firms submitted proposals.
If approved, Piper Jaffray will then market the bonds to investors.
To provide security for the bondholders, the City will pledge city-owned properties as
collateral for the debt. The original debt that is being refinanced had the following properties
as collateral for the debt:
Central Library
® 47.4 acres in Central Park
® Fire Training Center
Equestrian Center
By refinancing this debt, all of the existing liens against these properties will be removed.
The City will then use only the City Yard Complex on Gothard Street as collateral for the new
debt.
By approving the attached resolutions, the City Council will delegate the authority to proceed
with this transaction and to sign all related documents to staff. The City Council resolution
requires that in order for staff to proceed with the transaction, the net present value savings
to the City must be at least 3% of the refunded principal amounts. The minimum savings
amount is calculated as follows:
Principal Amount of Debt to be Redeemed $14,795,500
Times 3% 3%
Minimum Necessary Present Value Savings $443,850
If the savings is less than $443,850, then the transaction will not be completed.
If the City Council approves this action, there will be no further action required by the City
Council regarding this debt refunding. Staff will continue to monitor interest rate trends to
determine when and if additional debt refunding or defeasances will create a financial benefit.
If such a situation occurs, staff will present the proposal to the City Council for approval.
Environmental Status: Not Applicable.
Strategic Plan Goal: Maintain financial viability and our reserves
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: FN 10-015
Attachoment(s):
1. Resolution No. 20 "A Resolution of the Huntington Beach Financing Authority
Authorizing the Issuance and Sale of Lease Revenue Bonds to Refund the Outstanding
Huntington Beach Public Financing Authority Lease Revenue Bonds, 1997 Series A (Public
Facilities Project), and the Outstanding Huntington Beach Public Financing Authority Lease
Revenue Bonds, 2000 Series A (Capital Improvement Financing Project), Approving Form
and Authorizing Execution of Related Documents and Approving Official Actions."
2. Resolution No. 2010-37"A Resolution of the City Council of Huntington Beach Approving
Proceedings by the Huntington Beach Public Financing Authority for the Issuance and Sale
of Lease Revenue Bonds to Refund the Outstanding Huntington Beach Public Financing
Authority Lease Revenue Bonds, 1997 Series A (Public Facilities Project), and the
Outstanding Huntington Beach Public Financing Authority Lease Revenue Bonds, 2000
Series A (Capital Improvement Financing Project), Approving Form and Authorizing
Execution of Related Documents and Approving Official Actions."
3. Indenture of Trust
4. Site and Facility Lease
5. Lease Agreement
6. Memorandum of Lease Agreement
7. Memorandum of Assignment of Lease
8. Continuing Disclosure Certificate
9. Bond Purchase Agreement
10. Form of Final Opinion of Bond Counsel
11. Redemption Instructions and Request to Trustee (1997 Bonds)
12. Escrow Deposit and Trust Agreement 1997 Bonds)
13. Escrow Deposit and Trust Agreement (2000 Bonds)
14. Termination Agreement 1997 Documents)
15. Termination Agreement (2000 Documents)
16. Authority 15c2-12 Certificate Regarding Preliminary Official Statement
17. City 15c2-12 Certificate Regarding Preliminary Official Statement
18. Preliminary Official Statement
ATTACHMENT # 1
RESOLUTION NO. 20
A RESOLUTION OF THE HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE AND SALE OF LEASE REVENUE BONDS
TO REFUND THE OUTSTANDING HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY LEASE REVENUE BONDS, 1997 SERIES A (PUBLIC FACILITIES
PROJECT), AND THE OUTSTANDING HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY LEASE REVENUE BONDS, 2000 SERIES A (CAPITAL IMPROVEMENT
FINANCING PROJECT), APPROVING FORM AND AUTHORIZING EXECUTION OF
RELATED DOCUMENTS AND APPROVING OFFICIAL ACTIONS
WHEREAS, the Huntington Beach Public Financing Authority ("Authority") has
heretofore issued its $8,070,000 Huntington Beach Public Financing Authority Lease
Revenue Bonds, 1997 Series A (Public Facilities Project), of which $2,770,000 remains
outstanding (the "1997 Bonds"); and
The proceeds of the 1997 Bonds were used to finance the costs of the acquisition,
construction, installation and equipping of certain public capital improvements (the "1997
Project"); and
The Authority has also heretofore issued its $18,310,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 2000 Series A (Capital improvement
Financing Project), of which $12,785,000 remains outstanding (the "2000 Bonds"); and
The proceeds of the 2000 Bonds were used to finance and refinance the costs of
the acquisition, construction, installation and equipping of certain public capital
improvements (the "2000 Project'); and
The City, working together with the Authority, proposes to undertake the refinancing
of the 1997 Project and the 2000 Project, including the refunding of the 1997 Bonds and
the 2000 Bonds; and
For such purposes, the Authority has determined to issue its Huntington Beach
Public Financing Authority Lease Revenue Refunding Bonds, 2010 Series A, in the
aggregate principal amount of not to exceed $16,500,000 (the "Bonds"); and
The Bonds will be issued under the provisions of Article 4 (commencing with section
6584) of the Act (the "Bond Law") and an indenture of trust (the "Indenture"), by and
between the Authority and U.S. Bank National Assoc., as trustee; and
In order to provide for the repayment of the Bonds, the Authority will lease certain
real property and improvements (the "Property") to the City pursuant to a lease agreement
(the "Lease Agreement') under which the City will agree to make lease payments to the
Authority from moneys in its General Fund and the City will budget and appropriate
sufficient amounts in each year to pay the full amount of principal of and interest on the
Bonds-, and
10-2489/46080
PFA Resolution No. 20
As required pursuant to section 6586.5(a) of the California Government Code, a
public hearing has been held by the City Council of the City in connection with the.
financing; and
The firm of Piper Jaffray & Co. (the "Underwriter") has proposed to purchase and
underwrite the Bonds and has presented to the Authority a form of bond purchase
agreement for the Bonds, to be entered into among the Authority, the City and the
Underwriter (the "Bond Purchase Agreement"); and
A proposed form of official statement (the "Official Statement") describing the
Bonds, to be used in connection with the marketing of the Bonds by the Underwriter, has
been prepared and has been presented to the Authority; and
The Board has duly considered such transactions and wishes at this time to
approve said transactions in the public interests of the Authority; and
NOW, THEREFORE, the Huntington Beach Public Financing Authority does hereby
resolve as follows:
Section 1. Findings. The Board hereby finds that significant public benefits will arise
from the financing in accordance with section 6586 of the California Government Code.
Section 2. Issuance of Bonds; Approval of Indenture. The Board hereby authorizes
the issuance of the Bonds under and pursuant to the Bond Law and the indenture, for the
purpose of providing funds to refinance the 1997 Project and the 2000 Project, to refund
the 1997 Bonds and the 2000 Bonds. The Authority hereby approves the Indenture, in
substantially the form on file with the Secretary, together with any changes therein or
additions thereto approved by the Chair, the Executive Director or the Treasurer of the
Authority (the "Designated Officers"), whose execution thereof shall be conclusive
evidence of such approval. The Designated Officers, each acting alone, are hereby
authorized and directed for and in the name and on behalf of the Authority to execute, and
the Secretary is hereby authorized and directed to attest, the final form of the Indenture for
and in the name of the Authority. The Authority hereby authorizes the delivery and
performance of the Indenture.
Section 3. Approval of Site and Facility Lease. The Board hereby approves a site
and facility lease, by and between the City and the Authority (the "Site and Facility Lease"),
pursuant to which the City will lease the Property to the Authority, to be leased back to the
City pursuant to the Lease Agreement, in substantially the form on file with the Secretary,
together with any changes therein or additions thereto deemed advisable by any
Designated Officer, whose execution thereof shall be conclusive evidence of such
approval. The Designated Officers, each acting alone, are hereby authorized and directed
for and in the name and on behalf of the Authority to execute, and the Secretary is hereby
authorized and directed to attest, the final form of the Site and Facility Lease for and in the
name of the Authority. The Authority hereby authorizes the delivery and performance of
the Site and Facility Lease.
10-2489/46080 2
PFA Resolution No. 20
Section 4. Approval of Lease Agreement. The Board hereby approves the Lease
Agreement, in substantially the form on file with the Secretary, together with any changes
therein or additions thereto deemed advisable by any Designated Officer, whose execution
thereof shall be conclusive evidence of such approval. The Designated Officers, each
acting alone, are hereby authorized and directed for and in the name and on behalf of the
Authority to execute, and the Secretary is hereby authorized and directed to attest, the
final form of the Lease Agreement for and in the name of the Authority. The Authority
hereby authorizes the delivery and performance of the Lease Agreement.
Section 5. Approval of Escrow Agreements.
(a) The Board hereby approves an escrow deposit and trust agreement, by and
among the Authority, the City and U.S. Bank National Association, as escrow bank,
relating to the refunding of the 1997 Bonds (the "1997 Escrow Agreement"), in
substantially the form on file with the Secretary, together with any changes therein or
additions thereto deemed advisable by any Designated Officer, whose execution thereof
shall be conclusive evidence of the approval of any such changes or additions. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the
name and on behalf of the Authority to execute, and the Secretary is hereby authorized
and directed to attest, the final form of the 1997 Escrow Agreement for and in the name of
the Authority. The Board hereby authorizes the delivery and performance. of the 1997
Escrow Agreement.
(b) The Board hereby approves an escrow deposit and trust agreement, by and
among the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as
escrow bank, relating to the refunding of the 2000 Bonds (the "2000 Escrow Agreement"),
in substantially the form on file with the Secretary, together with any changes therein or
additions thereto deemed advisable by any Designated Officer, whose execution thereof
shall be conclusive evidence of the approval of any such changes or additions. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the
name and on behalf of the Authority to execute, and the Secretary is hereby authorized
and directed to attest, the final form of the 2000 Escrow Agreement for and in the name of
the Authority. The Board hereby authorizes the delivery and performance of the 2000
Escrow Agreement.
Section 6. Approval of Termination Agreements.
(a) The Board hereby approves a termination agreement, by and among the City,
the Authority and U.S. Bank National Association, providing for the termination of the
recorded documents relating to the 1997 Bonds (the "1997 Termination Agreement"), in
substantially the form on file with the Secretary, together with any changes therein or
additions thereto deemed advisable by any Designated Officer, whose execution thereof
shall be conclusive evidence of the approval of any such changes or additions. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the
name and on behalf of the Authority to execute, and the Secretary is hereby authorized
and directed to attest, the final form of the 1997 Termination Agreement for and in the
name of the Authority. The Board hereby authorizes the delivery and performance of the
1997 Termination Agreement.
10-2489/46080 3
PFA Resolution No. 20
(b) The Board hereby approves a termination agreement, by and among the City,
the Authority and The Bank of New York Mellon Trust Company, N.A., providing for the
termination of the recorded documents relating to the 2000 Bonds (the "2000 Termination
Agreement"), in substantially the form on file with the Secretary, together with any changes
therein or additions thereto deemed advisable by any Designated Officer, whose execution
thereof shall be conclusive evidence of the approval of any such changes or additions. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the
name and on behalf of the Authority to execute, and the Secretary is hereby authorized
and directed to attest, the final form of the 2000 Termination Agreement for and in the
name of the Authority. The Board hereby authorizes the delivery and performance of the
2000 Termination Agreement.
Section 7. Sale of the Bonds. The Board hereby approves the sale of the Bonds by
the Authority to the Underwriter pursuant to the Bond Purchase Agreement in substantially
the form on file with the Secretary, together with such additions thereto and changes
therein as a Designated Officer shall deem necessary, desirable or appropriate, the
execution of which by the Authority shall be conclusive evidence of the approval of any
such additions and changes. The Designated Officers, each acting alone, are hereby
authorized and directed to execute the final form of the Bond Purchase Agreement for and
in the name and on behalf of the Authority upon the submission of an offer by the
Underwriter to purchase the Bonds, which offer is acceptable to a Designated Officer and
consistent with the requirements of this Resolution. The amount of Underwriter's
compensation for the Bonds shall not exceed $3.50 per $1,000 principal amount of the
Bonds.
Section 8. Official Statement. The Board hereby approves, and hereby deems
nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934
(the "Rule"), the preliminary official statement describing the Bonds (the "Preliminary
Official Statement"), in substantially the form on file with the Secretary. The Designated
Officers, each acting alone, are hereby authorized and directed to execute an appropriate
certificate stating the Authority's determination that the Preliminary Official Statement is
nearly final within the meaning of the Rule. Distribution of the Preliminary Official
Statement in connection with the sale of the Bonds is hereby approved. The Designated
Officers, each acting alone, are hereby authorized and directed to approve any changes in
or additions to a final form of official statement (the "Final Official Statement"), and the
execution thereof by any Designated Officer shall be conclusive evidence of approval of
any such changes and additions. The Authority hereby authorizes the distribution of the
Final Official Statement by the Underwriter. The Final Official Statement shall be executed
in the name and on behalf of the Authority by any Designated Officer.
Section 9. Official Actions. The Chair, the Vice Chair, the Executive Director the
Treasurer, the Secretary and all other officers of the Authority are each authorized and
directed in the name and on behalf of the Authority to make any and all assignments,
certificates, requisitions, agreements, notices, consents, instruments of conveyance,
warrants and other documents, which they or any of them might deem necessary or
appropriate in order to consummate any of the transactions contemplated by the
documents approved pursuant to this Resolution. Whenever in this Resolution any officer
10-2489/46080 4
PFA Resolution No. 20
of the Authority is authorized to execute or countersign any document or take any action,
such execution, countersigning or action may be taken on behalf of such officer by any
person designated by such officer to act on his or her behalf in the case such officer shall
be absent or unavailable.
Section 10. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
PASSED AND ADOPTED by the Huntington Beach Public Financing Authority at a
meeting thereof on the 3rd day of May , 2010.
C
REVIE APPROVED: INITIATED AND APPROVED:
Exec#ver Urector Deputy Executiv 'rector
APPROVED AS FORM:
Authority Attorney
10-2489/46080 5
Ices. No. 20
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF HUNTINGTON BEACH )
1, JOAN FLYNN, the duly elected, qualified Secretary of the
Huntington Beach Public Financing Authority, do hereby certify that the
whole number of members of the Board of Directors of the Huntington Beach
Public Financing Authority 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
Board at a regular meeting thereof held on May 3, 2010 and that it was so
adopted by the following vote:
AYES: Directors: Carchio, Coerper, Hardy, Green, Bohr, Dwyer, Hansen
NOES: Directors: None
ABSENT: Directors: None
ABSTAIN: Directors: None
S retary of the Board o irectors
of the Huntington Beach Public
Financing Authority
ATTACHMENT #2
RESOLUTION NO. 2010-37
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
APPROVING PROCEEDINGS BY THE HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY FOR THE ISSUANCE AND SALE OF LEASE REVENUE BONDS TO
REFUND THE OUTSTANDING HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY LEASE REVENUE BONDS, 1997 SERIES A(PUBLIC FACILITIES
PROJECT), AND THE OUTSTANDING HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY LEASE REVENUE BONDS, 2000 SERIES A(CAPITAL IMPROVEMENT
FINANCING PROJECT), APPROVING FORM AND AUTHORITIZING EXECUTION
OF RELATED DOCUMENTS AND APPROVING OFFICIAL ACTIONS
WHEREAS, the Huntington Beach Public Financing Authority (the "Authority") has
heretofore issued its $8,070,000 Huntington Beach Public Financing Authority Lease Revenue
Bonds, 1997 Series A (Public Facilities Project), of which $2,770,000 remains outstanding (the
"1997 Bonds"); and
The proceeds of the 1997 Bonds were used to finance the costs of the acquisition,
construction, installation and equipping of certain public capital improvements (the "1997
Project"); and
The Authority has also heretofore issued its $18,310,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement Financing
Project), of which$12,785,000 remains outstanding(the "2000 Bonds"); and
The proceeds of the 2000 Bonds were used to finance and refinance the costs of the
acquisition, construction, installation and equipping of certain public capital improvements (the
"2000 Project"); and
The City, working together with the Authority, proposes to undertake the refinancing of
the 1997 Project and the 2000 Project, including the refunding of the 1997 Bonds and the 2000
Bonds; and
For such purposes, the Authority has determined to issue its Huntington Beach Public
Financing Authority Lease Revenue Refunding Bonds, 2010 Series A, in the aggregate principal
amount of not to exceed $16,500,000 (the "Bonds"); and
The Bonds will be issued under the provisions of Article 4 (commencing with section
6584) of the Act (the "Bond Law") and an indenture of trust (the "Indenture"), by and between
the Authority and U.S. Bank National Assof-as trustee; and
In order to provide for the repayment of the Bonds, the Authority will lease certain real
property and improvements (the "Property") to the City pursuant to a lease agreement (the
"Lease Agreement") under which the City will agree to make lease payments to the Authority
10-2489/46079 1
Resolution No, 2010-37
from moneys in its General Fund and the City will budget and appropriate sufficient amounts in
each year to pay the full amount of principal of and interest on the Bonds;and
As required by section 6586.5(a) of the California Government Code, a public hearing
has been held by this Council in connection with the financing; and
The Council desires to make a finding of significant public benefit pursuant to section
6586.5(a)(2) of the California Government Code, and to approve the financing and the
transactions contemplated by the Bonds; and
The firm of Piper Jaffray & Co. (the "Underwriter") has proposed to purchase and
underwrite the Bonds and has presented to the City a form of Bond Purchase Agreement for the
Bonds, to be entered into among the Authority, the City and the Underwriter (the `Bond
Purchase Agreement"); and
A proposed form of official statement (the "Official Statement") describing the Bonds, to
be used in connection with the marketing of the Bonds by the Underwriter, has been prepared
and has been presented to the City; and
The Council has duly considered such transactions and wishes at this time to approve said
transactions in the public interests of the City,
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
resolve as follows:
Section 1. Findings and Consent. The Council hereby finds that significant public
benefits will arise from the financing, in accordance with section 6586 of the California
Government Code.
Section 2. Approval of Bonds. The Council hereby approves the issuance of the
Bonds by the Authority for the purpose of providing funds to refinance the 1997 Project and the
2000 Project, to refund the 1997 Bonds and the 2000 Bonds.
Section 3. Approval of Site and Facility Lease. The Council hereby approves a site
and facility lease, by and between the City and the Authority (the "Site and Facility Lease"),
pursuant to which the City will lease the Property to the Authority, to be leased back to the City
pursuant to the Lease Agreement, in substantially the form on file with the City Clerk, together
with any nonsubstantive changes therein or additions thereto deemed advisable by the City
Administrator, either Deputy City Administrator or the Finance Director (the "Designated
Officers"), whose execution thereof shall be conclusive evidence of such approval. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the name
and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to
attest, the final form of the Site and Facility Lease for and in the name of the City. The Council
hereby authorizes the delivery and performance of the Site and Facility Lease.
10-2489/46079 2
Resolution No. 2010-37
Section 4. Approval of Lease Agreement. The Council hereby approves the Lease
Agreement, in substantially the form on file with the City Clerk, together with any
nonsubstantive changes therein or additions thereto deemed advisable by any Designated Officer,
whose execution thereof shall be conclusive evidence of the approval of any such changes or
additions, so long as the term of the Lease Agreement (not including extensions, as permitted
therein) does not extend beyond September 1, 2030, and so long as the issuance of the Bonds
provides net present value savings to the City of at least 3% of refunded principal. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the name
and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to
attest,the final form of the Lease Agreement for and in the name of the City. The Council hereby
authorizes the delivery and performance of the Lease Agreement.
Section 5. Approval of Escrow Agreements.
(a) The Council hereby approves an escrow deposit and trust agreement, by and among
the Authority, the City and U.S. Bank National Association, as escrow bank, relating to the
refunding of the outstanding 1997 Bonds (the "1997 Escrow Agreement"), in substantially the
form on file with the City Clerk, together with any nonsubstantive changes therein or additions
thereto deemed advisable by any Designated Officer, whose execution thereof shall be
conclusive evidence of the approval of any such changes or additions. The Designated Officers,
each acting alone, are hereby authorized and directed for and in the name and on behalf of the
City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of
the 1997 Escrow Agreement for and in the name of the City. The Council hereby authorizes the
delivery and performance of the 1997 Escrow Agreement.
(b) The Council hereby approves an escrow deposit and trust agreement, by and among
the Authority, the City and The Bank of New York Mellon Trust Company, N.A., as escrow
bank, relating to the refunding of the outstanding 2000 Bonds (the "2000 Escrow Agreement"),
in substantially the form on file with the City Clerk, together with any nonsubstantive changes
therein or additions thereto deemed advisable by any Designated Officer, whose execution
thereof shall be conclusive evidence of the approval of any such changes or additions. The
Designated Officers, each acting alone, are hereby authorized and directed for and in the name
and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to
attest, the final form of the 2000 Escrow Agreement for and in the name of the City. The Council
hereby authorizes the delivery and performance of the 2000 Escrow Agreement.
Section 5. Approval of Termination Agreements.
(a) The Council hereby approves a termination agreement, by and among the City, the
Authority and U.S. Bank National Association, providing for the termination of the recorded
documents relating to the 1997 Bonds (the "1997 Termination Agreement"), in substantially the -
form on file with the City Clerk, together with any nonsubstantive changes therein or additions
thereto deemed advisable by any Designated Officer, whose execution thereof shall be
conclusive evidence of the approval of any such changes or additions. The Designated Officers,
each acting alone, are hereby authorized and directed for and in the name and on behalf of the
City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of
10-2489/46079 3
Resolution No. 2010-37
the 1997 Termination Agreement for and in the name of the City. The Council hereby authorizes
the delivery and performance of the 1997 Termination Agreement.
(b) The Council hereby approves a termination agreement, by and among the City, the
Authority and The Bank of New York Mellon Trust Company, N.A., providing for the
termination of the recorded documents relating to the 2000 Bonds (the "2000 Termination
Agreement"), in substantially the form on file with the City Clerk, together with any
nonsubstantive changes therein or additions thereto deemed advisable by any.Designated Officer,
whose execution thereof shall be conclusive evidence of the approval of any such changes or
additions. The Designated Officers, each acting alone, are hereby authorized and directed for and
in the name and on behalf of the City to execute, and the City Clerk is hereby authorized and
directed to attest, the final form of the 2000 Termination Agreement for and in the name of the
City. The Council hereby authorizes the delivery and performance of the 2000 Termination
Agreement.
Section 7. Sale of the Bonds. The Council hereby approves the sale of the Bonds by
the Authority to the Underwriter pursuant to the Bond Purchase Agreement in substantially the
form on file with the Secretary, together with such nonsubstantive additions thereto and changes
therein as a Designated Officer shall deem necessary, desirable.or appropriate, the execution of
which by the Authority shall be conclusive evidence of the approval of any such additions and
changes. The Designated Officers, each acting alone, are hereby authorized and directed to
execute the final form of the Bond Purchase Agreement for and in the name and on behalf of the
Authority upon the submission of an offer by the Underwriter to purchase the Bonds, which offer
is acceptable to a Designated Officer and consistent with the requirements of this Resolution.
The Underwriter's compensation for the Bonds shall not exceed $3.50 per $1,000 of principal
amount of the Bonds.
Section 8. Official Statement. The Council hereby approves, and hereby deems
nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 (the
"Rule"), the preliminary official statement describing the Bonds (the "Preliminary Official
Statement") in substantially the form on file with the City Clerk. The Designated Officers, each
acting alone, are hereby authorized and directed to execute an appropriate certificate stating the
City's determination that the Preliminary Official Statement is nearly final within the meaning of
the Rule. Distribution of the Preliminary Official Statement in connection with the sale of the
Bonds is hereby approved. The Designated Officers, each acting alone, are hereby authorized
and directed to approve any nonsubstantive changes in or additions to a final form of official
statement (the "Final Official Statement"), and the execution thereof by any Designated Officer
shall be conclusive evidence of approval of any such changes and additions. The Council hereby
authorizes the distribution of the Final Official Statement by the Underwriter. The Final Official
Statement shall be executed in the name and on behalf of the City by any Designated Officer.
Section 9. Official Actions. The City Administrator, either Deputy City
Administrator, the Finance Director, the City Clerk and all other officers of the City are each
authorized and directed in the name and on behalf of the City to make any and all assignments,
certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and
other documents, which they or any of them might deem necessary or appropriate in order to
10-2489146079 4
Resolution No. 2010-37
consummate any of the transactions contemplated by the documents approved pursuant to this
Resolution. Whenever in this Resolution any officer of the City is authorized to execute or
countersign any document or take any action, such execution, countersigning or action may be
taken on behalf of such officer by any person designated by such officer to act on his or her
behalf in the case such officer shall be absent or unavailable.
Section 10. Effective Date. This Resolution shall take effect from and after the date of
its passage and adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach
at a regular meeting thereof held on the 3rd day of May , 20 10 .
Ma
REVIEW APPROVED: INITIATED AND APPROVED:
City i ' trator Director of Finance
APPROVED AS TO FORM:
�..- City Attorney
10-2489/46079 5
Res. No. 2010-37
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 3, 2010 by the following vote:
AYES: Carchio, Coerper, Hardy, Green, Bohr, Dwyer, Hansen
NOES: None
ABSENT: None
ABSTAIN: None
Ci Clerk and ex-officiogierk of the
City Council of the City of
Huntington Beach, California
ATTACHMENT #3
Qo,j�x,c&`il mmig LLP 03/18/10
04/01/10
INDENTURE OF TRUST
by and between the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
and
as Trustee
Dated as of Lune 1,2010
Relating to
Huntington Beach Public Financing Authority
Lease Revenue Refunding Bonds,2010 Series A
08008.04
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS;AUTHORIZATION AND PURPOSE OF BONDS;EQUAL SECURITY
Section1.01. Definitions........................................................................................................................................3
Section,I. 02. Rules of Construction...................................................................................................................10
Section 1.03. Authorization and Purpose of Bonds.........................................................................................10
Section1.04. Equal Security................................................................................................................................10
ARTICLE H
ISSUANCE OF BONDS
Section2.01. Authorization of Bonds................................................................................................................11
Section2.02. Terms of the Bonds.......................................................................................................................11
Section 2.03. Transfer and Exchange of Bonds................................................................................................12
Section2.04. Book-Entry System........................................................................................................................12
Section2.05, Registration Books.........................................................................................................................13
Section 2.06. Form and Execution of Bonds.....................................................................................................14
Section2.07. Temporary Bonds..........................................................................................................................14
Section 2.08. Bonds Mutilated,Lost,Destroyed or Stolen.............................................................................14
Section2.09. CUSIP Numbers............................................................................................................................15
ARTICLE III
APPLICATION OF PROCEEDS
Section 3.02. Application of Proceeds of Sale of Bonds..................................................................................16
Section 3.02. Establishment and Application of Costs of Issuance Fund.....................................................16
Section3.03. Validity of Bonds...........................................................................................................................16
ARTICLE IV
REDEMPTION OF BONDS
Section4.01. Terms of Redemption...................................................................................................................17
Section 4.02. Selection of Bonds for Redemption............................................................................................18
Section 4.03. Notice of Redemption...................................................................................................................18
Section 4.04. Partial Redemption of Bonds.......................................................................................................19
Section4.05. Effect of Redemption....................................................................................................................19
Section4.06. Purchase of Bonds.........................................................................................................................19
ARTICLE V
REVENUES;FUNDS AND ACCOUNTS;PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment;Revenue Fund....................................................................................20
Section 5.02. Allocation of Revenues.................................................................................................................20
Section 5.03. Application of Interest Account..................................................................................................21
Section 5.04. Application of Principal Account...............................................................................................21
Section 5.05. Application of Reserve Account.................................................................................................21
Section 5.06. Application of Redemption Fund...............................................................................................22
Sec iob 5.07. Insurance and Condemnation Fund...........................................................................................22
Section5.08. Investments....................................................................................................................................23
ARTICLE VI
PARTICULAR COVENANTS
Section6.01. Punctual Payment.........................................................................................................................25
-ectiort 6.02. Extension of Payment of Bonds..................................................................................................25
Section 6.03. Against Encumbrances.................................................................................................................25
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment......................................................25
-i-
Section6.05. Accounting Records......................................................................................................................25
Section 6.06. No Additional Obligations..........................................................................................................26
Section.6.07. Tax Covenants...............................................................................................................................26
5ection,6,08. Rebate Fund...................................................................................................................................26
Section 6.09. Collection of Amounts Due Under Lease Agreement.............................................................27
Section 6.10. Continuing Disclosure..................................................................................................................28
Section6.11. Waiver of Laws..............................................................................................................................28
Section 6.12. Further Assurances.......................................................................................................................28
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section7.01. Events of Default...........................................................................................................................29
Section 7.02. Remedies Upon Event of Default...............................................................................................29
Section 7.03. Application of Revenues and Other Funds After Default.......................................................30
Section 7,04. Trustee to Represent Bond Owners............................................................................................30
Section 7.05. Bond Owners'Direction of Proceedings....................................................................................31
Section 7.06. Limitation on Bond Owners'Right to Sue.................................................................................31
Se>:tion 7.07. Absolute Obligation of Authority...............................................................................................32
Section 7.08. Termination of Proceedings.........................................................................................................32
Section 7.09. Remedies Not Exclusive...............................................................................................................32
Section7.10. No Waiver of Default....................................................................................................................32
Section 7.11. Parties Interested Herein..............................................................................................................32
ARTICLE VIR
THE TRUSTEE
Section 8.01. Duties,Immunities and Liabilities of Trustee...........................................................................33
Section 8.02. Merger or Consolidation..............................................................................................................34
Section 8.03. Liability of Trustee........................................................................................................................34
Section 8.04. Right to Rely on Documents........................................................................................................36
Section 8.05. Preservation and Inspection of Documents..............................................................................37
Section 8.06. Compensation and Indemnification...........................................................................................37
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted...............................................................................................................38
Section 9.02. Effect of Supplemental Indenture...............................................................................................39
Section 9.03. Endorsement of Bonds;Preparation of New Bonds................................................................39
Section 9.04. Amendment of Particular Bonds................................................................................................39
ARTICLE X
DEFEASANCE
Section10.01. Discharge of Indenture.................................................................................................................40
Section 10.02. Discharge of Liability on Bonds..................................................................................................40
Section 10.03. Deposit of Money or Securities with Trustee............................................................................40
Section10.04. Unclaimed Funds..........................................................................................................................41
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues..............................................................................42
Section 11.02. Limitation of Rights to Parties and Bond Owners....................................................................42
Section11.03. Funds and Accounts.....................................................................................................................42
Section 11.04. Waiver of Notice;Requirement of Mailed Notice....................................................................42
Section 11-05. Destruction of Bonds....................................................................................................................42
Section 11.06. Severability of Invalid Provisions...............................................................................................42
Section11,07. Notices............................................................................................................................................43
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Section 11.08. Evidence of Rights of Bond Owners...........................................................................................43
Section 11.09. Disqualified Bonds.........................................................................................................................0
Section 11.10. Money Held for Particular Bonds...............................................................................................44
Section 11.11. Waiver of Personal Liability........................................................................................................44
Section 11.12. Successor Is Deemed Included in All References to Predecessor..........................................44
Section 11.13. Execution in Several Counterparts.............................................................................................45
Section11.14. Governing Law..............................................................................................................................45
EXHIBIT A FORM OF BOND
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this "Indenture"), made and entered into and dated as
of June 1, 2010, by and between the HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY, a joint exercise of powers authority organized and existing under and by virtue
of the laws of the State of California (the "Authority"), and , a
national banking association organized and existing under and by virtue of the laws of the
United States of America with a corporate trust office in Los Angeles, California, and being
qualified to accept and administer the trusts hereby created(the"Trustee");
RECITALS :
WHEREAS,the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated June 2, 1997, by and
between the City of Huntington Beach (the "City") and the Huntington Beach Community
Development Agency (the "Agency" and, with the City, the "Members"), and under the
provisions of Articles 1 through 4 (commencing with section 6500) of Chapter 5 of Division 7 of
Title 1. of the California Government Code(the"Act"),and is authorized pursuant to Article 4 of
the Act to borrow money for the purpose of financing the acquisition of bonds,notes and other
obligations of, or for the purpose of making loans to, public entities, including the Members,
and to provide financing for public capital improvements of public entities, including the
Members;
WHEREAS, the Huntington Beach Public Financing Authority (the "Authority") has
heretofore issued its $8,070,000 Huntington Beach Public Financing Authority Lease Revenue
Bonds, 1997 Series A (Public Facilities Project), of which $2,770,000 remains outstanding (the
"1997 Bonds");
WHEREAS, the proceeds of the 1997 Bonds were used to finance the costs of the
acquisition,construction,installation and equipping of certain public capital improvements(the
"1997 Project");
WHEREAS, the Authority has also heretofore issued its $18,310,000 Huntington Beach
Public Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement
Financing Project),of which$12,785,000 remains outstanding(the"2000 Bonds");
WHEREAS,the proceeds of the 2000 Bonds were used to finance and refinance the costs
of the acquisition, construction, installation and equipping of certain public capital
improvements(the"2000 Project");
WHEREAS, the City, working together with the Authority, proposes to undertake the
refinancing of the 1997 Project and the 2000 Project, including the refunding of the 1997 Bonds
and the 2000 Bonds;
WHEREAS, for such purposes, the Authority has determined to issue its Huntington
Beach Public Financing Authority Lease Revenue Refunding Bonds, 2010 Series A, in the
aggregate principal amount of$ (the"Bonds"),
WHEREAS, the Bonds will be issued under the provisions of Article 4 (commencing
with section 6584)of the Act(the'Bond Law")and this Indenture;
WHEREAS,in order to provide for the repayment of the Bonds,the Authority will lease
certain real property and improvements (the "Property") to the City pursuant to a lease
agreement,dated as of Lun 1,2010(the"Lease Agreement"),under which the City will agree to I
make lease payments to the Authority from moneys in its General Fund and the City will
budget and appropriate sufficient amounts in each year to pay the full amount of principal of
and interest on the Bonds;
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and to
secure the payment of the principal thereof, premium, if any, and interest thereon, the
Authority has authorized the execution and delivery of this Indenture;and
WHEREAS,the Authority has determined that all acts and proceedings required by law
necessary to make the Bonds,when executed by the Authority,authenticated and delivered by
the Trustee and duly issued, the valid, binding and legal special obligations of the Authority,
and to constitute this Indenture a valid and binding agreement for the uses and purposes herein
set forth in accordance with its terms, have been done and taken, and the execution and
delivery of the Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the Bonds at any time issued and Outstanding under this Indenture, according to
their terms, and to secure the performance and observance of all the covenants and conditions
therein and herein set forth, and to declare the terms and conditions upon and subject to which
the Bonds are to be issued and delivered, and in consideration of the premises and of the
mutual covenants herein contained 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 Authority does covenant and agree with the Trustee, for the benefit of the
respective Owners from time to time of the Bonds,as follows:
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ARTICLE I
DEFINITIONS;AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
Section 1.01. Definitions.Unless the context otherwise requires,the terms defined in this
Section 1.01 shall for all purposes of this Indenture,of any Supplemental Indenture,of the Lease
Agreement, of the Bonds and of any certificate, opinion, request or other documents herein
mentioned have the meanings herein specified.
"Authority" means the Huntington Beach Public Financing Authority, a joint exercise of
powers authority organized and existing under and by virtue of the laws of the State, and any
successor thereto.
"Authorized Representative" means: (a) with respect to the Authority, its Chair, Executive
Director or Treasurer or any other person designated as an Authorized Representative of the
Authority by a Written Certificate of the Authority signed by its Executive Director, and filed
with the City, and the Trustee; and (b) with respect to the City, its City Administrator, eiher
Deputy City Administrator, the Finance Director, or any other person designated as an
Authorized Representative of the City by a Written Certificate of the City signed by its City
Administrator and filed with the Authority and the Trustee.
"Bond Counsel" means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of
attorneys appointed by or acceptable to the Authority of nationally-recognized experience in
the issuance of obligations the interest on which is excludable from gross income for federal
income tax purposes under the Code.
"Bond Year" means each twelve-month period extending from September 2 in one
calendar year to September 1 of the succeeding calendar year,both dates inclusive;provided that
the first Bond Year with respect to the Bonds shall commence on the Closing Date and end on
September 1,2010.
"Bonds"means the$ aggregate principal amount of Huntington Beach Public
Financing Authority Lease Revenue Refunding Bonds,2010 Series A, authorized by and at any
time Outstanding pursuant to this Indenture.
"Business Day" means a day(other than a Saturday or a Sunday)on which banks are not
required or authorized to remain closed in the city in which the Office of the Trustee is located
and on which the Federal Reserve is open.
"City" means the City of Huntington Beach, a chartered city and municipal corporation
organized and existing under and by virtue of its charter and the laws of the State.
"Closing Date"means the date of delivery of the Bonds to the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or
(except as otherwise referenced herein) as it may be amended to apply to obligations issued on
the Closing Date, together with applicable proposed, temporary and final regulations
promulgated,and applicable official public guidance published,under such Code.
"Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate
executed by the City and the Authority and dated the date of execution and delivery of the
Bonds, as originally executed and as it may be amended from time to time in accordance with
the terms thereof.
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"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance,sale and delivery of the Bonds,including but not limited to all compensation,fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority or
the City,initial fees and expenses of the Trustee (including but not limited to fees and expenses
for legal counsel), compensation to any financial consultants or underwriters, legal fees and
expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction
of documents, out-of-pocket expenses of the Authority or the City, Authority and City staff
costs and costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.02.
"Debt Service" means, during any period of computation, the amount obtained for such
period by totaling the following amounts: (a) the principal amount of all Outstanding Bonds
coming due and payable by their terms in such period;and (b)the interest which would be due
during such period on the aggregate principal amount of Bonds which would be Outstanding
in such period if the Bonds are retired as scheduled, but deducting and excluding from such
aggregate amount the amount of Bonds no longer Outstanding.
"Defeasance Obligations" means (a) cash (insured at all times by the Federal Deposit
Insurance Corporation); (b) obligations of, or obligations fully and unconditionally guaranteed
as to the timely payment of principal and interest by, the United States or any agency or
instrumentality thereof, when such obligations are backed by the full faith and credit of the
United States,including: (i) United States treasury obligations; (ii) all direct or fully guaranteed
obligations; (iii) certificates of beneficial ownership of the Farmers Home Administration; (iv)
participation certificates of the General Services Administration; (v) guaranteed Title XI
financings of the U.S. Maritime Administration; (vi) Government National Mortgage
Association obligations;and(vii)State and Local Government Series.
"Event of Default," with respect to this Indenture, means any of the events specified in
Section 7.01 and, with respect to the Lease Agreement, means any of the events specified in
Section 9.1 of the Lease Agreement.
"Facility"means the improvements more particularly described in Exhibit B to the Lease
Agreement.
"Federal Securities" means: (a) any direct general obligations of the United States of
America (including obligations issued or held in book entry form on the books of the
Department of the Treasury of the United States of America),the timely payment of principal of
and interest on which are unconditionally and fully guaranteed by the United States of
America; (b) obligations of any agency or department of the United States of America which
represent the full faith and credit of the United States of America or the timely payment of the
principal of and interest on which are secured or guaranteed by the full faith and credit of the
United States of America; and (c) any obligations issued by the State of California or any
political subdivision thereof the payment of and interest and premium (if any) on which are
fully secured by Federal Securities described in the preceding clauses(a)or(b),as verified by an
independent certified public accountant, and rated "AAA" and "Aaa" by S&P and Moody's,
respectively.
"Fiscal Year"means any twelve-month period extending from October 1 in one calendar
year to September 30 of the succeeding calendar year,both dates inclusive,or any other twelve-
month period selected and designated by the Authority or the City, as applicable, as its official
fiscal year period.
-4-
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented,modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the City,and who,or each of whom
(a) is in fact independent and not under domination of the Authority or the City; (b) does not
have any substantial interest, direct or indirect, in the Authority or the City; and (c) is not
connected with the Authority or the City as an officer or employee of the Authority or the City
but who may be regularly retained to make annual or other audits of the books of or reports to
the Authority or the City.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30
Montgomery Street, loth Floor,Jersey City,NJ 07302,Attention: Editor;Mergent/FIS,Inc.,5250
77 Center Drive, Suite 150 Charlotte, NC 28217, Attention: Called Bond Dept.; Kenny S&P, 55
Water Street,New York,NY 10041,Attention:Notification Department;and,in accordance with
then current guidelines of the Securities and Exchange Commission; or to such other addresses
and/or such other national information services providing information with respect to the
redemption of bonds as the Authority may designate in a Written Certificate of the Authority
delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and held
by the Trustee pursuant to Section 5.07.
"Interest Account" means the account by that name established in the Revenue Fund
pursuant to Section 5.02.
"Interest Payment Date"means each March 1 and September 1,commencing September 1,
2010.
"Lease Agreement" means that certain Lease Agreement, dated as of Lune 1,2010,by and
between the Authority and the City, as originally executed and as it may from time to time be
supplemented, modified or amended in accordance with the terms thereof and of this
Indenture.
"Lease Payment Date" means, with respect to any Interest Payment Date, commencing
with the September 1, 2010, Interest Payment Date, the fifteenth (15th) calendar day of the
month preceding such Interest Payment Date.
"Lease Payments"means the aggregate amount of all the payments required to be paid by
the City pursuant to Section 4.3 of the Lease Agreement.
"Moody's"means Moody's Investors Service,New York,New York,or its successors.
"Net Proceeds"means amounts derived by the City from any policy of casualty insurance
with respect to any portion of the Property,or the proceeds of any taking of the Property or any
portion thereof in eminent domain proceedings (including sale under threat of such
proceedings), to the extent remaining after payment therefrom of all expenses incurred in the
collection and administration thereof.
"1997 Bonds" means the$8,070,000 Huntington Beach Public Financing Authority Lease
Revenue Bonds, 1997 Series A (Public Facilities Project), of which $2,770,000 remains
outstanding on the Closing Date.
-5-
"1997 Escrow Agreement" means that certain escrow deposit and trust agreement, dated
as of the Closing Date, by and among the Authority, the City and the 1997 Escrow Bank,
relating to the refunding of the 1997 Bonds.
"1997 Escrow Bank" means U.S. Bank National Association, as escrow bank under the
2000 Escrow Agreement.
"1997 Escrow Fund" means the fund by that name held by the 1997 Escrow Bank under
the 2000 Escrow Agreement.
"Office" means, with respect to the Trustee, the corporate trust office of the Trustee
located in Los Angeles, California, except that with respect to presentation of Bonds for
payment or for registration of transfer and exchange,such term shall mean the office or agency
of the Trustee at which,at any particular time,its corporate agency business shall be conducted.
"Original Purchaser" means the original purchaser of the Bonds upon their delivery by
the Trustee on the Closing Date.
"Outstanding," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation;(b)Bonds with respect to
which all liability of the Authority shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.09; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner," whenever used herein with respect to a Bond, means the person in whose
name the ownership of such Bond is registered on the Registration Books.
"Participating Underwriter" shall have the meaning ascribed thereto in the Continuing
Disclosure Certificate.
"Permitted Encumbrances" means, as of any particular time: (a) liens for general ad
valorem taxes and assessments,if any,not then delinquent,or which the City may,pursuant to
provisions of Article V of the Lease Agreement, permit to remain unpaid; (b) the Site and
Facility Lease; (c) the Lease Agreement; (d) any right or claim of any mechanic, laborer,
materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (e)
easements, rights-of-way, mineral rights, drilling rights and other rights, reservations,
covenants,conditions or restrictions which exist of record as of the Closing Date and which the
City certifies in writing will not materially impair the use of the Property; and (f) easements,
rights of way, mineral rights, drilling rights and other rights, reservations, covenants,
conditions or restrictions established following the date of recordation of the Lease Agreement
and to which the Authority and the City agree in writing do not reduce the value of the
Property.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein
and are consistent with the City's investment policies,but only to the extent that the same are
acquired at Fair Market Value (provided the Trustee may rely upon the Request of the
Authority directing investment hereunder as a determination that such investment is a
Permitted Investment):
-6-
(a) 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.
(b) debentures of the Federal Housing Administration to the extent such obligations are
guaranteed by the full faith and credit of the United States of America;
(c) obligations of the following agencies which are not guaranteed by the United States
of America: (i)participation certificates or debt obligations of the Federal Home Loan Mortgage
Corporation; (ii) consolidated system-wide bonds and notes of the Farm Credit Banks
(consisting of Federal Land Banks, Federal Intermediate Credit Banks and Banks for
Cooperatives); (iii) consolidated debt obligations or letter of credit-backed issues of the Federal
Home Loan Banks; (iv) mortgage-backed securities (excluding stripped mortgage securities
which are valued greater than par on the portion of unpaid principal)or debt obligations of the
Federal National Mortgage Association; or (v) letter of credit-backed issues or debt obligations
of the Student Loan Marketing Association; provided, however, that not more than ten percent
(10%) of the proceeds of the Bonds may,in the aggregate,be invested in any such obligations at
one time;
(d) Federal funds, negotiable certificates of deposit, time deposits and bankers
acceptances (having maturities of not more than 180 days) of banks (including the Trustee and
its affiliates) the short-term obligations of which are rated in one of the two highest Rating
Categories by Moody's and S&P;
(e) deposits (including those of the Trustee and its affiliates) which are fully insured by
the Federal Deposit Insurance Corporation("FDIC');
(0 debt obligations (excluding securities that do not have a fixed par value and/or
whose terms do not promise a fixed dollar amount at maturity or call date) rated in one of the
two highest Rating Categories by Moody's and S&P,without regard to gradations;
(g)commercial paper(having original maturities of not more than 270 days)rated in one
of the two highest Rating Categories by Moody's and S&P,without regard to gradations;
(h) money market funds or money market mutual funds rated "Aam" or higher by S&P
and, if rated by Moody's, rated "Aa2" or higher, including any mutual fund for which the
Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder
servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an
affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects
fees for services rendered pursuant to this Indenture, which fees are separate from the fees
received from such funds, and (iii) services performed for such funds and pursuant to this
Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of
the Trustee;
(i) demand deposits, including interest bearing money market accounts, trust funds,
trust accounts, overnight bank deposits, interest-bearing deposits or certificates of deposit,
including those placed by a third party pursuant to an agreement between the Trustee and the
Authority,including in the case of any such deposit,fund or account of the Trustee or any of its
affiliates, rated in at least the AA or Aa long-term ratings category or higher by S&P or
Moody's,r ively,without regard to gradations,or which are fully FDIC-insured;
(j) Collateralized investment agreements with qualified financial institutions rated AAA
by at least one national rating service; investments shall be collateralized with treasuries or
government agencies at one hundred and ten percent (110%) of funds deposited and subject to
-7-
the Agencies' retaining the right to sell the instrument if the financial institution's rating falls
below AA;
(k) the Local Agency Investment Fund of the State, created pursuant to Section 16429.1
of the California Government Code, to the extent the Trustee is authorized to register such
investment in its name;and
(1) Repurchase and reverse repurchase agreements collateralized with securities
described in subsections (a) and (c) of the definition of Permitted Investments, including those
of the Trustee or any of its affiliates.
(m)other forms of investments that satisfy the City's Statement of Investment Policy.
"Principal Account" means the account by that name established in the Revenue Fund
pursuant to Section 5.02.
"Property"means,collectively,the Site and the Facility.
"Qualified Reserve Fund Credit Instrument" means a surety bond issued to the Trustee by
an insurance company rated in the highest category by Moody's and S&P and, if rated by A.M.
Best&Company,rated in the highest rating category by A.M.Best&Company.
"Rating Category" means, with respect to any Permitted Investment, one of the generic
categories of rating by Moody's and S&P applicable to such Permitted Investment, without
regard to any refinement or graduation of such rating category by a plus or minus sign or a
numeral.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date,whether or not such day is a
Business Day.
"Redemption Fund"means the fund by that name established pursuant to Section 5.2.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.05 for the registration and transfer of ownership of the Bonds.
"Regulations" means the regulations of the United States Department of Treasury issued
under the Code.
"Reserve Account" means the account by that name in the Revenue Fund established
pursuant to Section 5.02.
"Reserve Requirement" means a fixed amount equal to the least of (a) maximum annual
debt service on the Bonds, (b) 125%of average annual debt service on the Bonds,and(c) 10%of
the par amount of the Bonds.The Reserve Requirement is$
"Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 5.01.
"Revenues" means (a) all Lease Payments, prepayments, insurance proceeds,
condemnation proceeds, and (b) subject to the provisions of Section 5.09-hereof, all interest,
profits or other income derived from the investment of amounts in any fund or account
established pursuant to this Indenture.
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"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies,Inc.,New York,New York,or its successors.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th
Floor, New York, NY 10041-0099, Attention: Call Notification Department, Fax (212) 855-7232;
and, in accordance with then current guidelines of the Securities and Exchange Commission,
such other addresses and/or such other securities depositories as the Authority may designate
in a Written Certificate of the Authority delivered to the Trustee.
"Site" means that certain real property more particularly described in Exhibit A to the
Site and Facility Lease and in Exhibit A to the Lease Agreement.
"Site and Facility Lease"means the Site and Facility Lease,dated as of Lune 1,2010,by and
between the City,as lessor,and the Authority,as lessee,together with any duly authorized and
executed amendments thereto.
"State"means the State of California.
"Supplemental Indenture" means any indenture hereafter duly authorized and entered
into between the Authority and the Trustee, supplementing, modifying or amending this
Indenture; but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
"Tax Certificate" means the certificate of the Authority dated the Closing Date, with
respect to tax matters.
"Trustee" means a national banking association organized
and existing under the laws of the United States of America, or its successor, as Trustee
hereunder as provided in Section 8.01.
"2000 Bonds"means the$17,450,000 Huntington Beach Public Financing Authority Lease
Revenue Bonds, 2000 Series A (Capital Improvement Financing Project), of which $12,785,000
remains outstanding on the Closing Date.
"2000 Escrow Agreement" means that certain escrow deposit and trust agreement, dated
as of the Closing Date, by and among the Authority, the City and the 2000 Escrow Bank,
relating to the refunding of the 2000 Bonds.
"2000 Escrow Bank" means The Bank of New York Mellon Trust Company, N.A., as
escrow bank under the 2000 Escrow Agreement.
"2000 Escrow Fund" means the fund by that name held by the 2000 Escrow Bank under
the 2000 Escrow Agreement.
"Written Certificate," "Written Request" and "Written Requisition" of the Authority or the
City mean, respectively, a written certificate, request or requisition signed in the name of the
Authority or the City by its Authorized Representative. Any such instrument and supporting
opinions or representations,if any,may,but need not,be combined in a single instrument with
any other instrument,opinion or representation,and the two or more so combined shall be read
and construed as a single instrument.
Section 1.02. Rules of Construction. All references in this Indenture to "Articles,"
"Sections" and other subdivisions are to the corresponding Articles,Sections or subdivisions of
this Indenture; and the words "herein," "hereof," "hereunder," and other words of similar
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import refer to this Indenture as a whole and not to any particular Article, Section or
subdivision hereof.
Section 1.03. Authorization and Purpose of Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all things, conditions, and acts
required by law to exist, happen and/or be performed precedent to and in the issuance of the
Bonds do exist, have happened and have been performed in due time, form and manner as
required by law, and the Authority is now authorized under each and every requirement of
law, to issue the Bonds in the manner and form provided in this Indenture. Accordingly, the
Authority hereby authorizes the issuance of the Bonds pursuant to this Indenture for the
purposes described herein.
Section 1.04. Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof,this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
prio-#y or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever,except as expressly provided therein or herein.
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ARTICLE II
ISSUANCE OF BONDS
Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance of
the Bonds, which shall constitute special obligations of the Authority, for the purpose of
providing funds to refund the 1997 Bonds and the 2000 Bonds. The Bonds are hereby
designated the "Huntington Beach Public Financing Authority Lease Revenue Refunding
Bonds, 2010 Series A." The aggregate principal amount of Bonds initially issued and
Outstanding under this Indenture shall equal dollars ($ ). At any
time after the execution of this Indenture, the Authority may execute and the Trustee shall
authenticate and,upon the Written Request of the Authority, deliver the Bonds. This Indenture
constitutes a continuing agreement with the Trustee and the Owners from time to time of the
Bonds to secure the full payment of the principal of and interest and premium(if any)on all the
Bonds,subject to the covenants,provisions and conditions herein contained.
Section 2.02. Terms of the Bonds. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond shall have more than one maturity date. The Bonds shall mature on September 1 in each
of the years and in the amounts,and shall bear interest(calculated on the basis of a 360-day year
of twelve 30-day months)at the rates,as follows:
Maturity Principal Interest Maturity Principal Interest
(September 1) Amount Rate (September 1) Amount Rate
Interest on the Bonds shall be payable semiannually on each Interest Payment Date, to
the person whose name appears on the Registration Books as the Owner thereof as of the
Record Date immediately preceding each such Interest Payment Date, such interest to be paid
by check of the Trustee mailed on such Interest Payment Date by first class mail to the Owners
at the respective addresses of such Owners as they appear on the Registration Books; provided
however, that payment of interest may be by wire transfer in immediately available funds to an
account in the United States of America to any Owner of Bonds in the aggregate principal
amount of$1,000,000 or more who shall furnish written wire instructions to the Trustee at least
five (5) days before the applicable Record Date. Principal of any Bond and any premium upon
redemption shall be paid by check of the Trustee upon presentation and surrender thereof at the
Office of the Trustee,except as provided in Section 2.04. Principal of and interest and premium
(if any)on the Bonds shall be payable in lawful money of the United States of America.
Each Bond shall be dated as of the Closing Date and shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated
after a Record Date and on or before the following Interest Payment Date, in which event it
shall bear interest from such Interest Payment Date,or(b)unless it is authenticated on or before
August 15, 2010, in which event it shall bear interest from the Closing Date; provided, however,
that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond
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shall bear interest from the Interest Payment Date to which interest has previously been paid or
made available for payment thereon.
Section 2.03. Transfer and Exchange of Bonds. Any Bond may, in accordance with its
terms,be transferred on the Registration Books by the person in whose name it is registered,in
person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer,duly executed in a form acceptable
to the Trustee. Transfer of any Bond shall not be permitted by the Trustee during the period
established by the Trustee for selection of Bonds for redemption or if such Bond has been
selected for redemption pursuant to Article IV. Whenever any Bond or Bonds shall be
surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and
shall deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity.
The Trustee may require the Bond Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer. The cost of printing
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
transfer shall be paid by the Authority.
Any Bond may be exchanged at the Office of the Trustee for a like aggregate principal
amount of Bonds of other authorized denominations and of like maturity. Exchange of any
Bond shall not be permitted during the period established by the Trustee for selection of Bonds
for redemption or if such Bond has been selected for redemption pursuant to Article IV. The
Trustee may require the Bond Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange. The cost of printing
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
transfer shall be paid by the Authority.
Section 2.04.Book-Entry System.Notwithstanding any provision of this Indenture to the
contrary:
(a) The Bonds shall be initially issued and registered in the name of "Cede & Co.," as
nominee of The Depository Trust Company, the depository designated by the Original
Purchaser, and shall be evidenced by one certificate maturing on each of the maturity dates set
forth in Section 2.02 hereof to be in a denomination corresponding to the total principal therein
designated to mature on such date. Registered ownership of such Bonds, or any portions
thereof,may not thereafter be transferred except:
(i) to any successor of The Depository Trust Company or its nominee, or of any
substitute depository designated pursuant to paragraph (ii) of this subsection (a)
("substitute depository"); provided that any successor of The Depository Trust
Company or substitute depository shall be qualified under any applicable laws to
provide the service proposed to be provided by it;
(ii) to any substitute depository designated in a written request of the Authority,
upon (A) the resignation of The Depository Trust Company or its successor (or any
substitute depository or its successor) from its functions as depository or (B) a
determination by the Authority that The Depository Trust Company or its successor is
no longer able to carry out its functions as depository;provided that any such substitute
depository shall be qualified under any applicable laws to provide the services proposed
to be provided by it;or
(iii)to any person as provided below,upon(A)the resignation of The Depository
Trust Company or its successor (or any substitute depository or its successor) from its
functions as depository or (B) a determination by the Authority that The Depository
Trust Company or its successor is no longer able to carry out its functions as depository;
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provided that no substitute depository which is not objected to by the Authority and the
Trustee can be obtained.
(b) In the case of any transfer pursuant to paragraph (i) or paragraph (ii) of subsection
(a) of this Section 2.04, upon receipt of all Outstanding Bonds by the Trustee, together with a
written request of an Authorized Representative of the Authority to the Trustee, a single new
Bond shall be issued, authenticated and delivered for each maturity of such Bond then
outstanding, registered in the name of such successor or such substitute depository or their
nominees, as the case may be, all as specified in such written request of an Authorized
Representative of the Authority. In the case of any transfer pursuant to paragraph (iii) of
subsection(a)of this Section 2.04,upon receipt of all Outstanding Bonds by the Trustee together
with a written request of an Authorized Representative of the Authority, new Bonds shall be
issued, authenticated and delivered in such denominations and registered in the names of such
persons as are requested in a written request of the Authority provided the Trustee shall not be
required to deliver such new Bonds within a period less than sixty (60) days from the date of
receipt of such a written request of an Authorized Representative of the Authority.
(c) In the case of partial redemption or an advance refunding of any Bonds evidencing
all of the principal maturing in a particular year, The Depository Trust Company shall, at the
Authority's expense, deliver the Bonds to the Trustee for cancellation and re-registration to
reflect the amounts of such reduction in principal.
(d) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the absolute Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall have no responsibility for transmitting
payments to,communication with,notifying or otherwise dealing with any beneficial owners of
the Bonds. Neither the Authority nor the Trustee will have any responsibility or obligations,
legal or otherwise, to the beneficial owners or to any other party including The Depository
Trust Company or its successor (or substitute depository or its successor), except for the
registered owner of any Bond.
(e) So long as all outstanding Bonds are registered in the name of Cede & Co. or its
registered assign,the Authority and the Trustee shall reasonably cooperate with Cede&Co.,as
sole registered Owner, or its registered assign in effecting payment of the principal and
redemption premium, if any, and interest due with respect to the Bonds by arranging for
payment in such manner that funds for such payments are properly identified and are made
immediately available on the date they are due.
(f) So long as all Outstanding Bonds are registered in the name of Cede & Co. or its
registered assigns(hereinafter,for purposes of this paragraph(0,the"Owner'):
(i) All notices and payments addressed to the Owners shall contain the Bonds'
CUSIP number.
(ii) Notices to the Owner shall be forwarded in the manner set forth in the form
of blanket issuer letter of representations (prepared by The Depository Trust Company)
executed by the Authority and received and accepted by The Depository Trust
Company.
Section 2.05. Registration Books. The Trustee will keep or cause to be kept, at the Office
of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds,
which shall at all reasonable times upon reasonable prior notice be open to inspection during
regular business hours by the Authority and the City;and,upon presentation for such purpose,
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the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or
cause to be registered or transferred, on such records, the ownership of the Bonds as
hereinbefore provided.
Section 2.06. Form and Execution of Bonds. The Bonds shall be signed in the name and
on behalf of the Authority with the facsimile signature of its Chair, Vice Chair or Executive
Director and attested with the facsimile signature of its Secretary, and shall be delivered to the
Trustee for authentication by it. In case any officer of the Authority who shall have signed any
of the Bonds shall cease to be such officer before the Bonds so signed shall have been
authenticated or delivered by the Trustee or issued by the Authority, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery
and issue,shall be as binding upon the Authority as though the individual who signed the same
had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of
the Authority by any individual who on the actual date of the execution of such Bond shall be
the proper officer although on the nominal date of such Bond such individual shall not have
been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A,manually executed by the Trustee,shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Authority,shall be in fully registered form without coupons and may contain such reference
to any of the provisions of this Indenture as may be appropriate.Every temporary Bond shall be
executed by the Authority and authenticated by the Trustee upon the same conditions and in
substantially the same manner as the definitive Bonds.If the Authority issues temporary Bonds
it will execute and deliver definitive Bonds as promptly thereafter as practicable,and thereupon
the temporary Bonds may be surrendered, for cancellation, at the Office of the Trustee and the
Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal
aggregate principal amount of definitive Bonds of authorized denominations. Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor 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 canceled by it and
delivered to,or upon the order of,the Authority. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Authority and the Trustee
and, if such evidence be satisfactory to them an indemnity satisfactory to them shall be given,
the Authority, at the expense of the Owner of such lost,destroyed or stolen Bond,shall execute,
and the Trustee shall thereupon authenticate and deliver,a new Bond of like tenor in lieu of and
in substitution for the Bond so lost,destroyed or stolen(or if any such Bond shall have matured
or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee may
pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee).
The Authority may require payment by the Owner of a sum not exceeding the actual cost of
preparing each new Bond issued under this Section 2.08 and of the expenses which may be
incurred by the Authority and the Trustee in the premises. Any Bond issued under the
provisions of this Section 2.08 in lieu of any Bond alleged to be lost, destroyed or stolen shall
-14-
core stitate an original additional contractual obligation on the part of the Authority whether or
not the Bond so alleged to be lost,destroyed or stolen be at any time enforceable by anyone,and
shale be entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
Section 2.09. CUSIP Numbers. The Trustee,the Authority and the City shall not be liable
for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any
redemption notice. The Trustee may, in its discretion, include in any redemption notice a
statement to the effect that the CUSIP numbers on the Bonds have been assigned by an
independent service and are included in such notice solely for the convenience of the Owners
and that neither the Trustee, the Authority nor the City shall be liable for any inaccuracies in
sR c�,,',: xn wnbers.
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ARTICLE III
APPLICATION OF PROCEEDS
Section 3.01.Application of Proceeds of Sale of Bonds.
(a) Upon the receipt of payment for the Bonds on the Closing Date of $
being the principal amount of the Bonds of $. less an underwriter's discount of
$. plus a net original issue premium of $ , the Trustee shall apply the
proceeds of sale thereof as follows:
(i)The Trustee shall deposit the amount of$ in the Costs of Issuance Fund;
(ii)The Trustee shall deposit the amount of$ in the Reserve Account;
(iii) The Trustee shall transfer the amount of $ to the 1997 Escrow
Bank for deposit in the 1997 Escrow Fund;and
(iv) The Trustee shall transfer the amount of $ to the 2000 Escrow
Bank for deposit in the 2000 Escrow Fund.
(b) The Trustee may,in its sole discretion,establish such funds or accounts in its records
to facilitate the foregoing transfers and deposits.
Section 3.02.Establishment and Application of Costs of Issuance Fund.The Trustee shall
establish, maintain and hold in trust a separate fund designated as the "Costs of Issuance
Fund." The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee
to pay the Costs of Issuance upon submission of Written Requisitions of the Authority stating
the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred and that such payment is a proper charge against said fund. Each such
Written Requisition shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts. On November 19, 2010, or
upon the earlier Written Request of the Authority, all amounts remaining in the Costs of
Issuance Fund shall be transferred by the Trustee to the Revenue Fund to be used for the
payment of interest on the Bonds and the Trustee shall close the Costs of Issuance Fund.
Section 3.03. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Authority or the Trustee with respect to or in connection with the Lease Agreement. The
.recital contained in the Bonds that the same are issued pursuant to the Constitution and laws of
the State shall be conclusive evidence of their validity and of compliance with the provisions of
law in their issuance.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01.Terms of Redemption.
(a) Optional Redemption. The Bonds maturing on or before September 1, , are not
subject to optional redemption prior to their respective stated maturities. The Bonds maturing
on or after September 1, , shall be subject to optional redemption,in whole or in part,upon
forty-five (45) days written notice to the Trustee (or such lesser number of daysptable to
the Trustee in the sole discretion of the trustee)by the City of its intention to optionally prepay
all or a portion of the Lease Payments, on any date on or after September 1, , from any
available source of funds of the City,at a redemption price equal to the principal amount of the
Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption,
without premium.
Any such redemption shall be in such order of maturity as the City shall designate in the
above-mentioned written notice (and, if no specific order of redemption is designated by the
City,pro rata among maturities).
(b) Sinking Fund Redemption. The Bonds maturing on September 1, (the "Term
Bonds"), shall also be subject to mandatory sinking fund redemption in part by lot on
September 1, , and on each September 1 thereafter, to and including September 1,
from sinking fund payments derived from scheduled Lease Payments made by the City at a
redemption price equal to the principal amount thereof to be redeemed together with accrued
interest thereon to the redemption date,without premium,in the aggregate respective principal
amounts and on the respective dates as set forth in the following table;provided,however,that if
some but not all of the Term Bonds have been redeemed pursuant to subsection (a) above, the
total amount of all future sinking fund payments shall be reduced by the aggregate principal
amount of Term Bonds so redeemed, to be allocated among the sinking fund payments as are
thereafter payable on a pro rata basis in integral multiples of$5,000 to the extent possible and in
inverse order thereafter.The City shall provide the Trustee with a revised schedule.
Sinking Fund Principal Amount Sinking Fund Principal Amount
Redemption Date to be Redeemed Redemption Date to be Redeemed
(September 1) or Purchased (September 1) or Purchased
taturity
In lieu of redemption of Term Bonds pursuant to this subsection(b),amounts on deposit
with_he Trustee as sinking fund payments may also be used and withdrawn by the Trustee,at
the written direction of the Authority, at any time for the purchase of Term Bonds otherwise
required to be redeemed on the following September 1 at public or private sale as and when
and at such prices(including brokerage and other charges and including accrued interest)as the
Authority may in its discretion determine. The par amount of any of the Term Bonds so
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purchased by the Authority and surrendered to the Trustee for cancellation in any twelve-
month period ending on u�y 1 in any year shall be credited towards and shall reduce the par
amount of the Term Bonds otherwise required to be redeemed on the following September 1
pursuant to this subsection(b).
(c) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds
shall also be subject to redemption as a whole, or in part on any date, to the extent the Trustee
has received hazard insurance proceeds or condemnation proceeds not used to repair or replace
any portion of the Property damaged or destroyed and elected by the City, to be used for such
purpose as provided in Section 5.07,at a redemption price equal to one hundred percent(100%)
of the principal amount thereof plus interest accrued thereon to the date fixed for redemption,
without premium.
Section 4.02. Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds of a particular maturity, the Trustee
shall select the Bonds to be redeemed from all Bonds of such maturity or such given portion
thereof not previously called for redemption,by lot in any manner which the Trustee in its sole
discretion shall deem appropriate. For purposes of such selection, the Trustee shall treat each
Bond as consisting of separate $5,000 portions and each such portion shall be subject to
redemption as if such portion were a separate Bond. If less than all the Outstanding Bonds are
called for redemption from proceeds of eminent domain or insurance at any one time, the
Authority shall specify to the Trustee a principal amount in each maturity to be redeemed
which, to the extent practicable, results in approximately equal annual debt service on the
Bonds Outstanding following such redemption.If less than all Outstanding Bonds are called for
redemption from proceeds of eminent domain or insurance at any one time,the Authority shall
designate the maturity or maturities of the Bonds to be redeemed.
Section 4.03.Notice of Redemption. Notice of redemption shall be mailed by the Trustee
by first class mail,postage prepaid,not less than thirty(30)nor more than sixty(60)days before
any redemption date,to the respective Owners of any Bonds designated for redemption at their
addresses appearing on the Registration Books, and to the Securities Depositories and to the
Information Services by means aeceptable to sueh institutions. Each notice of redemption shall
state the date of the notice,the redemption date,the place or places of redemption,whether less
than all of the Bonds(or all Bonds of a single maturity) are to be redeemed,the CUSIP numbers
and (in the event that not all Bonds within a maturity are called for redemption)Bond numbers
of the Bonds to be redeemed,the maturity or maturities of the Bonds to be redeemed and in the
case of Bonds to be redeemed in part only, the respective portions of the principal amount
thereof to be redeemed. Each such notice shall also state that on the redemption date there will
become due and payable on each of said Bonds the redemption price thereof,and that from and
after such redemption date interest thereon shall cease to accrue, and shall require that such
Bonds be then surrendered.Neither the failure to receive any notice nor any defect therein shall
affect the sufficiency of the proceedings for such redemption or the cessation of accrual of
interest from and after the redemption date. Eaeh stteh Written Requisition shall be suffleient.
evidenee to the Timustee ef the faets stated therein and the T-ndstee shall have ne dtt-' '
the aeettraey of Notice of redemption of Bonds shall be given by the Trustee, at the
expense of the Authority,for and on behalf of the Authority.
Notwithstanding the foregoing, in the case of any optional redemption of the Bonds
under Section 4.01(a) above, the notice of redemption shall state that the redemption is
conditioned upon receipt by the Trustee of sufficient moneys to redeem the Bonds on the
anticipated redemption date, and that the optional redemption shall not occur if, by no later
than the scheduled redemption date, sufficient moneys to redeem the Bonds have not been
deposited with the Trustee.In the event that the Trustee does not receive sufficient funds by the
scheduled optional redemption date to so redeem the Bonds to be optionally redeemed, such
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event shall not constitute an Event of Default, the Trustee shall send written notice to the
Owners, to the Securities Depositories and to one or more of the Information Services to the
effect that the redemption did not occur as anticipated, and the Bonds for which notice of
optional redemption was given shall remain Outstanding for all purposes of this Indenture.
The Authority shall have the right to rescind any optional or special mandatory
redemption by written notice to the Trustee on or prior to the date fixed for redemption. The
Trustee shall mail notice of rescission of redemption in the same manner notice of redemption
was originally provided.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in
part only, the Authority shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered and of the same interest rate and maturity.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid,and moneys for payment of the redemption price of,together with interest accrued to
the date fixed for redemption on,the Bonds(or portions thereof)so called for redemption being
held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions
thereof)so called for redemption shall become due and payable, interest on the Bonds so called
for redemption shall cease to accrue,said Bonds(or portions thereof)shall cease to be entitled to
any benefit or security under this Indenture, and the Owners of said Bonds shall have no rights
in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed.
Section 4.06. Purchase of Bonds. In lieu of redemption of Bonds as provided in this
Article IV, amounts held by the Trustee for such redemption may also be used on any Interest
Payment Date, upon receipt by the Trustee at least sixty (60) days prior to the next scheduled
Interest Payment Date of the written request of an Authorized Representative of the Authority,
for the purchase of Bonds at public or private sale as and when and at such prices (including
brokerage,accrued interest and other charges) as the Authority may in its discretion direct,but
not to exceed the redemption price which would be payable if such Bonds were redeemed.The
aggregate principal amount of Bonds of the same maturity purchased in lieu of redemption
pursuant to this Section 4.06 shall not exceed the aggregate principal amount of Bonds of such
maturity which would otherwise be subject to such redemption. Any Bonds so purchased shall
be surrendered to the Trustee for cancellation.
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ARTICLE V
REVENUES;FUNDS AND ACCOUNTS;PAYMENT OF
PRINCIPAL AND INTEREST
Section 5.01.Pledge and Assignment;Revenue Fund.
(a)Subject only to the provisions of this Indenture permitting the application thereof for
the purposes and on the terms and conditions set forth herein,all of the Revenues and any other
amounts (including proceeds of the sale of the Bonds) held in any fund or account established
pursuant to this Indenture are hereby pledged to secure the payment of the principal of,
premium,if any,and interest on the Bonds in accordance with their terms and the provisions of
this Indenture.Said pledge shall constitute a first lien on and security interest in such assets and
shall attach,be perfected and be valid and binding from and after the Closing Date,without any
physical delivery thereof or further act.
(b) The Authority hereby transfers in trust, grants a security interest in and assigns to
the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues
and all of the rights of the Authority in the Lease Agreement (except for certain rights to
indemnification set forth therein),and in the Site and Facility Lease, (except for certain rights to
indemnification set forth therein). The Trustee shall be entitled to and shall collect and receive
all of the Revenues,and any Revenues collected or received by the Authority shall be deemed to
be held,and to have been collected or received,by the Authority as the agent of the Trustee and
shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and
shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the
Trustee determines to be reasonably necessary in its judgment to enforce,either jointly with the
Authority or separately,all of the rights of the Authority,all of the obligations of the City under
toe Lease Agreement.
The assignment of the Lease Agreement and the Site and Facility Lease to the Trustee is
solely in its capacity as Trustee under this Indenture and the duties,powers and liabilities of the
Trustee in acting thereunder shall be subject to the provisions of this Indenture, including,
without limitation,the provisions of Article VIII hereof.The Trustee shall not be responsible for
any representations,warranties,covenants or obligations of the Authority.
(c) The Trustee agrees to provide written notice to the City at least five Business Days
prior to each Lease Payment Date of the amount,if any, on deposit in the Revenue Fund which
shall serve as a credit against, and shall relieve the City of making, the Lease Payments due
from the City on such Lease Payment Date. Subject to Section 5.08, all Revenues shall be
promptly deposited by the Trustee upon receipt thereof in a special fund designated as the
"Revenue Fund" which the Trustee shall establish, maintain and hold in trust; except that all
moneys received by the Trustee and required hereunder or under the Lease Agreement to be
deposited in the Redemption Fund or the Insurance and Condemnation Fund shall be promptly
deposited in such Funds. Within the Revenue Fund there shall be established an Interest
Account, a Principal Account and a Reserve Account. All Revenues deposited with the Trustee
shall be held, disbursed, allocated and applied by the Trustee only as provided in this
Indenture.
Section 5.02. Allocation of Revenues. Not later than the Business Day preceding each
Interest Payment Date, the Trustee shall transfer from the Revenue Fund and deposit into the
following respective accounts(each of which the Trustee shall establish and maintain within the
Revenue Fund), the following amounts in the following order of priority, the requirements of
each such account (including the making up of any deficiencies in any such account resulting
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from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to
be satisfied before any transfer is made to any account subsequent in priority:
(a) The Trustee shall deposit in the Interest Account an amount required to cause the
aggregate amount on deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such Interest Payment Date on all Bonds then
Outstanding.
(b) The Trustee shall deposit in the Principal Account an amount, if any, required to
cause the aggregate amount on deposit in the Principal Account to equal the principal amount
of the Bonds coming due at maturity or upon sinking fund redemption and payable on such
Interest Payment Date.
(c)The Trustee shall deposit in the Reserve Account an amount,if any,required to cause
the amount on deposit in the Reserve Account to be equal to the Reserve Requirement.
(d) If the then applicable Interest Payment Date is March 1, all remaining moneys shall
be held by the Trustee in the Revenue Fund and applied for the next succeeding September 1
Interest Payment Date deposits. If the then applicable Interest Payment Date is September 1, all
remaining moneys shall be transferred to the City for deposit to the General Fund of the City.
Section 5.03. Application of Interest Account. All amounts in the Interest Account shall
be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as
it shall become due and payable (including accrued interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Indenture).
Section 5.04. Application of Principal Account. All amounts in the Principal Account
shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates.
Section 5.05. Application of Sinking Account All amounts in the Sinking Account shall
be used and withdrawn by the Trustee solely to pay the aggregateprincipal amount of the Term
Bonds required to be redeemed on such September 1 pursuant to Section 4.01(b).
Section 5.06.Application of Reserve Account.
(a) Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely
for the purpose of making transfers to the Interest Account and the Principal Account in such
order of priority, in the event of any deficiency at any time in any of such accounts or for the
retirement of all the Bonds then Outstanding, except that so long as the Authority is not in
default hereunder,any amount in the Reserve Account in excess of the Reserve Requirement(as
determined by the Trustee based upon a valuation of investments held in such account)shall be
withdrawn from the Reserve Account semiannually on or before the Business Day preceding
each March 1 and September 1 by the Trustee and deposited in the Interest Account. All
amounts in the Reserve Account on the Business Day preceding the final Interest Payment Date
shaU be withdrawn from the Reserve Account and shall be transferred either (i) to the Interest
Account and the Principal Account, in such order, to the extent required to make the deposits
then required to be made pursuant to this Section 5.26or, (ii) if the Authority shall have caused
to be transferred to the Trustee an amount sufficient to make the deposits required by this
Section 5.06 then, at the Written Request of the Authority, to the Authority for deposit by the
Authority into the Revenue Fund.The Trustee may conclusively presume that there has been no
change in the Reserve Requirement unless notified in writing by the Authority.
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(b) At any time, moneys on deposit in the Reserve Account may be substituted by the
Authority with a Qualified Reserve Fund Credit Instrument,in an amount equal to the Reserve
Requirement, upon presentation to the Trustee of such Qualified Reserve Fund Credit
Instrument. Upon such substitution, the Trustee shall transfer amounts on deposit in the
Reserve Account to the Revenue Fund up to an amount equal to the maximum limits or
principal amount, as applicable, of such letter of credit, surety bond, bond insurance policy or
other form of guarantee.
Section 5.07. Application of Redemption Fund. The Trustee shall establish and maintain
the Redemption Fund,amounts in which shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of and premium on the Bonds to be redeemed pursuant to
Sections 4.01(a) or L); provided, however, that at any time prior to the selection of Bonds for
redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private
sale,in accordance with Section 4.06.
Section 5.08.Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of any proceeds of insurance or eminent
domain with respect to any portion of the Property,the Trustee shall establish and maintain an
Insurance and Condemnation Fund, to be held and applied as hereinafter set forth in this
Section 5.08. I
(b)Application of Insurance Proceeds.Any Net Proceeds of insurance against accident to or
destruction of the Property collected by the City in the event of any such accident or destruction
shall be paid to the Trustee by the City pursuant to Section 6.1 of the Lease Agreement and
deposited by the Trustee promptly upon receipt thereof in the Insurance and Condemnation
Fund.If the City fails to determine and notify the Trustee in writing of its determination,within
forty-five (45) days following the date of such deposit, to replace, repair, restore, modify or
improve the Property, then such Net Proceeds shall be promptly transferred by the Trustee to
the Redemption Fund and applied to the redemption of Bonds pursuant to Section 4.01(c)to the
extent that such Net Proceeds permit. All proceeds deposited u1 the Insurance and
Condemnation Fund and not so transferred to the Redemption Fund shall be applied to the
prompt replacement, repair, restoration, modification or improvement of the damaged or
destroyed portions of the Property by the City,upon receipt of Written Requisitions of the City,
as agent for the Authority, which: (i) states with respect to each payment to be made (A) the
requisition number, (B) the name and address of the person to whom payment is due, (C) the
amount to be paid and (D) that each obligation mentioned therein has been properly incurred,
is a proper charge against the Insurance and Condemnation Fund,has not been the basis of any
previous withdrawal; and (ii) specifies in reasonable detail the nature of the obligation. Each
such Written Requisition shall be sufficient evidence to the Trustee of the facts stated therein
and the Trustee shall have no duty to confirm the accuracy of such facts. Any balance of the
proceeds remaining after such work has been completed as certified by the City to the Trustee
shall after payment of amounts due the Trustee be paid to the City.
(c)Application of Eminent Domain Proceeds. If all or any part of the Property shall be taken
by eminent domain proceedings (or sold to a government threatening to exercise the power of
eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in the
Insurance and Condemnation Fund pursuant to Section 6.1 of the Lease Agreement and shall be
applied and disbursed by the Trustee as follows:
(i) If the City has not given written notice to the Trustee, within forty-five (45)
days following the date on which such Net Proceeds are deposited with the Trustee, of
its determination that such Net Proceeds are needed for the replacement of the Property
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or such portion thereof, the Trustee shall transfer such Net Proceeds to the Redemption
Fund to be applied towards the redemption of the Bonds pursuant to Section 4.01(c).
(ii) If the City has given written notice to the Trustee, within forty-five (45) days
following the date on which such Net Proceeds are deposited with the Trustee, of its
determination that such Net Proceeds are needed for replacement of the Property or
such portion thereof,the Trustee shall pay to the City,or to its order,from said proceeds
such amounts as the City may expend for such repair or rehabilitation,upon the filing of
Written Requisitions of the City as agent for the Authority in the form and containing
the provisions set forth in subsection (b) of this Section 5.08. Each such Written
Requisition shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts.
Section 5.09. Investments. All moneys in any of the funds or accounts established with '
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments.Such investments shall be directed by the Authority pursuant to a Written Request
of the Authority filed with the Trustee at least two (2) Business Days in advance of the making
of such investments (which Written Request shall certify that the investments constitute
Permitted Investments). In the absence of any such directions from the Authority, the Trustee
shall invest such moneys in the Permitted Investments described in paragraph ffi of the
definition thereof. Permitted Investments purchased as an investment of moneys in any fund
shall be deemed to be part of such fund or account. The Authority shall take the liquidity needs
of the moneys held hereunder into account in making investments.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Revenue Fund, except that interest or
gain derived from the investment of the amount in the Reserve Account shall be retained
therein to the extent required to maintain the Reserve Requirement. To the extent that any
investment agreement requires the payment of fees, such fees shall be paid from available
moneys in the Revenue Fund after the deposit of moneys described in Section 5.02 (a) through
(c) above. For purposes of acquiring any investments hereunder, the Trustee may commingle
funds held by it hereunder. The Trustee or any of its affiliates may act as principal or agent in
the acquisition or disposition of any investment and may impose its customary charges
therefor. The Trustee or its affiliates may act as sponsor or depository with respect to any
Permitted Investment. To the extent that any Permitted Investment purchased by the Trustee
are registrable securities such Permitted Investment shall be registered in the name of the
Trustee on behalf of the Owners. The Trustee shall incur no liability for losses arising from any
investments made pursuant to this Section 5.099.
The Authority acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Authority the right to receive
brokerage confirmations of security transactions as they occur, at no additional cost, the
Authority specifically waives receipt of such confirmations to the extent permitted by law. The
Trustee will furnish the Authority periodic cash transaction statements which include detail for
all investment transactions made by the Trustee hereunder.
Such investments shall be valued by the Trustee not less often than quarterly, at the
market value thereof,exclusive of accrued interest. Defieieneies ift the afneunt on deposit in any
ftmd or aeeottnt restilfing fr-ofn a deelitie in fflar-ket vaitte shall be restored no later than the
sueeeeding Investments purchased with funds on deposit in the Reserve
Account shall have a term to maturity of not greater than five years.
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The Trustee may utilize securities pricing services that may be available to it making
such valuations, including those within its accounting system with respect to the Bonds, and
conclusively rely thereon.
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal of and interest and premium (if any) on all the Bonds in strict conformity with the
terms of the Bonds and of this Indenture, according to the true intent and meaning thereof,but
only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled,in case of any
default hereunder,to the benefits of this Indenture,except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section 6.02 shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds,and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.03. Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge,lien, charge or other encumbrance upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes, and reserves the right to issue other obligations for such purposes. Nothing in this
section shall in any way limit the City's ability to encumber its assets in accordance with the
Lease Agreement.
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
respectively, under this Indenture in the manner and to the extent provided in this Indenture.
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and the
Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by
law,defend,preserve and protect said pledge and assignment of Revenues and other assets and
all the rights of the Bond Owners under this Indenture against all claims and demands of all
persons whomsoever.
Section 6.05.Accounting Records.The Trustee shall at all times keep,or cause to be kept,
proper books of record and account, prepared in accordance with corporate trust industry
standards, in which complete and accurate entries shall be made of all transactions made by it
relating to the proceeds of Bonds, the Revenues, the Lease Agreement and all funds and
accounts established pursuant to this Indenture. Such books of record and account shall be
available for inspection by the Authority and the City, during business hours and under
reasonable circumstances upon reasonable prior notice.
Section 6.06. No Additional Obligations. The Authority covenants that no additional
bonds, notes or other indebtedness shall be issued or incurred which are payable out of the
Revenues in whole or in part.
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Section 6.07. Tax Covenants. The Authority covenants to and for the benefit of the
Owners that, notwithstanding any other provisions of this Indenture (other than Section 11.01
hereof),it will:
(a) neither make or use nor cause to be made or used any investment or other use of the
proceeds of the Bonds or the moneys and investments held in the funds and accounts
established under this Indenture which would cause the Bonds to be arbitrage bonds under
section 103(b) and section 148 of the Code and the Regulations issued under section 148 of the
Code or which would otherwise cause the interest payable on the Bonds to be includable in
gross income for federal income tax purposes;
(b) not take or cause to be taken any other action or actions, or fail to take any action or
actions, which would cause the interest payable on the Bonds to be includable in gross income
for federal income tax purposes;
(c) at all times do and perform all acts and things permitted by law and necessary or
desirable in order to assure that interest paid by the Authority on the Bonds will be excluded
from the gross income,for federal income tax purposes, of the Owners pursuant to section 103
of the Code;and
(d)not take any action or permit or suffer any action to be taken if the result of the same
would be to cause the Bonds to be "federally guaranteed" within the meaning of section 149(b)
of the Code and the Regulations.
In furtherance of the covenants in this Section 6.07, the Authority shall execute, deliver
and comply with the provisions of the Tax Certificate, which is by this reference incorporated
into this Indenture and made a part of this Indenture as if set forth in this Indenture in full
including all of the defined terms therein.The Trustee agrees it will invest funds held under this
Indenture in accordance with the terms of this Indenture(this covenant shall extend throughout
the term of the Bonds, to all funds and accounts created under this Indenture held by the I
Trustee and all moneys on deposit to the credit of any fund or account held by the Tru .
The City has designated the Bonds as "Qualified Tax-Exempt Obligations" within the
meaning of section 265(b)(3)of the Code.
Section 6.08.Rebate Fund.
(a) The Trustee shall establish and maintain, when required, a fund separate from any
other fund established and maintained hereunder designated as the Rebate Fund. Within the
Rebate Fund, the Trustee shall maintain such accounts as shall be necessary to comply with
instructions of the Authority given pursuant to the terms and conditions of the Tax Certificate.
Subject to the transfer provisions provided in paragraph (e) below, all money at any time
deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to
satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the federal
government of the United States of America.Neither the Authority nor the Owner of any Bonds
shall have any rights in or claim to such money.All amounts deposited into or on deposit in the
Rebate Fund shall be governed by this Section 6.08, by Section 6.07 and by the Tax Certificate
(which is incorporated herein by reference). The Trustee shall be deemed conclusively to have
complied with such provisions if it follows the directions of the Authority including supplying
all necessary information reasonably requested by the Authority, and shall have no liability or
responsibility to enforce compliance by the Authority with the terms of the Tax Certificate or
any other tax covenants contained herein. The Trustee shall not be responsible for calculating
rebate amounts or for the adequacy or correctness of any rebate report or rebate calculations.
The Trustee shall have no independent duty to review such calculations or enforce the
-26-
compliance by the Authority with such rebate requirements. The Trustee shall have no duty or
obligation to determine the applicability of the Code and shall only be obligated to act in
accordance with written instructions provided by the Authority.
(b) Upon the Authority's written direction, an amount shall be deposited to the Rebate
Fund by the Trustee from deposits by the Authority, if and to the extent required, so that the
balance in the Rebate Fund shall equal the Rebate Requirement. Computations of the Rebate
Requirement shall be furnished by or on behalf of the Authority in accordance with the Tax
Certificate.The Trustee shall supply to the Authority all necessary information requested by the
Authority to the extent such information is reasonably available to the Trustee.
(c) The Trustee shall have no obligation to rebate any amounts required to be rebated
pursuant to this Section 6.08, other than from moneys held in the funds and accounts created
under this Indenture or from other moneys provided to it by the Authority.
(d)At the written direction of the Authority, the Trustee shall invest all amounts held in
to Rebate Fund in Permitted Investments. Moneys shall not be transferred from the Rebate
Fund except as provided in paragraph (e) below. The Trustee shall not be liable for any
consequences arising from such investment.
(e) Upon receipt of the Authority's written directions, the Trustee shall remit part or all
of the balances in the Rebate Fund to the United States, as so directed. In addition, if the
Authority so directs, the Trustee will deposit money into or transfer money out of the Rebate
Fund from or into such accounts or funds as directed by the Authority's written directions;
provided,however,only moneys in excess of the Rebate Requirement may,at the written direction
of the Authority, be transferred out of the Rebate Fund to such other accounts or funds or to
anyone other than the United States in satisfaction of the arbitrage rebate obligation.Any funds
remaining in the Rebate Fund after each five year remission to the United States, redemption
and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement, or
provision made therefor satisfactory to the Trustee, shall be withdrawn and remitted to the
Authority.
(f)Notwithstanding any other provision of this Indenture,including in particular Article
X, the obligation to remit the Rebate Requirement to the United States and to comply with all
other requirements of this Section 6.08, Section 6.07 and the Tax Certificate shall survive the
defeasance or payment in full of the Bonds.
Section 6.09. Collection of Amounts Due Under Lease Agreement. The Trustee shall
promptly collect all amounts due from the City pursuant to the Lease Agreement.Subject to the
provisions of Article VIII, the Trustee shall enforce, and take all steps, actions and proceedings
which the Trustee determines to be reasonably necessary for the enforcement of all of its rights
thereunder as assignee of the Authority,for the enforcement of all of the obligations of the City
under the Lease Agreement.
The Authority shall not amend, modify or terminate any of the terms of the Lease
Agreement, or consent to any such amendment,modification or termination,without the prior
written consent of the Trustee. The Trustee shall give such written consent only if (a) in the
opinion of Bond Counsel, such amendment, modification or termination will not materially
adversely affect the interests of the Owners, or (b) the Trustee first obtains the written consent
of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding to
such amendment,modification or termination.
Section 6.10. Continuing Disclosure. The Authority hereby covenants and agrees that it
will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
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Notwithstanding any other provision of this Indenture,failure of the Authority to comply with
the Continuing Disclosure Certificate shall not constitute an Event of Default hereunder;
provided, however, that any Participating Underwriter or any Owner or beneficial owner of the
Bonds may take such actions as may be necessary and appropriate to compel performance by
the Authority of its obligations under this Section 6.10, including seeking mandate or specific
performance by court order.
Section 6.11.Waiver of Laws.The Authority shall not at any time insist upon or plead in
any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension of
law now or at any time hereafter in force that may affect the covenants and agreements
contained in this Indenture or in the Bonds,and all benefit or advantage of any such law or laws
is hereby expressly waived by the Authority to the extent permitted by law.
Section 6.12. Further Assurances. The Authority will make,execute and deliver any and
all such further indentures, 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.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal or sinking fund
installments of any Bonds when and as the same shall become due and payable, whether at
maturity as therein expressed,by proceedings for redemption or otherwise.
(b)Default in the due and punctual payment of any installment of interest on any Bonds
when and as the same shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants,agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that if in the reasonable opinion of the Authority the default stated in the
notice can be corrected, but not within such thirty (30) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such thirty (30) day period and thereafter diligently and in good faith cure such failure
in a reasonable period of time which period shall be no longer than 120 days after the original
written notice of default.
(d) The occurrence and continuation of an event of default under and as defined in the
Lease Agreement.
Section 7.02.Remedies Upon Event of Default.Upon the occurrence and continuance of
any Event of Default, then and in every such case the Trustee in its discretion may, and upon
the written request of the Owners of not less than 25% in principal amount of the Bonds then
Outstanding and receipt of indemnity to its satisfaction, and payment of its fees and expenses,
including the fees and expenses of its counsel, shall in its own name and as the Trustee of an
express trust:
(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all
rights of the Owners under, and require the Authority or the City to carry out any agreements
with or for the benefit of the Owners of Bonds and to perform its or their duties under the Lease
Agreement and this Indenture,provided that any such remedy may be taken only to the extent
permitted under the applicable provisions of the Lease Agreement or this Indenture,as the case
may be;
(b)bring suit upon the Bonds;
(c)by action or suit in equity require the Authority to account as if it were the trustee of
an express trust for the Owners of Bonds;or
(d) by action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the Owners of Bonds hereunder.
Upon the occurrence of an Event of Default, the Trustee shall be entitled as a matter of
right to the appointment of a receiver or receivers for the Revenues,ex parte,and without notice,
and the Authority consents to the appointment of such receiver upon the occurrence of an Event
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of Default.In the case of any receivership,insolvency,bankruptcy,or other judicial proceedings
affecting the Authority or the City,the Trustee shall be entitled to file such proofs of claims and
other documents as may be necessary or advisable in order to have the claims of the Trustee
and the Bond Owners allowed in such proceedings,without prejudice,however, to the right of
any Bond Owner to file a claim on his or her own behalf,provided, the Trustee shall be entitled
to compensation and reimbursement for the reasonable fees and expenses of its counsel and
indemnity for its reasonable expenses and liability from the Authority, the City or the Bond
Owners,as appropriate.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Bond Owner any plan of reorganization, arrangement,
adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to
authorize the Trustee to vote in respect of the claim of any Bond Owner in any such proceeding
without the approval of the Bond Owners so affected.
Section 7.03. Application of Revenues and Other Funds After Default. If an Event of
Default shall occur and be continuing,all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the
Trustee as follows and in the following order:
(a)To the payment of any expenses necessary in the opinion of the Trustee to protect the
interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses of
the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about
the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon
presentation of the Bonds to be paid,and stamping or otherwise noting thereon of the payment
if only partially paid,or surrender thereof if fully paid)in accordance with the provisions of this
Indenture,as follows:
First: To the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available
shall not be sufficient to pay in full any installment or installments maturing on the same
date, then to the payment thereof ratably, according to the amounts due thereon, to the
persons entitled thereto,without any discrimination or preference;and
Second: To the payment to the persons entitled thereto of the unpaid principal of
any Bonds which shall have become due, whether at maturity or by redemption, with
interest on the overdue principal at the rate borne by the respective Bonds (to the extent
permitted by law), and, if the amount available shall not be sufficient to pay in full all
the Bonds,together with such interest,then to the payment thereof ratably,according to
the amounts of principal due on such date to the persons entitled thereto, without any
discrimination or preference.
Section 7.04. Trustee to Represent Bond Owners. The Trustee is hereby irrevocably
appointed(and the successive respective Owners of the Bonds,by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful
attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on
their behalf such rights and remedies as may be available to such Owners under the provisions
of the Bonds, this Indenture and applicable provisions of any law. Upon the occurrence and
continuance of an Event of Default or other occasion giving rise to a right in the Trustee to
represent the Bond Owners, the Trustee in its discretion may, and upon the written request of
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and
upon being indemnified to its satisfaction therefor, the Trustee shall, proceed to protect or
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enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or
other proceedings as shall be deemed most effectual to protect and enforce any such right, at
law or in equity, either for the specific performance of any covenant or agreement contained
herein, or in aid of the execution of any power herein granted, or for the enforcement of any
other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners
under the Bonds, this Indenture or any other law; and upon instituting such proceeding, the
Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues
and other assets pledged under this Indenture, pending such proceedings. All rights of action
under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee
without the possession of any of the Bonds or the production thereof in any proceeding relating
thereto,and any such suit,action or proceeding instituted by the Trustee shall be brought in the
name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to
the provisions of this Indenture.
Section 7.05. Bond Owners' Direction of Proceedings. Anything in this Indenture to the
contrary notwithstanding,the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee,and upon indemnification of the Trustee to its reasonable
satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee
hereunder,provided that such direction shall not be otherwise than in accordance with law and
the provisions of this Indenture, and that the Trustee shall have the right to decline to follow
any such direction which in the opinion of the Trustee would expose it to liability.
Section 7.06. Limitation on Bond Owners' Right to Sue. Notwithstanding any other
provision hereof, no Owner of any Bonds shall have the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy under
this Indenture, the Lease Agreement or any other applicable law with respect to such Bonds,
unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such
Owner or Owners shall have tendered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall
have failed to comply with such request for a period of sixty(60)days after such written request
shall have been received by,and said tender of indemnity shall have been made to,the Trustee;
and (e) no direction inconsistent with such written request shall have been given to the Trustee
during such sixty (60)day period by the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared,in every case,to be conditions precedent to the exercise by any Owner of Bonds of any
remedy hereunder or under law;it being understood and intended that no one or more Owners
of Bonds shall have any right in any manner whatever by his or their action to affect,disturb or
prejudice the security of this Indenture or the rights of any other Owners of Bonds,or to enforce
any right under the Bonds, this Indenture, the Lease Agreement or other applicable law with
respect to the Bonds,except in the manner herein provided,and that all proceedings at law or in
equity to enforce any such right shall be instituted, had and maintained in the manner herein
provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to
the provisions of this Indenture.
Section 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or in any other
provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest and
premium(if any)on the Bonds to the respective Owners of the Bonds at their respective dates of
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maturity, or upon call for redemption, as herein provided, but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners,which is also
absohAe and unconditional, to enforce such payment by virtue of the contract embodied in the
Bonds,
Section 7.08.Termination of Proceedings. If any proceedings taken by the Trustee or any
one or more Bond Owners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Bond
Owners, then the Authority, the Trustee and the Bond Owners,subject to any determination in
such proceedings,shall be restored to their former positions and rights hereunder,severally and
respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the
Mond Owners shall continue as though no such proceedings had been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies,and each and every such remedy,to the extent permitted by law,shall be cumulative
and in addition to any other remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.
Section 7.10.No Waiver of Default.No delay or omission of the Trustee or any Owner of
the Bonds to exercise any right or power arising upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein;and every power and remedy given by this Indenture to the
"Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be
deemed expedient.
Section 7.11.Parties Interested Herein.Nothing in this Indenture expressed or implied is
intended or shall be construed to confer upon,or to give to,any person or entity,other than the
City,the Authority,the Trustee,their officers,employees and agents,and the Owners any right,
remedy or claim under or by reason of this Indenture,or any covenant,condition or stipulation
hereof,and all covenants, stipulations,promises and agreements in this Indenture contained by
and on behalf of the Authority shall be for the sole and exclusive benefit of the City, the
Authority,the Trustee,their officers,employees and agents,and the Owners.
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ARTICLE VIII
THE TRUSTEE
Section 8.01.Duties,Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the curing or waiver of all
Events of Default which may have occurred, perform such duties and only such duties as are
expressly and specifically set forth in this Indenture and no implied duties or covenants shall be
read into this Indenture against the Trustee.The Trustee shall,during the existence of any Event
of Default(which has not been cured or waived),exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent
Verson would exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) The Authority may remove the Trustee at any time unless an Event of Default shall
have occurred and then be continuing,and the Authority shall remove the Trustee if at any time
requested to do so by the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding(or their attorneys duly authorized in writing) or if at any time the
Trustee shall cease to be eligible in accordance with subsection (e) of this Section 8.01, or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or its property shall be appointed, or any public officer shall take control or charge of
the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, in each case by giving written notice of such removal to the Trustee and the City
and thereupon shall appoint a successor Trustee by an instrument in writing.Any such removal
shall be made upon at least thirty(30)days'prior written notice to the Trustee.
(c)The Trustee may at any time resign by giving written notice of such resignation to the
.Authority and the City, and by giving the Bond Owners notice of such resignation by mail at
the addresses shown on the Registration Books. Upon receiving such notice of resignation, the
Authority shall promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee.If no successor
Trustee shall have been appointed and have accepted appointment within sixty (60) days of
giving notice of removal or notice of resignation as aforesaid,the Authority shall(or the Trustee
ma at the expense of the Authority) petition any court of competent jurisdiction for the
appointment of a successor Trustee,and such court may thereupon,after such notice (if any) as
it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under
this Indenture, shall signify its acceptance of such appointment by executing and delivering to
the Authority, to its predecessor Trustee a written acceptance thereof, and thereupon such
successor Trustee,without any further act,deed or conveyance,shall become vested with all the
moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor
Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written
Request of the Authority or the request of the successor Trustee, such predecessor Trustee shall
execute and deliver any and all instruments of conveyance or further assurance and do such
other things as may reasonably be required for more fully and certainly vesting in and
confirming to such successor Trustee all the right, title and interest of such predecessor Trustee
in and to any property held by it under this Indenture and shall pay over, transfer, assign and
deliver to the successor Trustee any money or other property subject to the trusts and
conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute
and deliver any and all instruments as may be reasonably required for more fully and certainly
vesting in and confirming to such successor Trustee all such moneys, estates,properties,rights,
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powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee
as provided in this subsection,the Authority shall promptly mail or cause the successor trustee
to mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency
which is then rating the Bonds and to the Bond Owners at the addresses shown on the
Registration Books. If the Authority fails to mail such notice within fifteen (15) days after
acceptance of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or association
organized and doing business under the laws of any state or the United States of America or the
District of Columbia, shall be authorized under such laws to exercise corporate trust powers,
shall have (or, in the case of a corporation or national banking association included in a bank
holding company system,the related bank holding company shall have)a combined capital and
surplus of at least fifty million dollars ($50,000,000), shall be subject to supervision or
examination by federal or state agency, so long as any Bonds are Outstanding. If such
corporation or national banking association publishes a report of condition at least annually
pursuant to law or to the requirements of any supervising or examining agency above referred
to then for the purpose of this subsection (e), the combined capital and surplus of such
corporation or national banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the
Trustee shall resign immediately in the manner and with the effect specified in this Section 8.01.
Section 8.02. Merger or Consolidation. Any bank or trust company into which the
Trustee may be merged or converted or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank or trust company shall be eligible under
oubsection (e) of Section 8.01 shall be the successor to such Trustee, without the execution or
filing of any paper or any further act,anything herein to the contrary notwithstanding.
Section 8.03.Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall not be taken as
statements of the Trustee,and the Trustee shall not assume responsibility for the correctness of
the same, or make any representations as to the validity or sufficiency of this Indenture, the
Bonds or the Lease Agreement,nor shall the Trustee incur any responsibility in respect thereof,
other than as expressly stated herein in connection with the respective duties or obligations
;herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be
responsible for its representations contained in its certificate of authentication on the Bonds.The
Trustee shall not be liable in connection with the performance of its duties hereunder,except for
its own negligence.The Trustee may become the Owner of Bonds with the same rights it would
have if it were not Trustee, and, to the extent permitted by law, may act as depository for and
permit any of its officers or directors to act as a member of,or in any other capacity with respect
to,any committee formed to protect the rights of Bond Owners,whether or not such committee
.hail represent the Owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c)The Trustee shall not be liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method
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and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture.
(d)The Trustee shall not be liable for any action taken by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or both,
would constitute an Event of Default hereunder unless and until it shall have actual knowledge
thereof, or a corporate trust officer shall have received written notice thereof, at its Office.
Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or
inquire as to the performance or observance by the Authority or the City of any of the terms,
conditions, covenants or agreements herein, under the Lease Agreement or of any of the
documents executed in connection with the Bonds,or as to the existence of an Event of Default
or an event which would, with the giving of notice, the passage of time, or both, constitute an
Event of Default. The Trustee shall not be responsible for the validity, effectiveness or priority
of any collateral given to or held by it. Without limiting the generality of the foregoing, the
Trustee shall not be required to ascertain or inquire as to the performance or observance by the
City and the Authority of the terms,conditions,covenants or agreements set forth in the Lease
Agreement, other than the covenants of the City to make Lease Payments to the Trustee when
due,such reports and certifications as the City are required to file with the Trustee thereunder.
(f) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it is not assured to its satisfaction
that the repayment of such funds or indemnity satisfactory to it against such risk or liability is
reasonably assured to it.
(g) The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(h) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of Owners pursuant to this Indenture,
unless such Owners shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction. No permissive power, right or remedy conferred
upon the Trustee hereunder shall be construed to impose a duty to exercise such power,right or
remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture and
the Lease Agreement relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of Section 8.01(a), this Section 8.03 and Section
8.04 hereof.
(j) The Trustee shall not be concerned with or accountable to anyone for the subsequent
use or application of any moneys which shall be released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
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contemplated by the Authority or the City of the Property. In no event shall the Trustee be
liable for incidental, indirect, special or consequential damages in connection with or arising
from the Lease Agreement or this Indenture for the existence,furnishing or use of the Property.
(1) Except to the extent that information was provided by the Trustee, 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.
(m) The indemnities extended to the Trustee also extend to its directors, officers,
employees and agents.
(n) The Trustee may become the owner or pledgee of any Bonds with the same rights it
would have if it were not Trustee.
(o) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay("unavoidable delay')in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,
material or supplies in the open market, litigation or arbitration involving a party or others
relating to zoning or other governmental action or inaction pertaining to the Property,malicious
mischief, condemnation,and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
(p) The Trustee agrees to accept and act upon instructions or directions pursuant to this
Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods, provided, however, that, the Trustee 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 replaced whenever a person is to be added or deleted from the listing. If the
Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions
by a similar electronic method) and the Trustee in its discretion elects to act upon such
instructions,the Trustee's understanding of such instructions shall be deemed controlling. The
Trustee shall not be liable for any losses,costs or expenses arising directly or indirectly from the
Trustees reliance upon and compliance with such instructions notwithstanding such
instructions conflict or are inconsistent with a subsequent written instruction. The Authority
and the City agree to assume all risks arising out of the use of such electronic methods to submit
instructions and directions to the Trustee, including without limitation the risk of the Trustee
acting on unauthorized instructions,and the risk of interception and misuse by third parties.
Section 8.04. Right to Rely on Documents. The Trustee shall be protected in acting upon
any notice, facsimile, e-mail, resolution, request, requisition, consent, order, certificate, report,
opinion, bonds or other paper or document believed by them 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 of or to the Authority,with regard to legal questions,and the opinion or advice
of such counsel shall be full and complete authorization and protection in respect of any action
taken or suffered by it hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as
the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any
notice to the contrary.
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Whenever in the administration of the trusts imposed upon it by 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 be deemed to be conclusively proved and established by
a Written Certificate, Written Request or Written Requisition of the Authority or the City, and
such Written Certificate, Written Request or Written Requisition shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of this Indenture in
reliance upon such Written Certificate, Written Request or Written Requisition, 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 deem reasonable.
Section 8.05. Preservation and Inspection of Documents. All documents received by the
Trustee under the provisions of this Indenture shall be retained by the Trustee and shall be
subject at all reasonable times to the inspection of the Authority,the City and any Bond Owner,
and their agents and representatives duly authorized in writing,at reasonable hours and under
reasonable conditions upon reasonable prior notice.
Section 8.06. Compensation and Indemnification.The Authority shall pay to the Trustee
from time to time compensation for all services rendered under this Indenture and also all
reasonable expenses and disbursements (including fees and expenses of counsel), incurred in
and about the performance of its powers and duties under this Indenture.
The Authority shall indemnify, defend and hold harmless the Trustee against any loss,
liability or expense incurred without negligence or willful misconduct on its part,arising out of
or in connection with the acceptance or administration of this Indenture, under the Lease
Agreement, or any other document or transaction contemplated in connection herewith
including costs and expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers hereunder. As security for the performance of
the obligations of the Authority under this Section 8.06 to the Trustee, the Trustee shall have a
lien prior to the lien of the Bonds upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of or interest on particular
Bonds. The rights of the Trustee and the obligations of the Authority under this Section 8.06
shall survive the resignation or removal of the Trustee or the discharge of the Bonds and this
Indenture.
When the Trustee incurs expenses or renders services after the occurrence of an Event of
Default, such expenses and the compensation for such services are intended to constitute
expenses of administration under any federal or state bankruptcy, insolvency, arrangement,
moratorium,reorganization or other debtor relief law.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01.Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any time by
as,, tndenture or indentures supplemental thereto, which the Authority and the Trustee may
eater into when the written consents of the Owners of a majority in aggregate principal amount
of all Bonds then Outstanding, shall have been filed with the Trustee. No such modification or
amendment shall (i) extend the fixed maturity of any Bonds,or reduce the amount of principal
thereof or extend the time of payment, or change the method of computing the rate of interest
:hereon,or extend the time of payment of interest thereon,without the consent of the Owner of
each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the
Owneno of which is required to effect any such modification or amendment, or permit the
creation of any lien on the Revenues and other assets pledged under this Indenture prior to or
on a parity with the lien created by this Indenture except as permitted herein, or deprive the
Ownem of the Bonds of the lien created by this Indenture on such Revenues and other assets
(except as expressly provided in this Indenture),without the consent of the Owners of all of the
Bond,- then Outstanding. It shall not be necessary for the consent of the Bond Owners to
approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
(b)This Indenture and the rights and obligations of the Authority,of the Trustee and the
Owners of the Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the Authority and the Trustee may enter into without the
consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the
provisions of such Supplemental Indenture shall not materially adversely affect the interests of
the C)wners of the Bonds, including, without limitation, for any one or more of the following
purposes
(i) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed,to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority;
(ii) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained
in this Indenture, or in regard to matters or questions arising under this Indenture, as
the Authority may deem necessary or desirable;
(iii)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, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal statute;or
(iv) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which
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materially adversely affects the Trustee's own rights,duties or immunities under this Indenture
or otherwise.
(d)Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall
be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such
Supplemental Indenture has been adopted in compliance with the requirements of this
Indenture and that the adoption of such Supplemental Indenture will not, in and of itself,
adversely affect the exclusion from gross income for purposes of federal income taxes of interest
on the Bonds.
(e)Written notice of any amendment or modification made pursuant to this Section 9.01
shall be given by the Authority to any rating agency then rating the Bonds at least thirty (30)
days prior to the effective date of such amendment or modification.
Section 9.02. Effect of Supplemental Indenture.Upon the execution of any Supplemental
Indenture pursuant to this Article IX, this Indenture shall be deemed to be modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Authority,the Trustee and all Owners of Bonds Outstanding shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may,and if the Authority
so determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds 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 shall be made on such Bonds. If the Supplemental Indenture
shall so provide,new Bonds so modified as to conform,in the opinion of the Authority and the
Trustee,to any modification or amendment contained in such Supplemental Indenture,shall be
prepared and executed by the Authority and authenticated by the Trustee, and upon demand
on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee,
without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation
of such Bonds,in equal aggregate principal amount of the same series and maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by
him.
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may be paid
by the Authority in any of the following ways,provided that the Authority also pays or causes
to be paid any other sums payable hereunder by the Authority:
(a)by paying or causing to be paid the principal of and interest and premium(if any) on
such Bonds,as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, Defeasance
Obligations in the necessary amount (as provided in Section 10.03) to pay or redeem such
Bonds;or
(c)by delivering to the Trustee,for cancellation by it,such Bonds.
If the Authority shall also pay or cause to be paid all other sums payable hereunder by
the Authority, then and in that case, at the election of the Authority (evidenced by a Written
Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to
discharge all such indebtedness and this Indenture), and notwithstanding that any of such
Bonds shall not have been surrendered for payment,this Indenture and the pledge of Revenues
and other assets made under this Indenture with respect to such Bonds and all covenants,
agreements and other obligations of the Authority under this Indenture (except its obligations
under Section 8.06 hereof) with respect to such Bonds shall cease, terminate,become void and
be completely discharged and satisfied. In such event, upon the Written Request of the
Authority,the Trustee shall execute and deliver to the Authority all such instruments as may be
necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay
over, transfer, assign or deliver to the City all moneys or securities or other property held by it
pursuant to this Indenture which are not required for the payment or redemption of any of such
Bonds not theretofore surrendered for such payment or redemption.
Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 10.03) to pay or redeem any Outstanding Bonds(whether upon or prior to the maturity
or the redemption date of such Bonds),provided that,if such Bonds are to be redeemed prior to
maturity, notice of such redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee shall have been made for the giving of such notice,then all
liability of the Authority in respect of such Bonds shall cease, terminate and be completely
discharged, and the Owners thereof shall thereafter be entitled only to payment out of such
money or securities deposited with the Trustee as aforesaid for their payment,subject,however,
to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds
previously issued and delivered, which the Authority may have acquired in any manner
whatsoever,and such Bonds,upon such surrender and cancellation,shall be deemed to be paid
and retired.
Section 10.03.Deposit of Money or Securities with Trustee.Whenever in this Indenture it
is provided or permitted that there be deposited with or held in trust by the Trustee money or
securities in the necessary amount to pay or redeem any Bonds,the money or securities so to be
deposited or held may include money or securities held by the Trustee in the funds and
accounts established pursuant to this Indenture and shall be:
-40-
(a) lawful money of the United States of America in an amount equal to the principal
amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of
Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for the giving of such notice, the amount to be deposited or held
shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption
date;or
(b) Defeasance Obligations, the principal of and interest on which when due will,in the
written opinion of an Independent Accountant filed with the City, the Authority and the
'Trustee, provide money sufficient to pay the principal of and interest and premium (if any) on
the Bonds to be paid or redeemed, as such principal, interest and premium become due,
provided that in the case of Bonds which are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms
of this Indenture or by Written Request of the Authority) to apply such money to the payment
of such principal, interest and premium (if any) with respect to such Bonds, and (ii) the
Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such
Bonds have been discharged in accordance with this Indenture (which opinion may rely upon
and assume the accuracy of the Independent Accountant's opinion referred to above).
Section 10.04. Unclaimed Funds. Notwithstanding any provisions of this Indenture,and
subject to applicable provisions of State law, any moneys held by the Trustee in trust for the
payment of the principal of, or interest on, any Bonds and remaining unclaimed. for two (2)
years after the principal of all of the Bonds has become due and payable(whether at maturity or
upon call for redemption as provided in this Indenture), if such moneys were so held at such
date,or two (2)years after the date of deposit of such moneys if deposited after said date when
all of the Bonds became due and payable, shall be repaid to the Authority free from the trusts
created by this Indenture, and all liability of the Trustee with respect to such moneys shall.
thereupon cease;provided, however, that before the repayment of such moneys to the Authority
as aforesaid,the Trustee shall (at the written request and cost of the Authority) first mail to the
Owners of Bonds which have not yet been paid, at the addresses shown on the Registration
Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the
Bonds so payable and not presented and with respect to the provisions relating to the
repayment to the Authority of the moneys held for the payment thereof.
-41-
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in
this Indenture or in the Bonds contained, the Authority shall not be required to advance any
moneys derived from any source other than the Revenues and other assets pledged under this
Indenture for any of the purposes in this Indenture mentioned,whether for the payment of the
principal of or interest on the Bonds or for any other purpose of this Indenture. Nevertheless,
the Authority may, but shall not be required to, advance for any of the purposes hereof any
funds of the Authority which may be made available to it for such purposes.
Section 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any
person other than the Authority,the Trustee,the City and the Owners of the Bonds,any legal or
equitable right, remedy or claim under or in respect of this Indenture or any covenant,
condition or provision therein or herein contained; and all such covenants, conditions and
provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the City,
the Authority and the Owners of the Bonds.
Section 11.03. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the
accounting records of the Trustee, either as a fund or an account, and may, for the purposes of
such records, any audits thereof and any reports or statements with respect thereto,be treated
either as a fund or as an account; but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with industry standards to the extent
practicable, and for the protection of
the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such
funds and accounts as it deems necessary to perform its obligations hereunder. The Trustee
shall deliver a monthly accounting-to the Authority of the funds and accounts held hereunder;
provided, that the Trustee shall not be obligated to deliver an accounting for any fund or
account that has had no activity since the last reporting date and that has a balance of zero.
Section 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this
Indenture the giving of notice by mail or otherwise is required,the giving of such notice may be
waived in writing by the person entitled to receive such notice and in any such case the giving
r receipt of such notice shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.Whenever in this Indenture any notice shall be required to be given
by mail, such requirement shall be satisfied by the deposit of such notice in the United States
mail,postage prepaid,by first class mail.
Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Authority of any Bonds,the Trustee shall,
in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law, and at
the written request of the Authority the Trustee shall deliver a certificate of such destruction to
the Authority.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect,then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
-42-
herein,. The Authority hereby declares that it would have entered into this Indenture and each
and every other Section, paragraph, sentence, clause or phrase hereof and authorized the
issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 11.07.Notices.All written notices to be given under this Indenture shall be given
by first class mail or personal delivery to the party entitled thereto at its address set forth below,
or at such address as the party may provide to the other party in writing from time to time.
Notice shall be effective either (a)upon transmission by facsimile transmission or other form of
telecommunication, confirmed by Phone, (b) after deposit in the United States mail, postage
prepaid,upon receipt, or (c) in the case of personal delivery to any person,upon actual receipt.
The Authority, the City or the Trustee may,by written notice to the other parties, from time to
time modify the address or number to which communications are to be given hereunder.
If to the Authority: Huntington Beach Public Financing Authority
c/o City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
Phone:(714)536-5630
Fax:(714)374-5365
If to the City: City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
Phone:(714)536-5630
Fax:(714)374-5365
If to the Trustee:
Attention:
Phone:(213)
Fax:(213)
The City, the Authority and the Trustee, by notice given hereunder, may designate
different addresses to which subsequent notices, certificates or other communications will be
sent..
Section 11.08. Evidence of Rights of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be
signed or executed by such Bond Owners in person or by an agent or agents duly appointed in
writing.. Proof of the execution of any such request,consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by delivery,
shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and the Authority if made in the manner provided in this Section 11.08.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
-43-
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall
bind every future Owner of the same Bond and the Owner of every Bond issued in exchange
therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or
the Authority in accordance therewith or reliance thereon.
Section 11.09. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be
owned or held by or for the account of the Authority or the City,or by any other obligor on the
Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or
indirect common control with,the Authority or the City or any other obligor on the Bonds,shall
be disregarded and deemed not to be Outstanding for the purpose of any such determination
(unless 100% of the Bonds are so owned). Bonds so owned which have been pledged in good
faith may be regarded as Outstanding for the purposes of this Section 11.09 if the pledgee shall
certify to the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a person
directly or indirectly controlling or controlled by, or under direct or indirect common control
with,the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such
right,any decision by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
Upon request, the Authority or the City shall specify to the Trustee those Bonds
disqualified pursuant to this Section 11.09. The Trustee may conclusively rely on such
representation of the Authority and City.
Section 11.10. Money Held for Particular Bonds. The money held by the Trustee for the
payment of the interest or principal due on any date with respect to particular Bonds (or
portions of Bonds in the case of Bonds redeemed in part only) shall,on and after such date and
pending such payment, be set aside on its books and held in trust by it for the Owners of the
Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof but without
any liability for interest thereon.
Section 11.11.Waiver of Personal Liability.No member,officer,agent or employee of the
Authority shall be individually or personally liable for the payment of the principal of or
interest or premium(if any)on the Bonds or be subject to any personal liability or accountability
by reason of the issuance thereof;but nothing herein contained shall relieve any such member,
officer,agent or employee from the performance of any official duty provided by law or by this
Indenture.
Section 11.12.Successor Is Deemed Included in All References to Predecessor.Whenever
in this Indenture either the City, the Authority or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof,and all the covenants and
agreements in this Indenture contained by or on behalf of the City,the Authority or the Trustee
shall bind and inure to the benefit of the respective successors and assigns thereof whether so
expressed or not.
Section 11.13.Execution in Several Counterparts. This Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original; and all such counterparts, or as many of them as the Authority and the Trustee shall
preserve undestroyed,shall together constitute but one and the same instrument.
-44-
Section 11.14. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State.
-45-
IN WITNESS WHEREOF, the HUNTINGTON BEACH PUBLIC FINANCING
AUTHORITY has caused this Indenture to be signed in its name by its officers identified below
and _ , in token of its acceptance of the trust 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.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
as Trustee
By
Name
Title
-46-
Quint 8b Thimmig LLP 03/18/10
04/01/10
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
ORANGE COUNTY
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
Lease Revenue Refunding Bonds,2010 Series A
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
% Se tember 1, 2010
REGISTERED OWNER: CEDE&CO.
PRINCIPAL AMOUNT: DOLLARS
The HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY, a duly constituted
redevelopment agency under the laws of the State of California (the "Authority'), for value
received,hereby promises to pay to the Registered Owner specified above or registered assigns
(the "Registered Owner"), on the Maturity Date specified above (subject to any right of prior
redemption hereinafter provided for), the Principal Amount specified above, in lawful money
of the United States of America, and to pay interest thereon in like lawful money from the
Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this
Bond unless (i) this Bond is authenticated on or before an Interest Payment Date and after the
close of business on the fifteenth day of the month preceding such interest payment date, in
which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is
authenticated on or before August 15, 2010, in which event it shall bear interest from the
Original Issue Date specified above;provided,however,that if at the time of authentication of this
Bond,interest is in default on this Bond,this Bond shall bear interest from the Interest Payment
Date to which interest has previously been paid or made available for payment on this Bond,at
the Interest Rate specified above, payable semiannually on March 1 and September 1 in each
year,commencing September 1,2010 (collectively,the "Interest Payment Dates"),calculated on
the basis of a 360-day year composed of twelve 30-day months. Principal hereof and premium,
if any,upon early redemption hereof are payable upon presentation and surrender hereof at the
corporate trust office (the "Office") of , as trustee (the "Trustee") or
such other place as designated by the Trustee. Interest hereon is payable by check on the
Interest Payment Date of the Trustee mailed on the applicable Interest Payment Date to the
Registered Owner hereof at the Registered Owner's address as it appears on the registration
books of the Trustee as of the close of business on the fifteenth day of the month preceding each
Interest Payment Date(a"Record Date"),or,upon written request filed with the Trustee at Ieast
five days prior to such Record Date by a Registered Owner of at least $1,000,000 in aggregate
principal amount of Bonds,by wire transfer in immediately available funds to an account in the
United States designated by such Registered Owner in such written request.
Exhibit A 08008.04
Page 1
This Bond is not a debt of the City of Huntington Beach(the"City"),Orange County,the
State of California, or any of its political subdivisions, and neither the City, said County, said
State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be
payable out of any funds or properties of the Authority other than the Revenues (as defined in
the Indenture hereinafter defined).
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,2010 Series A
(the"Bonds"),in an aggregate principal amount of dollars($ ),all of
like tenor and date (except for such variation, if any, as may be required to designate varying
numbers, maturities, interest rates or redemption provisions) and all issued pursuant to the
provisions of Article 5 of Part 1 of Division 24 of the California Health and Safety Code (the
"Law"), and pursuant to an Indenture of Trust, dated as of Lune 1, 2010, by and between the
Authority and the Trustee (the "Indenture"), and a resolution of the Authority adopted on
February 19, 2010, authorizing the issuance of the Bonds. Reference is hereby made to the
Indenture (copies of which are on file at the office of the Authority) and all supplements thereto
for a description of the terms on which the Bonds are issued, the provisions with regard to the
nature and extent of the Revenues, and the rights thereunder of the owners of the Bonds and
the rights, duties and immunities of the Trustee and the rights and obligations of the Authority
thereunder, to all of the provisions of which the Registered Owner of this Bond,by acceptance
hereof,assents and agrees.
The Bonds are being issued to (a) refund the Authority's Huntington Beach Public
Financing Authority Lease Revenue Bonds, 1997 Series A (Public Facilities Project), of which
$2,770,000 remains outstanding (the "1997 Bonds"); (b) refund the Authority's Huntington
Beach Public Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement
Financing Project), of which $12,785,000 remains outstanding (the "2000 Bonds"), (c) fund a
reserve fund for the Bonds,and(d)pay costs of issuance of the Bonds.
This Bond and the interest and premium, if any, hereon and all other Bonds and the
interest and premium, if any, thereon (to the extent set forth in the Indenture) are special
obligations of the Authority, and are payable from,and are secured by a charge and lien on the
Revenues as defined in the Indenture, consisting primarily of payments under the Lease
Agreement. As and to the extent set forth in the Indenture, all of the Revenues are exclusively
and irrevocably pledged in accordance with the terms hereof and the provisions of the
Indenture,to the payment of the principal of and interest and premium(if any)on the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in
the Indenture,but no such modification or amendment shall extend the fixed maturity of any
Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the
time of payment,or change the method of computing the rate of interest thereon,or extend the
time of payment of interest thereon,without the consent of the owner of each Bond so affected.
The Bonds maturing on or before September 1, , are not subject to optional
redemption prior to their respective stated maturities. The Bonds maturing on or after
September 1, ,are subject to redemption at the option of the Authority as a whole,or in part
in such order of maturity as the City shall designate (and, if no specific order of redemption is
designated by the City, pro rata among maturities) on any date on or after September 1,
from any available source of funds, at a redemption price equal to the principal amount of the
Bonds to be redeemed,together with accrued interest thereon to the date fixed for redemption,
without premium.
Exhibit A
Page 2
The Bonds maturing on September 1, (the "Term Bonds') are also subject to
mandatory sinking fund redemption in part by lot on September 1, , and on September 1,
from sinking account payments made by the Authority at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium, in the aggregate respective principal amounts and on the
respective dates as set forth in the following table;provided, however, that if some but not all of
the Term Bonds have been optionally redeemed,the total amount of all future sinking account
payments will be reduced by the aggregate principal amount of Term Bonds so redeemed,to be
allocated among the sinking account payments as are thereafter payable on a pro rata basis in
integral multiples of$5,000 as determined by the Authority(notice of which determination shall
be given by the Authority to the Trustee).
Sinking Account
Redemption Date Principal Amount to be
(September 1) Redeemed or Purchased
tMaturity
In lieu of redemption of Term Bonds, amounts on deposit as sinking account payments
may also be used and withdrawn by the Trustee, at the written direction of the Authority, at
any time for the purchase of Term Bonds otherwise required to be redeemed on the following
September 1 at public or private sale as and when and at such prices (including brokerage and
other charges and including accrued interest) as the Authority may in its discretion determine.
The par amount of any of the Term Bonds so purchased by the Authority and surrendered to
the Trustee for cancellation in any twelve-month period ending on Jul 1 in any year shall be
credited towards and shall reduce the par amount of the Term Bonds otherwise required to be
redeemed on the following September 1.
The Bonds are also subject to redemption as a whole,or in part on a pro rata basis among
maturities, on any date, to the extent the Trustee has received hazard insurance proceeds or
condemnation proceeds not used to repair or replace any portion of the leased property
damaged or destroyed and elected by the City, to be used for such purpose, at a redemption
price equal to one hundred percent(100%) of the principal amount thereof plus interest accrued
thereon to the date fixed for redemption,without premium.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by
first class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption
date to the respective owners of any Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee,but neither failure to receive such notice nor
any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed for redemption.
Notwithstanding the foregoing.in the case of any optional redemption of the Bonds,the
notice of redemption may be conditioned upon receipt by the Trustee of sufficient moneys to-
redeem the Bonds on the anticipated redemption date and that the optional redemption shall
nit occur if, by no later than the scheduled redemption date sufficient moneys to redeem the
Bonds have not been deposited with the Trustee In the event that the Trustee does not receive
sufficient funds by the scheduled optional redemption date to so redeem the Bonds to be
optionally redeemed such event shall not constitute an Event of Default the Trustee shall send
written notice to the Owners to the effect that the redemption did not occur as anticipated, and
the Bands for which notice of optional redemption wa_s gLygn shall remain Outstanding for all
purposes of the Indenture.
Exhibit A
Page 3
If this Bond is called for redemption and payment is duly provided therefor as specified
in the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default,as defined in the Indenture,shall occur,the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing,at the Office of the Trustee,or such other place as designated by the
Trustee, but only in the manner, subject to the limitations and upon payment of the charges
provided in the Indenture,and upon surrender and cancellation of this Bond.Upon registration
of such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the
same aggregate principal amount and of the same maturity will be issued to the transferee in
exchange herefor. This Bond may be exchanged at the Office of the Trustee,or such other place
as designated by the Trustee,for Bonds of the same tenor, aggregate principal amount,interest
rate and maturity,of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
notice to the contrary.
THE BONDS HAVE BEEN DESIGNATED BY THE CITY AS "QUALIFIED TAX-
EXEMPT OBLIGATIONS" WITHIN THE MEANING OF SECTION 265(b)(3) OF THE
INTERNAL REVENUE CODE OF 1986.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Authority or the Trustee for registration of
transfer,exchange,or payment,and any Bond 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 VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co.,has an interest herein.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
by the Law and the laws of the State of California and that the amount of this Bond, together
with all other indebtedness of the Authority,does not exceed any limit prescribed by the Law or
any laws of the State of California, and is not in excess of the amount of Bonds permitted to be
issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been manually signed by the Trustee.
Exhibit A
Page 4
IN WITNESS WHEREOF,the Huntington Beach Public Financing Authority has caused
this Bond to be executed in its name and on its behalf with the facsimile signature of its Chair
and attested to by the facsimile signature of its Secretary, all as of the Original Issue Date
slsecified above.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Chair
Attest:
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
as Trustee
By
Authorized Signatory
Exhibit A
Page 5
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 widdri 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 Guaranteed:
Notice: Signature guarantee shall be made by a Notice: The signature on this assignment must
guarantor institution participating in the Securities correspond with the name(s) as written on the face of
Transfer Agents Medallion Program or in such other the within Bond in every particular without alteration or
guarantee program acceptable to the Trustee. enlargement or any change whatsoever."
Exhibit A
Page 6
�� ATTACHMENT #4
">.'TT in mig LLP 03/18/10
04/01/10
AFTER RECORDATION RETURN TO:
Quint&Thimmig LLP
575 Market Street,Suite 3600
Said Fraikcisco,California 94105-2874
Attention.Brian D.Quint,Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SITE AND FACILITY LEASE
Dated as of Lune 1,2010 f
by and between the
CITY OF HUNTINGTON BEACH,as Lessor
and
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY,as Lessee
Relating to
Huntington Beach Public Financing Authority
Lease Revenue Refunding Bonds,2010 Series A
08008.04
SITE AND FACILITY LEASE
This SITE AND FACILITY LEASE,dated as of Lune 1,2010,is by and between the CITY
OF HUNTINGTON BEACH,a municipal corporation and chartered city organized and existing
under and by virtue of the laws of the State of California (the "City"), as lessor, and the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority organized and existing under and by virtue of the laws of the State of California, as
lessee(the"Authority");
WITNESSETH :
WHEREAS, the Authority intends to assist the City by leasing certain real property and
improvements to the City pursuant to a Lease Agreement, dated as of un 1, 2010, and
recorded concurrently herewith by memorandum thereof (the "Lease Agreement"), and the
City proposes to enter into this Site and Facility Lease with the Authority as a material
consideration for the Authority's agreement to lease such real property and improvements to
the City;
NOW,THEREFORE,IT IS HEREBY MUTUALLY AGREED,as follows:
Section 1. Definitions. Unless the context clearly otherwise requires or unless otherwise
d.efirted herein, the capitalized terms in this Site and Facility Lease shall have the respective
meanings specified in that certain Indenture of Trust, dated as of Lune 1,2010,by and between
the Authority and .as trustee thereunder.
Section 2. Site and Facility Lease. The City hereby leases to the Authority and the
Authority hereby leases from the City, on the terms and conditions hereinafter set forth, those
pertain parcels of real property situated in Orange County,State of California,more particularly
described in Exhibit A attached hereto and made a part hereof (collectively, the "Site"), and
certain existing facilities on the Site, more particularly described in Exhibit B attached hereto
and made a part hereof(collectively,the"Facility").
Section 3. Term. The term of this Site and Facility Lease shall commence on the date of
recordation of this Site and Facility Lease in the Office of the County Recorder of Orange
County,State of California,and shall end on September 1,2030,unless such term is extended or
sooner terminated as hereinafter provided. If, on September 1, 2030, the aggregate amount of
1,ease Payments (as defined in and as payable under the Lease Agreement) shall not have been
paid, or provision shall not have been made for their payment, then the term of this Site and
Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made
for such payment. If, prior to September 1, 2030, all Lease Payments shall be fully paid or
provision made for such payment in accordance with Section 4.3 or 4.4 of the Lease Agreement,
the term of this Site and Facility Lease shall end ten(10)days thereafter.
Section 4. Rental. The City acknowledges receipt from the Authority as and for rental
hereunder the sum of one dollar($1.00),on or before the date of delivery of this Site and Facility
Lease.
Section 5. Purpose. The Authority shall use the Site and the Facility solely for the
purpose of leasing the Site and the Facility to the City pursuant to the Lease Agreement and for
such purposes as may be incidental thereto;provided,however,that in the event of default by the
Cite under the Lease Agreement, the Authority and its assigns may exercise the remedies
provided in the Lease Agreement.
Section 6. City s Interest in the Site and the Facility. The City covenants that it is the
owner of fee title to the Site and the Facility.
Section 7. Assignments; Subleases; Amendments. Unless the City shall be in default
under the Lease Agreement, the Authority may not assign its rights under this Site and Facility
Lease or sublet the Site or the Facility, except as provided in the Lease Agreement and the
Indenture, without the written consent of the City. This Site and Facility Lease may be
amended,if required,pursuant to the provisions of Section 8.3 of the Lease Agreement.
Section 8. Right of Entry. The City reserves the right, for any of its duly authorized
representatives, to enter upon the Site and the Facility at any reasonable time to inspect the
same or to make any repairs,improvements or changes necessary for the preservation thereof.
Section 9. Termination. The Authority agrees, upon the termination of this Site and
Facility Lease, to quit and surrender the Site and the Facility in the same good order and
condition as the same was in at the time of commencement of the term hereunder, reasonable
wear and tear excepted, and agrees that any permanent improvements and structures existing
upon the Site and the Facility at the time of the termination of this Site and Facility Lease shall
remain thereon and title thereto shall vest in the City.
Section 10. Default. In the event the Authority shall be in default in the performance of
any obligation on its part to be performed under the terms of this Site and Facility Lease,which
default continues for thirty (30) days following notice and demand for correction thereof to the
Authority,the City may exercise any and all remedies granted by law,except that no merger of
this Site and Facility Lease and of the Lease Agreement shall be deemed to occur as a result
thereof;provided, however, that so long as any Bonds are outstanding and unpaid in accordance
with the terms thereof, the Lease Payments assigned by the Authority to the Trustee under the
Indenture shall continue to be paid to the Trustee.
Section 11. Quiet Enjoyment. The Authority, at all times during the term of this Site and
Facility Lease,shall peaceably and quietly have,hold and enjoy the Site and the Facility subject
to the provisions of the Lease Agreement and the Indenture.
Section 12. Waiver of Personal Liability. All liabilities under this Site and Facility Lease
on the part of the Authority are solely liabilities of the Authority and the City hereby releases
each and every member,director,officer,employee and agent of the Authority of and from any
personal or individual liability under this Site and Facility Lease. No member, director, officer,
,,,arnployee or agent of the Authority shall at any time or under any circumstances be
individually or personally liable under this Site and Facility Lease for anything done or omitted
to be done by the Authority hereunder.
Section 13. Taxes. The City covenants and agrees to pay any and all assessments of any
kind or character and also all taxes,including possessory interest taxes,levied or assessed upon
the Site and the Facility(including both land and improvements).
Section 14.Eminent Domain. In the event the whole or any part of the Site or the Facility
is taken by eminent domain proceedings,the interest of the Authority shall be recognized and is
hereby determined to be the amount of the then unpaid Bonds including the unpaid principal
and interest with respect to any such Bonds then outstanding and, subject to the provisions of
the Lease Agreement,the balance of the award,if any,shall be paid to the City.
Section 15. Use of the Proceeds. The City and the Authority hereby agree that the lease
to the Authority of the City's right, title and interest in the Site and the Facility pursuant to
Section 2.serves the public purposes of the City.The City hereby agrees that the proceeds of the
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Bonds shall be used solely for the purpose of financing the costs of certain public improvements
owned, to be held or controlled by the City for its public purposes, on or before the date three
Years.following the date of execution and delivery of the Bonds,or to refinance prior obligations
of the City incurred for such purposes.
Section 16. Partial Invalidity. If any one or more of the terms, provisions, covenants or
conditions of this Site and Facility Lease shall,to any extent,be declared invalid,unenforceable,
void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding,
order or decree of which becomes final,none of the remaining terms,provisions,covenants and
conditions of this Site and Facility Lease shall be affected thereby,and each provision of this Site
and I acility Lease shall be valid and enforceable to the fullest extent permitted by law.
Section 17. Notices. All notices, statements, demands, consents, approvals,
authorizations, offers, designations, requests or other communications hereunder by either
party to the other shall be in writing and shall be sufficiently given and served upon the other
party if delivered personally or if mailed by United States registered mail, return receipt
requested,postage prepaid, and,if to the City, to the City Clerk, the City of Huntington Beach,
2000 Main Street, Huntington Beach, CA 92648, and if to the Authority, to the Secretary,
i ntington Beach Public Financing Authority,2000 Main Street, Huntington Beach, CA 92648,
or to such other addresses as the respective parties may from time to time designate by notice in
writing.
Section 18. Section Headin-s. All section headings contained herein are for convenience
of reference only and are not intended to define or limit the scope of any provision of this Site
and Facility Lease.
Section 19. Applicable Law. This Site and Facility Lease shall be governed by and
construed in accordance with the laws of the State.
Section 20. Execution in Counterparts. This Site and Facility Lease may be executed in
any number of counterparts, each of which shall be deemed to be an original but all together
shall constitute but one and the same instrument.
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IN WITNESS WHEREOF,the City and the Authority have caused this Site and Facility
Lease to be executed by their respective officers thereunto duly authorized,all as of the day and
year first above written.
CITY OF HUNTINGTON BEACH,as
Lessee
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attests
Joan L.Flynn
Secretary
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[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach,Orange County,State of California, described as
follows:
PARCEL 1:
LOTS 1 THROUGH 312 INCLUSIVE OF TRACT NO 263 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE, STATE OF CALIFORNIA. AS PER MAP FILED IN BOOK 13. PAGE 42__OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
EXCEPTING THEREFROM LOTS 1, 48, 49, 96, 97, 144, 145, 192, 193, 240, 241, 288, AND 299, THE
EASTERLY 10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL. GAS, AND MINERAL SUBSTANCES, BELOW A DEPTH
OFF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 2:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 264 IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BO K 13 PAGE 43 OF
I�1[APS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY
EXCEPTING THEREFROM LOTS 1 48 49 96 97 144 14 192 193 240,241,AND 248,THE EASTERLY
10 FEET THEREOF.
.ALSO EXCEPTING THEREFROM ALL OIL. GAS, AND MINERAL SUBSTANCES, BELOW A DEPTH
-OF 500 FEET AS RESERVED IN DEEDS OF RECORD.
PARCEL 3:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 265 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE. STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13, PAGE 46, OF
MAPS M THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL. GAS. AND MINERAL SUBSTANCES, BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD.
PARCEL 4:
I OTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 273 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13, PAGE 45, OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS ANII MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD.
PARCEL 5:
LOTS 1 THROUGH 14 INCLUSIVE 35 THROUGH 62 INCLUSIVE 83 THROUGH 110 INCLUSIVE
131 THROUGH 158, INCLUSIVE. 179 THROUGH 2O6.INCLUSIVE, 219 THROUGH 262. INCLUSIVE.
ND 267 THROUGH 310.INCLUSIVE.OF TRACT NO.274,M THE CITY OF HUNTINGTON BEACH.
_ NR OF ORANGE. STATE OF CALIFORNIA. AS PER MAP FILED IN BOOK 13. PAGES 52; OF
MAPS,IN ITHE OFFICE OF THE RECORDER OF SAID COUNTY
Exhibit A
Page 1
EXCEPTING THEREFROM A PORTION OF LOTS 219,227,254,262,267,275,302,AND 310,AND ALL
OF LOTS 220 THROUGH 226. INCLUSIVE, 255 THROUGH 261, INCLUSIVE. 268 THROUGH 274,
INCLUSIVE.AND 303 THROUGH 309.INCLUSIVE.ALL OF TRACT N0.274.AS SHOWN ON A MAP
FILED IN BOOK 13. PAGE 52, OF MISCELLANEOUS MAPS. RECORDS OF ORANGE COUNTY.
CALIFORNIA,MORE PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO.81-
86, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIF_ORNIA,AS
PER MAP FILED IN BOOK 171, PAGE 25, OF MAPS, IN THE OFFICE OF THE RECORDER OF SAID
COUNTY. - -
ALSO EXCEPTING THEREFROM TRACT NO. 4329, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 156 PAGES 19 AND
2-0,OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL. GAS.AND MINERALS SUBSTANCES.BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL .
PORTION OF LOTS 219,227, 254, 262, 267,275,302. AND 310. AND ALL OF LOTS 220 THROUGH
INCLUSIVE 255 THROUGH 261 INCLUSIVE 268 THROUGH 274. INCLUSIVE. AND 363
THROUGH 309, INCLUSIVE ALL OF TRACT NO 274 AS SHOWN ON A MAP FILED IN BOOK 13
PAGE 52, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY. CALIFORNIA, MORE
PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO.81-586, THE CITY OF
HUNTINGTON BEACH—COUNTY OF ORANGE. STATE OF CALIFORNIA AS PER MAP FILED
BOOK 171,PAGE 25,OF MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES, BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD.
PARCEL 6:
LOTS 1 THROUGH 14, INCLUSIVE: 35 THROUGH 62. INCLUSIVE, 83 THROUGH 110, INCLUSIVE,
131 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSIVE 227 THROUGH 254 INCLUSIVE
AND 275 THROUGH 288 INCLUSIVE OF TRACT NO 275 M THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 14, PAGES 16, OF
MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE, TATE OF CALIFORNIA AS PER MAP FILED IN BOOK 156 PAGES 19 AND
20 OF MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
AK-SO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OI°°_50' FEET,AS RESERVED IN DEEDS OF RECORD.
APN:111-032-35 and 111-042-41 and 111-050-38
Exhibit A
Page 2
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Property consists of the Donald W. Kiser Corporation Yard and the site thereof. the Donald
W—Usex Corporation Yard consists of a main building four large warehouse type structures equipment
and materials storage and office space The two-story 7.200 square foot administration building was
con,tmcted in 1972 and_is used for centralized customer service operations and office space The City
Yai Buildings provide operations bases for a variety of maintenance services. Building; B is
1,?o ci ately 26000 square feet and was also constructed in 1972 Building B houses the fleet
rnainte,viance facility that includes mechanics bays and parts storage for servicing vehicles. large and
small equipment and fire engines Building C constructed in 1973 is approximately 19 000 square feet.
T c_b_cdldin� holds materials and equipment used in traffic signal signs and markings maintenance.
Buikdit.C also includes facility maintenance small equipment such as carpentry, locksmith plumbing
and electrical tools Building D is approximatek 7,500 square feet and was built in 1983 It is used for
mechanical services to police vehicles motorcycles and radio equipment.This facility includes mechanics
b�_ _uid parts storage Building E approximately 14,600 square feet is a storage warehouse for parts.
xax�quipment Building E was finished in 1988 The lot includes several small sheds as well as
MW _£ sand gravel and loose construction materials A fuel island contains four gasoline.twosel.die
_sar-propane pumps that service all city owned vehicles and equipment The City estimates that the
value of the Property.including land and buildin tg o be appproximately$29.500.000.
Exhibit B
j` ATTAC H M E N T #5
Qukat&Tldmmig LLP 03/18/10
04/01/10
LEASE AGREEMENT
Dated as of J=un 1,2010
by and between the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY,as Lessor
and the
CITY OF HUNTINGTON BEACH,as Lessee
Relating to
Huntington Beach Public Financing Authority
Lease Revenue Refunding Bonds,2010 Series A
08008.04
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND EXHIBITS
Section1.1. Definitions........................................................................................................................................2
Section1.2. Exhibits.............................................................................................................................................2
ARTICLE II
REPRESENTATIONS,COVENANTS AND WARRANTIES
Section 2.1. Representations,Covenants and Warranties of Authority.......................................................3
Section 2.2. Representations,Covenants and Warranties of the City...........................................................4
ARTICLE III
ISSUANCE OF THE BONDS
Section3.1. The Bonds.........................................................................................................................................6
ARTICLE IV
Lease of PROPERTY;TERM OF THE LEASE AGREEMENT;LEASE PAYMENTS
Section4.1. Lease of Property.............................................................................................................................7
Section4.2. Term of Lease...................................................................................................................................7
Section4.3. Lease Payments...............................................................................................................................7
Section4A. Prepayment Option.........................................................................................................................8
Section4.5. Quiet Enjoyment..............................................................................................................................9
Section4.6. Title....................................................................................................................................................9
Section4.7. Additional Payments......................................................................................................................9
ARTICLE V
MAINTENANCE,TAXES,INSURANCE AND OTHER MATTERS
Section 5.1. Maintenance,Utilities,Taxes and Assessments.......................................................................10
Section 5.2. Modification of Property..............................................................................................................10
Section 5.3. Public Liability and Property Damage Insurance....................................................................11
Section 5.4. Fire and Extended Coverage Insurance.....................................................................................11
Section 5.5. Rental Interruption Insurance.....................................................................................................11
Section 5.6. Recordation Hereof;Title Insurance...........................................................................................12
Section 5.7.. Net Proceeds of Insurance;Form of Policies.............................................................................12
Section 5.8. Installation of Personal Property................................................................................................12
Section59. Liens................................................................................................................................................13
Section5.10. Tax Covenants...............................................................................................................................13
Section 5.11. Continuing Disclosure..................................................................................................................14
ARTICLE VI
DAMAGE,DESTRUCTION AND EMINENT DOMAIN;ABATEMENT OF LEASE PAYMENTS
Section.6.1, Application of Net Proceeds........................................................................................................15
Section 6.2. Abatement of Lease Payments....................................................................................................15
ARTICLE VII
DISCLAIMER OF WARRANTIES;ACCESS
Section 7.1. Disclaimer of Warranties..............................................................................................................17
Section7.2. Rights of Access.............................................................................................................................17
Section 7.3., Release and Indemnification Covenants....................................................................................17
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ARTICLE VIII
ASSIGNMENT,LEASING AND AMENDMENT
Section.81. Assignment by the Authority......................................................................................................18
Section 8.2. Assignment and Subleasing by the City....................................................................................18
Section 8.3. Amendment of Lease....................................................................................................................18
ARTICLE IX
EVENTS OF DEFAULT;REMEDIES
Section 9.1. Events of Default Defined............................................................................................................22
Section9.2. Remedies on Default.....................................................................................................................22
Section 93. Limitation on Remedies...............................................................................................................23
Section 9.4. No Remedy Exclusive...................................................................................................................23
Section 9.5. Agreement to Pay Attorneys'Fees and Expenses....................................................................23
Section 9.6. No Additional Waiver Implied by One Waiver.......................................................................24
Section 9.7. Trustee and Bond Owners to Exercise Rights...........................................................................24
ARTICLE X
MISCELLANEOUS
Section10.1. Notices............................................................................................................................................25
Section10.2. Binding Effect..................................•••............................................................................................25
Sectiun10.3. Severability.....................................................................................................................................25
Section10.4. Net-net-net Lease..........................................................................................................................25
Section 10.5. Further Assurances and Corrective Instruments.....................................................................26
Section 10.6. Execution in Counterparts...........................................................................................................26
Section10.7. Applicable Law..............................................................................................................................26
Section 10.8. Authorized Representatives........................................................................................................26
Section 10.9. Waiver of Personal Liability........................................................................................................26
Section 10.10. Limitation of Rights to Parties and Bond Owners....................................................................26
Section10.11. Captions..........................................................................................................................................26
EXHIBIT A: DESCRIPTION OF THE SITE
EXHIBIT B: DESCRIPTION OF THE FACILITY
EXHIBIT C: SCHEDULE OF LEASE PAYMENTS
-ii-
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease Agreement"), dated for convenience as of
1, 2010, by and between the HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY, a
joint exercise of powers authority organized and existing under and by virtue of the laws of the
State of California, as lessor (the "Authority"), and the CITY OF HUNTINGTON BEACH, a
municipal corporation and chartered city organized and existing under and by virtue of the
laws of the State of California,as lessee(the"City");
WITNESSETH :
WHEREAS,pursuant to that certain Site and Facility Lease,dated as of un 1,2010(the
"Site and Facility Lease"), the City has leased those certain parcels of real property situated in
Orange County, State of California, more particularly described in Exhibit A attached hereto
and made a part hereof (the "Site"), and certain existing facilities on the Site,more particularly
described in Exhibit B attached hereto and made a part hereof(the"Facility"and,with the Site,
the "Property"), all for the purpose of enabling the City to refinance the costs of the acquisition,
construction, installation and equipping of certain public capital improvements, including (a)
the refunding of the Huntington Beach Public Financing Authority Lease Revenue Bonds, 1997
Series A (Public Facilities Project),of which$2,770,000 remains outstanding(the"1997 Bonds"),
and (b) the refunding of the Huntington Beach Public Financing Authority Lease Revenue
Bonds, 2000 Series A (Capital Improvement Financing Project), of which $12,785,000 remains
outstanding(the"2000 Bonds");
WHEREAS, in order to provide the revenues necessary to enable the Authority to pay
debt service on the Bonds as it becomes due,the Authority proposes to lease the Property to the
City pursuant to this Lease Agreement and to assign its right to receive lease payments under
this Lease Agreement (the "Lease Payments"), its right to enforce payment of the Lease
Payments and otherwise to enforce its interest and rights under this Lease Agreement in the
event of a default hereunder by the City, to I , as trustee (the
"Trustee"),pursuant to that certain Indenture of Trust,dated as of un 1,2010,by and between I
the Authority and the Trustee(the"Indenture"),and pursuant to which the Authority will issue
and the Trustee will authenticate and deliver the $ aggregate principal amount of
Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds, 2010 Series A
(the"Bonds");and
WHEREAS,the Authority and the City have duly authorized the execution and delivery
of this Lease Agreement;
NOW, THEREFORE, for and in consideration of the premises and the material
covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1.Definitions.Unless the context clearly otherwise requires or unless otherwise
defined herein, the capitalized terms in this Lease Agreement shall have the respective
meartings specified in Section 1.01 of the Indenture.
Section 1.2.Exhibits.The following exhibits are attached to,and by this reference made a
part of,this Lease Agreement:
Exhibit A: Description of the Site
Exhibit B: Description of the Facility
Exhibit C: Schedule of Lease Payments
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ARTICLE II
REPRESENTATIONS,COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of Authority. The Authority
makes the following covenants, representations and warranties as the basis for its undertakings
herein contained:
(a) Due Organization and Existence. The Authority is a joint exercise of powers authority, f
organized and existing under and by virtue of the laws of the State;has power to enter into this
Lease Agreement, the Site and Facility Lease, the Indenture, the 1997 Escrow Agreement and
the 2000 Escrow Agreement; is possessed of full power to own and hold, improve and equip
real and personal property, and to lease and lease back the same; and has duly authorized the
execution and delivery of each of the aforesaid agreements and such agreements constitute the
legal, valid and binding obligations of the Authority, enforceable against the Authority in
accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this Lease Agreement,
the Site and Facility Lease, the Indenture, the 1997 Escrow Agreement and the 2000 Escrow
Agreement are fully authorized to execute the same pursuant to official action taken by the
governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease Agreement, the Site and Facility
Lease, the Indenture, the 1997 Escrow Agreement and the 2000 Escrow Agreement have been
duly authorized, executed and delivered by the Authority and constitute the legal, valid and
binding agreements of the Authority,enforceable against the Authority in accordance with their
respective terms.
(d) No Conflicts. The execution and delivery of this Lease Agreement, the Site and
Facility Lease, the Indenture, the 1997 Escrow Agreement and the 2000 Escrow Agreement, the
consummation of the transactions herein and therein contemplated and the fulfillment of or
compliance with the terms and conditions hereof,do not and will not conflict with or constitute
a violation or breach of or default (with due notice or the passage of time or both) under any
applicable law or administrative rule or regulation, or any applicable court or administrative
decree or order, or any indenture,mortgage,deed of trust,lease,contract or other agreement or
instrument to which the Authority is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the Authority,
which conflict, violation, breach, default, lien, charge or encumbrance would have
consequences that would materially and adversely affect the consummation of the transactions
contemplated by this Lease Agreement, the Site and Facility Lease, the Indenture, the 1997
Escrow Agreement and the 2000 Escrow Agreement or the financial condition,assets,properties
or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the Authority,and no consent,permission,authorization,order or license of,or
filing or registration with, any governmental authority is necessary in connection with the
execution and delivery of this Lease Agreement, the Site and Facility Lease, the Indenture, the
1997 Escrow Agreement and the 2000 Escrow Agreement, or the consummation of any
transaction herein or therein contemplated,except as have been obtained or made and as are in
full force and effect.
-3-
(f)No Litigation.There is no action,suit,proceeding,inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the Authority after reasonable investigation, threatened against or affecting the
Authority or the assets, properties or operations of the Authority which, if determined
adversely to the Authority or its interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of this Lease Agreement, the
Site and Facility Lease,the Indenture or the Escrow Agreement,or upon the financial condition,
assets,properties or operations of the Authority,and the Authority is not in default with respect
to any order or decree of any court or any order, regulation or demand of any federal, state,
municipal or other governmental authority,which default might have consequences that would
materially and adversely affect the consummation of the transactions contemplated by this
Lease Agreement, the Site and Facility Lease, the Indenture or the Escrow Agreement or the
financial conditions,assets,properties or operations of the Authority.
Section 2.2. Representations,Covenants and Warranties of the City. The City makes the
following covenants, representations and warranties to the Authority as of the date of the
execution and delivery of this Lease Agreement:
(a) Due Organization and Existence.The City is a municipal corporation and chartered city
organized and existing under and by virtue of its charter and the laws of the State,has full legal
right, power and authority under the laws of the State to enter into the Site and Facility Lease,
this Lease Agreement, the 1997 Escrow Agreement and the 2000 Escrow Agreement and to
carry out and consummate all transactions contemplated hereby and thereby, and by proper
action the City has duly authorized the execution and delivery of the Site and Facility Lease,
this Lease Agreement,the 1997 Escrow Agreement and the 2000 Escrow Agreement.
(b) Due Execution. The representatives of the City executing the Site and Facility Lease,
this Lease Agreement, the 1997 Escrow Agreement and the 2000 Escrow Agreement have been
illy authorized to execute the same pursuant to a resolution duly adopted by the City Council
of the City.
(c) Valid, Binding and Enforceable Obligations. The Site and Facility Lease, this Lease
Agreement, the 1997 Escrow Agreement and the 2000 Escrow Agreement have been duly
authorized, executed and delivered by the City and constitute the legal, valid and binding
obligations of the City enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site and Facility Lease, this Lease
Agreement,the 1997 Escrow Agreement and the 2000 Escrow Agreement,the consummation of
the transactions herein and therein contemplated and the fulfillment of or compliance with the
terms and conditions hereof and thereof, do not and will not conflict with or constitute a
violation or breach of or default (with due notice or the passage of time or both) under any
applicable law or administrative rule or regulation, or any applicable court or administrative
decree or order, or any indenture,mortgage,deed of trust,lease,contract or other agreement or
instrument to which the City is a party or by which it or its properties are otherwise subject or
bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of the City,which conflict,violation,
breach, default, lien, charge or encumbrance would have consequences that would materially
and adversely affect the consummation of the transactions contemplated by the Site and Facility
Lease, this Lease Agreement, the 1997 Escrow Agreement and the 2000 Escrow Agreement, or
the financial condition,assets,properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any
indebtedness of the City or of the voters of the City, and no consent,permission, authorization,
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order os license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of the Site and Facility Lease,this Lease Agreement,
the 1997 Escrow Agreement and the 2000 Escrow Agreement, or the consummation of any
transaction herein or therein contemplated,except as have been obtained or made and as are in
full force and effect.
(f)No Litigation.There is no action,suit,proceeding,inquiry or investigation before or by
any court or federal, state, municipal or other governmental authority pending or, to the
knowledge of the City after reasonable investigation,threatened against or affecting the City or
the assets, properties or operations of the City which,if determined adversely to the City or its
interests, would have a material and adverse effect upon the consummation of the transactions
contemplated by or the validity of the Site and Facility Lease, this Lease Agreement, the 1997
Escrow Agreement and the 2000 Escrow Agreement, or upon the financial condition, assets,
properties or operations of the City, and the City is not in default with respect to any order or
decree of any court or any order,regulation or demand of any federal,state,municipal or other
governmental authority, which default might have consequences that would materially and
ad erseiy affect the consummation of the transactions contemplated by the Site and Facility
heas,r, this Lease Agreement, the 1997 Escrow Agreement and the 2000 Escrow Agreement, or
the financial conditions,assets,properties or operations of the City.
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ARTICLE III
ISSUANCE OF THE BONDS
Section 3.1.The Bonds.The Authority has authorized the issuance of the Bonds pursuant
to the Indenture in the aggregate principal amount of dollars ($ ).
The Authority agrees that the proceeds of sale of the Bonds shall be paid to the Trustee on the
Closing Date for deposit and application pursuant to the terms and conditions of the Indenture,
which.h4 terms and conditions authorize the City to draw upon specified proceeds of the Bonds
for huirposes of refunding the 1997 Bonds and the 2000 Bonds. The City hereby approves the
Indenture, the assignment to the Trustee of the rights (but none of the obligations) of the
Authority assigned or purported to be assigned thereunder, and the issuance of the Bonds by
the Authority thereunder.
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ARTICLE IV
LEASE OF PROPERTY;TERM OF THE LEASE AGREEMENT;
LEASE PAYMENTS
Section 4.1. Lease of Property. The Authority hereby leases the Property to the City, and
the City hereby leases the Property from the Authority,upon the terms and conditions set forth
in this Lease Agreement.
Section 4.2. Term of Lease. This Lease Agreement shall take effect on the date hereof,
and shall end on the earlier of September 1,2030, or such earlier date on which the Bonds shall
no longer be Outstanding under the Indenture. If,on September 1,2030,the Indenture shall not
be discharged by its terms or if the Lease Payments payable hereunder shall have been abated
at any time and for any reason, then the Term of the Lease Agreement shall be extended until
there has been deposited with the Trustee an amount sufficient to pay all obligations due under
the Lease Agreement, but in no event shall the Term of the Lease Agreement extend beyond
September 1,2040.
Section 4.3.Lease Payments.
(a) Obligation to Pay. In consideration of the lease of the Property from the Authority
hereunder and subject to the provisions of Section 6.2, the City agrees to pay to the Authority,
its successors and assigns, as rental for the use and occupancy of the Property during each
Fiscal Year,the Lease Payments(denominated into components of principal and interest)for the
Property in the respective amounts specified in Exhibit C hereto,to be due and payable on the
respective Lease Payment Dates specified in Exhibit C hereto.Any amount held in the Revenue
Fund (except the Reserve Account therein), the Interest Account, the Principal Account or the
Sinking Account on any Lease Payment Date, derived from any source of funds of the City or
the Authority, shall be credited towards the Lease Payment then due and payable. The Lease
Payments coming due and payable in any Fiscal Year shall be for the use of the Property for
such Fiscal Year.
The City's obligation to pay Lease Payments hereunder shall be absolute and
unconditional subject only to abatement,in the event and to the extent that there is substantial
interference with the use and occupancy of the property or any portion thereof..
(b) Rate on Overdue Payments. In the event the City should fail to make any of the
payments required in this Section 4.3, the payment in default shall continue as an obligation of
the City until the amount in default shall have been fully paid, and the City agrees to pay the
same with interest thereon,from the date of default to the date of payment at the highest rate of
interest borne by any Outstanding Bond. Such interest, if received, shall be deposited in the
Revenue Fund.
(c) Fair Rental Value. The Lease Payments and Additional Payments coming due and
payable in each Fiscal Year shall constitute the total rental for the Property for each Fiscal Year
and shall be paid by the City in each Fiscal Year for and in consideration of the right of the use
and occupancy of, and the continued quiet use and enjoyment of, the Property during each
Fiscal Year. The Authority and the City hereby agree and determine that the total Lease
Payments do not exceed the fair rental value of the Property. In making such determination,
consideration has been given to the obligations of the parties under this Lease Agreement, the
value of the Property, the uses and purposes which may be served by the Property and the
benefits therefrom which will accrue to the City and the general public.
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(d) Source of Payments; Budget and Appropriation. The Lease Payments shall be payable
from any source of available funds of the City, subject to the provisions of Section 6.2. The City
covenants to take such action as may be necessary to include all Lease Payments due hereunder
in each of its budgets during the Term of the Lease Agreement and to make the necessary
annual appropriations for all such Lease Payments.The covenants on the part of the City herein
contained shall be deemed to be and shall be construed to be ministerial duties imposed by law
and it shall be the duty of each and every public official of the City to take such action and do
such things as are required by law in the performance of the official duty of such official to
enable the City to carry out and perform the covenants and agreements in this Lease Agreement
agreed to be carried out and performed by the City. During the Term of the Lease Agreement,
the City shall furnish to the Authority and the Trustee, no later than ten days following the
adoption of a budget for the current Fiscal Year, a certificate stating that the Lease Payments
due in that Fiscal Year have been included in the budget approved by the City Council for such
Fiscal Year.
(e) Assignment. The City understands and agrees that all Lease Payments have
previously been assigned by the Authority to the Trustee in trust,pursuant to Section 5.01 of the
Indenture, for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment.The Authority hereby directs the City,and the City hereby agrees, to pay all of the
Lease Payments to the Trustee at its Office.
(f) Security Deposit. Notwithstanding any other provision of this Lease Agreement, the
City may on any date secure the payment of the Lease Payments for the Property in whole or in
part by depositing with the Trustee an amount of cash which, together with other available
amounts,including but not limited to amounts on deposit in the Revenue Fund and the Reserve
Account,is either (i)sufficient to pay such Lease Payments,including the principal and interest
components thereof, and premium, if any, in accordance with the Lease Payment schedule set
forth in Exhibit C,or (ii) invested in whole or in part in Defeasance Obligations in such amount
as will, in the opinion of an Independent Accountant, together with interest to accrue thereon
and together with any cash which is so deposited, be fully sufficient to pay such Lease
Payments when due hereunder, as the City shall instruct at the time of said deposit. Said
security deposit shall be deemed to be and shall constitute a special fund for the payment of
Lease Payments in accordance with the provisions of this Lease Agreement.
Section 4.4. Prepayment Option. The Authority hereby grants an option to the City to
prepay the principal component of the Lease Payments in full,or in part,without premium.
Said option may be exercised with respect to Lease Payments due on and after April 15,
2020,in whole or in part on any date commencing April 15,2019. Said option shall be exercised
by the City by giving written notice to the Authority and the Trustee of the exercise of such
option at least sixty (60) days prior to said Lease Payment Date. Such option shall be exercised
in the event of prepayment in full, by depositing with said notice cash in an amount, which,
together with amounts then on deposit in the Reserve Account, the Insurance and
Condemnation Fund and the Revenue Fund, will be sufficient to pay the aggregate unpaid
Lease Payments on said Lease Payment Date as set forth in Exhibit C hereto,together with any
Lease Payments then due but unpaid,or,in the event of prepayment in part,by depositing with
said notice cash equal to the amount desired to be prepaid (the principal component of which
shall be an amount divisible by$5,000) together with any Lease Payments then due but unpaid.
In the event of prepayment in part, the partial prepayment shall be applied against Lease
Payments in such manner as the City shall determine and if the City shall fail to make such
determination, in inverse order of their payment dates. Lease Payments due after any such
partial prepayment shall be in the amounts set forth in a revised Lease Payment schedule which
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shall be provided by, or caused to be provided by, the City to the Trustee and which shall
represent an adjustment to the schedule set forth in Exhibit C attached hereto taking into
account said partial prepayment.
Section 4.5. Quiet Enjoyment. During the Term of the Lease Agreement, the Authority
shall provide the City with quiet use and enjoyment of the Property, and the City shall,during
such Term,peaceably and quietly have and hold and enjoy the Property without suit,trouble or
hindrance from the Authority, except as expressly set forth in this Lease Agreement. The
Authority will, at the request of the City and at the City's cost,join in any legal action in which
the City asserts its right to such possession and enjoyment to the extent the Authority may
lawfully do so. Notwithstanding the foregoing,the Authority shall have the right to inspect the
Property as provided in Section 7.2.
Section 4.6. Title. If the City pays all of the Lease Payments and Additional Payments
during the Term of the Lease Agreement as the same become due and payable, or if the City
posts a security deposit for payment of the Lease Payments pursuant to Section 4.3(f),and if the
City has paid in full all of the Additional Payments coming due and payable as of such date,
and provided in any event that no Event of Default shall have occurred and be continuing, all
right,title and interest of the Authority in and to the Property shall be transferred to and vested
in the City. The Authority agrees to take any and all steps and execute and record any and all
documents reasonably required by the City to consummate any such transfer of title.
Section 4.7. Additional Payments. In addition to the Lease Payments, the City shall pay
when due the following Additional Payments:
(a) Any fees and expenses incurred by the Authority in connection with or by reason of
its leasehold estate in the Property as and when the same become due and payable;
(b) Any amounts due to the Trustee pursuant to Section 8.06 of the Indenture for all
services rendered under the Indenture and for all reasonable expenses,charges,costs,liabilities,
legal fees and other disbursements incurred in and about the performance of its powers and
duties under the Indenture;
(c) Any reasonable fees and expenses of such accountants, consultants, attorneys and
other experts as may be engaged by the Authority or the Trustee to prepare audits, financial
statements, reports, opinions or provide such other services required under this Lease
Agreement or the Indenture;and
(d) Any reasonable out-of-pocket expenses of the Authority in connection with the
execution and delivery of this Lease Agreement or the Indenture, or in connection with the
issuance of the Bonds, including any and all expenses incurred in connection with the
authorization, issuance, sale and delivery of the Bonds, or incurred by the Authority in
connection with any litigation which may at any time be instituted involving this Lease
Agreement, the Bonds, the Indenture or any of the other documents contemplated hereby or
thereby, or incurred by the Authority in connection with the Continuing Disclosure Certificate,
or otherwise incurred in connection with the administration hereof or thereof.
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ARTICLE V
MAINTENANCE,TAXES,INSURANCE AND OTHER
MATTERS
Section 5.1. Maintenance,Utilities, Taxes and Assessments. Throughout the Term of the
Lease Agreement, as part of the consideration for the rental of the Property, all improvement,
repair and maintenance of the Property shall be the responsibility of the City and the City shall
pay irar or otherwise arrange for the payment of all utility services supplied to the Property
wb c i rraay include, without limitation, janitor service, security, power, gas, phone, light,
heating, water and all other utility services, and shall pay for or otherwise arrange for the
payment of the cost of the repair and replacement of the Property resulting from ordinary wear
and tear or want of care on the part of the City or any assignee or lessee thereof.In exchange for
the Lease Payments herein provided, the Authority agrees to provide only the Property, as
hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of
Section 1932 of the California Civil Code,but such waiver shall not limit any of the rights of the
City under the terms of this Lease Agreement.
The City shall also pay or cause to be paid all taxes and assessments of any type or
nature, if any, charged to the Authority or the City affecting the Property or the respective
interests or estates therein; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years,the City
shall be obligated to pay only such installments as are required to be paid during the Term of
the I_.ease Agreement as and when the same become due.
The City may,at the City's expense and in its name,in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit the
taxer:;, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Authority shall notify the City that, in the
reasonable opinion of the Authority, by nonpayment of any such items, the interest of the
Authority in the Property will be materially endangered or the Property or any part thereof will
be subject to loss or forfeiture, in which event the City shall promptly pay such taxes,
assessments or charges or provide the Authority with full security against any loss which may
result from nonpayment,in form satisfactory to the Authority and the Trustee.
Section 5.2.Modification of Property.The City shall,at its own expense,have the right to
.make additions, modifications and improvements to the Property. All additions, modifications
and improvements to the Property shall thereafter comprise part of the Property and be subject
to the provisions of this Lease Agreement. Such additions, modifications and improvements
shall not in any way damage the Property or cause the Property to be used for purposes other
than those authorized under the provisions of State and federal law;and the City shall file with
the Trustee and the Authority a Written Certificate of the City stating that the Property, upon
completion of any additions, modifications and improvements made thereto pursuant to this
Section 5.2, shall be of a value which is not substantially less than the value of the Property
iim-nediately prior to the making of such additions, modifications and improvements. The City
will not permit any mechanic's or other lien to be established or remain against the Property for
labor or materials furnished in connection with any remodeling, additions, modifications,
improvements,repairs,renewals or replacements made by the City pursuant to this Section 5.2;
provided that if any such lien is established and the City shall first notify or cause to be notified
the Authority of the City's intention to do so,the City may in good faith contest any lien filed or
established against the Property,and in such event may permit the items so contested to remain
undischarged and unsatisfied during the period of such contest and any appeal therefrom and
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shall provide the Authority with full security against any loss or forfeiture which might arise
from the nonpayment of any such item,in form satisfactory to the Authority.The Authority will
cooperate fully in any such contest,upon the request and at the expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throughout the Term of the Lease Agreement, a standard
comprehensive general insurance policy or policies in protection of the Authority, City, and
their respective members, officers, agents, employees and assigns. Said policy or policies shall
provide for indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned by reason of the
operation of the Property. Said policy or policies shall provide coverage in the minimum
liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for
personal injury or deaths of two or more persons in each accident or event, and in a minimum
amount of $100,000 (subject to a deductible clause of not to exceed $5,000) for damage to
property resulting from each accident or event. Such public liability and property damage
insurance may, however, be in the form of a single limit policy in the amount of $3,000,000
covering all such risks.Such insurance may be maintained as part of or in conjunction with any
other insurance coverage carried by the City,and such liability insurance may be maintained in
whole or in part in the form of self-insurance by the City,subject to the provisions of Section 5.7,
or in the form of the participation by the City in a joint powers agency or other program
providing pooled insurance. The proceeds of such liability insurance shall be applied by the
City toward extinguishment or satisfaction of the liability with respect to which paid.
Section 5.4.Fire and Extended Coverage Insurance.The City shall procure and maintain,
or cause to be procured and maintained, throughout the Term of the Lease Agreement,
insurance against loss or damage to the improvements constituting a part of the Property by fire
and lightning, with extended coverage and vandalism and malicious mischief insurance. Said
extended coverage insurance, when required, shall, as nearly as practicable, cover loss or
damage by explosion, windstorm, riot, aircraft,vehicle damage, smoke and such other hazards
as are normally covered by such insurance, and shall include earthquake coverage if such
coverage is available at reasonable cost from reputable insurers in the judgment of the City.
Such insurance shall be in an amount at least equal to the lesser of (a) one hundred percent
(100%)of the replacement cost of all of the insured improvements,or(b)the aggregate principal
amount of the outstanding Bonds. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be maintained in
whole or in part in the form of the participation by the City in a joint powers agency or other
program providing pooled insurance; provided however, that such insurance may not be
maintained by the City in the form of self-insurance. The Net Proceeds of such insurance shall
be applied as provided in Section 6.1(a).
Section 5.5.Rental Interruption Insurance.The City shall procure and maintain,or cause
to be procured and maintained, throughout the Term of the Lease Agreement, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of the
Property as a result of any of the hazards covered in the insurance required by Section 5.4,in an
amount at least equal to the maximum Lease Payments coming due and payable during any
future twenty-four (24) month period. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be maintained in
whole or in part in the form of the participation by the City in a joint powers agency or other
program providing pooled insurance; provided that such insurance may not be maintained in
the form of self-insurance. The proceeds of such insurance, if any, shall be paid to the Trustee
and deposited in the Revenue Fund, and shall be credited towards the payment of the Lease
Payments as the same become due and payable.
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Section 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date the City
shall, at its expense, (a) cause the Site and Facility Lease and this Lease Agreement, or a
memorandum hereof or thereof,in each case in form and substance approved by Bond Counsel,
to be recorded in the office of the Orange County Recorder,and (b)obtain a CLTA policy of title
insurance which insures the City's leasehold estate in the Property in an amount equal to the
aggregate principal amount of the Bonds. All Net Proceeds received under said policy shall be
deposited with the Trustee in the Redemption Fund and shall be applied to the redemption of
Bonds pursuant to Section 4.01(c)of the Indenture.
Section 5.7. Net Proceeds of Insurance; Form of Policies. Each policy of insurance
maintained pursuant to Sections 5.4, 5.5 and 5.6 shall name the Trustee as loss payee so as to
provide that all proceeds thereunder shall be payable to the Trustee. All required insurance
policies shall be provided by a commercial insurer in one of the two highest rating categories by
Moody's and S&P (without regard to designations of plus (+) or minus (-)). The City shall pay
or cause to be paid when due the premiums for all insurance policies required by this Lease
Agreement.All such policies shall provide that the Trustee shall be given thirty(30) days'notice
of each expiration, any intended cancellation thereof or reduction of the coverage provided
thereby. The Trustee shall not be responsible for the sufficiency or amount of any insurance or
self-insurance herein required and shall be fully protected in accepting payment on account of
such insurance or any adjustment,compromise or settlement of any loss.The City shall cause to
be delivered to the Trustee annually,no later than September 1 in each year,a certificate stating
that all of the insurance policies required by this Lease Agreement are in full force and effect
and identifying whether any such insurance is then maintained in the form of self-insurance.
In the event that any insurance maintained pursuant to Section 5.3 shall be provided in
the form of self-insurance, the City shall file with the Trustee annually,within ninety (90) days
following the close of each Fiscal Year, a statement of the City risk manager, insurance
consultant or actuary identifying the extent of such self-insurance and stating the determination
that the City maintains sufficient reserves with respect thereto. In the event that any such
insurance shall be provided in the form of self-insurance by the City, the City shall not be
obligated to make any payment with respect to any insured event except from such reserves.
The results of such review shall be filed with the Trustee.
Section 5.8. Installation of Personal Property.The City may,at any time and from time to
time, in its sole discretion and at its own expense, install or permit to be installed items of
equipment or other personal property in or upon any portion of the Property. All such items
shall remain the sole property of the City, in which neither the Authority nor the Trustee shall
have any interest, and may be modified or removed by the City at any time provided that the
City shall repair and restore any and all damage to the Property resulting from the installation,
modification or removal of any such items. Nothing in this Lease Agreement shall prevent the
City from purchasing or leasing items to be installed pursuant to this Section 5.8 under a lease
or conditional sale agreement,or subject to a vendor's lien or security agreement,as security for
the unpaid portion of the purchase price thereof,provided that no such lien or security interest
shall attach to any part of the Property.
Section 5.9. Liens. Neither the City nor the Authority shall, directly or indirectly,create,
incur, assume or suffer to exist any mortgage,pledge, lien,charge,encumbrance or claim on or
with respect to any portion of the Property, other than the respective rights of the Trustee,the
Authority and the City as provided herein and Permitted Encumbrances. Except as expressly
provided in this Article V,the City and the Authority shall promptly,at their own expense,take
such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien,
charge,encumbrance or claim,for which it is responsible,if the same shall arise at any time.The
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,City shall reimburse the Authority for any expense incurred by it in order to discharge or
remove any such mortgage,pledge,lien,charge,encumbrance or claim.
Section 5.10.Tax Covenants.
(a) Private Activity Bond Limitation. The City shall assure that proceeds of the Bonds are
not say used as to cause the Bonds to satisfy the private business tests of section 141(b) of the
Code or the private loan financing test of section 141(c)of the Code.
(b) Federal Guarantee Prohibition. The City shall not take any action or permit or suffer
any action to be taken if the result of the same would be to cause any of the Bonds to be
"federally guaranteed"within the meaning of section 149(b)of the Code.
(c) Rebate Requirement. The City shall take any and all actions necessary to assure
compliance with section 148(f) of the Code,relating to the rebate of excess investment earnings,
if any,to the federal government,to the extent that such section is applicable to the Bonds.
(d)No Arbitrage.The City shall not take,or permit or suffer to be taken by the Trustee or
otherwise, any action with respect to the proceeds of the Bonds which, if such action had been
reasonably expected to have been taken, or had been deliberately and intentionally taken, on
the Closing Date would have caused the Bonds to be "arbitrage bonds" within the meaning of
section 148 of the Code.
(e) Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the
exclusion of interest with respect to the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the Closing Date.
(f) Small Issuer Exemption from Bank Deductibility Restriction.
Q) The City hereby designates the Bonds as "qualified tax-exempt obligations"
for the purposes and within the meaning of section 265(b)(3) of the Code. In support of
such designation,the City hereby certifies that(A) the Bonds will be at no time "private
activity bonds" (as defined in section 141 of the Code), (B) as of the date hereof in
calendar year 2010, other than the Bonds, no tax-exempt obligations of any kind have
been issued (1) by or on behalf of the City, (2) by other issuers, any of the proceeds of
which have been or will be used to make any loans to the City, or (3) any portion of
which has been allocated to the City for purposes of section 265(b) of the Code,and (C)
not more than$30,000,000 of obligations of any kind(including the Bonds) issued (1)by
or on behalf of the City, (2) by other issuers any of the proceeds of which have been or
will be used to make any loans to the City,or(3)any portion of which has been allocated
to the City for purposes of section 265(b) of the Code during calendar year 2010 will be
designated for purposes of section 265(b)(3)of the Code.
(ii) The City is not subject to control by any entity, and there are no entities
subject to control by the City.
(iii) On the date hereof, the City does not reasonably anticipate that for calendar
year 2010 it will issue, borrow the proceeds of or have allocated to it for purposes of
section 265(b) of the Code,any Section 265 Tax-Exempt Obligations (other than the Tax-
Exempt Bonds),or that any Section 265 Tax-Exempt Obligations will be issued on behalf
of it. "Section 265 Tax-Exempt Obligations" are obligations the interest on which is
excludable from gross income of the owners thereof under section 103 of the Code,
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except for private activity bonds,other than qualified 501(c)(3)bonds,both as defined in
section 141 of the Code.The City will not,in calendar 2010,issue,permit the issuance on
behalf of it or by any entity subject to control by the City(which may hereafter come into
existence),borrow the proceeds of or agree to an allocation to it for purposes of section
265(b) of the Code, Section 265 Tax-Exempt Obligations (including the Bonds) that
exceed the aggregate amount of $30,000,000 during calendar year 2010, unless it first
obtains an opinion of bond counsel to the effect that such issuance, borrowing or
allocation will not adversely affect the treatment of the Bonds as a"qualified tax-exempt
obligation"for the purpose and within the meaning of section 265(b)(3)of the Code.
(iv) The Bonds have not been sold in conjunction with any other tax exempt
obligations.
Section 5.11. Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Lease Agreement, failure of the City to comply
with the Continuing Disclosure Certificate shall not constitute an Event of Default hereunder;
Provided, however, that the Participating Underwriter or any Owner or beneficial owner of the
l oiids may take such actions as may be necessary and appropriate to compel performance by
the C- y of its obligations under this Section 5.11, including seeking mandate or specific
performance by court order.
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ARTICLE VI
DAMAGE,DESTRUCTION AND EMINENT DOMAIN;ABATEMENT OF
LEASE PAYMENTS
Section 6.1.Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award resulting from any
damage to or destruction of the Property by fire or other casualty shall be paid by the City to
the`Trustee and shall be deposited in the Insurance and Condemnation Fund by the Trustee and
applied as set forth in Section 5.08 of the Indenture.
(b) From Eminent Domain Award. If the Property or any portion thereof shall be taken
permanently or temporarily under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Net Proceeds resulting therefrom
shall be deposited in the Insurance and Condemnation Fund and applied as set forth in Section
5.08 of the Indenture.
(c) From Title Insurance Award. The Net Proceeds of any title insurance award shall be
paid to the Trustee, deposited in the Insurance and Condemnation Fund and applied as set
forth in Section 5.08 of the Indenture. I
Section 6.2.Abatement of Lease Payments.
(a) Abatement Due to Damage or Destruction of the Property; Non-Completion. The Lease
Payments shall be abated during any period in which by reason of damage to or destruction of
the Property (other than by eminent domain which is hereinafter provided for) there is
substantial interference with the use and occupancy by the City of the Property or any portion
thereof. The amount of such abatement shall be an amount agreed upon by the City and the
Authority such that the resulting Lease Payments represent fair consideration for the use and
occupancy of the portions of the Property not damaged or destroyed and available for use and
possession by the City. Such abatement shall continue for the period commencing with such
damage or destruction and ending with the substantial completion of the work of repair or
reconstruction or the date when the remaining portion of the Property is available for use and
possession by the City. In the event of any such damage, destruction or non-completion, this
Lease Agreement shall continue in full force and effect and the City waives any right to
terminate this Lease Agreement by virtue of any such damage, destruction or non-completion.
There shall be no abatement of the Lease Payments to the extent that moneys derived from any
person as a result of such damage or destruction are available to pay the amount which would
otherwise be abated or if there is any money available in the Revenue Fund or the Reserve
Account to pay the amount which would otherwise be abated.
(b) Abatement Due to Eminent Domain. If all of the Property shall be taken permanently
under the power of eminent domain or sold to a government threatening to exercise the power
of eminent domain,the Term of the Lease Agreement shall cease with respect to the Property as
of the day possession shall be so taken. If less than all of the Property shall be taken
permanently, or if all of the Property or any part thereof shall be taken temporarily under the
power of eminent domain, (a) this Lease Agreement shall continue in full force and effect and
shall not be terminated by virtue of such taking and the parties waive the benefit of any law to
the contrary, and (b) there shall be a partial abatement of Lease Payments in an amount to be
agreed upon by the City and the Authority such that the resulting Lease Payments for the
Property represent fair consideration for the use and occupancy of the remaining usable portion
of the Property.
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ARTICLE VII
DISCLAIMER OF WARRANTIES;ACCESS
Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE PROPERTY, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY. IN NO
EVENT SHALL THE AUTHORITY AND ITS ASSIGNS BE LIABLE FOR INCIDENTAL,
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR
ARISING OUT OF THE SITE AND FACILITY LEASE, THIS LEASE AGREEMENT OR THE
INDENTURE FOR THE EXISTENCE,FURNISHING,FUNCTIONING OR THE CITY'S USE OF
THE PROPERTY.
Section 7.2. Rights of Access. The City agrees that the Authority and any Authorized
Representative of the Authority, and the Authority's successors or assigns, shall have the right
at all reasonable times to enter upon and to examine and inspect the Property. The City further
agrees that the Authority, any Authorized Representative of the Authority, and the Authority's
successors or assigns, shall have such rights of access to the Property as may be reasonably
necessary to cause the proper maintenance of the Property in the event of failure by the City to
perform its obligations hereunder;provided,however, that the Authority's assigns shall not be
required to cause such proper maintenance.
Section 7.3.Release and Indemnification Covenants.The City shall and hereby agrees to
indemnify and save the Authority, the Trustee and their respective officers, agents, directors,
employees, successors and assigns, harmless from and against all claims, losses and damages,
including legal fees and expenses, arising out of (a) the use, maintenance, condition or
management of, or from any work or thing done on the Property by the City, (b) any breach or
default on the part of the City in the performance of any of its obligations under this Lease
Agreement, (c) any act or negligence of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Property, (d) any act or negligence of any lessee of
the City with respect to the Property, or (e) the performance by the Trustee of its duties
hereunder or under the Indenture. No indemnification is made under this Section 7.3 or
elsewhere in this Lease Agreement for willful misconduct or negligence under this Lease
Agreement by the Authority, the Trustee or any of their respective officers or employees. The
indemnification hereunder shall survive removal or resignation of the Trustee, termination of
this Lease Agreement or discharge of the Bonds.
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ARTICLE VIII
ASSIGNMENT,LEASING AND AMENDMENT
Section 8.1. Assignment by the Authority. Certain rights of the Authority under this
Lease Agreement, including the right to receive and enforce payment of the Lease Payments to
be made by the City under this Lease Agreement, have been pledged and assigned to the
Tnistee for the benefit of the Owners of the Bonds pursuant to the Indenture, to which pledge
and assignment the City hereby consents. The assignment of this Agreement to the Trustee is
solely in its capacity as Trustee under the Indenture and the duties,powers and liabilities of the
Trustee in acting hereunder shall be subject to the provisions of the Indenture, including,
without limitation,the provisions of Article VIII thereof.
Section 8.2. Assignment and Subleasing by the City. This Lease Agreement may not be
assigned by the City. The City may sublease the Property or any portion thereof,subject to,and
delivery to the Authority of a certificate as to,all of the following conditions:
(a) This Lease Agreement and the obligation of the City to make Lease Payments
hereunder shall remain obligations of the City;
(b)The City shall,within thirty(30)days after the delivery thereof,furnish or cause to be
furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c) No such sublease by the City shall cause the Property to be used for a purpose other
than as may be authorized under the provisions of the laws of the State;and
(d) The City shall furnish the Authority and the Trustee with a written opinion of Bond
Counsel, stating that such sublease is permitted by this Lease Agreement and the Indenture,
and will not cause the interest on the Bonds to become included in gross income for federal
income tax purposes.
Section 8.3.Amendment of Lease.
(a) Substitution of Site. The City shall have, and is hereby granted, the option at any time
and from time to time during the Term of the Lease Agreement to substitute other land (a
"Substitute Site") for the Site (the "Former Site"), or a portion thereof, provided that the City
Lall st Atisfy all of the following requirements which are hereby declared to be conditions
precedent to such substitution:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
to the Site and Facility Lease which adds thereto a description of.such Substitute Site
and deletes therefrom the description of the Former Site;
(ii) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which adds thereto a description of such Substitute Site and
deletes therefrom the description of the Former Site;
(iii) The City shall certify in writing to the Authority and the Trustee that such
Substitute Site serves the purposes of the City, constitutes property that is
unencumbered (or the portion of such property to be to substituted is unencumbered),
subject to Permitted Encumbrances, and constitutes property which the City is
permitted to lease under the laws of the State;
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(iv) The City delivers to the Trustee and the Authority evidence that the
Substitute Site (or the portions to be to substituted) is of equal or greater value than the
Site(or the portions thereof)to be to substituted;
(v)The City shall certify the Substitute Site shall not cause the City to violate any
of its covenants,representations and warranties made herein;
(vi) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which adds thereto a description of the Substitute Site and
deletes therefrom the description of the Former Site;
(vii) The City shall certify that the Substitute Site is of the same or greater
essentiality to the City as was the Former Site;
(viii) The City shall certify that the Substitute Site has a useful life equal to or
longer than the remaining term of the Bonds;and
(ix) The City shall provide notice of such substitution to any rating agency then
rating the Bonds.
(b) Substitution of Facility. The City shall have, and is hereby granted, the option at any
time and from time to time during the Term of the Lease Agreement to substitute a substitute
facility or substitute facilities(a"Substitute Facility")for the Facility(the"Former Facility"),or a
portion thereof,provided that the City shall satisfy all of the following requirements which are
hereby declared to be conditions precedent to such substitution:
(i)The City shall file with the Authority and the Trustee an amended Exhibit B to
the Site and Facility Lease which adds thereto a description of such Substitute Facility
and deletes therefrom the description of the Former Facility,if applicable;
(ii) The City shall file with the Authority and the Trustee an amended Exhibits B
to this Lease Agreement which adds thereto a description of such Substitute Facility and
deletes therefrom the description of the Former Facility;
(iii) The City shall certify in writing to the Authority and the Trustee that such
Substitute Facility serves the purposes of the City, constitutes property that is
unencumbered (or the portion of such property to be to substituted is unencumbered),
subject to Permitted Encumbrances, and constitutes property which the City is
permitted to lease under the laws of the State;
(iv) The City delivers to the Trustee and the Authority evidence that the
Substitute Facility (or the portions to be to substituted) is of equal or greater value than
the property(or the portions thereof)to be to substituted;
(v) The City shall certify the Substitute Facility shall not cause the City to violate
any of its covenants,representations and warranties made herein;
(vi) The City shall certify that the Substitute Facility is of the same or greater
essentiality to the City as was the Former Facility;
(vii) The City shall certify that the Substitute Facility has a useful life equal to or
longer than the remaining term of the Bonds;and
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(viii)The City shall provide notice of such substitution to any rating agency then
rating the Bonds.
(c) Release of Site. The City shall have, and is hereby granted, the option at any time and
front time to time during the Term of the Lease Agreement to release any portion of the Site,
provided that the City shall satisfy all of the following requirements which are hereby declared
to be conditions precedent to such release:
(i) The City shall file with the Authority and the Trustee an amended Exhibit A
to the Site and Facility Lease which describes the Site,as revised by such release;
(ii) The City shall file with the Authority and the Trustee an amended Exhibit A
to this Lease Agreement which describes the Site,as revised by such release;
(iii) The City delivers to the Trustee and the Authority evidence that the Site, as
revised by such release, without regard to the value of the Facility, has a value at least
equal to 1.1 times the principal amount of the Bonds then outstanding;
(iv) The City shall obtain an amendment to the title insurance policy required
pursuant to Section 5.6 hereof which describes the Site,as revised by such release;and
(v)The City shall provide notice of such release to any rating agency then rating
the Bonds.
Notwithstanding the foregoing, the City may, at any time in connection with a legal
subdivision of the Site, release all portions of the Site other than the legal footprint of the City
Hall building,and shall not be required to satisfy the requirements of subparagraphs(iii),(iv)or
(v) of this paragraph (c), and such release may be accomplished with the necessity of separate
approval by the City Council.
(d) Release of Facility. The City shall have, and is hereby granted, the option at any time
and from time to time during the Term of the Lease Agreement to release any portion of the
Facility provided that the City shall satisfy all of the following requirements which are hereby
declared to be conditions precedent to such release:
(i)The City shall file with the Authority and the Trustee an amended Exhibit B to
u'he Site and Facility Lease which describes the Facility,as revised by such release;
(ii)The City shall file with the Authority and the Trustee an amended Exhibit B
to this Lease Agreement which describes the Facility,as revised by such release;
(iii) The City delivers to the Trustee and the Authority evidence that the Facility,
as revised by such release, together with the Site, has a total value at least equal to 1.1
times the principal amount of the Bonds then outstanding;and
(iv)The City shall provide notice of such release to any rating agency then rating
the Bonds.
Notwithstanding the foregoing, the City may, at any time in connection with a legal
subdivision of the Site,release all portions of the Facility other than the City Hall building,and
shall riot be required to satisfy the requirements of subparagraphs (iii) or (iv) of this paragraph
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(d), and such release may be accomplished with the necessity of separate approval by the City
Council.
(e) Generally. The Authority and the City may at any time amend or modify any of the
provisions of this Lease Agreement,but only (a) with the prior written consents of the Owners
of a majority in aggregate principal amount of the Outstanding Bonds, or (b) without the
consent of any of the Bond Owners,but only if such amendment or modification is for any one
or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease
Agreement, other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained herein, or in any
other respect whatsoever as the Authority and the City may deem necessary or
desirable, provided that, in the opinion of Bond Counsel, such modifications or
amendments will not materially adversely affect the interests of the Owners of the
Bends;or
(iii) to amend any provision thereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect the
exclusion from gross income of interest on the Bonds under the Code, in the opinion of
Bond Counsel.
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ARTICLE IX
EVENTS OF DEFAULT;REMEDIES
Section 9.1. Events of Default Defined. The following shall be "Events of Default"under
this Lease Agreement:
(a) Failure by the City to pay any Lease Payment required to be paid hereunder at the
time;specified herein.
(b) Failure by the City to make any Additional Payment required hereunder and the
continuation of such failure for a period of thirty(30)days.
(c) Failure by the City to observe and perform any covenant,condition or agreement on
its part to be observed or performed,other than as referred to in the preceding clauses(a)or(b),
ffoz a period of sixty (60) days after written notice specifying such failure and requesting that it
be remedied has been given to the City by the Authority or the Trustee;provided,however,that
if in the reasonable opinion of the City the failure stated in the notice can be corrected,but not
within such sixty(60)day period,such failure shall not constitute an Event of Default if the City
shall commence to cure such failure within such sixty (60) day period and thereafter diligently
and in good faith shall cure such failure in a reasonable period of time which shall last no
longer than 120 days after the original written notice.
(d) The filing by the City of a voluntary petition in bankruptcy, or failure by the City
promptly to lift any execution, garnishment or attachment, or adjudication of the City as a
bankrupt, or assignment by the City for the benefit of creditors,or the entry by the City into an
agreement of composition with creditors,or the approval by a court of competent jurisdiction of
a petition applicable to the City in any proceedings instituted under the provisions of applicable
federal bankruptcy law,or under any similar acts which may hereafter be enacted.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section
9.1 shall have happened and be continuing, it shall be lawful for the Authority to exercise any
and all remedies available pursuant to law or granted pursuant to this Lease Agreement;
provided, however, that notwithstanding anything to the contrary herein or in the Indenture,
there shall be no right under any circumstances to accelerate the Lease Payments or otherwise
declare any Lease Payments not then in default to be immediately due and payable or to
terminate this Lease Agreement or to cause the fee interest or the leasehold interest of the City
in the Property to be sold, assigned or otherwise alienated. Each and every covenant hereof to
be kept and performed by the City is expressly made a condition and,upon the breach thereof,
the authority may exercise any and all rights of entry and re-entry upon the Property. The City
hereby irrevocably consents to the Authority's repossession of the Property if such an Event of
Default shall occur and consents to the Authority's re-letting of the Property for the account of
the City. In the event of such default and notwithstanding any re-entry by the Authority, the
City shall,as herein expressly provided,continue to remain liable for the payment of the Lease
Payments and/or damages for breach of this Lease Agreement and the performance of all
conditions herein contained and, in any event, such rent and/or damages shall be payable to
the Authority at the time and in the manner as herein provided,to wit:
(a)The City agrees to and shall remain liable for the payment of all Lease Payments and
the performance of all conditions herein contained and shall reimburse the Authority for any
deficiency arising out of the re-leasing of the Property, or, in the event the Authority is unable
to re-lease the Property,then for the full amount of all Lease Payments to the end of the Term of
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the Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the
same time and in the same manner as hereinabove provided for the payment of Lease Payments
hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful
detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or
obtaining possession of the Property or the exercise of any other remedy by the Authority.
(b)The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact
of the City to enter upon and re-lease the Property in the event of default by the City in the
performance of any covenants herein contained to be performed by the City and to remove all
personal property whatsoever situated upon the Property to place such property in storage or
other suitable place in Orange County,for the account of and at the expense of the City,and the
City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage
whatsoever arising or occasioned by any such entry upon and re-leasing of the Property and the
removal and storage of such property by the Authority or its duly authorized agents in
accordance with the provisions herein contained.
(c) The City hereby waives any and all claims for damages caused or which may be
caused by the Authority in re-entering and taking possession of the Property as herein provided
and all claims for damages that may result from the destruction of or injury to the Property and
all claims for damages to or loss of any property belonging to the City that may be in or upon
the Property.
(d) The City agrees that the terms of this Lease Agreement constitute full and sufficient
notice of the right of the Authority to re-lease the Property in the event of such re-entry without
effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority
in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement
irrespective of the term for which such re-leasing is made or the terms and conditions of such
re-leasing,or otherwise.
Section 9.3. Limitation on Remedies. Notwithstanding the foregoing provisions of
Section 9.2, neither the Authority nor the Trustee shall exercise any remedies against the
Property to the extent such remedies would generate funds which are not available to satisfy
the obligations of this Lease Agreement or the Indenture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive and every such remedy shall be cumulative and shall,
except as herein expressly provided to the contrary,be in addition to every other remedy given
under this Lease Agreement or now or hereafter existing at law or in equity. No delay or
onussion 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 thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Authority to exercise any remedy reserved to it in this Article IX it shall not be necessary to give
any notice,other than such notice as may be required in this Article IX or by law.
Section 9.5.Agreement to Pay Attorneys'Fees and Expenses.In the event either party to
this Lease Agreement should default under any of the provisions hereof and the nondefaulting
party should employ attorneys or incur other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of the
defaulting party herein contained, the defaulting party agrees that it will on demand therefor
pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so
incurred by the nondefaulting party.
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Section 9.6. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Lease Agreement should be breached by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
Section 9.7. Trustee and Bond Owners to Exercise Rights. Such rights and remedies as
are given to the Authority under this Article IX have been assigned by the Authority to the
Trustee under the Indenture, to which assignment the City hereby consents. Such rights and
remedies shall be exercised by the Trustee and the Owners of the Bonds as provided in the
Indenture. The Trustee shall be considered a third party beneficiary for enforcing its rights
iAnder this Lease Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.1.Notices.All written notices to be given under this Lease Agreement shall be
given by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
forin of telecommunication, confirmed by phi (b) upon receipt after deposit in the United
Staters rnail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual
receipt.
If to the Authority: Huntington Beach Public Financing Authority
c/o City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
Phone:(714)536-5630
Fax:(714)374-5365
If to the City: City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
Phone:(714)536-5630
Fax:(714)374-5365
If to the Trustee:
Attention:
Phone:(213)
Fax:(213)—
The Authority, the City or the Trustee may,by written notice to the other parties, from
time to time modify the address or number to which communications are to be given
hereunder.
Section 10.2. Binding Effect. This Lease Agreement shall inure to the benefit of and shall
be binding upon the Authority and the City and their respective successors and assigns.
Section 10.3. SeverabiliW. In the event any provision of this Lease Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 10.4. Net-net-net Lease. This Lease Agreement shall be deemed and construed to
be a"net-net-net lease"and the City hereby agrees that the Lease Payments shall be an absolute.
net return to the Authority,free and clear of any expenses,charges or set-offs whatsoever.
Section 10.5. Further Assurances and Corrective Instruments. The Authority and the
City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments
as may reasonably be required for correcting any inadequate or incorrect description of the
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Property hereby leased or intended so to be or for carrying out the expressed intention of this
Lease Agreement.
Section 10.6. Execution in Counterparts. This Lease 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 10.7.Applicable Law.This Lease Agreement shall be governed by and construed
in accordance with the laws of the State.
Section 10.8. Authorized Representatives. Whenever under the provisions of this Lease
Agreement the approval of the Authority or the City is required, or the Authority or the City is
required to take some action at the request of the other, such approval or such request shall be
given for the Authority by an Authorized Representative of the Authority and for the City by an
Authorized Representative of the City, and any party hereto shall be authorized to rely upon
any such approval or request.
Section 10.9. Waiver of Personal Liability. All liabilities under this Lease Agreement on
the part of the City are solely liabilities of the City and the Authority hereby releases each and
every member, director, officer, employee and agent of the City of and from any personal or
individual liability under this Lease Agreement. No member, director, officer, employee or
agent of the City shall at any time or under any circumstances be individually or personally
liable under this Lease Agreement for anything done or omitted to be done by the City
hereunder.
Section 10.10. Limitation of Rights to Parties and Bond Owners. Nothing in this Lease
Agreement expressed or implied is intended or shall be construed to give to any person other
than the Authority,the Trustee,the City,the Authority and the Owners of the Bonds, any legal
or equitable right, remedy or claim under or in respect of this Lease Agreement or any
covenant,condition or provision therein or herein contained;and all such covenants,conditions
and provisions are and shall be held to be for the sole and exclusive benefit of the Authority,the
Trustee,the City,the Authority and the Owners of the Bonds.
Section 10.11. Captions. The captions or headings in this Lease Agreement are for
convenience only and in no way define,limit or describe the scope or intent of any provisions or
Section of this Lease Agreement.
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IN WITNESS WHEREOF,the Authority has caused this Lease Agreement to be executed
in its name by its duly authorized officers; and the City has caused this Lease Agreement to be
ex Acuted in its name by its duly authorized officers,as of the date first above written.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest.
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH,as
Lessee
By
Name
Title
Attest
Joan L.Flynn
City Clerk
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[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach,Orange County,State of California, described as
follows:
PARCEL 1:
LOTS 1. THROUGH 312. INCLUSIVE, OF TRACT NO. 263, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE. STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13, PAGE 42. OF
MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM LOTS 1 48 49 96 97 144 145 192 193 240, 241, 288, AND 299, THE
EASTERLY 10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES, BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 2:
LOTS 1 THROUGH 288, INCLUSIVE,OF TRACT NO. 264, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13. PAGE 43. OF
MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM LOTS 1.48,49,96.97,144, 145,192.193,240,241,AND 248,THE EASTERLY
10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL, GAS. AND MINERAL SUBSTANCES BELOW A DEPTH
F 500 FEET.AS RESERVED IN DEEDS OF RECORD.
PARCEL I
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 265 IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13. PAGE 46, OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL_SUBSTANCES, BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 4:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 273 IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE. STATE OF CALIFORNIA. AS PER MAP FILED IN BOOK 13, PAGE 45, OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL, GAS. AND MINERAL SUBSTANCES, BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 5:
LOTS 1 THROUGH 14 INCLUSIVE 35 THROUGH 62 INCLUSIVE 83 THROUGH 110, INCLUSIVE,
131 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSIVE 219 THROUGH 262 INCLUSIVE
AND 267 THROUGH 310 INCLUSIVE.OF TRACT T NO.274,IN THE CITY OF HUNTINGTON BEACH.
COS TY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13, PAGES 52. OF
MAPS.IN THE OFFICE OF THE RECORDER OF SAID COUNTY
Exhibit A
EXCEPTING THEREFROM A PORTION OF LOTS 219,227,254,262,267.275,302,AND 310,AND ALL
F LOTS 220 THROUGH 226. INCLUSIVE. 255 THROUGH 261. INCLUSIVE. 268 THROUGH 274.
ELUSIVE AND 303 THROUGH 309 INCLUSIVE ALL OF TRACT NO.274.AS SHOWN ON A MAP
FILED IN BOOK 13. PAGE 52, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY.
CALIFORNIA MORE PARTICULARLY DESCRIBED AS PARCELS 1 AND f OF PARCEL MAP NO.81-
5886 IN THE CITY OF HUNTINGTON BEACH COUNTY OF ORANGE STATE OF CALIFORNIA. AS
PER MAP FILED IN BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID
COUNTY.
ALSO EXCEPTING THEREFROM TRACT NO 4 29 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE.STATE OF CALIFORNIA,AS PER MAP FILED IN BOOK 156,PAGES 19 AND
24 OF MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL.GAS.AND MINERALS SUBSTANCES.BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 5B:
A PORTION OF LOTS 219 227 224 262 267 275 302 AND 310 AND ALL OF LOTS 220 THROUGH
226 INCLUSIVE 255 THROUGH 261 INCLUSIVE 268 THROUGH 274. INCLUSIVE. AND 303
THROUGH 309 MCLUSPJE ALL OF TRACT NO 274 AS SHOWN ON A MAP FILED IN BOOK 13
PAGE 52 OF MISCELLANEOUS MAPS—RECORDS_ OF ORANGE COUNTY CALIFORNIA MORE
PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO 81-586 IN THE CITY OF
HUNTINGTON BEACH COUNTY OF ORANGE STATE OF CALIFORNIA—AS PER MAP FILED_ IN
BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD
PARCEL 6:
LOTS 1 THROUGH 14 INCLUSIVE 35 THROUGH 62 INCLUSIVE 83 THROUGH 110 INCLUSIVE
131 THROUGH 158, INCLUSIVE. 179 THROUGH 2O6, INCLUSIVE, 227 THROUGH 254. INCLUSIVE.
AND 275 THROUGH 288 INCLUSIVE OF TRACT NO.275.IN THE CITY OF HUNTINGTON BE
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP_ FILED IN BOOK 14 PAGES 16 OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 156,PAGES 19 AND
20 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD
APN:111-032-35 and 111-042-41 and 111-050-M
Exhibit A
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Property consists of the Donald W. Kiser Corporation Yard and the site thereof the Donald
W.Kiser Corporation Yard consists of a main building four large warehouse type structures eauinment
and materials storage and office mace The two-story 7.200 square foot administration building was
constructed in 1972 and is used for centralized customer service operations and office space. The City
Yard -buildings provide operations bases for a variety of maintenance services. Building B is
a KI-A- atelly 26,000 square feet and was also constructed in 1972 Building B houses the fleet
maintenance facility that includes mechanics bays and parts storage for servicing vehicles. large and
small equipment and fire engines Building C. constructed in 1973 is approximately 19 000 square feet
The building holds materials and equipment used in traffic signal sums and markings maintenance
B ildin also includes facility maintenance small equipment such as carpentry, locksmith plumbing
and electrical tools Building D is approximately_?500 square feet and was built in 1983 It is used for
mechanical services to police vehicles motorcycles and radio equipment This facility includes mechanics
W)a' nd parts storage Building E, approximatdy 14.600 square feet is a storage warehouse for I a
supplies and equipment Building E was finished in 1988 The lot includes several small sheds as well as
stc ra e f r sand—Rravel and loose construction materials A fuel island contains four gasoline,two diesel,
and Gne propane pumps that service all city owned vehicles and equipment The City estimates that the
value of the Property,including land and building to be approximately$29.500,000.
Exhibit B
EXHIBIT C
SCHEDULE OF LEASE PAYMENTS
Lease Total
Payment Principal Interest Lease
Date Component Component Payment
8/15/10
2/15/11
8/15/11
2/15/12
8/15/12
2/15/13
8/15/13
2/15/14
8/15/14
2/15/15
8/15/15
2/15/16
8/15/16
2/15/17
8/15/17
2/15/18
8/15/18
2/15/19
8/15/19
2/15/20
8/15/20
2/15/21
8/15/21
2/15/22
8/15/22
2/15/23
8/15/23
2/15/24
8/15/24
2/15/25
8/15/25
2/15/26
8/15/26
2/15/27
8/15/27
2/15/28
8/15/28
2/15/29
8/15/29
2/15/30
8/15/30
Exhibit C
ATTACHMENT #6
Quint&Thinunig LLP 03/18/10
04/01/10
AFTER RECORDATION RETURN TO:
Quint&Thimmig LLP
575 Market Street,Suite 3600
San Francisco,CA 94105-2874
Attention:Brian D.Quint,Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
MEMORANDUM OF LEASE AGREEMENT
This MEMORANDUM OF LEASE AGREEMENT (this "Memorandum of Lease
Agreement"), is entered into as of LtLne 1, 2010, by and between the HUNTINGTON BEACH
PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and
existing under and by virtue of the laws of the State of California (the "Authority"), and the
CITY OF HUNTINGTON BEACH, a municipal corporation and chartered city organized and
existing under and by virtue of the laws of the State of California, as lessee (the "City"), who
agree as follows:
Section 1. The Lease. The City leases from the Authority and the Authority leases to the
City,certain real property described in paragraph 2 hereof,and the improvements situated and
to be situated upon said real property, upon the terms and conditions, and for the term, more
fully set forth in the Lease Agreement, dated as of Lune 1,2010,by and between the Authority,
as lessor, and the City, as lessee (the "Lease Agreement"), all of the provisions of which are
hereby incorporated into this Memorandum of Lease Agreement by reference.
Section 2. Leased Premises; Term. The Authority leases, lets and demises unto the City
and the City leases, hires and takes from the Authority, those certain parcels of real property
situated in Orange County, State of California, more particularly described in Exhibit A
attached hereto and made a part hereof(collectively,the"Site"),and certain existing facilities on
the Site, more particularly described in Exhibit B attached hereto and made a part hereof (the
"Facility" and, with the Site, the "Property"). The Lease Agreement is for a term commencing
on the date of recordation and ending on September 1, 2030, or such earlier date on which the
Lease Payments (as defined in the Lease Agreement) are paid in full or provision has been
made for such payment in accordance with the Lease Agreement.
Section 3. Assignment of Lessor's Rights Under Lease Agreement. Pursuant to the
Indenture of Trust, dated as of une 1, 2010, by and between the Authority and
as trustee (the "Trustee"), the Authority has agreed to assign and
transfer to the Trustee, certain of its rights under the Lease Agreement and in consideration of
such assignment, the Authority has agreed to issue and the Trustee has agreed to authenticate
and deliver$ aggregate principal amount of the Huntington Beach Public Financing
Authority Lease Revenue Refunding Bonds,2010 Series A.
08008.04
Section 4. Provisions Binding on Successors and Assigns. Subject to the provisions of the
Lease Agreement relating to assignment and subletting, the Lease Agreement shall inure to the
benefit of and shall be binding upon the Authority and the City and their respective successors
and assigns.
Section 5. Purpose of Memorandum.This Memorandum of Lease Agreement is prepared
for the purpose of recordation and it in no way modifies the provisions of the Lease Agreement.
Section 6. Execution.This Memorandum of Lease Agreement may be executed in several
rouixterp,arts,each of which shall be an original and all of which shall constitute but one and the
saute instrument.
-2-
IN WITNESS WHEREOF, the Authority has caused this Memorandum of Lease
Agreement to be executed in its corporate name by its duly authorized officers;and the City has
caused this Memorandum of Lease Agreement to be executed in its name by its duly authorized
officers,as of the date first above written.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH,as
Lessee
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
-3-
[NOTARY ACKNOWLEDGMENTS TO BE ATTACHED]
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach,Orange County, State of California,described as
follows:
PARC CELL
LOTS 1 THROUGH 312 INCLUSIVE, OF TRACT NO. 263, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE: STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13. PAGE 42. O
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
EXCEPTING THEREFROM LOTS 1. 48, 49, 96, 97, 144, 145, 192. 193. 240, 241. 288, AND 299, THE
EASTERLY 10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD
PARCEL 2:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 264 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA. AS PER MAP FILED IN BOOK 13, PAGE 43. 0F
1[AP IN THE OFFICE OF THE RECORDER OF SAID COUNTY
EXCEPTING THEREFROM LOTS 1.48.49.96,97.144_,145.192.193.240.241,AND 248,THE EASTERLY
10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW_ A DEPTH
OF 500 EEET AS RESERVED IN DEEDS OF RECORD
PARCEL 3:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO. 265 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13. PAGE 46, OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD
PARCEL-4--
LOT 1 THROUGH 288 INCLUSIVE OF TRACT NO 273 IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13 PAGE 45 OF
Mom,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
AL50 EXCEPTING THEREFROM ALL OIL GAS AND MINERAL UB TAN BELOW A DEPTH
QF 00 FEET, AS RESERVED IN DEEDS OF RECORD
PARCEL 5:
LOTS 1 THROUGH 14 INCLUSIVE 35 THROUGH 62 INCLUSIVE 83 THROUGH 110 INCLUSIVE
1311 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSIVE 219 THROUGH 262 INCLUSIVE
AND 267 THROUGH 310 INCLUSIVE OF TRACT NO.274 IN THE CITY OF HUNTINGTON BEACH.
COUNTY-DE ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13 PAGES 52. O
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
Exhibit A
EXCEPTING THEREFROM A PORTION OF LOTS 219 227 254 262 267,275,302,AND 310,AND ALL
OF LOTS 220 THROUGH 226 INCLUSIVE 255 THROUGH 261 INCLUSNE. 268 THROUGH 274.
INCLUSIVE.AND 303 THROUGH 309 INCLUSIVE ALL OF TRACT NO 274 AS SHOWN ON A MAP
FILED IN BOOK 13 PAGE 52 OF MISCELLANEOUS MAPS RECORDS OF ORANGE COUNTY
CALIFORNIA,MORE PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO 81-
586.IN THE CITY OF HUNTINGTON BEACH COUNTY OF ORANGE STATE OF CALIFORNIA AS
PER MAP FILED IN BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID
COUNTY.
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON BEACH
,COUNTY-OF ORANGE.STATE OF CALIFORNIA.AS PER MAP FILED IN BOOK 156.PAGES 19 AND
20.OF MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OILS AND MINERALS SUBSTANCES BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD
PARCEL 5B:
A_PORTION OF LOTS 219 227 254 262 267 M. 02 AND 310 AND ALL OF LOTS 220 THROUGH
226, INCLUSNE. 255 THROUGH 261. INCLUSIVE. 268 THROUGH M. INCLUSIVE. AND 303
THROUGH 309, INCLUSIVE ALL OF TRACT NO 274 AS SHOWN ON A MAP FILED IN BOOK 11
PAGE 52 OF MISCELLANEOUS MAPS RECORDS OF ORANGE COUNTY CALIFORNIA. MORE
PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO 81-586 IN THE CITY OF
HUNTINGTON BEACH COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN
BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 6:
LOTS 1 THROUGH 14 INCLUSIVE. 35 THROUGH 62 INCLUSNE 83 THROUGH 110 INCLUSIVE
131 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSNE 227 THROUGH 254. INCLUSIVE,
AND 275 THROUGH 288 INCLUSIVE,OF TRACT NO 275 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE—STATE-OF CALIFORNIA AS PER MAP FILED IN BOOK 14 PAGES 16 OF
MAP I 4 THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE.STATE OF CALIFORNIA,AS PER MAP FILED M BOOK 156,PAGES 19 AND
20.017 MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS. AND MINERAL SUBSTANCES BELOW A DEPTH
OE 50 FFEET,AS RESERVED IN DEEDS OF RECORD.
APN•111-032-35 and 111-042-41 and 111-050-38
Exhibit A
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Property consists of the Donald W. Kiser Corporation Yard and the site thereof. the Donald
IC Kiser Corporation Yard consists of a main building four large warehouse type structures,equi men
and materials storage and office space The two-story 7.200 square foot administration building was
comas cted in 1972 and is used for centralized customer service operations and office space. The City
Yar"WId ilgs provide operations bases for a variety of maintenance services Building B is
�a s f xinnately 26 000 square feet and was also constructed in 1972 Building B houses the fleet
mainLenance facility that includes mechanics bays and parts storage for servicing vehicles. larger
small equipment and fire engines Building C constructed in 1973 is approximately 19,000 square feet
Thilding holds materials and equipment used in traffic signal igns and markings maintenance
Build ng C also includes facility maintenance small equipment such as carpentry, locksmith plumbing
and electrical tools Building D is approximate) 7� quare feet and was built in 1983 It is used for
mechanical services to police vehicles,motorcycles,and radio equipment.This facility includes mechanics
fix amd parts storage Building E. approximately 14,600 square feet is a storage warehouse for parts.
sles and equipment Building E was finished in 1988 The lot includes several small sheds as well as
and,,ravel and loose construction materials A fuel island contains four gasoline,two diesel.
and-me-p_rop�ane pumps that service all city owned vehicles and-equipment. The City estimates that the
value of the Property,including land and building to be approximately$29.500A00.
Exhibit B
ATTACHMENT #7
Quint&Thimmig LLP 03/18/10
04/01/10
AFTER RECORDATION RETURN TO:
Quint&Thimmig LLP
575 Market Street,Suite 3600
San Francisco,California 94105-2874
Attention:Brian D.Quint,Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 6103 OF THE
CALIFORNIA GOVERNMENT CODE.
MEMORANDUM OF ASSIGNMENT OF LEASE
THIS MEMORANDUM OF ASSIGNMENT OF LEASE (this "Memorandum'), made
and entered into as of un 1, 2010, is by and between the HUNTINGTON BEACH PUBLIC I
FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under
and by virtue of the laws of the State of California (the "Authority"), and
_ , a national banking association organized and existing under and by
virtue of the laws of the United States of America,as trustee(the"Trustee");
WITNESSETH :
In the joint and mutual exercise of their powers, in consideration of the mutual
covenants herein contained, and for other valuable consideration, the parties hereto recite and
agree as follows:
Section 1. Recitals.
(a) The Authority and the City of Huntington Beach (the "City") have entered into that
ce3dain Lease Agreement, dated as of Lun-c 1, 2010 (the Lease Agreement"), evidenced by a
memorandum recorded concurrently herewith, under which the Authority has leased to the
City certain parcels of real property situated in Orange County, State of California, more
particularly described in Exhibit A attached hereto and made a part hereof (collectively, the
"Site"), certain existing facilities on the Site, more particularly described in Exhibit B attached
hereto and made a part hereof(the"Facility"and,with the Site,the"Property").
(b) Under the Lease Agreement, the Authority has agreed to lease the Property to the
City in the manner and on the terms set forth therein,which terms include, without limitation,
the obligation of the City to pay Lease Payments (as defined in the Lease Agreement) to the
Authority,as the rental for the lease of the Property.
(c) Under the Lease Agreement and under an Indenture of Trust, dated as of Lune 1, f
2010,,by and between the Authority and the Trustee(the"Indenture"),the Authority is required
to cause to be deposited certain sums of money to be credited, held and applied in accordance
therewith.
08008.04
(d) For the purpose of obtaining such moneys, the Authority has assigned and
transferred to the Trustee,under the Indenture,certain of its rights under the Lease Agreement
foy the purpose of securing the bonds of the Authority designated the "Huntington Beach
Public Financing Authority Lease Revenue Refunding Bonds,2010 Series A," issued under the
Indenture in the aggregate principal amount of$ (the`Bonds").
(e) The Authority has requested the Trustee to enter into this Memorandum for the
purpose of memorializing such assignment of record.
Section 2. Assignment. The Authority has transferred, assigned and set over to the
Trustee, pursuant to the terms of the Indenture, and does hereby assign to the Trustee for the
benefit of the Owners of Bonds, (a) all of the rights of the Authority in the Lease Agreement
(other than the rights of the Authority under Sections 4.7, 7.3 and 9.5 thereof and other than its
rights to give approvals and consents thereunder), including but not limited to the right to
receive and collect all of the Lease Payments (including prepayments thereof) from the City
-wider the Lease Agreement,and the right to exercise such rights and remedies conferred on the
Authority pursuant to the Lease Agreement as may be necessary or convenient to enforce
payment of the Lease Payments and prepayments thereof, and (b) all of the rights of the
Authority in the Site and Facility Lease (other than its rights to give approvals and consents
thereunder). All rights assigned by the Authority shall be administered by the Trustee in
accordance with the provisions of the Indenture and for the benefit of the owners of the Bonds.
Section 3. Acceptance. The Trustee hereby accepts the assignments made herein for the
purpose of providing for the payments due pursuant to the Indenture to, and the rights under
the Lease Agreement and Indenture of, the owners of the Bonds delivered pursuant to the
Indenture,all subject to the provisions of the Indenture.
Section 4.Conditions.This Memorandum shall confer no obligations or impose no duties
upon the Trustee beyond those expressly provided for in the Indenture.
Section 5. Counterpart Signatures. This Memorandum may be executed in several
counterparts,each of which shall be an original and all of which shall constitute but one and the
same agreement.
-2-
IN WITNESS WHEREOF,the parties have executed this Memorandum by their officers
thereunto duly authorized as of the day and year first written above.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
as Trustee
By
Name
Title
-3-
NOTARY ACKNOWLEDGMENT FORMS TO BE ATTACHED
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach,Orange County,State of California,described as
follows:
PARCEL 1:
LOTS 1 THROUGH 312, INCLUSIVE, OF TRACT NO. 263, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13, PAGE 42. OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM LOTS 1 48 49 96 97 144 145 192 193 240, 241, 288, AND 299, THE
EASTERLY 10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD.
PARCEL 2:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 264 IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13 PAGE 43 OF
MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY
EXCEPTING THEREFROM LOTS 1 48 49 96 97 144 145 192 193 240 241 AND 248 THE EASTERLY
10 FEET THEREOF.
ALSO EXCEPTING THEREFROM ALL. OIL. GAS, AND MINERAL SUBSTANCES: BELOW A_DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL I
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO, 265 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 13 PAGE 46�F
MAPS,IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD
PARCEL 4:
LOTS 1 THROUGH 288 INCLUSIVE OF TRACT NO 273 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13 PAGE 45 OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET AS RESERVED IN DEEDS OF RECORD
PARCEL 5:
LOTS 1 THROUGH 14 INCLUSIVE 35 THROUGH 62 INCLU5IVE83 THROUGH 110 INCLUSIVE
131 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSIVE 219 THROUGH 262 INCLUSIVE
AND 267 THROUGH 310 INCLUSIVE,OF TRACT NO 274 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 13, PAGES 52, OF
1 _PAS N THE OFFICE OF THE RECORDER OF SAID COUNTY.
Exhibit A
Pagel
EXCEPTING THEREFROM A PORTION OF LOTS 219 227 254 262 267 275 302 AND 310 AND ALL
OF LOTS 220 THROUGH 226 INCLUSIVE 255 THROUGH 261 INCLUSIVE 268 THROUGH 274,
INCLUSIVE AND 303 THROUGH 309 INCLUSIVE ALL OF TRACT NO 274 AS SHOWN ON A MAP
FL OM- IN BOOK 13, PAGE 52, OF MISCELLANEOUS MAPS: RECORD_S OF ORANGE COUNTY,
ALIFORNIA MORE PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO.81-
586 IN THE CITY OF HUNTINGTON BEACH. UNTY OF ORANGE STATE OF CALIFORNIA, AS
PER MAP FILED IN BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID
COUNTY.
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON _BEACH
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 156 PAGES 19 AND
A OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERALS SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD.
PARCEL 5B:
A PORTION OF LOTS 219 227 262 267 275 302 AND 310 AND ALL OF LOTS 220 THROUGH
226 INCLUSNE 255 THROUGH 261 INCLUSIVE 268 THROUGH 274 INCLUSIVE. AND 303
THROUGH 309.INCLUSIVE ALL OF TRACT NO. 274 AS SHOWN ON A MAP FILED IN BOOK 13,
k 52 OF MISCELLANEOUS MAPS RECORDS OF ORANGE COUNTY CALIFORNIA MORE
PARTICULARLY DESCRIBED AS PARCELS 1 AND 2 OF PARCEL MAP NO. 81-586 IN THE CITY OF
HUNTINGTON BEACH COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN
BOOK 171 PAGE 25 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
OF 500 FEET,AS RESERVED IN DEEDS OF RECORD
PARCEL 6:
LAC TS 1 THROUGH 14 INCLUSIVE. 35 THROUGH 62 INCLUSIVE 83 THROUGH 110. INCLUSNE
131 THROUGH 158 INCLUSIVE 179 THROUGH 206 INCLUSIVE 227 THROUGH 254 INCLUSIVE
AND 275 THROUGH 288.INCLUSIVE,OF TRACT NO.275,IN THE CITY OF HUNTINGTON BEACH.
COUNTY OF ORANGE STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 14 PAGES 16 OF
MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY
ALSO EXCEPTING THEREFROM TRACT NO 4329 IN THE CITY OF HUNTINGTON BEACH
COUNTY OF ORANGE_STATE OF CALIFORNIA AS PER MAP FILED IN BOOK 156 PAGES 19 AND
20 OF MAPS IN THE OFFICE OF THE RECORDER OF SAID COUNTY.
ALSOFXCEPTING THEREFROM ALL OIL GAS AND MINERAL SUBSTANCES BELOW A DEPTH
O1�,5�``lQ FEET,AS RESERVED IN DEEDS OF RECORD
APN-111-032-35 and 111-042-41 and 111-050-38
Exhibit A
Page 2
EXHIBIT B
DESCRIPTION OF THE FACILITY
The Property consists of the Donald W. Kiser CgMQration Yard and the site thereof the Donald
W.Kier Corporation Yard consists of a main building, four large warehouse type structures equipment
and materials storage and office space The two-story 7 200 square foot administration buddingjEaus
c nsts_tructed in 1972 and is used for centralized customer service operations and office space. The City
Yard buildings provide operations bases for a variety of maintenance services Building B is
approximately 26 000 square feet and was also constructed in 1972 Building B houses the fleet
maintenance facility that includes mechanics bans and parts storage for servicing vehicles, large an
small equipment and fire engines Buildings constructed in 1973 is approximately 19,000 square feet.
The building holds materials and equipment used in traffic signalsigns and markings maintenance
Building C also includes facility maintenance small equipment such as carpentry locksmith plumbing
and electrical tools Building D is approximately 7,500 square feet and was built in 1983. It is used for
m_� services to police vehicles motorcycles and radio equipment This facility includes mechanics
kd parts storage Building E approximately 14,600 square feet is a storage warehouse for parts
supplies and equipment Building E was finished in 1988 The lot includes several small sheds as well as
stor for sand gravel and loose construction materials A fuel island contains four gasoline two diesel
-Qn—e.propane pumps that service all city owned vehicles and equipment The City estimates that the
value of the Property,including land and building.to be approximately$29.500.000.
Exhibit B
ATTACHMENT #8
Quint&Thimmig LLP 03/18/10
04/01/10
CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is
executed and delivered by the CITY OF HUNTINGTON BEACH (the "City") in connection
with the issuance by the Huntington Beach Public Financing Authority (the "Authority") of
aggregate principal amount of Huntington Beach Public Financing Authority
Lease Revenue Refunding Bonds, 2010 Series A (the 'Bonds"). The Bonds are being issued
pursuant to an indenture of trust,dated as of Lunne 1,2010(the"Indenture"),by and between the
Authority and as trustee (the "Trustee"). The City covenants and
agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-
12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this
Section 2,the following capitalized terms shall have the following meanings:
"Annual Report"shall mean any Annual Report provided by the City pursuant to,and as
described in,Sections 3 and 4 of this Disclosure Certificate.
"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 tax purposes.
"Dissemination Agent" shall mean Harrell & Company Advisors LLC or any successor
Dissemination Agent designated in writing by the City and which has filed with the City a
written acceptance of such designation. In the absence of such a designation, the City shall act
as the Dissemination Agent.
"EMMA" or "Electronic Municipal Market Access" means the centralized on-line
repository for documents filed with the MSRB, such as official statements and disclosure
information relating to municipal bonds, notes and other securities as issued by state and local
governments or similar medium should EMMA no longer exist.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Certificate.
"MSRB" means the Municipal Securities Rulemaking Board,which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information which may be
designated by the Securities and Exchange Commission as such for purposes of the Rule in the
future.
08008.04
"Participating Underwriter" shall mean the original underwriter of the Bonds,required to
comply with the Rule in connection with offering of the Bonds.
"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 may be amended from time
to time.
Section 3.Provision of Annual Reports.
(a) Delivery of Annual Report to MSRB. The City shall, or shall cause the Dissemination
::agent to,not later than March 31 of each year(being the last day of the 9th month after the end
of the City's fiscal year,which ends on June 30), commencing with the report for the 2009-2010
fiscal year,provide to the Participating Underwriter and to file with EMMA,in a readable PDF
or other electronic format as prescribed by the MSRB, an Annual Report prepared by or on
behalf of the City that is consistent with the requirements of Section 4 of this Disclosure
Certificate. The Annual Report may be submitted as a single document or as separate
documents comprising a package, and may cross-reference other information as provided in
Section 4 of this Disclosure Certificate;provided that the audited financial statements of the City
may be submitted separately from the balance of the Annual Report and later than the date
required above for the filing of the Annual Report if they are not available by that date.
(b) Change of Fiscal Year. If the City's fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section 5(d).
(c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business
Days prior to the date specified in subsection (a) for providing the Annual Report to EMMA,
the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If
by such date, the Dissemination Agent has not received a copy of the Annual Report, the
?dissemination Agent shall notify the City.
(d) Report of Non-Compliance. If the City is unable to provide an Annual Report by the
date required in subsection (a), the Dissemination Agent shall send a notice to EMMA in
substantially the form attached as Exhibit A.
(e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination
Agent is other than the City, file a report with the City certifying that the Annual Report has
been provided pursuant to this Disclosure Certificate,stating the date it was provided.
Section 4.Content of Annual Reports.The Annual Report shall contain or incorporate by
reference the following:
(a) Audited financial statements of the City for the preceding fiscal year, prepared in
accordance with the laws of the State and including all statements and information prescribed
for inclusion therein by the Controller of the State. If the City's audited financial statements are
not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
(b)To the extent not included in the audited financial statements of the City,the Annual
Report shall also include operating data with respect to the City for the preceding fiscal year,
substantially similar to that provided in the corresponding tables and charts in the official
statement for the Bonds,as follows:
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(i) General Fund Budget Summary;
(ii) Investment Portfolio of the City;
(iii) Tax Revenues By Source,Governmental Funds;
(iv) Sales Tax Rate;
(v) Motor Vehicle In-Lieu Tax;
(vi) Assessed Full Cash Value of All Taxable Property;
(vii) Property Tax Levies and Tax Collections;
(viii) Principal Secured Property Taxpayers;
(ix) Annual Pension Cost;
(x) Annual OPEB Cost;and
(xi) Direct and Overlapping Debt Report
(c) Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which are available to the public on the MSRB's Internet web site or filed with the Securities and
Exchange Commission.The City shall clearly identify each such other document so included by
reference.
If the document included by reference is a final official statement, it must be available
from EMMA.
(d) In addition to any of the information expressly required to be provided under
paragraph(b)of this Section 4,the City shall provide such further information,if any,as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made,not misleading.
Section 5.Reporting of Significant Events.
(a)Listed Events. Pursuant to the provisions of this Section 5,the City shall give,or cause
to be given,notice of the occurrence of any of the following events with respect to the Bonds,if
material:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults.
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.
(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.
(v) Substitution of credit or liquidity providers,or their failure to perform.
(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.
(vii) Modifications to rights of security holders.
(viii) Contingent or unscheduled bond calls.
(ix) Defeasances.
(x) Release,substitution,or sale of property securing repayment of the securities.
(xi) Rating changes.
(b) Determination of Materiality of Listed Events. Whenever the City obtains knowledge of
the occurrence of a Listed Event, the City shall as soon as possible determine if such event
would.be material under applicable federal securities laws.
(c) Notice to Dissemination Agent. If the City has determined that knowledge of the
occurrence of a Listed Event would be material under applicable federal securities laws, the
City shall promptly notify the Dissemination Agent (if other than the City) in writing. Such
notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection
(d).
(d) Notice of Listed Events. The City shall file, or cause the Dissemination Agent to file, a
notice of the occurrence of a Listed Event, if material, with EMMA, in a readable PDF or other
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electronic format as prescribed by EMMA, with a copy to the Participating Underwriter.
Notwithstanding the foregoing,notice of Listed Events described in subsections(a)(viii)and(ix)
(defeasances) need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to Bondholders of affected Bonds.
Section 6. Identifying Information for Filings with EMMA. All documents provided to
EMMA under this Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City's obligations under this
Disclosure Certificate shall terminate upon the 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 City
shall give notice of such termination in the same manner as for a Listed Event under Section 5.
Section 8.Dissemination Agent.
(a) Appointment of Dissemination Agent. The initial Dissemination Agent shall be Harrell
& Company Advisors. LLC. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such agent, with or without appointing a successor Dissemination
Agent. If the Dissemination Agent is not the City, the Dissemination Agent shall not be
responsible in any manner for the content of any notice or report prepared by the City pursuant
to this Disclosure Certificate. It is understood and agreed that any information that the
Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it
by the City. The Dissemination Agent has undertaken no responsibility with respect to any
reports, notices or disclosures provided to it under this Continuing Disclosure Certificate, and
has no liability to any person,including any Owner,with respect to any such reports,notices or
disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any
fiduciary or banking relationship with the City shall not be construed to mean that the
Dissemination Agent has actual knowledge of any event or condition except as may be
provided by written notice from the City.
(b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid
compensation by the City for its services provided hereunder in accordance with its schedule of
fees as agreed to between the Dissemination Agent and the City from time to time and all
expenses, legal fees and advances made or incurred by the Dissemination Agent in the
performance of its duties hereunder.The Dissemination Agent shall not be deemed to be acting
in any fiduciary capacity for the City, Holders or Beneficial Owners, or any other party. The
Dissemination Agent may rely and shall be protected in acting or refraining from acting upon
any direction from the City or an opinion of nationally recognized bond counsel. The
Dissemination Agent may at any time resign by giving written notice of such resignation to the
City.
Section 9. Amendment;Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate (and the Dissemination Agent shall
agree to any amendment so requested by the City that does not impose any greater duties or
risk of liability on the Dissemination Agent), and any provision of this Disclosure Certificate
may be waived,provided that the following conditions are satisfied:
(a) Change in Circumstances. If the amendment or waiver relates to the provisions of
Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that
arises from a change in legal requirements, change in law, or change in the identity, nature, or
status of an obligated person with respect to the Bonds,or the type of business conducted;
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(b) Compliance as of Issue Date. The undertaking, as amended or taking into account such
waiver,would,in the opinion of a nationally recognized bond counsel,have complied with the
requirements of the Rule at the time of the original issuance of the Bonds, after taking into
account any amendments or interpretations of the Rule,as well as any change in circumstances;
and
(c) Consent of Holders; Non-impairment Opinion. The amendment or waiver either (i) is
approved by the Bondholders in the same manner as provided in the Indenture for
amendments to the Indenture with the consent of Bondholders,or(ii)does not,in the opinion of
nationally recognized bond counsel provided to the Dissemination Agent,materially impair the
interests of the Bondholders or Beneficial Owners.
If this Disclosure Certificate is amended or any provision of this Disclosure Certificate is
waived,the City shall describe such amendment or waiver in the next following Annual Report
and shall include, as applicable, a narrative explanation of the reason for the amendment or
waiver and its impact on the type (or in the case of a change of accounting principles, on the
presentation) of financial information or operating data being presented by the City. In
addition, if the amendment relates to the accounting principles to be followed in preparing
financial statements, (i)notice of such change shall be given in the same manner as for a Listed
Event under Section 5(d), and (ii) the Annual Report for the year in which the change is made
should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate 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 Certificate.If the City 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 Certificate, the City shall have no
obligation under this Disclosure Certificate to update such information or include it in any
future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of
this Disclosure Certificate, any Bondholder or Beneficial Owner may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court
order,to cause the City to comply with its obligations under this Disclosure Certificate.The sole
remedy under this Disclosure Certificate in the event of any failure of the City to comply with
this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors,employees and agents,harmless against any loss,expense and liabilities which it may
incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees and expenses) of defending against
any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or
willful misconduct. The obligations of the City under this Section shall survive resignation or
removal of the Dissemination Agent and payment of the Bonds.
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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the City, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial
Owners from time to time of the Bonds,and shall create no rights in any other person or entity.
Date:June 2 2010
CITY OF HUNTINGTON BEACH
By
Name
Title
ACKNOWLEDGED:
HARRELL&COMPANY ADVISORS,LLC,
as Dissemination Agent
By-
Name_
Title
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EXHIBIT A
NOTICE TO EMMA OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Huntington Beach Public Financing Authority
Name of Obligor: City of Huntington Beach,California
Name of Issue: $ Huntington Beach Public Financing Authority Lease
Revenue Refunding Bonds,2010 Series A
Date of Issuance: Lune 2,2010
NOTICE IS HEREBY GIVEN that the City of Huntington Beach has not provided an
Annual Report with respect to the above-named Bonds as required by the Continuing
Disclosure Certificate dated Tune 2" 2010, furnished by the City in connection with the Bond
Issue; The City anticipates that the Annual Report will be filed by
Dated:
HARRELL&COMPANY ADVISORS LLC,
as Dissemination Agent
By
Name
Title
cc:Trustee
ATTACHMENT
#9
Quint&Thimmig LLP 0318/ /10
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
Lease Revenue Refunding Bonds,2010 Series A
BOND PURCHASE AGREEMENT
Mom,2010
Huntington Beach Public Financing Authority
2000 Main Street
Huntington Beach,California 92648
City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
Ladies and Gentlemen:
Piper Iaffray & Co. (the "Underwriter") hereby offers to enter into this bond purchase
agreement (the 'Bond Purchase Agreement") with the Huntington Beach Public Financing
Authority (the "Authority") and the City of Huntington Beach (the "City"). Upon the
acceptance hereof by the Authority and the City, this offer will be binding upon the Authority,
the City and the Underwriter. This offer is made subject to (a) the written acceptance hereof by
the Authority and the City and (b) withdrawal by the Underwriter upon written notice (by
telecopy or otherwise) delivered to the Authority and the City at any time prior to each of their
acceptance hereof by the Authority and the City.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements set forth herein, the Underwriter hereby agrees to
purchase on the Closing Date (as defined herein), and the Authority and the City hereby agree
to sell and deliver to the Underwriter on the Closing Date, $ aggregate principal
amount of Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,
2010 Series A (the 'Bonds). The Bonds are being issued pursuant to Article 4, Chapter 5,
Division 7, Title 1 of the California Government Code (the "Marks-Roos Act"), a resolution of
the Authority authorizing the issuance of the Bonds, adopted on April 19,2010(the "Authority
Resolution"), and an Indenture, dated as of June 1, 2010 (the "Indenture"),by and between the
Authority and . as trustee (the "Trustee"). The City will lease certain
real property and all buildings and other improvements installed thereon (collectively, the
"Property") to the Authority pursuant to a Site and Facility Lease, dated as of Lune 1, 2010 (the
"Site and Facility Lease"). The Property will be leased by the Authority to the City pursuant to
the Lease Agreement, dated as of Lune 1, 2010 (the "Lease Agreement"), by and between the
Authority and the City. All capitalized terms not defined herein shall have the respective
meaning specified in Section 1.01 of the Indenture.
08008.04
Under the Lease Agreement, the City is required to make Lease Payments and
Additional Payments from legally available funds in amounts calculated to be sufficient to pay
principal of and interest on the Bonds when due.All of the Authority's right,title and interest in
and to the Lease Agreement (except for the right to receive Additional Payments to the extent
payable to the Authority and certain rights to indemnification), including the right to receive
Lease Payments under the Lease Agreement, are assigned to the Trustee for the benefit of the
Owners of the Bonds.
The Bonds are being issued to (a) refund the Authority's Huntington Beach Public
Financing Authority Lease Revenue Bonds, 1997 Series A (Public Facilities Project), of which
$2,770,000 remains outstanding (the "1997 Bonds"); (b) refund the Authority's Huntington
Beach Public Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement
Financing Project), of which $12,785,000 remains outstanding (the "2000 Bonds"), (c) fund a
reserve fund for the Bonds,and(d)pay costs of issuance of the Bonds.
The aggregate purchase price to be paid by the Underwriter for the Bonds is hereby
agreed to be $ , which amount represents the principal amount of the Bonds of
$ , less $ , representing the Underwriter's discount, plus $
representing net original issue premium(such payment and delivery of the Bonds and the other
actions contemplated hereby to take place at the time of such payment and delivery being
herein sometimes called the"Closing").
A Preliminary Official Statement of the City and the Authority, dated , 2010
(together with the Appendices thereto, any documents incorporated therein by reference and
any supplements or amendments thereto and as disseminated in its printed physical form or in
electronic form in all respects materially consistent with such physical form, the "Preliminary
Official Statement"), has been prepared for use in marketing the Bonds, and a final Official
Statement of the Authority, to be dated the date hereof, as amended to conform to the terms of
this Purchase Contract, and with such changes and amendments as are mutually agreed to by
the Authority, the City and the Underwriter, including the cover page, inside cover page, the
appendices and all information incorporated therein by reference,is herein collectively referred
to as the "Official Statement," which shall be in substantially the form of the Preliminary
Official Statement, with such changes and amendments thereto as may be mutually agreed
upon by the Underwriter,the Authority and the City.
The Bonds shall be dated their date of delivery, and shall have the maturities, bear
interest at the rates, have reoffering yields, and be subject to mandatory sinking fund
redemption as shown on Exhibit A hereto.
It shall be a condition to the Authority's obligation to sell and to deliver the Bonds to the
Underwriter and to the obligation of the Underwriter to purchase, to accept delivery of and to
pay for the Bonds that the entire $ aggregate principal amount of the Bonds as
authorized by the Indenture shall be sold and delivered by the Authority and accepted and paid
for by the Underwriter at the Closing. The Underwriter may change the offering prices (or
yields)of the Bonds from time to time at any time.The Bonds may be offered and sold to certain
dealers at prices lower than such initial public offering prices.The obligation of the Authority to
sell and deliver the Bonds to the Underwriter shall also be conditioned upon the delivery by
Quint & Thimmig LLP, Bond Counsel ("Bond Counsel"), of its approving legal opinion with
respect to the Bonds.
The Authority and the City hereby authorize the Underwriter to use and distribute the
Lease Agreement, the Site and Facility Lease, the Indenture, the Escrow Deposit and Trust
Afreement, by and among the Authority, the City and U.S. Bank National Association, as
escrow bank (the "1997 Escrow Bank"), relating to the refunding of the 1997 Bonds (the "1997
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Escrow Agreement"), the Escrow Deposit and Trust Agreement,by and among the Authority,
the City and The Bank of New York Mellon Trust Company, N.A., as escrow bank (the "2000
Escrow Bank"),relating to the refunding of the 2000 Bonds(the"2000 Escrow Agreement"),and
the Official Statement and the information contained in such documents in connection with the
public offering and sale of the Bonds.The Authority and the City have authorized the use of the
Preliminary Official Statement in connection with the public offering of the Bonds by the
Underwriter prior to the date hereof.
The obligation of the City to make Lease Payments under the Lease Agreement does not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any form of taxation.Neither the Bonds nor
the obligation of the City to make Lease Payments under the Lease Agreement constitutes a
debt of the Authority, the City,the State of California or any of its political subdivisions within
the meaning of any constitutional or statutory debt limitation or restriction. The obligation of
the City to make Lease Payments, as set forth in the Lease Agreement, shall be deemed to be
and shall be construed to be a ministerial duty imposed by law and it shall be the ministerial
duty of each and every public official of the City to take such actions and do such things as are
required by law in the performance of such duty, subject to abatement in the event of damage
or destruction to,or condemnation of,the Property or a portion thereof.
2. The Bonds. The Bonds will be issued, executed and delivered pursuant to the
Indenture. The Authority will assign its interest in the Lease Agreement and the Site and
Facility Lease to the Trustee pursuant to the Indenture. The City Council of the City has
adopted a resolution on April 19,2010,relating to the Bonds(the "City Resolution").This Bond
Purchase Agreement, the Lease Agreement, the Site and Facility Lease, the 1997 Escrow
Agreement, the 2000 Escrow Agreement and the Continuing Disclosure Certificate (as
hereinafter defined), are collectively referred to as the "City Documents." This Bond Purchase
Agreement, the Indenture, the Lease Agreement, the Site and Facility Lease, the 1997 Escrow
Agreement and the 2000 Escrow Agreement are collectively referred to as the "Authority
Documents."
3.Official Statement,Continuing Disclosure.
(a) The Authority and the City represent that they have deemed the Preliminary Official
Statement to be final as of its date, except for either revisions or additions to the offering
price(s),interest rate(s),yield(s) to maturity, selling compensation,aggregate principal amount,
principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which
depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934,as amended (the"Rule").
(b)The Underwriter agrees that,prior to the time the final Official Statement is available,
the Underwriter will send to any potential purchaser of the Bonds, upon the request of such
potential purchaser,a copy of the most recent Preliminary Official Statement. Such Preliminary
Official Statement shall be sent by first class mail(or other equally prompt means)not later than
the second business day following the date upon which each such request is received.
(c) The Authority agrees to deliver to the Underwriter, at such addresses as the
Underwriter shall specify,as many copies of the final Official Statement relating to the Bonds as
the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of the
Rule and with Rule G-32, Rule G-36 and all other applicable rules of the Municipal Securities
Rulemaking Board. The Authority agrees to deliver such Official Statements within seven
business days after the execution hereof.The Underwriter agrees to give notice to the Authority
on the date after which the Underwriter shall no longer be obligated to deliver Official
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Statements pursuant to paragraph (b)(4) of the Rule,which date shall be no earlier than 25 days
after the"end of the underwriting period,"as determined in accordance with Section 13 herein.
(d) Prior to the earlier of(i) receipt of notice from the Underwriter that no participating
underwriter, as such term is defined in the Rule, remains obligated to deliver Official
Statements pursuant to paragraph (b)(4) of the Rule or (ii) 25 days after the date of the Closing
(as defined below), the Authority and the City shall provide the Underwriter with such
information regarding the Authority and the City,each of their current financial conditions and
ongoing operations as the Underwriter may reasonably request.
(e) The City hereby covenants and agrees that it will, on or prior to the Closing Date,
enter into an agreement or contract for the benefit of the owners of the Bonds in which the City
will undertake to provide financial information,operating data and notices of material events as
required by paragraph (d)(2)(ii) of the Rule substantially in the form of Appendix D to the
Official Statement(the"Continuing Disclosure Certificate").
4. Representations, Warranties and Agreements of the City. The City represents,
warrants and agrees as follows:
(a) The City is a municipal corporation and chartered city duly organized and validly
existing under its charter and the Constitution and laws of the State of California.
(b)The City has full legal right,power and authority(i)to enter into,execute and deliver
the City Documents; and (ii) to carry out and consummate the transactions on its part
contemplated by the City Documents and the Official Statement.
(c) By all necessary official action, the City has duly authorized and approved the City
Documents, has duly authorized and approved the Preliminary Official Statement and the
Official Statement and approved the distribution thereof(including in electronic form),has duly
authorized and approved the execution and delivery of,and the performance by the City of the
obligations in connection with the execution and delivery of the Bonds on its part contained in
the City Documents, and the consummation by it of all other transactions contemplated by the
City Documents in connection with the execution and delivery of the Bonds,all pursuant to the
City Resolution adopted at a meeting duly called and held in accordance with the requirements
of all applicable laws and at which a quorum of the members of the City Council was
continuously present. The City Resolution has not been modified, amended or rescinded since
the date of its adoption.
(d) The City is not in any material respect in breach of or default under any applicable
constitutional provision, law or administrative regulation of the State of California or of the
United States,or any agency or instrumentality of either,or any applicable judgment or decree,
or any loan agreement, indenture, bond, note, resolution, agreement (including, without
limitation,the City Documents)or other instrument to which the City is a party which breach or
default has or may have an adverse effect on the ability of the City to perform its obligations
under the City Documents,and no event has occurred and is continuing which with the passage
of time or the giving of notice,or both,would constitute such a default or event of default under
any such instrument;and the execution and delivery of the Bonds and the City Documents,and
compliance with the provisions on the City's part contained therein, will not conflict in any
material way with or constitute a material breach of or a material default under any
constitutional provision, law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the City is a party
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
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whatsoever upon any of the property or assets of the City or under the terms of any such law,
regulation or instrument,except as provided by the Bonds and the City Documents.
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having jurisdiction of
the matter which are required for the due authorization by, or which would constitute a
condition precedent to or the absence of which would materially adversely affect the due
performance by, the City of its obligations in connection with the execution and delivery of the
Bonds under the City Documents or the consummation by it of all other transactions
contemplated by the City Documents have been duly obtained, except for such approvals,
consents and orders as may be required under the Blue Sky or securities laws of any state in
connection with the offering and sale of the Bonds; except as described in or contemplated by
the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of
any governmental authority, board, agency or commission having jurisdiction of the matter
which are required for the due authorization by, or which would constitute a condition
precedent to or the absence of which would materially adversely affect the due performance by,
the City of its obligations under the City Documents have been duly obtained.
(f) There is no action,suit,proceeding,inquiry or investigation,notice of which has been
duly served on the City,at law or in equity before or by any court, government agency,public
board or body, pending or to the best knowledge of the officer of the City executing this Bond
Purchase Agreement,threatened against the City,affecting the existence of the City or the titles
of its officers to their respective offices,or affecting or seeking to prohibit,restrain or enjoin the
sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as
to the City the validity or enforceability of the Bonds or the City Documents, or contesting the
completeness or accuracy of the Preliminary Official Statement or the Official Statement, or
contesting the powers of the City to cause the execution and delivery of the Bonds, or the
execution and delivery or adoption by the City of the City Documents,or in any way contesting
or challenging the consummation of the transactions contemplated hereby or thereby; nor, to
the best knowledge of the City, is there any basis for any such action, suit,proceeding, inquiry
or investigation,wherein an unfavorable decision,ruling or finding would materially adversely
affect the validity of the Bonds or the authorization, execution, delivery or performance by the
City of the City Documents.
(g)The City will furnish such information,execute such instruments and take such other
action in cooperation with the Underwriter as the Underwriter may reasonably request in order
(i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and
regulations of such states and other jurisdictions of the United States as the Underwriter may
designate and (ii)to determine the eligibility of the Bonds for investment under the laws of such
states and other jurisdictions, and will use its best efforts to continue such qualifications in
effect so long as required for the distribution of the Bonds; provided, however, that the City
shall not be required to execute a general or special consent to service of process or qualify to do
business in connection with any such qualification or determination in any jurisdiction, and the
Underwriter shall bear all costs in connection with the foregoing.
(h) As of the date thereof, the Preliminary Official Statement did not, except for the
omission of certain information permitted to be omitted in accordance with the Rule, contain
any untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.
(i)At the time of the City's acceptance hereof, and (unless an event occurs of the nature
described in paragraph (k) of this Section 4) at all times subsequent thereto up to and including
the Closing Date, the Official Statement (other than information therein provided by the
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Underwriter) did not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made,not misleading.
(j) If the Official Statement is supplemented or amended pursuant to paragraph (k) of
this Section 4, at the time of each supplement or amendment thereto and (unless subsequently
again supplemented or amended pursuant to such paragraph) at all times subsequent thereto
up to and including the Closing Date, the Official Statement (other than information therein
provided by the Underwriter) as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein,in the light of the circumstances under which they were made,not misleading.
(k) If between the date of this Bond Purchase Agreement and that date which is 25 days
after the end of the underwriting period (as determined in accordance with Section 13 hereof)
any event of which the officer of the City executing this Bond Purchase Agreement has
knowledge shall occur affecting the City which might adversely affect the marketability of the
Bonds or the market prices thereof, or which might cause the Official Statement, as then
supplemented or amended,to contain any untrue statement of a material fact or to omit to state
a material fact necessary to make the statements therein,in the light of the circumstances under
which they were made, not misleading, the City shall notify the Underwriter thereof, and if in
the opinion of the Underwriter such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the City will at its expense prepare and
furnish to the Underwriter a reasonable number of copies of such supplement to,or amendment
of,the Official Statement in a form and in a manner approved by the Underwriter.
(1) Any certificate signed by any officer of the City and delivered to the Underwriter
pursuant to the City Documents or any document contemplated thereby or required for the
valid execution and delivery of the Bonds shall be deemed a representation and warranty by the
City to the Underwriter as to the statements made therein.
(m)The City will cause the proceeds from the sale of the Bonds to be paid to the Trustee
for the purposes specified in the Indenture and the Official Statement. So long as any of the
Bonds are outstanding and except as may be authorized by the Indenture, the City will not
issue or sell,or cause to be issued or sold,any Bonds or other obligations,other than the Bonds
delivered thereunder,the interest on and premium,if any,or principal of which will be payable
from Lease Payments.
(n)The City shall honor all other covenants on its part contained in the Lease Agreement
which are incorporated herein and made a part of this Bond Purchase Agreement.
5. Representations, Warranties and Agreements of the Authority. The Authority
represents,warrants and agrees as follows:
(a)The Authority is a joint exercise of powers entity duly organized and validly existing
under the laws of the State of California pursuant to a Joint Exercise of Powers Agreement
between the City and the Huntington Beach Community Development Agency, dated June 2,
1997(the"JPA Agreement").
(b) The Authority has full legal right, power and authority (i) to enter into, execute and
deliver the Authority Documents and to sell and deliver the Bonds to the Underwriter as
provided herein;and (ii) to carry out and consummate the transactions on its part contemplated
by the Authority Documents and the Official Statement.
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(c) By all necessary official action, the Authority has duly authorized and approved the
issuance of the Bonds and the Authority Documents, has duly authorized and approved the
Preliminary Official Statement and the Official Statement and approved the distribution thereof
(including in electronic form),has duly authorized and approved the execution and delivery of,
and the performance by the Authority of the obligations in connection with the execution and
delivery of the Bonds on its part contained in the Bonds and the Authority Documents,and the
consummation by it of all other transactions contemplated by the Authority Documents in
connection with the execution and delivery of the Bonds, all pursuant to the Authority
Resolution adopted at a meeting duly called and held in accordance with the requirements of all
applicable laws and at which a quorum of the board members of the Authority was
continuously present. The Authority Resolution has not been modified, amended or rescinded
since the date of its adoption and each Authority Document is the valid and binding obligation
of the Authority.
(d) The Authority is not in any material respect in breach of or default under any
applicable constitutional provision,law or administrative regulation of the State of California or
of the United States, or any agency or instrumentality of either, or any applicable judgment or
decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution,
agreement (including, without limitation, the Authority Documents) or other instrument to
which the Authority is a party which breach or default has or may have an adverse effect on the
ability of the Authority to perform its obligations under the Bonds or the Authority Documents,
and no event has occurred and is continuing which with the passage of time or the giving of
notice,or both, would constitute such a default or event of default under any such instrument;
and the execution and delivery of the Bonds and the Authority Documents, and compliance
with the provisions on the Authority's part contained therein, will not conflict in any material
way with or constitute a material breach of or a material default under any constitutional
provision, law, administrative regulation,judgment, decree, loan agreement, indenture, Bond,
note, resolution, agreement or other instrument to which the Authority is a party nor will any
such execution,delivery,adoption or compliance result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever upon any of the
property or assets of the Authority or under the terms of any such law, regulation or
instrument,except as provided by the Bonds and the Authority Documents.
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having jurisdiction of
the matter which are required for the due authorization by, or which would constitute a
condition precedent to or the absence of which would materially adversely affect the due
performance by, the Authority of its obligations in connection with the execution and delivery
of the Bonds under the Authority Documents or the consummation by it of all other
transactions contemplated by the Authority Documents,including all filings with the California
Secretary of State, have been duly obtained, except for such approvals, consents and orders as
may be required under the Blue Sky or securities laws of any state in connection with the
offering and sale of the Bonds;except as described in or contemplated by the Official Statement,
all authorizations, approvals, licenses, permits, consents and orders of any governmental
authority,board,agency or commission having jurisdiction of the matter which are required for
the due authorization by, or which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by, the Authority of its
obligations under the Bonds and the Authority Documents have been duly obtained.
(f) The Bonds, when executed, issued, authenticated and delivered in accordance with
the Indenture, and sold to the Underwriter as provided herein, will be validly executed and
outstanding obligations, entitled to the benefits of the Indenture, and upon such execution and
delivery, the Indenture will provide, for the benefit of the Owners from time to time of the
Bonds,the legally valid and binding security interest it purports to create.
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(g) There is no action, suit, proceeding, inquiry or investigation, notice of which has
been duly served on the Authority, at law or in equity before or by any court, government
agency,public board or body,pending or to the best knowledge of the officer of the Authority
executing this Bond Purchase Agreement, threatened against the Authority, affecting the
existence of the Authority or the titles of its officers to their respective offices, or affecting or
seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds
pursuant to the Indenture, or contesting or affecting as to the Authority the validity or
enforceability of the Bonds or the Authority Documents, or contesting the completeness or
accuracy of the Preliminary Official Statement or the Official Statement, or contesting the
powers of the Authority to cause the execution and delivery of the Bonds,or the execution and
delivery or adoption by the Authority of the Authority Documents,or in any way contesting or
challenging the consummation of the transactions contemplated hereby or thereby; nor, to the
best knowledge of the Authority,is there any basis for any such action,suit,proceeding,inquiry
or investigation,wherein an unfavorable decision,ruling or finding would materially adversely
affect the validity of the Bonds or the authorization, execution, delivery or performance by the
Authority of the Bonds or the Authority Documents.
(h)The Authority will furnish such information,execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request in
order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and
regulations of such states and other jurisdictions of the United States as the Underwriter may
designate and(ii)to determine the eligibility of the Bonds for investment under the laws of such
states and other jurisdictions, and will use its best efforts to continue such qualifications in
effect so long as required for the distribution of the Bonds; provided, however, that the
Authority shall not be required to execute a general or special consent to service of process or
qualify to do business in connection with any such qualification or determination in any
jurisdiction,and the Underwriter shall bear all costs in connection with the foregoing.
(i) As of the date thereof, the Preliminary Official Statement did not, except for the
omission of certain information permitted to be omitted in accordance with the Rule, contain
any untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.
(j) At the time of the Authority's acceptance hereof, and (unless an event occurs of the
nature described in paragraph (1) of this Section 5) at all times subsequent thereto up to and
including the Closing Date, the Official Statement (other than information therein provided by
that.Underwriter)did not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made,not misleading.
(k) If the Official Statement is supplemented or amended pursuant to paragraph (1) of
this Section 5, at the time of each supplement or amendment thereto and (unless subsequently
again supplemented or amended pursuant to such paragraph) at all times subsequent thereto
up to and including the Closing Date, the Official Statement (other than information therein
provided by the Underwriter) as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein,in the light of the circumstances under which they were made,not misleading.
(1) If between the date of this Bond Purchase Agreement and that date which is 25 days
after the end of the underwriting period (as determined in accordance with Section 13 hereof)
any event of which the officer of the Authority executing this Bond Purchase Agreement has
knowledge shall occur affecting the Authority which might adversely affect the marketability of
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flee Bonds or the market prices thereof, or which might cause the Official Statement, as then
supplemented or amended,to contain any untrue statement of a material fact or to omit to state
a material fact necessary to make the statements therein,in the light of the circumstances under
which they were made,not misleading,the Authority shall notify the Underwriter thereof, and
if in the opinion of the Underwriter such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the Authority will at its expense prepare
and furnish to the Underwriter a reasonable number of copies of such supplement to, or
amendment of,the Official Statement in a form and in a manner approved by the Underwriter.
(m) Any certificate signed by any officer of the Authority and delivered to the
Underwriter pursuant to the Authority Documents or any document contemplated thereby or
required for the valid execution and delivery of the Bonds shall be deemed a representation and
warranty by the Authority to the Underwriter as to the statements made therein.
(n) The Authority will cause the proceeds from the sale of the Bonds to.be paid to the
Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of
the Bonds are outstanding and except as may be authorized by the Indenture,the Authority will
not issue or sell any Bonds or other obligations, other than the Bonds delivered thereunder, the
interest on and premium,if any,or principal of which will be payable from the Revenues.
(o) The Authority shall honor all other covenants on its part contained in the Indenture
and the Lease Agreement which are incorporated herein and made a part of this Bond Purchase
Agreement.
6. Closing. At 8:00 A.M., California time, on u 2, 2010, or on such other date time, as
may be mutually agreed upon by the Authority, the City and the Underwriter (the "Closing
Date"), the Authority will, subject to the terms and conditions hereof, deliver to the
Underwriter, at the offices of The Depository Trust Company ("DTC"), in New York, New
York,or at such other place as the Authority,the City and the Underwriter may mutually agree
upon,the Bonds in definitive,fully registered form(one Bond for each maturity),duly executed
and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and
conditions hereof, the Underwriter shall wire to the Trustee Federal Reserve Bank Funds in the
amount of the purchase price of the Bonds.
7. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement
in reliance upon the representations and warranties of the Authority and the City contained
herein, and in reliance upon the representations and warranties to be contained in the
documents and instruments to be delivered at the Closing and upon the performance by the
Authority and the City of its obligations hereunder, both as of the date hereof and as of the
Closing Date. Accordingly,the Underwriter's obligations under this Bond Purchase Agreement
to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the
performance by the Authority and the City of their respective obligations to be performed
hereunder and under such documents and instruments at or prior to the Closing Date, shall be
subject, at the option of the Underwriter, to the accuracy in all material respects of the
statements the officers and other officials of the Authority and of the City, as the Underwriter,
authorized representatives of Bond Counsel, the Trustee, and the City Attorney made in any
certification or other documents furnished pursuant to the provisions hereof, and shall also be
subject to the following additional conditions:
(a) The respective representations and warranties of the Authority and the City
contained herein shall be true, complete and correct on the date hereof and on and as of the
Closing Date,as if made on the Closing Date;
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(b) At the time of Closing,the City Documents and the Authority Documents shall be in
full force and effect in accordance with their terms and shall not have been amended,modified
or supplemented and the Official Statement shall not have been supplemented or amended,
except in any such case as may have been agreed to by the Underwriter;
(c) All necessary official action of the Authority,the City and of the other parties thereto
relating to the City Documents and the Authority Documents shall have been taken and shall be
in full force and effect and shall not have been amended, modified or supplemented in any
material respect;
(d) Subsequent to the date hereof, there shall not have occurred any change in or
affecting particularly the Authority, the City or the Bonds, as the foregoing is described in the
Official Statement, which in the reasonable opinion of the Underwriter materially impairs the
investment quality of the Bonds;and
(e)At or prior to the Closing Date,the Underwriter shall have received copies of each of
the following documents:
(i) The Official Statement and each supplement or amendment, if any, thereto,
executed by authorized officers of the Authority and the City;
(ii)A copy of the Indenture,executed by the parties thereto;
(iii)A copy of the Lease Agreement,executed by the parties thereto;
(iv)A copy of the Site and Facility Lease,executed by the parties thereto;
(v)A copy of the 1997 Escrow Agreement,executed by the parties thereto;
(vi)A copy of the 2000 Escrow Agreement,executed by the parties thereto;
(vii)A copy of the Continuing Disclosure Certificate,executed by the City;
(viii)A certified copy of the JPA Agreement;
(ix) A certificate or certificates of the City, dated the Closing Date, to the effect
that:
(A) the representations and warranties of the City contained herein are
true and correct in all material respects on and as of the Closing Date as if made
on the Closing Date and the City has complied with all of the terms and
conditions of this Purchase Agreement required to be complied with by the City
at or prior to the Closing Date;
(B) none of the proceedings or authority for (i) the authorization, sale,
execution and delivery of the Bonds, (ii) the adoption of the City Resolution, or
(iii) the execution and delivery of the City Documents and performance of its
obligations thereunder, has been repealed, modified, amended, revoked or
rescinded;
(C) subsequent to June 30,2010, and prior to Closing, there have been no
material adverse changes in the financial position of the City;
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(D) no event affecting the City has occurred since the date of the Official
Statement that should be disclosed in the Official Statement for the purposes for
which it is to be used or which it is necessary to disclose therein in order to make
the statements and information therein not misleading in any material respect;
(E) the information and statements contained in the Official Statement
(other than information relating to The Depository Trust Company and its book-
entry system)do not contain an untrue statement of a material fact required to be
stated therein or necessary to make such statements therein, in the light of the
circumstances under which they were made, not misleading in any material
respect;
(F) to the best of its knowledge after reasonable investigation, the City is
not in breach of or default under any applicable law or administrative regulation
of the State of California or the United States or any applicable judgment or
decree or any loan agreement, indenture, bond, note, resolution, agreement
(including but not limited to the Lease Agreement) or other instrument to which
the City is a party or is otherwise subject, which would have a material adverse
impact on the City's ability to perform its obligations under the City Documents,
and no event has occurred and is continuing which, with the passage of time or
the giving of notice, or both, would constitute a default or an event of default
under any such instrument;and
(G) No consent is required for the inclusion of the City's 2008-09 audited
financial statements in the Official Statement.
(x) A certificate or certificates of the Authority, dated the Closing Date, to the
effect that:
(A) the representations and warranties of the Authority contained herein
are true and correct in all material respects on and as of the Closing Date as if
made on the Closing Date and the Authority has complied with all of the terms
and conditions of this Purchase Agreement required to be complied with by the
Authority at or prior to Closing Date;
(B) none of the proceedings or authority for (i) the authorization, sale,
execution and delivery of the Bonds, (ii) the adoption of the Authority
Resolution, or (iii) the execution and delivery of the Authority Documents, has
been repealed,modified,amended,revoked or rescinded;
(C) no event affecting the Authority has occurred since the date of the
Official Statement that should be disclosed in the Official Statement for the
purposes for which it is to be used or which it is necessary to disclose therein in
order to make the statements and information therein not misleading in any
material respect;and
(D) the information and statements contained in the Official Statement
(other than information relating to the Underwriter and The Depository Trust
Company and its book-entry system) do not contain an untrue statement of a
material fact required to be stated therein or necessary to make such statements
therein, in the light of the circumstances under which they were made, not
misleading in any material respect; and to the best of its knowledge after
reasonable investigation, the Authority is not in breach of or default under any
applicable law or administrative regulation of the State of California or the
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United States or any applicable judgment or decree or any loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the
Authority is a party or is otherwise subject,which would have a material adverse
impact on the Authority's ability to perform its obligations under the Authority
Documents, and no event has occurred and is continuing which, with the
passage of time or the giving of notice,or both,would constitute a default or an
event of default under any such instrument;
(xi) An opinion or opinions, dated the Closing Date and addressed to the
Underwriter and the Trustee, of the Huntington Beach City Attorney, counsel for the
City,to the effect that:
(A)The City is a municipal corporation and chartered city duly organized
and validly existing under the Constitution and laws of the State of California;
(B) The City Documents have been duly approved by a resolution of the
City adopted at a meeting duly called and held in accordance with the
requirements of all applicable laws,with all public notice required by law,and at
which a quorum of the members of the City Council was continuously present
and such resolution has not been modified, amended or rescinded since the date
of its adoption;
(C) Except as described in the Official Statement, there is no litigation,
inquiry,or investigation pending or to the best of such counsel's knowledge after
due inquiry,threatened,which:(1) challenges the right or title of any member or
officer of the City to hold his or her office or exercise or perform the powers and
duties pertaining thereto; (2) challenges the validity or enforceability of the
Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds
or the execution and delivery by the City of,or the performance by the City of its
legal obligations under, the City Documents or in which a final adverse decision
could materially adversely affect the operations of the City with respect to the
Property; or (4) contesting in any way the completeness or accuracy of the
Preliminary Official Statement or the Official Statement, nor, to the best of such
counsel's knowledge,is there any basis therefor;
(D)The execution and delivery by the City of,and the performance by the
City of its obligations under,the City Documents, do not conflict with,violate or
constitute a default under any provision of any law,court order or decree or any
contract, instrument or agreement to which the City is a party or by which it is
bound and of which such counsel has knowledge;
(E) As of the date hereof, the statements and information relating to the
City contained in the Preliminary Official Statement and Official Statement did
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein,in the light of the circumstances,under
which they were made not misleading;and
(F) The City Documents have been duly authorized, executed and
delivered by the City and,assuming due authorization,execution and delivery of
the City Documents by the parties thereto other than the City, the City
Documents constitute legal, valid and binding agreements of the City,
enforceable against the City in accordance with their respective terms except as
enforcement may be limited by bankruptcy, insolvency and other laws affecting
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the enforcement of creditors' rights and remedies in general, or by the
application of equitable principles if equitable remedies are sought.
(G) Except as may be required under the "blue sky" or securities laws of
the United States or any state, there is no authorization, approval, consent or
other order of, or filing with, or certification by, the State or any other
governmental authority or agency within the State having jurisdiction over the
City required for the issuance of the Bonds or the consummation by the City of
the other financial transactions contemplated by the Official Statement and the
City Documents.
(H) Based on the information made available to the City Attorney in its
role as City Attorney to the City, and without having undertaken to determine
independently or assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Official Statement, nothing has come
to its attention which would lead it to believe that the Official Statement as of its
date and as of the date of Closing (excluding therefrom the financial and
statistical data and forecasts included therein, as to which no opinion is
expressed and information relating to the Authority and the Depository Trust
Company and its book entry system)contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made,not misleading;
(xii) An opinion or opinions, dated the Closing Date and addressed to the
Underwriter, of the Huntington Beach City Attorney, counsel for the Authority, to the
effect that:
(A) The Authority is a joint exercise of powers authority duly organized
and validly existing under the laws of the State of California pursuant to the JPA
Agreement;
(B)The Authority Documents have been duly approved by a resolution of
the Authority adopted at a meeting duly called and held in accordance with the
requirements of all applicable laws,with all public notice required by law,and at
which a quorum of the members of the Board of the Authority was continuously
present and such resolution has not been modified, amended or rescinded since
the date of its adoption;
(C) Except as described in the Official Statement, there is no litigation,
inquiry, or investigation pending to the best of such counsel's knowledge after
due inquiry, or threatened,which: (1) challenges the right or title of any member
or officer of the Authority to hold his or her office or exercise or perform the
powers and duties pertaining thereto;(2)challenges the validity or enforceability
of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale
of the Bonds or the execution and delivery by the Authority of, or the
performance by the Authority of its legal obligations under, the Authority
Documents or in which a final adverse decision could materially adversely affect
the operations of the Authority with respect to the Property; or (4) contesting in
any way the completeness or accuracy of the Preliminary Official Statement or
the Official Statement, nor, to the best of such counsel's knowledge, is there any
basis therefor;
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(D) The execution and delivery by the Authority of,and the performance
by the Authority of its obligations under, the Authority Documents, do not
conflict with,violate or constitute a default under any provision of any law,court
order or decree or any contract,instrument or agreement to which the Authority
is a party or by which it is bound and of which such counsel has knowledge;and
(E) The Authority Documents have been duly authorized, executed and
delivered by the Authority and, assuming due authorization, execution and
delivery of the Authority Documents by the parties thereto other than the
Authority, the Authority Documents constitute legal, valid and binding
agreements of the Authority, enforceable against the Authority in accordance
with their respective terms except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the enforcement of creditors' rights and
remedies in general, or by the application of equitable principles if equitable
remedies are sought.
(F) Except as may be required under the "blue sky' or securities laws of
the United States or any state, there is no authorization, approval, consent or
other order of, or filing with, or certification by, the State or any other
governmental authority or agency having jurisdiction over the Authority
required for the issuance of the Bonds or the consummation by the Authority of
the other financial transactions contemplated by the Official Statement and the
Authority Documents.
(G) Based on the information made available to such City Attorney in its
role as counsel to the Authority, and without having undertaken to determine
independently or assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Official Statement under the captions
entitled "THE AUTHORITY," and "LITIGATION", nothing has come to such
City Attorney's attention that would lead it to believe that the statements
contained in the above-referenced captions as of the date of the Official
Statement and as of the date of Closing (excluding therefrom the financial and
statistical data and forecasts included therein, as to which no opinion is
expressed) contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made,not misleading;
(xiii) An opinion, dated the Closing Date and addressed to the Authority, of
Bond Counsel, substantially in the form set forth in Appendix C to the Official
Statement, together with a letter from such counsel, dated the Closing Date and
addressed to the Underwriter, to the effect that the foregoing opinion may be relied
upon by the Underwriter to the same extent as if such opinion were addressed to them;
(xiv) A supplemental opinion, dated the Closing Date and addressed to the
Underwriter,of Bond Counsel,to the effect that:
(A) the Bonds are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Indenture is exempt from
qualification pursuant to the Trust Indenture Act of 1939,as amended;
(B) the Bond Purchase Agreement has been duly executed and delivered
by the Authority and the City and is a valid and binding agreement of the
Authority and the City;and
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(C) the statements contained in the Official Statement under the captions
"THE BONDS," "SECURITY FOR THE BONDS" and "TAX MATTERS" and in
APPENDIX D—"SUMMARY OF CERTAIN PROVISIONS OF THE LEGAL
DOCUMENTS," insofar as such statements expressly summarize certain
provisions of the Indenture,the Lease Agreement,the Site and Facility Lease and
the final opinion of Bond Counsel concerning certain state income tax matters
relating to the Bonds,are accurate in all material respects;
(xv) A defeasance opinion with respect to the 1997 Bonds to be defeased, dated
the Closing Date and addressed to the Underwriter, of Bond Counsel, in form and
substance satisfactory to the Underwriter;
(xvi) A defeasance opinion with respect to the 2000 Bonds, dated the Closing
Date and addressed to the Underwriter, of Bond Counsel, in form and substance
satisfactory to the Underwriter;
(xvii) An opinion letter, dated the Closing Date and addressed to the Authority,
the City and the Underwriter of Quint & Thimmig, LLP, San Francisco, California,
Disclosure Counsel ("Disclosure Counsel'), to the effect that based upon their
participation in the preparation of the Official Statement as Disclosure Counsel, except
to the extent set forth in their supplemental opinion without assuming any
responsibility for the accuracy, completeness or fairness of any of the statements
contained in the Official Statement nor making any representation regarding
independent verification of the accuracy, completeness or fairness of any of the
statements contained in the Official Statement, except to the extent set forth in their
supplemental opinion such counsel advises that during the course of such
representation of the Authority as disclosure counsel on this matter, no information
came to the attention of the attorneys in such firm rendering legal services in connection
with such representation which caused them to believe that the Official Statement as of
its date (except for any financial, statistical or economic data or forecasts, numbers,
charts, tables, graphs, estimates, projections, assumptions or expressions of opinion
(except opinions of Bond Counsel), Appendix A to the Official Statement, or any
information about book-entry or DTC included therein, as to which no opinion or view
is expressed) contained any untrue statement of a material fact or omitted 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;
(xviii) A certificate of an authorized officer of the Trustee satisfactory to the
Underwriter,certifying substantially as follows:
(A) The Trustee is a national banking association duly organized and in
good standing under the laws of the United States of America and has all
necessary power and authority to enter into the Indenture and to perform its
duties under the Indenture;
(B) The Trustee is duly authorized to enter into the Indenture and to
authenticate and deliver the Bonds to the Underwriter pursuant to the terms of
the Indenture and,when executed by the other parties thereto,the Indenture will
constitute a legal, valid and binding obligation of the Trustee enforceable in
accordance with its terms;
(C) The Bonds have been duly authenticated and delivered to the
Underwriter pursuant to direction from the Authority;
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(D) The Trustee is not in breach of or default under any law or
administrative rule or regulation of the State of California or of any department,
division, agency or instrumentality thereof, of any applicable court or
administrative decree or order, or any other material instrument to which the
Trustee is a party or is otherwise subject or bound and which would materially
impair the ability of the Trustee to perform its obligations under the Indenture;
(E)To its knowledge,no action,suit,proceeding,inquiry or investigation,
at law or in equity, before or by any court, regulatory agency, public board or
body, is pending or threatened in any way affecting the existence of the Trustee
or the titles of its directors or officers to their respective offices, or seeking to
restrain or enjoin the execution, sale or delivery of the Bonds, the application of
the proceeds thereof in accordance with the Indenture, or in any way contesting
or affecting the validity or enforceability of the Bonds or the Indenture;
(F) The execution and delivery of the Indenture will not conflict with or
constitute a breach of or default under the Trustee's duties under such
documents, or any law, administrative regulation, court decree, resolution,
articles of association,bylaws or other material agreement to which the Trustee is
subject or by which it is bound;and
(G) No consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the Trustee that
has not been obtained is or will be required for the authentication and delivery of
the Bonds, the execution and delivery of the Indenture, the performance of the
Trustee's duties under the Indenture or the consummation by the Trustee of the
other transactions contemplated by the Indenture, except as such may be
required under the state securities or blue sky laws in connection with the
distribution of the Bonds by the Underwriter.
(xix)A certificate of an authorized officer of the 1997 Escrow Bank satisfactory to
the Underwriter,certifying substantially as follows:
(A) The 1997 Escrow Bank is a national banking association duly
organized and in good standing under the laws of the United States of America
and has all necessary power and authority to enter into the 1997 Escrow
Agreement and to perform its duties under the 1997 Escrow Agreement;
(B) The 1997 Escrow Bank is duly authorized to enter into the 1997
Escrow Agreement and, when executed by the other parties thereto, the 1997
Escrow Agreement will constitute a legal, valid and binding obligation of the
1997 Escrow Bank enforceable in accordance with their terms;
(C) The 1997 Escrow Bank is not in breach of or default under any law or
administrative rule or regulation of the State of California or of any department,
division,agency or instrumentality thereof,or of the United States of America,of
any applicable court or administrative decree or order, or any other material
instrument to which the 1997 Escrow Bank is a party or is otherwise subject or
bound and which would materially impair the ability of the 1997 Escrow Bank to
perform its obligations under the 1997 Escrow Agreement;
(D) To its knowledge, no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, regulatory agency,
public board or body,is pending or threatened in any way affecting the existence
-16-
of the 1997 Escrow Bank or the titles of its directors or officers to their respective
offices, or in any way contesting or affecting the validity or enforceability of the
1997 Escrow Agreement;
(E) The execution and delivery of the 1997 Escrow Agreement will not
conflict with or constitute a breach of or default under the 1997 Escrow Bank's
duties under such documents, or any law, administrative regulation, court
decree, resolution, articles of association,bylaws or other material agreement to
which the 1997 Escrow Bank is subject or by which it is bound;and
(F) No consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the 1997 Escrow
Bank that has not been obtained is or will be required for the execution and
delivery of the 1997 Escrow Agreement, the performance of the 1997 Escrow
Bank's duties under the 1997 Escrow Agreement or the consummation by the
1997 Escrow Bank of the other transactions contemplated by the 1997 Escrow
Agreement,except as such may be required under the state securities or blue sky
laws in connection with the distribution of the Bonds by the Underwriter.
(xx) A certificate of an authorized officer of the 2000 Escrow Bank satisfactory to
the Underwriter,certifying substantially as follows:
(A) The 2000 Escrow Bank is a national banking association duly
organized and in good standing under the laws of the United States of America
and has all necessary power and authority to enter into the 2000 Escrow
Agreement and to perform its duties under the 2000 Escrow Agreement;
(B) The 2000 Escrow Bank is duly authorized to enter into the 2000
Escrow Agreement and, when executed by the other parties thereto, the 2000
Escrow Agreement will constitute a legal, valid and binding obligation of the
2000 Escrow Bank enforceable in accordance with their terms;
(C) The 2000 Escrow Bank is not in breach of or default under any law or
administrative rule or regulation of the State of California or of any department,
division,agency or instrumentality thereof,or of the United States of America,of
any applicable court or administrative decree or order, or any other instrument
to which the 2000 Escrow Bank is a party or is otherwise subject or bound and
which would materially impair the ability of the 2000 Escrow Bank to perform its
obligations under the 2000 Escrow Agreement;
(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 or threatened in any way affecting the existence of the 2000 Escrow
Bank or the titles of its directors or officers to their respective offices, or in any
way contesting or affecting the validity or enforceability of the 2000 Escrow
Agreement;
(E) The execution and delivery of the 2000 Escrow Agreement will not
conflict with or constitute a breach of or default under the 2000 Escrow Bank's
duties under such documents, or any law, administrative regulation, court
decree, resolution,charter,bylaws or other agreement to which the 2000 Escrow
Bank is subject or by which it is bound;and
-17-
(F) No consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the 2000 Escrow
Bank that has not been obtained is or will be required for the execution and
delivery of the 2000 Escrow Agreement, the performance of the 2000 Escrow
Bank's duties under the 2000 Escrow Agreement or the consummation by the
2000 Escrow Bank of the other transactions contemplated by the 2000 Escrow
Agreement,except as such may be required under the state securities or blue sky
laws in connection with the distribution of the Bonds by the Underwriter.
(xxi) An opinion of counsel to the Trustee in form and substance acceptable to
the Underwriter;
(xxii) An opinion of counsel to the 1997 Escrow Bank in form and substance
acceptable to the Underwriter;
(xxiii) An opinion of counsel to the 2000 Escrow Bank in form and substance
acceptable to the Underwriter;
(xxiv) Evidence, satisfactory to Bond Counsel and the Underwriter,of insurance,
including a CLTA title insurance policy,in compliance with the Lease Agreement;
(xxv) 15c2-12 certificates of City and the Authority;
(xxvi)Certified copies of the City Resolution and the Authority Resolution;
(xxvii) Evidence, satisfactory to the Underwriter, that the Bonds have been
assigned the rating of"AA+"by Standard&Poor's Ratings Services;
(xxviii) Transcripts of all proceedings relating to the authorization, issuance,
execution and delivery of the Bonds certified by the City and the Authority as
applicable;and
(xxix) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the date of the Closing, of the City's
representations and warranties contained herein and of the statements and information
contained in the Official Statement and the due performance or satisfaction by the City
and the Authority on or prior to the date of the Closing of all the agreements then to be
performed and conditions then to be satisfied by each of them.
All the opinions,letters,certificates,instruments and other documents mentioned above
or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the
provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel,
Disclosure Counsel and the Underwriter.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter
to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase
Agreement,or if the obligations of the Underwriter to purchase,to accept delivery of and to pay
for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement,
this Bond Purchase Agreement shall terminate and none of the Underwriter, the Authority or
the City shall be under any further obligation hereunder.
8. Termination. The Underwriter shall have the right to terminate the Underwriter's
obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay
-18-
for the Bonds by notifying the Authority and the City in writing or by telegram,of its election to
do so, if, after the execution hereof and prior to the Closing: (a) the United States has become
engaged in,or there has been an escalation of,hostilities which,in the reasonable opinion of the
Underwriter, materially adversely affects the marketability or market price of the Bonds; (b)
there shall have occurred the declaration of a general banking moratorium by any authority of
the United States or the State of New York or the State of California; (c) an event shall have
occurred, or been discovered as described in paragraph (k) of Section 4 or paragraph (1) of
Section 5 hereof, which in the opinion of the Underwriter requires the preparation and
publication of disclosure material or a supplement or amendment to the Official Statement; (d)
any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any
governmental body, department or agency in the State of California, or a decision by any court
of competent jurisdiction within the State of California shall be rendered which, in the
Underwriter's reasonable opinion,materially adversely affects the market price of the Bonds;(e)
any rating of the Bonds or the rating or credit outlook of any obligations of the City secured by
the City's general fund shall have been downgraded or withdrawn by national rating services;
(f) legislation shall be introduced,by amendment or otherwise, or be enacted by the House of
Representatives or the Senate of the Congress of the United States, or a decision by a court of
the United States shall be rendered,or a stop order,ruling,regulation or official statement by or
on behalf of the Securities and Exchange Commission or other governmental agency having
jurisdiction of the subject matter shall be made or proposed, to the effect that the execution,
issuance, delivery, offering or sale of obligations of the general character of the Bonds, or the
Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any
provision of the Securities Act of 1933, as amended and as then in effect, or 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 with the purpose or effect of otherwise prohibiting the
issuance, offering or sale of obligations of the general character of the Bonds or the Bonds, as
contemplated hereby or by the Official Statement; (g) 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; (h) the New York Stock
Exchange, or other national securities exchange or association 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 broker-dealers; (i) trading
in securities on the New York Stock Exchange or other national securities exchange or
association shall have been suspended or limited or minimum prices have been established on
either such exchange; (j) any action shall have been taken by any government in respect of its
monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse
effect on the United States securities market; or as of the date hereof that in the Underwriter's
reasonable opinion materially adversely affects the marketability or market price of the Bonds.
If this Bond Purchase Agreement shall be terminated pursuant to Section 7 or this
Section 8, or if the purchase provided for herein is not consummated because any condition to
the Underwriter's obligations hereunder is not satisfied or because of any refusal, inability or
failure on the part of the City or the Authority to comply with any of the terms or to fulfill any
of the conditions of this Bond Purchase Agreement, or if for any reason the City or the
Authority shall be unable to perform all of its respective obligations under this Bond Purchase
Agreement,neither the City nor the Authority shall be liable to the Underwriter for damages on
account of loss of anticipated profits arising out of the transactions covered by this Bond
Purchase Agreement. The Underwriter may, in its sole discretion, waive any of the conditions
set forth in Section 7 or this Section 8.
9. Changes in Official Statement. After the Closing, neither the Authority nor the City
will adopt any amendment of or supplement to the Official Statement to which the Underwriter
shall reasonably object in writing. Within 25 days following the "end of the underwriting
-19-
period" (as defined in Section 240 15c-12 in Chapter II of Title 17 of the Code of Federal
Regulations (Rule 15c2-12), whichever occurs first, if any event relating to or affecting the
Bonds,the City or the Authority shall occur as a result of which it is necessary,in the opinion of
the Underwriter, to amend or supplement the Official Statement in order to make the Official
Statement not misleading in any material respect in the light of the circumstances existing at the
time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the
Underwriter an amendment or supplement that will amend or supplement the Official
Statement so that it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein,in the light of the circumstances
existing at the time the Official Statement is delivered to purchaser, not misleading. The City
and the Authority shall cooperate with the Underwriter in the filing by the Underwriter of such
amendment or supplement to the Official Statement with a nationally recognized municipal
securities repository.
10.Payment of Costs and Expenses.
(a) All costs and expenses incident to the sale and delivery of the Bonds to the
Underwriter shall be payable by the Authority from the proceeds of the Bonds, including, but
not limited to: (i) the fees and expenses of the City,its counsel and consultants; (ii)the fees and
expenses of the Authority, its counsel and consultants; (iii) the fees and expenses of Bond
Counsel; (iv) the fees and expenses of Disclosure Counsel; (v) the fees and expenses of
Fieldman,Rolapp&Associates,the City's financial advisor;(vi) all expenses in connection with
the preparation and printing of the Bonds;(vii)all expenses in connection with the preparation,
printing, distribution and delivery of the Preliminary Official Statement, the Official Statement
and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee,
including the reasonable fees and expenses of its counsel; (ix) the fees and expenses of any
rating agency rating the Bonds;and (x)any credit enhancement costs for the Bonds.
(b) The Underwriter shall pay all expenses incurred by it in connection with the public
offering and distribution of the Bonds including,but not limited to: (i) all advertising expenses
in connection with the offering of the Bonds; (ii) the fees and disbursements of Underwriter's
counsel, if any, and (iii) all out-of-pocket disbursements and expenses incurred by the
Underwriter in connection with the offering and distribution of the Bonds,including, air travel
and hotel accommodations in connection with the pricing of the Bonds; investor meetings,
rating agency trips and meetings; the Closing; meals and transportation for the City, the
Underwriter and other working group personnel during rating agency, investor meetings;
pricing and Closing trips; expenses related to attending working group meetings, such as
parking, meals and transportation and any other miscellaneous costs associated with the
Closing; (iv) all other expenses incurred by the Underwriter in connection with the public
offering and distribution of Bonds,except as provided in(a)above or as otherwise agreed to by
the Underwriter and the City, and (v) the fees of the California Debt and Investment Advisory
Commission.
-20-
11. Notices. Any notice or other communication to be given under this Bond Purchase
Agreement may be given by delivering the same in writing:
To the City: City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
To the Authority: Huntington Beach Public Financing Authority
c/o City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Attention:Finance Director
To the Underwriter: Piper Iaffrav&Co.
345 California Street Suite 2400
San Francisco,CA 94104
Attention:Mr.Richard Kiss,Managing Dim rector
12. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of
the Authority, the City and the Underwriter (including the successors or assigns of the
Underwriter)and no other person shall acquire or have any right hereunder or by virtue hereof.
All of the Authority's and the City's representations, warranties and agreements contained in
this Bond Purchase Agreement shall remain operative and in full force and effect,regardless of:
(a) any investigations made by or on behalf of the Underwriter;(b) delivery of and payment for
the Bonds pursuant to this Bond Purchase Agreement; and (c) any termination of this Bond
Purchase Agreement.
13. Determination of End of the Underwriting Period. For purposes of this Bond
Purchase Agreement,the end of the underwriting period for the Bonds shall mean the earlier of
(a) the Closing Date unless the City and the Authority have been notified in writing by the
Underwriter,on or prior to the Closing Date,that the "end of the underwriting period" for the
Bonds for all purposes of the Rule will not occur on the Closing Date, or (b) the date on which
notice is given to the City and the Authority by the Underwriter in accordance with the
following sentence. In the event that the Underwriter has given notice to the City and the
Authority pursuant to clause (a) above that the "end of the underwriting period" for the Bonds
will not occur on the Closing Date,the Underwriter agrees to notify the City and the Authority
in writing as soon as practicable following the "end of the underwriting period" for the Bonds
for all purposes of the Rule.The Underwriter agrees to file a copy of the Official Statement with
each of the nationally recognized municipal securities information repositories.
14.No Assignment.This Bond Purchase Agreement is entered into between the City,the
Authority and the Underwriter, and is solely for the benefit of the City, the Authority, the
Underwriter and their respective successors or assigns, and no person other than the foregoing
shall acquire or have any right under or by virtue of this Bond Purchase Agreement. All of the
representations, warranties and agreements contained in this Bond Purchase Agreement shall
survive the delivery of and payment for the Bonds and any termination thereof.
15. Effectiveness. This Bond Purchase Agreement shall become effective upon the
execution of the acceptance by an authorized representative of the City and an authorized
representative of the Authority and shall be valid and enforceable at the time of such
acceptance.
16. Headings. The headings of the sections of this Bond Purchase Agreement are
inserted for convenience only and shall not be deemed to be a part hereof..
-21-
17. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and
enforced in accordance with the laws of the State of California.
18. Counterparts. This Bond Purchase Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall constitute one and the
same instrument.
If the foregoing is in accordance with your understanding of this Bond Purchase
Agreement please sign and return to us the enclosed duplicate copies hereof,whereupon it will
become a binding agreement among the City,the Authority and the Underwriter in accordance
wizia it;terms.
Very truly yours,
PIPER AFFRAY&CO.,as Underwriter
By
Richard Kiss I
Managing or
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By--------
Name
Title -�—
CITY OF HUNTINGTON BEACH
By
Name
Title _-
-22-
EXHIBIT A
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
Lease Revenue Refunding Bonds,2010 Series A
MATURITIES PRINCIPAL AMOUNTS INTEREST RATES PRICES AND YIELDS
Maturity Principal Interest
September 1 Amount Rate Yield Price
Redemption Provisions
Optional Redemption
The Bonds maturing on or after September 1, , are subject to optional redemption
prior to their respective stated maturities, at the written direction of the Authority, from
moneys deposited by the Authority or the City,in whole or in part,in such order of maturity as
the City designates(and,if no specific order of redemption is designated by the City,in inverse
order of maturity), on any date on or after September 1, from any available source of
funds, at a redemption price equal to the principal amount of the Bonds to be redeemed,
together with accrued interest thereon to the date fixed for redemption,without premium.
Mandatory Sinking Fund Redemption
The Bonds maturing on September 1, (the "Term Bonds') are also subject to
mandatory sinking fund redemption in part by lot on September 1, ,and on September 1,
,from sinking account payments made by the Authority at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium, in the aggregate respective principal amounts and on the
respective dates as set forth in the following table;provided, however, that if some but not all of
the Term Bonds have been optionally redeemed, the total amount of all future sinking account
Exhibit A
Page 1
payments will be reduced by the aggregate principal amount of Term Bonds so redeemed,to be
allocated among the sinking account payments as are thereafter payable on a pro rata basis in
integral multiples of$5,000 as determined by the Authority(notice of which determination shall
be given by the Authority to the Trustee).
Sinking Account
Redemption Date Principal Amount to be
(September 1) Redeemed or Purchased
tmaturity
Extraordinary Redemption from Insurance or Condemnation Proceeds
The Bonds are also subject to redemption as a whole, or in part on a pro rata basis
among maturities, on any date, in integral multiples of $5,000, to the extent of prepayments
made by the City from insurance proceeds or condemnation proceeds not used to repair,
reconstruct or replace any portion of the Property damaged or destroyed or elected by the City
to be used for such purpose, at a redemption price equal to 100% of the principal amount
thereof plus interest accrued thereon to the date fixed for redemption,without premium.
Exhibit A
Page 2
ATTACHMENT # 10
u=_`arc_t 'T"lhimnigLLP 03/18/10
04/01/10
FORM OF FINAL OPINION OF BOND COUNSEL
[Letterhead of Quint&Thimmig LLP]
une 2 2010
Huntington Beach Public Financing Authority
2000 Main Street
Huntington Beach,California 92648
OPINION: $ Huntington Beach Public Financing Authority Lease Revenue
Refunding Bonds,2010 Series A
Members of the Authority:
We have acted as bond counsel in connection with the delivery by the Huntington Beach
Public Financing Authority (the "Authority") of$ aggregate principal amount of the
bonds of the Authority designated the "Huntington Beach Public Financing Authority Lease
Revenue Refunding Bonds,2010 Series A" (the`Bonds"),pursuant to the provisions of Article 4
(commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California
Government Code (the "Law"), and pursuant to an indenture of trust, dated as of June 1, 2010
(the "Indenture"),by and between the Authority and ,as trustee,and
a resolution of the Authority adopted on April 19,2010.The Bonds are secured by Revenues(as
defined in the Indenture), including certain payments made by the City of Huntington Beach
(the "City") under a lease agreement,dated as of Lune 1,2010 (the "Lease Agreement"),by and
between the Authority and the City.We have examined the Law and such certified proceedings
and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of
the Authority and the City contained in the Indenture and Lease Agreement,as applicable, and
in the certified proceedings, and upon other certifications furnished to us,without undertaking
to verify the same by independent investigation.
Based upon our examination we are of the opinion,under existing law,that:
1. The Authority is a duly constituted joint exercise of powers authority under the laws
of the State of California with power to enter into the Indenture, to perform the agreements on
its part contained therein and to issue the Bonds.
2. The Bonds constitute legal, valid and binding special obligations of the Authority
enforceable in accordance with their terms and payable solely from the sources provided
therefor in the Indenture.
3.The Indenture has been duly approved by the Authority and constitutes a legal,valid
and binding obligation of the Authority enforceable against the Authority in accordance with its
terms..
08008.04
1-1uniktgton Beach Public Financing Authority ume 22,2010
Page 2
4. The Indenture establishes a valid first and exclusive lien on and pledge of the
Revenues (as such term is defined in the Indenture) and other funds pledged thereby for the
security of the Bonds,in accordance with the terms of the Indenture.
5. Subject to the Authority's and the City's compliance with certain covenants, interest
on the Bonds (i) is excludable from gross income of the owners thereof for federal income tax
purposes, and (ii) is not included as an item of tax preference in computing the alternative
mini-mum tax for individuals and corporations under the Internal Revenue Code of 1986, as
amended(the"Code").Failure to comply with certain of such covenants could cause interest on
the Bonds to be includable in gross income for federal income tax purposes retroactively to the
date of issuance of the Bonds. It is also our opinion that the Bonds are "qualified tax exempt
obligations"under section 265(b)(3)of the Code.
6. Interest on the Bonds is exempt from personal income taxation imposed by the State
of California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and
we express no opinion regarding any such collateral consequences arising with respect to the
Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds, the Indenture
and the Lease Agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted
and also may be subject to the exercise of judicial discretion in accordance with general
principles of equity.
In rendering this opinion, we have relied upon certifications of the Authority, the City
and others with respect to certain material facts. Our opinion represents our legal judgment
based upon such review of the law and the facts that we deem relevant to render our opinion
and is not a guarantee of a result.This opinion is given as of the date hereof and we assume no
obligation to revise or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in law that may hereafter occur.
Respectfully submitted,
-ATTACHMENT #11
Wnt:& Tbi.minig LLP 03/18/10
04/01/10
REDEMPTION INSTRUCTIONS AND REQUEST TO TRUSTEE
May_,2010
U.S.Bank.National Association
633 West Fifth Street,24th Floor
Los Angeles,CA 90071 `
Attention:Mr.Martin Meza
Re: Huntington Beach Public Financing Authority Lease Revenue Bonds,1997 Series A
Ladies and Gentlemen:
As trustee (the "Trustee") with respect to the Huntington Beach Public Financing
Authority Lease Revenue Bonds, 1997 Series A.dated as of May 1, 1997,in the principal amount
of$8,070,000, of which $2,770,000 is currently outstanding (the "1997 Bonds"), you are hereby
notified of the election of the Huntington Beach Public Financing Authority (the "Authority")
and the City of Huntington Beach (the "City") to redeem, pursuant to that certain Indenture,
dated as of May 1, 1997, by and between the Authority and the Trustee, on une 2010, all C
outstanding 1997 Bonds at a price equal to 100% of the principal amount thereof, plus accrued
interest to the date fixed for redemption. The Authority intends to fund the redemption of the
1.997 Bonds from the proceeds of its Huntington Beach Public Financing Authority Lease
Revenue Refunding Bonds, 1997 Series A (the "2010 Refunding Bonds"), which were sold to
on M 2010. The 2010 Refunding Bonds are scheduled to close on un
2 2010.
You are hereby instructed to provide, no later than May 10, 2010, conditional notice of
redemption of the 1997 Bonds to occur on Tune 2010, substantially in the form attached
hereto as Exhibit A. Please note that the redemption of the 1997 Bonds is conditional upon the
receipt of the proceeds of the 2010 Refunding Bonds.
08008.04
In connection with your acting on the instructions of the Authority to provide a
rescindable notice to redeem the 1997 Bonds, the Authority agrees to reimburse the Trustee for
all vat-of-pocket costs and expenses incurred by the Trustee related to or arising from the
sending of a rescindable notice, any rescission of the notice or redemption and further agrees to
indemnify and hold harmless the Trustee,its officers,directors,employees and agents from and
against any claims, losses, damages, costs, liabilities, expenses or attorney's fees resulting from
the fact- that the notice of redemption of the 1997 Bonds states that the redemption date is
conditional upon receipt of the proceeds of the 2010 Refunding Bonds, or the rescinding of the
notice of redemption of the 1997 Bonds by the Trustee upon instruction from the Authority.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
CITY OF HUNTINGTON BEACH
By
Name
Title
EXHIBIT A
CONDITIONAL NOTICE OF FULL/FINAL REDEMPTION OF
Huntington Beach Public Financing Authority
Lease Revenue Bonds,1997 Series A
(Public Facilities Project)
Maturity Date Amount Redemption Interest Original Date CUSIP
(December 15) Called Premium Price Rate of Execution Number
2010 $ 95,000 — $ 95,000 5.25% 5/1/1997 60519N AHO
2011 100,000 — 100,000 5.30 5/1/1997 60519N AJ6
2012 105,000 — 105,000 5.40 5/1/1997 60519N AK3
2013 110,000 — 110,000 5.40 5/1/1997 60519N AL1
2014 115,000 — 115,000 5.50 5/1/1997 60519N AM9
2017 385,000 — 385,000 5.50 5/1/1997 60519N AY3
2022 805,000 — 805,000 5.50 5/1/1997 60519N BB2
2027 1,055,000 — 1,055,000 5.50 5/1/1997 60519N BE6
CONDITIONAL NOTICE is hereby given that the Huntington Beach Public Financing
Authority (the "Authority) has conditionally called for redemption on June 2010 (the 'Redemption
Date"),the outstanding Huntington Beach Public Financing Authority Lease Revenue Bonds,1997 Series
A (the 'Bonds"),as described above,in the aggregate principal amount of$2,770,000,at a price equal to
100% of the principal amount thereof, plus accrued interest to the date fixed for redemption (the
"Redemption Price"). The Bonds are being conditionally called for redemption on the Redemption Date
subject to the provisions of the succeeding paragraph of this notice,and pursuant to the provisions of the
governing documents of the Bonds.
The Conditional Notice of Redemption, and the payment of the principal of and interest on the
Bonds on the Redemption Date,is subject to the receipt of funds in an amount sufficient to pay in full the
specified redemption price of all of the Bonds on or before the Redemption Date, resulting from a
negotiated sale of refunding bonds,expected to be funded on or about Tune 2.2010.
In the event such funds are not received by the Redemption Date, this notice shall be null and
void and of no force and effect: The Bonds delivered for redemption shall be returned to the respective
owners thereof,and said Bonds shall remain outstanding as though this notice of conditional redemption
had not been given. Notice of a failure to receive funds, and cancellation of this redemption, shall be
given by the Trustee by first class mail,postage prepaid,to the registered holders of the Bonds.
On the Redemption Date, the Redemption Price will become due and payable upon each Bond
and interest with respect thereto shall cease to accrue from and after the Redemption Date.
Payment of principal will be made upon presentation on and after January 11, 2010, at the
following addresses:
If by Mail:(Registered Bonds) If by Hand or Overnight Mail:
U.S.Bank National Association U.S.Bank National Association
Owners of Bonds presenting their certificates in person for the same day payment must
surrender their certificate by 1:00 p.m. on the prepayment date and a check will be available for pickup
after 2:00 p.m.Checks not picked up by 4:30 p.m.will be mailed to the Bondholder by first class mail.
Interest with respect to the principal amount designated to be redeemed shall cease to accrue on
and after the Redemption Date.
If payment of the Redemption Price is to be made to the registered owner of the Bond you are not
required to endorse the Bond to collect the Redemption Price.
Under the Economic Growth and Tax Relief Reconciliation Act of 1997 (the "Act") 30% will be
witl-theld if tax identification number is not properly certified. The Form W-9 may be obtained from the
Internal Revenue Service.
Neither the Authority nor the Trustee shall be held responsible for the selection or use of the
IJJ'." 'ounnber,nor is any representation made as to its correctness as shown in the Redemption Notice.
It is solely for convenience of the Holders.
Dated.May_,2010 U.S.Bank National Association,as
Trustee
� p►TTACHMENT # 12
Quint&Thiimnig LLP 03/18/10
04/01/10
ESCROW DEPOSIT AND TRUST AGREEMENT
by and among the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY,
the
CITY OF HUNTINGTON BEACH
and
U.S. BANK NATIONAL ASSOCIATION,as Escrow Bank
Dated un Z 2010
Relating to the Refunding of the outstanding
Huntington Beach Public Financing Authority
Lease Revenue Bonds,1997 Series A
(Public Facilities Project)
08008.04
ESCROW DEPOSIT AND TRUST AGREEMENT
This ESCROW DEPOSIT AND TRUST AGREEMENT is dated this 2nd day of Tune.
2010, by and among the HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY, a joint
exercise of powers authority organized and existing under and by virtue of the laws of the State
of California (the "Authority"), the CITY OF HUNTINGTON BEACH, a municipal corporation
and chartered city duly organized and existing under the laws of the State of California (the
"City"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association duly
organized and existing under the laws of the United States of America, as escrow bank and as
1997 Trustee(as defined herein)(the"Escrow Bank");
WITNESSETH :
WHEREAS, the Authority has heretofore issued its $8,070,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 1997 Series A, of which $12,785,000 remains
outstanding (the "1997 Bonds"), the proceeds of which were used to finance the costs of the
acquisition, construction, installation and equipping certain public capital improvements (the
"1997 Project");
WHEREAS, the 1997 Bonds were issued pursuant to the terms of a trust indenture,
dated as May 1, 1997 (the "1997 Indenture"), by and between the Authority and First Trust of
California, National Association, as succeeded by U.S. Bank National Association, as trustee
thereunder(the"1997 Trustee");
WHEREAS, in order to provide for the repayment of the 1997 Bonds, the Authority
leased certain real property and improvements (the "1997 Property") to the City pursuant to a
lease agreement, dated as of May 1, 1997 (the "1997 Lease Agreement"), under which the City
agreed to make lease payments to the Authority (the "1997 Lease Payments") from moneys in
its General Fund and the City has budgeted and appropriated sufficient amounts in each year to
pay the full amount of principal of and interest on the 1997 Bonds;
WHEREAS, the City has determined that, as a result of favorable financial market
conditions and for other reasons,it is in the best interests of the City at this time to refinance the
City's obligation to make the 1997 Lease Payments and, as a result thereof, to provide for the
redemption of all outstanding 1997 Bonds on Tune 2010, at the redemption price equal to
102% of the principal amount thereof, plus accrued interest, and to that end, the City proposes
to enter into a new lease agreement,dated as of fune 1,2010,by and between the Authority and
the City;
WHEREAS, the Authority and the City propose to provide for the payments described
above and to appoint the Escrow Bank as their agent for the purpose of applying said deposit to
provide for the payment of the 1997 Lease Payments in accordance with the instructions
provided by this Escrow Deposit and Trust Agreement and of applying said 1997 Lease
Payments to the payment of the principal of and interest on the 1997 Bonds and the Escrow
Bank desires to accept said appointment;
WHEREAS, the Authority and the City wish to provide for the payment described
above and to enter into this Escrow Deposit and Trust Agreement for the purpose of providing
the terms and conditions for the deposit and application of amounts so deposited;
WHEREAS, the Authority has agreed to issue its $ Huntington Beach Public
Financing Authority Lease Revenue Refunding Bonds,2010 Series A (the"Bonds"),pursuant to
the terms of an indenture, dated as of Lune 1, 2010 (the "Indenture"), by and between the
Authority and , as trustee thereunder (the "Trustee"), and to apply a
portion of the proceeds thereof to accomplish such refinancing;and
WHEREAS, the Escrow Bank has full powers to act with respect to the escrow and trust
created herein and to perform the duties and obligations to be undertaken pursuant to this
Escrow Deposit and Trust Agreement.
NOW,THEREFORE,in consideration of the above premises and of the mutual promises
and covenants herein contained and for other valuable consideration, the parties hereto do
hereby agree as follows:
Section 1. Definitions. Capitalized terms used, but not otherwise defined, herein, shall
have the meanings ascribed thereto in the 1997 Indenture.
Section 2.Appointment of Escrow Bank. The Authority and the City hereby appoint the
Escrow Bank as escrow bank for all purposes of this Escrow Deposit and Trust Agreement and
in accordance with the terms and provisions of this Escrow Deposit and Trust Agreement, and
the Escrow Bank hereby accepts such appointment.
Section 3. Establishment of Escrow Fund. There is hereby created by the Authority and
the City with,and to be held by,the Escrow Bank as security for the payment of the 1997 Bonds
as hereinafter set forth, an irrevocable escrow to be maintained in trust by the Escrow Bank on
behalf of the Authority and the City and for the benefit of the owners of the 1997 Bonds, said
escrow to be designated the "Escrow Fund." All moneys and securities (the "Escrow
Securities") deposited in the Escrow Fund shall be held as a special fund for the payment of the
principal and interest with respect to the 1997 Bonds in accordance with the provisions of this
Escrow Deposit and Trust Agreement. If at any time the Escrow Bank shall receive actual
knowledge that the moneys and Escrow Securities in the Escrow Fund will not be sufficient to
make any payment required by Section 5 hereof, the Escrow Bank shall notify the City of such
fact and the City shall immediately cure such deficiency.
Section 4.Deposit into Escrow Fund;Investment of Amounts.
(a)Concurrently with delivery of the Bonds,the Authority and the City shall cause to be
transferred to the Escrow Bank for deposit into the Escrow Fund the amount of$ in
immediately available funds,derived as follows:
(i)$ from the proceeds of the sale of the Bonds;and
(ii) $ from amounts on deposit in the reserve account established
under the 1997 Indenture(the"1997 Reserve Fund").
(b)The Escrow Bank shall invest all moneys deposited into the Escrow Fund pursuant to
the preceding paragraph in Demand Deposit United States Treasury Securities—State and Local
Government Series(the"Escrow Securities").The Escrow Securities shall be deposited with and
held by the Escrow Bank in the Escrow Fund solely for the uses and purposes set forth herein.
(c) The Escrow Bank shall not be liable or responsible for any loss resulting from its full
compliance with the provisions of this Escrow Deposit and Trust Agreement.
-2-
Section 5.Instructions as to Application of Deposit.
(a) The total amount of Escrow Securities deposited in the Escrow Fund pursuant to
Section 4 shall be applied by the Escrow Bank for the sole purpose of paying the redemption
price of the 1997 Bonds on the date and in the amount set forth in Exhibit A attached hereto and
by this reference incorporated herein.
(b) The Authority and the City have previously instructed the Escrow Bank, in its
capacity as 1997 Trustee,to give notice of redemption of the 1997 Bonds, and the Escrow Bank,
as 1997 Trustee, has given notice of redemption of the 1997 Bonds in accordance with the
applicable provisions of the 1997 Indenture on the redemption date set forth in Exhibit A
attached hereto and by this reference incorporated herein.
Section 6.Application of 1997 Bond Funds. On the date of original delivery of the Bonds
and the deposit of a portion of the proceeds thereof in the Escrow Fund pursuant to Section 4,
the Escrow Bank, as 1997 Trustee, is hereby directed to withdraw all amounts on deposit in the
1997 Deserve Fund ($ )and transfer such sum to the Escrow Fund.
Any amounts remaining on deposit in any fund or account established under the 1997
Indenture for the 1997 Bonds, including any investment earnings received after the date of
original delivery of the Bonds, shall be transferred by the Escrow Bank to the Trustee for
deposit in the Interest Account created under the Indenture and used for the purposes of such
fund.
Section 7. Application of Certain Terms of 1997 Indenture. All of the terms of the 1997
Indenture relating to the making of payments of principal and interest with respect to the 1997
Bonds are incorporated in this Escrow Deposit and Trust Agreement as if set forth in full herein.
The provisions of the 1997 Indenture relating to the limitations from liability and protections
afforded the 1997 Trustee and the resignation and removal of the 1997 Trustee are also
incorporated in this Escrow Deposit and Trust Agreement as if set forth in full herein and shall
be the procedure to be followed with respect to any resignation or removal of the Escrow Bank
hereunder.
Section 8. Compensation to Escrow Bank. The City shall pay the Escrow Bank full
compensation for its duties under this Escrow Deposit and Trust Agreement, including out-of-
pocket costs such as publication costs,prepayment or redemption expenses,legal fees and other
costs and expenses relating hereto and, in addition, fees, costs and expenses relating to the
purchase of any Escrow Securities after the date hereof. Under no circumstances shall amounts
deposited in the Escrow Fund be deemed to be available for said purposes.
Section 9. Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no
obligation to make any payment or disbursement of any type or incur any financial liability in
the performance of its duties under this Escrow Deposit and Trust Agreement unless the City
shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank may rely and
shall be protected in acting upon the written instructions of the City or its agents relating to any
matter or action as Escrow Bank under this Escrow Deposit and Trust Agreement.
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 Deposit and Trust Agreement, the establishment of the
Escrow Fund,the acceptance of the moneys or any securities deposited therein,the purchase of
the securities to be purchased pursuant hereto, the retention of such securities or the proceeds
thereof, the sufficiency of the securities or any uninvested moneys held hereunder to
accomplish the purposes set forth in Section 5 hereof, or any payment, transfer or other
-3-
application of moneys or securities by the Escrow Bank in accordance with the provisions of
this Escrow Deposit and Trust 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
statement of the City, and the Escrow Bank assumes no responsibility for the correctness
thereof. The Escrow Bank makes no representations as to the sufficiency of the securities to be
purchased pursuant hereto and any uninvested moneys to accomplish the purposes set forth in
Section 5 hereof or to the validity of this Escrow Deposit and Trust Agreement as to the City or
the Authority and,except as otherwise provided herein,the Escrow Bank shall incur no liability
in respect thereof. The Escrow Bank shall not be liable in connection with the performance of its
duties under this Escrow Deposit and Trust 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 Deposit and Trust Agreement, and no implied
cwvenants or obligations shall be read into this Escrow Deposit and Trust Agreement against the
Escrow Bank. The Escrow Bank may consult with counsel, who may or may not be counsel to
the City, and in reliance upon the written opinion of such counsel shall have full and complete
authorization and protection in respect of 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 Deposit and Trust Agreement, such matter (except the matters set forth herein as
specifically requiring a certificate of a nationally recognized firm of independent certified public
accountants or an opinion of counsel) may be deemed to be conclusively established by a
written certification of the City.
Anything in this Escrow Deposit and Trust Agreement to the contrary notwithstanding,
in no event shall the Escrow Bank be liable for special,indirect,punitive or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow
Bank has been advised of the likelihood of such loss or damage and regardless of the form of
action.
The Escrow Bank agrees to accept and act upon instructions or directions pursuant to
this Escrow Deposit and Trust 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 replaced whenever a person is to be added or
deleted from the listing. If the City or the Authority 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 Authority and the City agree 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.
The City hereby assumes liability for, and hereby agrees (whether or not any of the
transactions contemplated hereby are consummated), to the extent permitted by law, to
indemnify, protect, save and hold harmless the Escrow Bank and its respective directors,
officers, employees, successors, assigns, agents and servants from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements (including legal fees and disbursements) of whatsoever kind and nature which
may be imposed on,incurred by,or asserted against, at any time,the Escrow Bank (whether or
-4-
not also indemnified against by any other person under any other agreement or instrument)
and in any way relating to or arising out of the execution and delivery of this Escrow Deposit
and Trust Agreement, the establishment of the Escrow Fund, the retention of the moneys
therein and any payment, transfer or other application of moneys or securities by the Escrow
Bank in accordance with the provisions of this Escrow Deposit and Trust Agreement,or as may
arise by reason of any act, omission or error of the Escrow Bank made in good faith in the
conduct of its duties; provided, however, that the City shall not be required to indemnify the
Escrow Bank against its own negligence or misconduct. The indemnities contained in this
Section 9 shall survive the termination of this Escrow Deposit and Trust Agreement or the
resignation or removal of the Escrow Bank.
Section 10. Amendment. This Escrow Deposit and Trust Agreement may be modified or
amended at any time by a supplemental agreement which shall become effective when the
written consents of the owners of one hundred percent(100%)in aggregate principal amount of
the 1997 Bonds shall have been filed with the Escrow Bank. This Escrow Deposit and Trust
Agreement may be modified or amended at any time by a supplemental agreement,without the
consent of any such owners,but only (1) to add to the covenants and agreements of any party,
other covenants to be observed,or to surrender any right or power herein or therein reserved to
the City, (2) to cure, correct or supplement any ambiguous or defective provision contained
herein, (3) in regard to questions arising hereunder or thereunder, as the parties hereto or
thereto may deem necessary or desirable and which, in the opinion of counsel, shall not
materially adversely affect the interests of the owners of the 1997 Bonds or the Bonds, and that
such amendment will not cause interest on the 1997 Bonds or the Bonds to become subject to
federal income taxation. In connection with any contemplated amendment or revocation of this
Escrow Deposit and Trust Agreement, prior written notice thereof and draft copies of the
applicable legal documents shall be provided by the City to each rating agency then rating the
1997 Bonds.
Section 11. Severability. If any section, paragraph, sentence, clause or provision of this
Escrow Deposit and Trust Agreement shall for any reason be held to be invalid or
unenforceable, the invalidity or unenforceability of such section,paragraph, sentence clause or
provision shall not affect any of the remaining provisions of this Escrow Deposit and Trust
.Agreement. Notice of any such invalidity or unenforceability shall be provided to each rating
agency then rating the 1997 Bonds.
Section 12. Notice of Escrow Bank, City and Authority. Any notice to or demand upon
the Escrow Bank may be served and presented,and such demand may be made,at the Principal
Corporate Trust Office of the Escrow Bank as specified by the Escrow Bank as 1997 Trustee in
accordance with the provisions of the 1997 Indenture. Any notice to or demand upon the City
and the Authority,respectively,shall be deemed to have been sufficiently given or served for all
purposes by being mailed by first class mail, and deposited, postage prepaid, in a post office
letter box, addressed to such party as provided in the 1997 Lease Agreement (or such other
address as may have been filed in writing by the City or the Authority with the Escrow Bank).
Section 13. Merger or Consolidation of Escrow Bank. 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, provided such company shall be eligible to act as trustee under the
1997 Indenture, shall be the successor hereunder to the Escrow Bank without the execution or
filing of any paper or any further act.
Section 14. Governing Law. This Escrow Deposit and Trust Agreement shall be
governed by the laws of the State of California.
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IN WITNESS WHEREOF,the Authority,the City and the Escrow Bank have each caused
this Escrow Deposit and Trust Agreement to be executed by their duly authorized officers all as
of the date first above written.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
U.S.BANK NATIONAL ASSOCIATION,as
Escrow Bank
By
Name
Title
-6-
EXHIBIT A
PRINCIPAL PAYMENT AND REDEMPTION SCHEDULE OF 1997 BONDS
Redemption Maturing Redeemed Redemption Total
Date Principal Principal Interest Premium Payment
6/_/10 — $2,770,000 $ —
Exhibit A
ATTACHMENT # 13
Quint Ev Thimtnig LLP 03/18/10
04/01/10
ESCROW DEPOSIT AND TRUST AGREEMENT
by and among the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY,
the
CITY OF HUNTINGTON BEACH
and
THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A.,as Escrow Bank
Dated ne 2 2010
Relating to the Refunding of the outstanding
Huntington Beach Public Financing Authority
Lease Revenue Bonds,2000 Series A
(Capital Improvement Financing Project)
08008.04
ESCROW DEPOSIT AND TRUST AGREEMENT
This ESCROW DEPOSIT AND TRUST AGREEMENT is dated this 2nd day of Tune,
2010, by and among the HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY, a joint
exercise of powers authority organized and existing under and by virtue of the laws of the State
of California (the "Authority"),the CITY OF HUNTINGTON BEACH, a municipal corporation
and chartered city duly organized and existing under the laws of the State of California (the
"City"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national
banking association duly organized and existing under the laws of the United States of
America,as escrow bank and as 2000 Trustee(as defined herein)(the"Escrow Bank");
WITNESSETH:
WHEREAS,the Authority has heretofore issued its$18,310,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 2000 Series A, of which $12,785,000 remains
outstanding (the "2000 Bonds"), the proceeds of which were used to finance the costs of the
acquisition, construction, installation and equipping of a new City Hall facility and to expand
the public library(the"2000 Project");
WHEREAS, the 2000 Bonds were issued pursuant to the terms of a trust indenture,
dated as August 1, 2000 (the "2000 Indenture"), by and between the Authority and BNY
Western Trust Company, now known as The Bank of New York Mellon Trust Company,N.A.,
as trustee thereunder(the"2000 Trustee");
WHEREAS, in order to provide for the repayment of the 2000 Bonds, the Authority
leased certain real property and improvements (the "2000 Property") to the City pursuant to a
lease agreement, dated as of August 1, 2000 (the "2000 Lease Agreement"), under which the
City agreed to make lease payments to the Authority(the"2000 Lease Payments") from moneys
in its General Fund and the City has budgeted and appropriated sufficient amounts in each year
to pay the full amount of principal of and interest on the 2000 Bonds;
WHEREAS, the City has determined that, as a result of favorable financial market
conditions and for other reasons,it is in the best interests of the City at this time to refinance the
City's obligation to make the 2000 Lease Payments and, as a result thereof, to provide for the
payment and redemption of all outstanding 2000 Bonds on September 1, 2010, at the
redemption price equal to 100% of the principal amount thereof, plus accrued interest, and to
that end,the City proposes to enter into a new lease agreement,dated as of Lune 1,2010,by and
between the Authority and the City;
WHEREAS, the Authority and the City propose to provide for the payments described
above and to appoint the Escrow Bank as their agent for the purpose of applying said deposit to
provide for the payment of the 2000 Lease Payments in accordance with the instructions
provided by this Escrow Deposit and Trust Agreement and of applying said 2000 Lease
Payments to the payment of the principal of and interest on the 2000 Bonds and the Escrow
Bank desires to accept said appointment;
WHEREAS, the Authority and the City wish to provide for the payment described
above and to enter into this Escrow Deposit and Trust Agreement for the purpose of providing
the terms and conditions for the deposit and application of amounts so deposited;
WHEREAS, the Authority has agreed to issue its $ Huntington Beach Public
Financing Authority Lease Revenue Refunding Bonds,2010 Series A (the"Bonds"),pursuant to
the terms of an indenture, dated as of Lune 1, 2010 (the "Indenture"), by and between the
Authority and , as trustee thereunder (the "Trustee"), and to apply a
portion of the proceeds thereof to accomplish such refinancing;and
WHEREAS,the Escrow Bank has full powers to act with respect to the escrow and trust
created herein and to perform the duties and obligations to be undertaken pursuant to this
Escrow Deposit and Trust Agreement.
NOW,THEREFORE,in consideration of the above premises and of the mutual promises
and covenants herein contained and for other valuable consideration, the parties hereto do
hereby agree as follows:
Section 1. Definitions. Capitalized terms used, but not otherwise defined, herein, shall
have the meanings ascribed thereto in the 2000 Indenture.
Section 2. Appointment of Escrow Bank.The Authority and the City hereby appoint the
Escrow Bank as escrow bank for all purposes of this Escrow Deposit and Trust Agreement and
in accordance with the terms and provisions of this Escrow Deposit and Trust Agreement, and
the Escrow Bank hereby accepts such appointment.
Section 3. Establishment of Escrow Fund. There is hereby created by the Authority and
the City with,and to be held by,the Escrow Bank as security for the payment of the 2000 Bonds
as hereinafter set forth, an irrevocable escrow to be maintained in trust by the Escrow Bank on
behalf of the Authority and the City and for the benefit of the owners of the 2000 Bonds, said
escrow to be designated the "Escrow Fund." All moneys and securities (the "Escrow
Securities")deposited in the Escrow Fund shall be held as a special fund for the payment of the
principal and interest with respect to the 2000 Bonds in accordance with the provisions of this
Escrow Deposit and Trust Agreement. If at any time the Escrow Bank shall receive actual
knowledge that the moneys and Escrow Securities in the Escrow Fund will not be sufficient to
make any payment required by Section 5 hereof, the Escrow Bank shall notify the City of such
fact and the City shall immediately cure such deficiency.
Section 4.Deposit into Escrow Fund;Investment of Amounts.
(a)Concurrently with delivery of the Bonds,the Authority and the City shall cause to be
transferred to the Escrow Bank for deposit into the Escrow Fund the amount of$15,395,798.47
in immediately available funds,derived as follows:
(i)$ from the proceeds of the sale of the Bonds;and
(ii)$ from amounts on deposit in the reserve account established under
the 2000 Indenture(the"2000 Reserve Fund").
(b)The Escrow Bank shall invest$ of the moneys deposited into the Escrow Fund
pursuant to the preceding paragraph in the securities set forth in Exhibit A attached hereto and
by this reference incorporated herein (the "Escrowed Federal Securities") and shall hold the
remaining $ in cash, uninvested. The Escrowed Federal Securities shall be deposited
with and held by the Escrow Bank in the Escrow Fund solely for the uses and purposes set forth
herein.
(c)The Escrow Bank may rely upon the conclusion of Grant Thornton LLP,independent
certified public accountants, as contained in its opinion and accompanying schedules (the
-2-
"Report") dated un 2 2010, concerning the 2000 Bonds, that the Escrowed Federal Securities
mature and bear interest payable in such amounts and at such times as, together with cash on
deposit in the Escrow Fund, will be sufficient to pay the principal of and interest on the 2000
Bonds through September 1, 2010, and to provide for the redemption of the 2000 Bonds in full
on September 1, 2010, at the redemption price of 100% of the principal amount thereof to be
redeemed,plus accrued interest.
(d) The Escrow Bank shall not be liable or responsible for any loss resulting from its full
compliance with the provisions of this Escrow Deposit and Trust Agreement.
Section 5.Instructions as to Application of Deposit.
(a) The total amount of Escrow Securities and uninvested moneys deposited in the
Escrow Fund pursuant to Section 4 shall be applied by the Escrow Bank for the sole purpose of
paying the principal of and interest on the 2000 Bonds as the same shall become due and
payable, all at the times and in the amounts set forth in Exhibit B attached hereto and by this
reference incorporated herein.
(b) The Authority and the City hereby instruct the Escrow Bank, and the Escrow Bank,
hereby agrees to give notice of redemption of the 2000 Bonds, such notice of redemption to be
given timely for redemption of the 2000 Bonds on September 1, 2012, in accordance with the
applicable provisions of the 2000 Indenture.
Section 6. Investment of Any Remaining Moneys. The Escrow Bank shall invest and
reinvest the proceeds received from any of the Escrowed Federal Securities, and the cash
originally deposited into the Escrow Fund, for a period ending not later than the next
succeeding interest payment date relating to the 2000 Bonds, in Federal Securities pursuant to
written directions of the Authority and the City; provided, however, that (i) such written
directions of the Authority and the City shall be accompanied by (A) a certification of an
independent certified public accountant or firm of certified public accountants of favorable
national reputation experienced in the refunding of obligations of political subdivisions that the
Federal Securities then to be so deposited in the Escrow Fund, together with the Federal
Securities then on deposit in the Escrow Fund, together with the interest to be derived
therefrom, shall be in an amount at all times at least sufficient to make the payments specified
in Section 5 hereof,and (B) an opinion of nationally recognized bond counsel('Bond Counsel")
that investment in accordance with such directions will not affect, for Federal income tax
purposes,the exclusion from gross income of interest due with respect to the 2000 Bonds or the
Certificates, and (ii) if the Authority and the City direct such investment or reinvestment to be
made in United States Treasury Securities-State and Local Government Series, the Authority
and the City shall,at their cost,cause to be prepared all necessary subscription forms therefor in
sufficient time to enable the Escrow Bank to acquire such securities. In the event that the
Authority and the City shall fail to file any such written directions with the Escrow Bank
concerning the reinvestment of any such proceeds, such proceeds shall be held uninvested by
the Escrow Bank. Any interest income resulting from investment or reinvestment of moneys
pursuant to this Section 6 and not required for the purposes set forth in Section 5, as indicated
by such verification, shall, promptly upon the receipt of such interest income by the Escrow
Bank, be paid to the Trustee for deposit in the lease payment fund created for the Certificates
and applied as a credit against Lease Payments to be made by the Authority and the City.
Section 7. Substitution or Withdrawal of Federal Securities. The Authority and the City
may,at any time,direct the Escrow Bank in writing to substitute Federal Securities for any or all
of the Escrowed Federal Securities then deposited in the Escrow Fund, or to withdraw and
transfer to the Authority any portion of the Federal Securities then deposited in the Escrow
Fund, provided that any such direction and substitution or withdrawal shall be simultaneous
-3-
and shall be accompanied by: (a) a certification of an independent certified public accountant or
firm of certified public accountants of favorable national reputation experienced in the
refunding of obligations of political subdivisions that the Federal Securities then to be so
deposited in the Escrow Fund together with interest to be derived therefrom, or in the case of
withdrawal, the Federal Securities to be remaining in the Escrow Fund following such
withdrawal together with the interest to be derived therefrom,shall be in an amount at all times
at least sufficient to make the payments specified in Section 5 hereof;and(b)an opinion of Bond
Counsel that the substitution or withdrawal will not affect,for Federal income tax purposes,the
exclusion from gross income of interest due with respect to the 2000 Bonds or the Certificates.In
the event that, following any such substitution of Federal Securities pursuant to this Section 7,
there is an amount of moneys or Federal Securities in excess of an amount sufficient to make the
payments required by Section 5 hereof, as indicated by such verification, such excess shall be
paid to the Authority.
Section S.Application of 2000 Bond Funds.On the date of original delivery of the Bonds
and the deposit of a portion of the proceeds thereof in the Escrow Fund pursuant to Section 4,
the Escrow Bank,as 2000 Trustee,is hereby directed to 2000withdraw all amounts on deposit in
the 2000 Reserve Fund($ )and transfer such sum to the Escrow Fund.
Any amounts remaining on deposit in any fund or account established under the 2000
Indenture for the 2000 Bonds, including any investment earnings received after the date of
original delivery of the Bonds, shall be transferred by the Escrow Bank to the Trustee for
deposit in the Interest Account created under the Indenture and used for the purposes of such
fund.
Section 9. Application of Certain Terms of the 2000 Indenture. All of the terms of the
2000 Indenture relating to the making of payments of principal and interest with respect to the
2000 Bonds are incorporated in this Escrow Deposit and Trust Agreement as if set forth in full
herein. The provisions of the 2000 Indenture relating to the limitations from liability,rights and
protections afforded the 2000 Trustee and the resignation and removal of the 2000 Trustee are
also incorporated in this Escrow Deposit and Trust Agreement as if set forth in full herein and
shall be the procedure to be followed with respect to any resignation or removal of the Escrow
Bank hereunder.
Section 10. Compensation to Escrow Bank. The Authority and the City shall pay the
Escrow Bank full compensation for its duties under this Escrow Deposit and Trust Agreement,
including out-of-pocket costs such as publication costs, prepayment expenses, legal fees and
other costs and expenses relating hereto and,in addition,fees,costs and expenses relating to the
purchase of any Federal Securities after the date hereof. Under no circumstances shall amounts
deposited in the Escrow Fund be deemed to be available for said purposes.
Section 11. Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no
obligation to make any payment or disbursement of any type or incur any financial liability in
the performance of its duties under this Escrow Deposit and Trust Agreement unless the
Authority and the City shall have deposited sufficient funds with the Escrow Bank.The Escrow
Bank may rely and shall be protected in acting upon the written instructions of the Authority
and the City or their agents relating to any matter or action as Escrow Bank under this Escrow
Deposit and Trust Agreement.
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 Deposit and Trust Agreement, the establishment of the
Escrow Fund,the acceptance of the moneys or any securities deposited therein,the purchase of
the securities to be purchased pursuant hereto, the retention of such securities or the proceeds
-4-
thereof, the sufficiency of the securities or any uninvested moneys held hereunder to
accomplish the defeasance of the 2000 Bonds, or any payment, transfer or other application of
moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow
Deposit and Trust 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 statement of the
Authority and the City, and the Escrow Bank assumes no responsibility for the correctness
thereof. The Escrow Bank make no representations as to the sufficiency of the securities to be
purchased pursuant hereto and any uninvested moneys to accomplish the payment of the 2000
Bonds pursuant to the 2000 Indenture or to the validity of this Escrow Deposit and Trust
Agreement as to the Authority and the City and, except as otherwise provided herein, the
Escrow Bank shall incur no liability in respect thereof. The Escrow Bank shall not be liable in
connection with the performance of its duties under this Escrow Deposit and Trust Agreement
except for its own negligence or willful misconduct, and the duties and obligations of the
Escrow Bank shall be determined by the express provisions of this Escrow Deposit and Trust
Agreement. The Escrow Bank may consult with counsel,who may or may not be counsel to the
Authority or the City, and in reliance upon the advice or written opinion of such counsel shall
have full and complete authorization and protection in respect of 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 Deposit and Trust Agreement, such matter (except the
matters set forth herein as specifically requiring a certificate of a nationally recognized firm of
independent certified public accountants or an opinion of counsel) may be deemed to be
conclusively established by a written certification of the Authority and the City.
Anything in this Escrow Deposit and Trust Agreement to the contrary notwithstanding,
in no event shall the Escrow Bank be liable for special,indirect,punitive or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow
Bank has been advised of the likelihood of such loss or damage and regardless of the form of
action.The Escrow Bank shall not be liable to the parties hereto or deemed in breach or default
hereunder if and to the extent its performance hereunder is .prevented by reason of force
majeure. The term "force majeure" means an occurrence that is beyond the control of the
Escrow Bank and could not have been avoided by exercising due care. Force majeure shall
include acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other
similar occurrences.
The Escrow Bank agrees to accept and act upon instructions or directions pursuant to
this Escrow Deposit and Trust 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 replaced whenever a person is to be added or
deleted from the listing. If the Authority and the City elect 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 Authority and the City agree 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.
-5-
The Authority and the City hereby assume liability for, and hereby agree (whether or
not any of the transactions contemplated hereby are consummated), to the extent permitted by
law, to indemnify, protect, save and hold harmless the Escrow Bank and its respective
successors, assigns, agents and servants from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including
legal fees and disbursements) of whatsoever kind and nature which may be imposed on,
incurred by,or asserted against, at any time,the Escrow Bank(whether or not also indemnified
against by any other person under any other agreement or instrument) and in any way relating
to or arising out of the execution and delivery of this Escrow Deposit and Trust Agreement,the
establishment of the Escrow Fund, the retention of the moneys therein and any payment,
transfer or other application of moneys or securities by the Escrow Bank in accordance with the
provisions of this Escrow Deposit and Trust Agreement, or as may arise by reason of any act,
omission or error of the Escrow Bank made in good faith in the conduct of its duties;provided,
however, that the Authority and the City shall not be required to indemnify the Escrow Bank
against its own negligence or willful misconduct. The indemnities contained in this Section 11
shall survive the termination of this Escrow Deposit and Trust Agreement or the resignation or
removal of the Escrow Bank.
Section 12. Amendment. This Escrow Deposit and Trust Agreement may be modified or
amended at any time by a supplemental agreement which shall become effective when the
written consents of the owners of one hundred percent(100%)in aggregate principal amount of
the 2000 Bonds then outstanding shall have been filed with the Escrow Bank. This Escrow
Deposit and Trust Agreement may be modified or amended at any time by a supplemental
agreement, without the consent of any such owners, but only (1) to add to the covenants and
agreements of any party, other covenants to be observed, or to surrender any right or power
herein or therein reserved to the Authority and the City, (2) to cure, correct or supplement any
ambiguous or defective provision contained herein, (3)in regard to questions arising hereunder
or thereunder, as the parties hereto or thereto may deem necessary or desirable and which, in
the opinion of counsel, shall not materially adversely affect the interests of the owners of the
2000 Bonds or the Certificates, and that such amendment will not cause interest represented by
the 2000 Bonds or represented by the Certificates to become subject to federal income taxation.
Section 13. Severability. If any section, paragraph, sentence, clause or provision of this
Escrow Deposit and Trust Agreement shall for any reason be held to be invalid or
unenforceable, the invalidity or unenforceability of such section, paragraph, sentence clause or
provision shall not affect any of the remaining provisions of this Escrow Deposit and Trust
Agreement.
Section 14. Notice of Escrow Bank, Authority and City. Any notice to or demand upon
the Escrow Bank may be served and presented, and such demand may be made, at the
Corporate Trust Office of the Escrow Bank as specified by the Escrow Bank as trustee in
accordance with the provisions of the 2000 Indenture. Any notice to or demand upon the City
and the Authority,respectively,shall be deemed to have been sufficiently given or served for all
purposes by being mailed by first class mail, and deposited, postage prepaid, in a post office
letter box, addressed to such party as provided in the Lease Agreement (or such other address
as may have been filed in writing by the City or the Authority with the Escrow Bank).
Section 15. Merger or Consolidation of Escrow Bank. 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, provided such company shall be eligible to act as trustee under the
2000 Indenture, shall be the successor hereunder to the Escrow Bank without the execution or
filing of any paper or any further act.
-6-
Section 16.Section Headings. All section headings contained in this Escrow Deposit and
Yeast Agreement are for convenience of reference only and are not intended to define or limit
the scope of any provision of this Escrow Deposit and Trust Agreement.
Section 17. Applicable Law. This Escrow Deposit and Trust Agreement shall be
governed by and construed in accordance with the laws of the State of California. Each party
hereto hereby agrees not to elect a trial by jury of any issue triable of right by jury, and waives
any right to trial by jury fully to the extent that any such right shall now or hereafter exist with
regard to this Escrow Deposit and Trust Agreement, or any claim,counterclaim or other action
aril t-,g in connection herewith. This waiver of right to trial by jury is given knowingly and
voluntarily by each party, and is intended to encompass individually each instance and each
issue as to which the right to a trial by jury would otherwise accrue.
Section 18. Execution in Counterparts. This Escrow Deposit and Trust Agreement may
be executed in any number of counterparts,each of which shall be deemed to be an original but
all together shall constitute but one and the same instrument.
-7-
IN WITNESS WHEREOF,the Authority,the City and the Escrow Bank have each caused
this Escrow Deposit and Trust Agreement to be executed by their duly authorized officers all as
of the date first above written.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A.,as Escrow Bank
By
Name
Title
_g_
EXHIBIT A
SCHEDULE OF ESCROWED FEDERAL SECURITIES
Type Maturity Coupon Principal Price Cost Accrued Total
SLCS 9/1/10
Exhibit A
EXHIBIT B
PAYMENT SCHEDULE OF 2003A CERTIFICATES
Interest
Payment Maturing Called Redemption Total
Bate Principal Principal Interest Premium Payment
09/01/10 $760,000 $12,025,000 $340,260.63 — $13,125,260.63
Exhibit B
ATTACHMENT # 14
Quint&Ti:dmmig LLP 03/18/10
04/01/10
AFTER RECORDATION RETURN TO:
Quint& Thimmig LLP
575 Market Street,Suite 3600
San Francisco,CA 94105-2874
Attention:Brian D.Quint,Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
TERMINATION AGREEMENT
Dated un 2 2010
by and among the
CITY OF HUNTINGTON BEACH
the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
and
U.S. BANK NATIONAL ASSOCIATION,as Trustee
Relating to the
Huntington Beach Public Financing Authority
Lease Revenue Bonds,1997 Series A
(Public Facilities Project)
08008.04
TERMINATION AGREEMENT
This TERMINATION AGREEMENT is made and entered into this 2nd day of Tune.
20�by and among the CITY OF HUNTINGTON BEACH (the "City"), the HUNTINGTON
BEACH PUBLIC FINANCING AUTHORITY (the "Authority"), and U.S. BANK NATIONAL
ASSOCIATION, as successor to First Trust of California, National Association, as trustee (the
"1997 Trustee").
WITNESSETH :
WHEREAS, the Authority has heretofore issued its $8,070,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 1997 Series A (Public Facilities Project) (the "1997
Bonds"), the proceeds of which were used to finance the costs of the acquisition, construction,
installation and equipping of certain public capital improvements(the"1997 Project");
WHEREAS, the 1997 Bonds were issued pursuant to the terms of a trust indenture,
dated as May 1,1997,by and between the Authority and the 1997 Trustee;
WHEREAS, in order to provide for the repayment of the 1997 Bonds, the City and the
Authority have heretofore entered into a base lease, dated as of May 1, 1997 (the "1997 Base
Lease"),and a lease agreement,dated as of May 1,1997(the"1997 Lease Agreement"),pursuant
to which the Authority and the City entered into a transaction for the lease financing of the 1997
Project and the City agreed to make certain lease payments (the "1997 Lease Payments") to the
Authority;
WHEREAS, the City has determined that, as a result of favorable financial market
conditions and for other reasons,it is in the best interests of the City at this time to refinance the
City's obligation to make the 1997 Lease Payments and, as a result thereof, to provide for the
redemption of all outstanding 1997 Bonds in full on un 2010,at the redemption price equal
to 100% of the principal amount thereof, plus accrued interest, and to that end, the City
proposes to enter into a new lease agreement, dated as of Lune 1, 2010, by and between the
Authority and the City;
WHEREAS, the 1997 Lease Agreement provides that in the event that the City deposits,
or causes the deposit on its behalf of moneys for the prepayment of the 1997 Lease Payments,
then all of the obligations of the City under the 1997 Lease Agreement and all of the security
provided by the City for such obligations,excepting only the obligation of the City to make the
1997 Lease Payments from said deposit, shall cease and terminate, and unencumbered title to
the 1997 Project shall be vested in the City without further action by the City or the Authority;
WHEREAS,to obtain moneys to make such deposit,the Authority has agreed to issue its
$ Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,
2010 Series A (the"Bonds"),pursuant to the terms of an indenture, dated as of June 1,2010 (the
"Indenture"), by and between the Authority and as trustee
thereunder(the"Trustee");
WHEREAS, upon delivery of the Bonds and deposit of a portion of the proceeds for
prepayment of the 1997 Lease Payments,the 1997 Lease Agreement and the agreements related
thereto need not be maintained (except as otherwise provided below), and the parties hereto
now desire to provide for the termination of such documents as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other consideration the
receipt and sufficiency of which are hereby acknowledged,the parties hereto do hereby agree:
Section 1.Termination.
(a) By virtue of the deposit of a portion of the proceeds of the Bonds for prepayment of
the 1997 Lease Payments,all obligations of the City under the 1997 Lease Agreement shall cease
and terminate, excepting only the obligation of the City to make, or cause to be made, all
payments from such deposit and title to the 1997 Project shall vest in the City automatically and
without further action by the City or the Authority. Said deposit and interest earnings thereon
shall be deemed to be and shall constitute a special fund for the prepayment of the 1997 Lease
Payments.
(b) In accordance with the foregoing, the following agreements are hereby terminated
and are of no further force or effect other than those oblations that are stated to survive the I
termination of such agreements:
1.unrecorded 1997 Base Lease;
2. 1997 Lease Agreement, recorded by memorandum on May 13, 1997, as
Document No. 19970221305,Official Records of Orange County;and
3. unrecorded Assignment Agreement, dated as of May 1, 1997,by and between
the Authority and the 1997 Trustee.
(c) that from and after the date hereof,none of the parties shall have any further rights
or obligations thereunder,other than those obligations that are stated to survive the termination
of such agreements.
Section 2. Execution in Counterparts. This Termination 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.
-2-
IN WITNESS WHEREOF, the parties hereto have duly executed this Termination
Agreement.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
U.S.BANK NATIONAL ASSOCIATION,as
1997 Trustee
By
Name
Title
-3-
NOTARY ACKNOWLEDGMENTS TO BE INSERTED
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach,Orange County, State of California,described as
follows:
THAT CERTAIN PARCEL OF LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, BEING THAT PORTION OF THE RANCHO LAS BALSAS,
SECTIONS 26 AND 35,TOWNSHIP 5 SOUTH,RANGE 11 WEST,AS SHOWN ON MAP RECORDED IN
BOOK 51,PAGE 13 OF MISCELLANEOUS MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY,DESCRIBED AS FOLLOWS:
COMMENCING AT THE CENTERLINE INTERSECTION OF GOLDEN WEST STREET AND ELLIS
AVENUE, SAID CENTERLINE INTERSECTION BEING DELINEATED AS THE ORANGE COUNTY
HORIZONTAL CONTROL STATION "GPS#5059"HAVING A STATE PLANE COORDINATE VALUE
OF NORTHING 2200569.821 FEET AND EASTING 6027477.751 FEET;THENCE NORTH 0°16'33"EAST,
2641,81 FEET ALONG THE CENTERLINE OF GOLDEN WEST STREET TO A POINT OF
INTERSECTION WITH THE CENTERLINE OF TALBERT AVENUE, SAID CENTERLINE
INTERSECTION BEING DELINEATED AS THE ORANGE COUNTY HORIZONTAL CONTROL
STATION "GPS #5073" HAVING A STATE PLANE COORDINATE VALUE OF NORTHING
2203211.545 FEET AND EASTING 6027490.465 FEET AND SAID POINT BEING THE
SOUTHWESTERLY CORNER OF SAID SECTION 26;THENCE SOUTH 89°43'27"EAST,207.74 FEET TO
THE TRUE POINT OF BEGINNING;THENCE SOUTH 2°07'44"WEST,320.54 FEET;THENCE NORTH
87°20'19" EAST, 1122.81 FEET; THENCE NORTH 36°13'50" WEST, 535.78 FEET; THENCE NORTH
0012'15" EAST, 377.82 FEET; THENCE NORTH 83°19'27" WEST, 562.50 FEET; THENCE SOUTH
21008'07" WEST, 261.18 FEET; THENCE SOUTH 14°28'10" EAST, 235.93 FEET; THENCE SOUTH
77048'10"WEST. 201.57 FEET;THENCE SOUTH 2°07'44" WEST. 96.63 FEET TO THE TRUE POINT OF
BEGINNING.
Exhibit A
Page 1
ATTAC H M E NT # 15
Quint&Thimmig LLP 03/18/10
04/01/10
AFTER RECORDATION RETURN TO:
Quint &Thimmig LLP
575 Market Street,Suite 3600
San Francisco,CA 94105-2874
Attention:Brian D.Quint,Esq.
'THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
TERMINATION AGREEMENT
Dated une 2 2010
by and among the
CITY OF HUNTINGTON BEACH
the
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A.,as Trustee
Relating to the
Huntington Beach Public Financing Authority
Lease Revenue Bonds,2000 Series A
(Capital Improvement Financing Project)
08008.04
TERMINATION AGREEMENT
This TERMINATION AGREEMENT is made and entered into this 2nd dam of Tune
2010, by and among the CITY OF HUNTINGTON BEACH (the "City"), the HUNTINGTON
BEACH PUBLIC FINANCING AUTHORITY (the "Authority"), and THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., previously known as BNY Western Trust
Company,as trustee(the"2000 Trustee").
WITNESSETH :
WHEREAS,the Authority has heretofore issued its$18,310,000 Huntington Beach Public
Financing Authority Lease Revenue Bonds, 2000 Series A (Capital Improvement Financing
Project) (the "2000 Bonds"), the proceeds of which were used to finance the costs of the
acquisition,construction,installation and equipping of certain public capital improvements(the
"2000 Project");
WHEREAS, the 2000 Bonds were issued pursuant to the terms of a trust indenture,
dated as August 1,2000,by and between the Authority and the 2000 Trustee;
WHEREAS, in order to provide for the repayment of the 2000 Bonds, the City and the
Authority have heretofore entered into a site and facility lease, dated as of August 1, 2000 (the
"2000 Site and Facility Lease"), and a lease agreement, dated as of August 1, 2000 (the "2000
Lease Agreement"),pursuant to which the Authority and the City entered into a transaction for
the lease financing of the 2000 Project and the City agreed to make certain lease payments (the
"2000 Lease Payments") to the Authority;
WHEREAS, the City has determined that, as a. result of favorable financial market
conditions and for other reasons,it is in the best interests of the City at this time to refinance the
City's obligation to make the 2000 Lease Payments and, as a result thereof, to provide for the
redemption of all outstanding 2000 Bonds in full on September 1, 2010, at the redemption price
equal to 100% of the principal amount thereof, plus accrued interest, and to that end, the City
proposes to enter into a new lease agreement, dated as of men 1, 2010, by and between the
Authority and the City;
WHEREAS,the 2000 Lease Agreement provides that in the event that the City deposits,
or causes the deposit on its behalf of moneys for the prepayment of the 2000 Lease Payments,
then all of the obligations of the City under the 2000 Lease Agreement and all of the security
provided by the City for such obligations, excepting only the obligation of the City to make the
2000 Lease Payments from said deposit, shall cease and terminate, and unencumbered title to
the 2000 Project shall be vested in the City without further action by the City or the Authority;
WHEREAS,to obtain moneys to make such deposit,the Authority has agreed to issue its
$ Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,
2010 Series A (the"Bonds"),pursuant to the terms of an indenture, dated as of Lune 1,2010 (the
"Indenture"), by and between the Authority and as trustee thereunder
(the"Trustee");
WHEREAS, upon delivery of the Bonds and deposit of a portion of the proceeds for
prepayment of the 2000.Lease Payments,the 2000 Lease Agreement and the agreements related
thereto need not be maintained (except as otherwise provided below), and the parties hereto
now desire to provide for the termination of such documents as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other consideration the
receipt and sufficiency of which are hereby acknowledged,the parties hereto do hereby agree:
Section 1.Termination.
(a) By virtue of the deposit of a portion of the proceeds of the Bonds for prepayment of
the 2000 Lease Payments,all obligations of the City under the 2000 Lease Agreement shall cease
and terminate, excepting only the obligation of the City to make, or cause to be made, all
payments from such deposit and title to the 2000 Project shall vest in the City automatically and
without further action by the City or the Authority. Said deposit and interest earnings thereon
shall be deemed to be and shall constitute a special fund for the prepayment of the 2000 Lease
Payments.
(b) In accordance with the foregoing, the following agreements are hereby terminated
and are of no further force or effect other than those obligations that are stated to survive the
termination of such agreements:
1. 2000 Site and Facility Lease, recorded on August 2000 as Document No.
20000415811,Official Records of Orange County;
2. 2000 Lease Agreement, recorded by memorandum on August 8. 2000. as I
Document No 20000415812,Official Records of Orange County;and
3.Memorandum of Assignment of Lease,dated as of August 1,2000,recorded on I
August 8 2000 as Document No.20000415813.Official Records of Orange County.
(c) that from and after the date hereof, none of the parties shall have any further rights
or obligations thereunder,other than those obligations that are stated to survive the termination
�f-s xuc a reements.
Section 2. Execution in Counterparts. This Termination 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.
-2-
IN WITNESS WHEREOF, the parties hereto have duly executed this Termination
Agreement.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
Attest:
Joan L.Flynn
Secretary
CITY OF HUNTINGTON BEACH
By
Name
Title
Attest:
Joan L.Flynn
City Clerk
THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A.,as 2000 Trustee
By
Name
Title
-3-
NOTARY ACKNOWLEDGMENTS TO BE INSERTED
EXHIBIT A
DESCRIPTION OF THE SITE
Those parcels of land in the City of Huntington Beach, Orange County,State of California,described as
follows:
PARCEL 1:
PARCEL 3, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON THE PARCEL MAP RECORDED IN BOOK 37 PAGE 28, OF PARCEL
MAPS,RECORDS OF ORANGE COUNTY;CALIFORNIA.
PARCEL 2:
THE SOUTH TWO-THIRDS OF THE WEST THREE-FOURTHS OF THE NORTH HALF OF THE
SOUTHWEST QUARTER OF SECTION 26,TOWNSHIP 5 SOUTH,RANGE 11 WEST PARTLY IN THE
RANCHO LAS BOLSAS AND PARTLY IN THE RANCHO LA BOLSA CHICA,AS SHOWN ON A MAP
RECORDED IN BOOK 51 PAGE 13 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA,SAID LAND BEING ALSO DESCRIBED AS THE CENTRAL ONE-THIRD EXTENDING
EAST AND WEST OF THE WEST THREE-FOURTHS OF THE NORTH HALF OF THE SOUTHWEST
QUARTER OF SAID SECTION 26.
EXCEPT THEREFROM, ALL OIL, OIL RIGHTS, NATURAL GAS RIGHTS, MINERAL RIGHTS, AND
OTHER HYDROCARBON SUBSTANCES BY WHATEVER NAME KNOWN, TOGETHER WITH
APPURTENANT RIGHTS THERETO, WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE
SURFACE OF SAID LAND NOR ANY PORTION OF THE SUBSURFACE LYING ABOVE A DEPTH OF
500 FEET,AS EXCEPTED OR RESERVED IN INSTRUMENTS OF RECORD.
ALSO EXCEPTING THEREFROM ANY PORTION LYING WITH GOTHARD STREET AND GOLDEN
WEST STREET.
PARCEL 3:
THE SOUTH 320.00 FEET OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF THE
NORTHWEST QUARTER OF SECTION 35,TOWNSHIP 5 SOUTH,RANGE 11 WEST IN THE RANCHO
LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 13 OF MISCELLANEOUS
MAPS,RECORDS OF ORANGE COUNTY,CALIFORNIA.
EXCEPTING THEREFROM ONE-HALF OF ALL MINERALS, OIL, GAS, ASPHALTUM, BREA AND
OTHER HYDROCARBON SUBSTANCES LYING BELOW A DEPTH OF 500 VERTICAL FEET BELOW
THE SURFACE OF SAID LAND WITHOUT THE RIGHT TO ENTER UPON THE SURFACE OF SAID
LAND, AS SET FORTH IN THE DEED FROM ROBERT H. LARSEN AND WIFE, RECORDED
SEPTEMBER 11, 1950,IN BOOK 2069 PAGE 166,OF OFFICIAL RECORDS,AND IN THE QUITCLAIM
DEED RECORDED FEBRUARY 6,1964,IN BOOK 6913 PAGE 899,OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM ANY PORTION LYING WITHIN GOTHARD STREET.
PARCEL 4:
THE SOUTHEAST ONE-QUARTER (SE1/4) OF THE SOUTHEAST ONE-QUARTER (SE1/4) OF
SECTION 27,TOWNSHIP 5 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN,
IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE,STATE OF CALIFORNIA.
Exhibit A
Pagel
EXCEPT THEREFROM, ALL OIL, OIL RIGHTS, NATURAL GAS RIGHTS, MINERAL RIGHTS, AND
OTHER HYDROCARBON SUBSTANCES BY WHATEVER NAME KNOWN, TOGETHER WITH
APPURTENANT RIGHTS THERETO, WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE
SURFACE;OF SAID LAND NOR ANY PORTION OF THE SUBSURFACE LYING ABOVE A DEPTH OF
500 FEET",AS EXCEPTED OR RESERVED IN INSTRUMENTS OF RECORD.
ALSO EXCEPTING THEREFROM ANY PORTION LYING WITHIN GOLDEN WEST STREET,
TALBERT AVENUE AND CENTRAL PARK DRIVE.
Exhibit A
Page 2
ATTACHMENT # 16
Quint R=hinunig LLP 03/18/10
04/01/10
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
Lease Revenue Refunding Bonds,2010 Series A
AUTHORITY CERTIFICATE
REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:
(i) that the undersigned is the duly appointed,qualified and acting
of the Huntington Beach Public Financing Authority, a joint exercise powers authority duly
organized and existing under the laws of the State of California (the"Authority"),and,as such,
is familiar with the facts herein certified and is authorized and qualified to certify the same on
behalf of the Authority;
(ii) that there has been delivered to Piper laffrav & Co., as underwriter (the
"Underwriter"), a Preliminary Official Statement, dated � , 2010 (including the cover
page and all appendices thereto,the"Preliminary Official Statement"),relating to the captioned
bonds, which the undersigned, on behalf of the Authority, deems final as of its date, for
purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-
12"),except for information permitted to be omitted therefrom by Rule 15c2-12;and
(iii) that the Authority hereby approves of the use and distribution by the Underwriter
of the Preliminary Official Statement.
Dated: ,2010 HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Name
Title
*Prelirayinary,subject to change. 08008.04
ATTACHMENT # 17
€rip)?&`hirnmig LLP 03/18/10
04/01/10
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
Lease Revenue Refunding Bonds,2010 Series A
CITY CERTIFICATE
REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:
(i) that the undersigned is the duly appointed, qualified and acting
of the City of Huntington Beach,a municipal corporation and chartered city duly organized and
existing under the laws of the State of California (the "City"), and, as such, is familiar with the
facts herein certified and is authorized and qualified to certify the same on behalf of the City;
(ii) that there has been delivered to Piper Iaffray & Co.,, as underwriter (the
"Underwriter"), a Preliminary Official Statement, dated , 2010 (including the cover
page and all appendices thereto,the"Preliminary Official Statement"),relating to the captioned
bonds, which the undersigned, on behalf of the Authority, deems final as of its date, for
purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-
12"),except for information permitted to be omitted therefrom by Rule 15c2-12;and
(iii) that the City hereby approves of the use and distribution by the Underwriter of
the Preliminary Official Statement.
Dated: 2010 CITY OF HUNTINGTON BEACH
By
Name
Title
*Prelixninazy,subject to change. 08008.04
ATTAC H M E NT # 18
PRELIMINARY OFFICIAL STATEMENT DATED 2010
_ NEW ISSUE—BOOK-ENTRY ONLY RATING:
S&P:" "
See"RATING"herein.
In the opinion of Quint&Thimmig LLP,San Francisco,California,Bond Counsel,subject,however,to certain qualifications described in this Official Statement,under existing
law,interest on the Bonds(i)is excludable from the gross income of the owners thereof for federal income tax purposes,and(ii)is not included as an item of tax preference in
computing the federal alternative minimum tax for individuals and corporations,but interest on the Bonds is taken into account,however,in computing an adjustment used in
determining the federal alternative minimum tax for certain corporations.The Bonds are"qualified tax-exempt obligations"under Section 265(b)(3)of the Internal Revenue
Code of 1986,as amended.In addition,in the opinion of Bond Counsel,interest on the Bonds is exempt from personal income taxation imposed by the State of California.See
"TAX MATTERS"herein.
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
(Orange County,California)
Lease Revenue Refunding Bonds,2010 Series A
(Bank Qualified)
Dated:Date of Delivery Due:September 1,as shown below
The$_ _*Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,2010 Series A(the"Bonds"),are being issued by the Huntington Beach Public
Financing Authc ri ,a joint exercise of powers entity organized and existing under the laws of the State of California the"Authority"),pursuant to Article 4,Chapter 5,
. .. g h' i P ty g g (
Division 7,Title 1(commencing with section 6584)of the California Government Code,a resolution of the Authority authorizing the issuance of the Bonds and an Indenture,
dated as of Tune 1.2010(the"Indenture"),by and between the Authority and as trustee(the"Trustee").The Bonds are being issued to(a)refinance
the costs of the acquisition,construction,installation and equipping of certain public capital improvements,including the refunding of(i)the outstanding Huntington Beach
c Public Financing Authority Lease Revenue Bonds,1997 Series A(Public Facilities Project),and(ii)the outstanding Huntington Beach Public Financing Authority Lease Revenue
Bonds,2000 Series A(Capital Improvement Financing Project),(b)fund a reserve fund for the Bonds,and(c)pay costs of issuance of the Bonds.See'THE REFUNDING PLAN"
and"ESTIMATED SOURCES AND USES OF FUNDS"herein.The Bonds are secured by a pledge of and lien on the Revenues(as defined herein)and the amounts in the
Reserve Fund(as defined herein).
The Bonds are issuable in denominations of$5,000 and any integral multiple thereof.Interest on the Bonds is payable on March 1 and September 1 of each year,commencing
September 1,2010.See'THE BONDS"herein.
The Bonds will be delivered in fully registered form only,and,when delivered,will be registered in the name of Cede&Co.,as nominee of The Depository Trust Company,
New York,New York("DTC").DTC will act as securities depository of the Bonds.Ownership interests in the Bonds may be purchased in book entry form only.Principal of,
premium,if any,and interest on the Bonds will be paid by the Trustee to DTC or its nominee,which will in turn remit such payment to its participants for subsequent
j disbursement to the beneficial owners of the Bonds.See"THE BONDS"herein and APPENDIX E—"BOOK-ENTRY ONLY SYSTEM."
The Bonds are subject to optional and mandatory redemption as described herein.See"THE BONDS—Redemption"herein
_ The City will lease certain real property and the improvements thereon from the Authority pursuant to a Lease Agreement,dated as of Tvne 1.2010(the"Lease Agreement"),by
and between the Authority and the City.Under the Lease Agreement,the City is required to make Lease Payments(as defined herein)from legally available funds in amounts
calculated to be sufficient to pay principal of and interest on the Bonds when due,subject to abatement,as described herein.All of the Authority's right,title and interest in and
to the Lease Agreement(except for the right to receive any Additional Payments(as defined herein)to the extent payable to the Authority and certain rights to indemnification),
including the right to receive Lease Payments under the Lease Agreement,are assigned to the Trustee under the Indenture for the benefit of the Bondowners.See"SECURITY
FOR THE BONDS"herein.
4 THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE REVENUES PLEDGED UNDER
THE INDENTURE.THE BONDS ARE NOT A DEBT OF THE CITY,THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS,EXCEPT THE AUTHORITY
TO THE EXTENT DESCRIBED HEREIN,AND NEITHER THE CITY, THE STATE OF CALIFORNIA NOR ANY OF ITS POLITICAL SUBDIVISIONS, EXCEPT THE
AUTHORITY TO THE EXTENT DESCRIBED HEREIN,IS LIABLE THEREON.IN NO EVENT SHALL THE BONDS OR ANY INTEREST OR REDEMPTION PREMIUM
THEREON BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY AS SET FORTH IN THE INDENTURE.THE BONDS DO
NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.NEITHER THE
MEMBERS OF THE AUTHORITY,THE CITY NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY ON THE BONDS BY REASON OF THEIR
J° ISSUANCE.
c.
S MATURITY SCHEDULE*
$ Serial Bonds
CUSIP Prefix: t
Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP
(September 1) Amount Rate Yield Suffixt (September 1) Amount Rate Yield Suffixt
c-
r $ %Term Bonds due September 1, Price: %o,to Yield %;CUSIP t
c 'This cover page contains information for quick reference only.It is not a summary of this issue.Potential purchasers must read the entire Official Statement to obtain
information essential to making an informed investment decision.
= The Bonds will be offered when,as and if issued,and received by the Underwriter,subject to the approval as to their validity by Quint&Thimmig LLP,San Francisco,
California,Bond Counsel,and certain other conditions.Certain legal matters will be passed upon for the City and the Authority by Tennif r McC ..F a City Attorney,and h.
by Quint&Thimmig LLP,San Francisco,California,Disclosure Counsel.It is anticipated that the Bonds will be available for delivery through DTC in New York,New York,on
or about€ ,2010.
Piperjaffray.
Dated:May_,2010
'Preliminary,subject to change.
r Copyrighr'7.B1B,American Bankers Association.CUSIP®is a registered trademark of the American Bankers Association.CUSIP data herein is provided by the CUSIP Service Bureau,operated by Standard&Poor's,
_ a division of'rhe 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 Services Bureau.CUSIP numbers have been assigned by an
independent company riot affiliated with the Authority or the City and are included solely for the convenience of the registered owners of the Bonds.Neither the Authority nor the City is responsible for the selection
or uses of them CUSIP numbers,and no representation is made as to their correctness on the Bonds or as included herein.The CUSIP number for a specific maturity is subject to being changed after the issuance of the
Bonds as a m;ult of various subsequent actions including,but not limited to,a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by
investors that is applicable to all or a portion of certain maturities of the Bonds
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
CITY OF HUNTINGTON BEACH
City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
(714)536-500
http://www.ci.huntington-beach.ca.us/
Authority Board of Directors and City Council
Cathy Green,Authority Chair/Mayor
Jill Hardy,Authority Vice Chair/Mayor Pro Tem
Keith Bohr,Authority/Council Member
Joe Carchio,Authority/Council Member
Gil Coerper,Authority/Council Member
Devin Dwyer,Authority/Council Member
Don Hansen,Authority/Council Member
Authority/City Staff
Fred Wilson,Executive Director/City Administrator
Paul Emery,Deputy City Administrator
Robert Hall,Deputy City Administrator
Bob Wingenroth,Finance Director
Robert Sedlak,Accounting Manager
Jennifer Lampman,Budget Manager
Joan L.Flynn,Secretary/City Clerk
Jennifer McGrath,Esq.,Authority Counsel and City Attorney
Special Services
Quint&Thimmig LLP
San Francisco,California
Bond Counsel and Disclosure Counsel
Public Financial Management,Inc.
Los Angeles,California
Financial Advisor
Los Angeles,California
Trustee
U.S.Bank National Association
Los Angeles,California
1997 Escrow Bank
The Bank of New York Mellon Trust Company,N.A.
Los Angeles,California
2000 Escrow Bank
Grant Thornton LT P I
Minneapolis.Minnesota
Verification Agent
No dealer,broker,salesperson or other person has been authorized by the Authority,the City or
the Underwriter to give any information or to make any representations other than as set forth herein
and,if given or made, such other information or representation must not be relied upon as having been
authorized by the Authority,the City 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 of the Bonds.
Statements contained in this Official Statement that 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 facts.
The information set forth in this Official Statement has been obtained from official sources and
other sources that are believed to be reliable,but it is not guaranteed as to accuracy or completeness,and
is not to be construed as a representation of the Underwriter.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 Authority or the City since the date hereof. This Official Statement is submitted in
connection with the sale of the Bonds referred to herein and may not be reproduced or used,in whole or
in part,for any other purpose.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 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.
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 "plan," "expect," "estimate," "budget" or other similar
words. 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.No assurance is
given that actual results will meet the Authority's or the City's forecasts in any way, regardless of the
level of optimism communicated in the information.The Authority is not obligated to issue any updates
or revisions to the forward-looking statements if or when its expectations, or events, conditions or
circumstances on which such statements are based occur.See"CONTINUING DISCLOSURE"herein.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.SUCH
STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE
UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND OTHERS AT
PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE OF THIS
OFFICIAL STATEMENT, AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME
TO TIME BY THE UNDERWRITER.
The City maintains a website,however,the information presented therein is not a part of this Official
Statement and should not be relied on in making an investment decision with respect to the Bonds.
TABLE OF CONTENTS
INTRODUCTION................................................................1 Sales Taxes......................................................................24
General Description........................................................1 Motor Vehicle In-Lieu Tax...........................................24
Terms of the Bonds.........................................................1 Transient Occupancy Taxes.........................................25
Book-Entry Only..............................................................2 PROPERTY TAXES...........................................................26
Source of Payment for the Bonds..................................2 Ad Valorem Property Taxes..........................................26
Reserve Account..............................................................2 OTHER FINANCIAL INFORMATION.........................29
Additional Bonds............................................................3 Labor Relations..............................................................29
TheCity.............................................................................3 Risk Management...............
TheAuthority..................................................................3
Employee Retirement Plans.........................................30
Limited Liability..............................................................
3 Post-Employment Medical Insurance........................32
Continuing Disclosure....................................................3 Overlapping Debt..........................................................35
TaxMatters.......................................................................4
Certain Risk Factors........................................................4 CONSTITUTIONAL AND STATUTORY
Other Information...........................................................4 LIMITATIONS ON TAXES,REVENUES AND
ESTIMATED SOURCES AND USES OF FUNDS...........5 APPROPRIATIONS..........................................................37
Article XIIIA of the California Constitution..............37
THE PROPERTY..................................................................5 Article XIIIB of the California Constitution...............38
THE REFUNDING PLAN..................................................6 Proposition 218..............................................................39
Refunding of the 1997 Bonds.........................................6 Proposition lA of 2004..................................................40
Refunding of the 2000 Bonds.........................................6 Future Initiatives...........................................................42
THEBONDS.........................................................................7 RISK FACTORS.................................................................42
General........................ .. ......... 7 Limited Obligation........................................................42
... .. . ..................................
42
Transfer and Exchange of Bonds..................................8 Lease Payments Are Not Debt....................................
Optional Redemption.....................................................8 Valid and Binding Covenant to Budget and
Mandatory Sinking Account Redemption...................8 Appropriate..................................................................43
Extraordinary Redemption from Insurance or Abatement............... .................................................43
Condemnation Proceeds..............................................9 Risk of Uninsured Lossoss.................................................44
Selection of Bonds for Redemption..............................9 Eminent Domain....ces..................................................44
Notice of Redemption.....................................................9 Hazardous Substances..................................................44
Partial Redemption of Bonds.......................................10 Earthquakes....................................................................45
Effectof Redemption....................................................10 Bankruptcy................. ..............................................45
Limitations on Remediesies..............................................46
SECURITY FOR THE BONDS.........................................10 No Liability of Authority to the Owners...................46
General............................................................................10 Risk of Tax Audit...........................................................47
Lease Payments and Additional Payments...............11 State Budgets...................................... 47
..........................
Insurance and Condemnation Awards......................12 Loss of Tax Exemption.................................................55
Reserve Account............................................................13 Limited Secondary Market...........................................55
Abatement......................................................................13 Changes in Law.............................................................55
Insurance........................................................................13 j
Debt Service Schedule.............................................. 15 TAX MATTERS..................................................................56
Additional Bonds..........................................................15 CERTAIN LEGAL MATTERS.........................................58
THE AUTHORITY............................................................15 FINANCIAL STATEMENTS...........................................59
THECITY...........................................................................16 LITIGATION......................................................................59
CITY FINANCIAL INFORMATION..............................16 UNDERWRITING.............................................................59
Financial Statements.....................................................16 VERIFICATION OF MATHEMATICAL
Budgetary Process.........................................................17 COMPUTATIONS.............................................................60
City Financial Management Policies..........................18
Current Investments.....................................................19 FINANCIAL ADVISOR...................................................60
Reliance on State Budget..............................................19 CONTINUING DISCLOSURE........................................60
Principal Sources of General Fund Revenues...........19
General Fund Revenues and Expenditures...............22 ADDITIONAL INFORMATION....................................61
APPENDIX A: GENERAL,ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY
APPENDIX B: COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE
FISCAL YEAR ENDED SEPTEMBER 30,2009
APPENDIX C: CITY INVESTMENT POLICY
APPENDIX D: SUMMARY OF CERTAIN PROVISIONS OF THE LEGAL DOCUMENTS
APPENDIX E: PROPOSED FORM OF BOND COUNSEL OPINION
APPENDIX F: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX G: BOOK-ENTRY ONLY SYSTEM
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OFFICIAL STATEMENT
HUNTINGTON BEACH PUBLIC FINANCING AUTHORITY
(Orange County,California)
Lease Revenue Refunding Bonds,2010 Series A
INTRODUCTION
The following introduction presents a brief description of certain information in
connection with the Bonds (as defined below) and is qualified in its entirety by reference to the
entire Official Statement and the documents summarized or described herein.References to,and
summaries of,provisions of the Constitution and the laws of the State of California (the "State")
and any documents referred to herein do not purport to be complete and such references are
qualified in their entirety by reference to the complete provisions thereof.Capitalized terms used
in this Official Statement and not defined elsewhere herein have the meanings given such terms
in the Indenture. See APPENDIX D—"SUMMARY OF CERTAIN PROVISIONS OF THE
PRINCIPAL LEGAL DOCUMENTS—Definitions."
General Description
This Official Statement, including the cover page, the inside cover page and the attached
appendices (this "Official Statement"), provides certain information concerning the issuance of
$ * aggregate principal amount of Huntington Beach Public Financing Authority
Lease Revenue Refunding Bonds, 2010 Series A (the 'Bonds"),by the Huntington Beach Public
Financing Authority, a joint exercise of powers entity organized under the laws of the State(the
"Authority"). The Bonds are being issued pursuant to Article 4, Chapter 5, Division 7, Title 1
(commencing with section 6584) of the California Government Code, a resolution of the
Authority authorizing the issuance of the Bonds (the "Authority Resolution") and an Indenture,
dated as of Tune 1,2010(the "Indenture"),by and between the Authority and , I
as trustee(the"Trustee").The Bonds are being issued to(a)refinance the costs of the acquisition,
construction, installation and equipping of certain public capital improvements, including the
refunding of (i) the outstanding Huntington Beach Public Financing Authority Lease Revenue
Bonds, 1997 Series A (Public Facilities Project) (the "1997 Bonds"), and (ii) the outstanding
Huntington Beach Public Financing Authority Lease Revenue Bonds, 2000 Series A (Capital
Improvement Financing Project) (the "2000 Bonds"), (b) fund a reserve fund for the Bonds, and
(c) pay costs of issuance of the Bonds. See "THE REFUNDING PLAN" and `ESTIMATED
SOURCES AND USES OF FUNDS."
Terms of the Bonds
The Bonds will mature on the dates and in the principal amounts set forth on the cover
page of this Official Statement. Interest on the Bonds is payable semiannually on each March 1
and September 1 (each,an "Interest Payment Date"),commencing September 1,2010, computed
at the respective rates of interest set forth on the inside cover page of this Official Statement.The
Bonds will be issuable in denominations of$5,000 or any integral multiple thereof.The Bonds are
subject to optional and mandatory redemption as described herein.See"THE BONDS."
*Preliminary,subject to change.
Boole-Entry Only
The Bonds will be issuable in fully registered form only and,when issued and delivered,
will be registered in the name of Cede&Co.,as nominee of the Depository Trust Company,New
York,New York ("DTC"). DTC will act as the depository of the Bonds and all payments due on
the Bonds will be made to DTC or its nominee. Ownership interests in the Bonds may be
purchased in book-entry form only.See APPENDIX G—"BOOK-ENTRY ONLY SYSTEM."
Source of Payment for the Bonds
Pursuant to the Site and Facility Lease, dated as of Tune 1. 2010 (the "Site and Facility
Lease"),by and between the City and the Authority, the City will lease to the Authority certain
real property and certain facilities and improvements located thereon(the"Property")owned by
the City. See "THE PROPERTY." Concurrently, the City will sublease the Property from the
Authority pursuant to a Lease Agreement, dated as of Tune 1.2010 (the "Lease Agreement"),by
and between the Authority and the City. Under the Lease Agreement, subject to abatement as
provided therein, the City is required to make lease payments (the "Lease Payments") from
legally available funds for use and occupancy of the Property in amounts calculated to be
sufficient to pay principal of and interest on the Bonds when due.The City has covenanted in the
Lease Agreement to take such action as may be necessary to include the Lease Payments in each
of its annual budgets during the Term of the Lease Agreement and has further covenanted to
make the necessary annual appropriations for all such Lease Payments. All of the Authority's
right, title and interest in and to the Lease Agreement (apart from certain rights to receive
Additional Payments to the extent payable to the Authority and to indemnification), including
the right to receive Lease Payments under the Lease Agreement, are assigned to the Trustee
under the Indenture for the benefit of the Bondowners.
Except to the extent of amounts held in the Reserve Account or otherwise available to the
City for payments under the Lease Agreement, during any period in which, by reason of
material damage or destruction(other than by condemnation,which is provided for in the Lease
Agreement) there is substantial interference with the use and occupancy by the City of any
portion of the Property, Lease Payments will be adjusted or abated in the proportion in which
the value of that portion of the Property rendered unusable bears to the entire value of the
Property. Such adjustment or abatement will end with the substantial replacement or
reconstruction of the Property.See"SECURITY FOR THE BONDS—Abatement."
The Bonds are special limited obligations of the Authority payable solely from and
secured by the Revenues and certain other amounts(including proceeds of the sale of the Bonds)
held by the Trustee in any fund or account established under the Indenture and pledged
therefor, and the Revenues may not be used for any other purpose while any of the Bonds
remain Outstanding; provided, however, that the Revenues may be applied for such other
purposes as are permitted under the Indenture. "Revenues" means (i) all Lease Payments and
other amounts paid,or caused to be paid,by the City,and received by the Authority pursuant to
the Lease Agreement (but not Additional Payments), and (ii) all interest or other income from
any investment of any money in any fund or account established pursuant to the Indenture
(other than the Rebate Fund).
Reserve Account
A reserve account (the "Reserve Account") will be established and held under the
Indenture in order to secure the payment of principal of and interest on the Bonds in an amount,
as of the Closing Date,equal to the Reserve Requirement.A portion of the proceeds of the Bonds
will be deposited in the Reserve Account in an amount equal to the Reserve Requirement. If,on
any Interest Payment Date for the Bonds,the amounts on deposit under the Indenture to pay the
-2-
principal of and interest due on the Bonds are insufficient therefor, the Trustee will draw on the
amounts in the Reserve Account to replenish the Interest Account or the Principal Account, in
that order,to make up such deficiencies. See "SECURITY FOR THE BONDS—Reserve Account"
and APPENDIX D—"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL
DOCUMENTS"for additional information on the Reserve Account.
Additional Bonds
The Authority may not issue additional bonds,notes or other indebtedness that would be
payable out of the Revenues in whole or in part.See"SECURITY FOR THE BONDS—Additional
Bonds."
The City
The City is a municipal corporation and general law city of the State. See "THE CITY,"
"CITY FINANCIAL INFORMATION" and APPENDIX A—"GENERAL, ECONOMIC AND
DEMOGRAPHIC INFORMATION RELATING TO THE CITY."
The Authority
The Authority is a joint exercise of powers entity formed on March 8, 1988,by agreement
between the City and the Redevelopment Agency of the City of Huntington Beach (the
"Agency") pursuant to Articles 1 through 4, Chapter 5, Division 7, Title 1 of the California
Government Code.See"THE AUTHORITY."
Limited Liability
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY,PAYABLE
SOLELY FROM AND SECURED SOLELY BY CERTAIN PROCEEDS OF THE BONDS HELD IN
CERTAIN FUNDS AND ACCOUNTS PURSUANT TO THE INDENTURE AND THE
REVENUES DERIVED FROM LEASE PAYMENTS AND OTHER PAYMENTS MADE OR
CAUSED TO BE MADE BY THE CITY PURSUANT TO THE LEASE AGREEMENT. THE
AUTHORITY IS NOT OBLIGATED TO PAY INTEREST ON OR PRINCIPAL OF THE BONDS
EXCEPT FROM THE REVENUES. THE CITY HAS COVENANTED IN THE LEASE
AGREEMENT TO TAKE SUCH ACTIONS AS MAY BE NECESSARY TO INCLUDE ALL
LEASE PAYMENTS DUE THEREUNDER IN ITS ANNUAL BUDGETS AND TO MAKE THE
NECESSARY ANNUAL APPROPRIATIONS THEREFOR. NEITHER THE BONDS NOR THE
OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS CONSTITUTES AN
INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
DEBT LIMITATION, OR A PLEDGE OF THE FAITH AND CREDIT OF THE CITY. THE
AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE LEASE
PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE
CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH
THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Continuing Disclosure
The ultimate security for the payments of principal and interest on the Bonds comes from
the Lease Payments to be made by the City, and, therefore, the City, as an obligated person
within the meaning of the Rule (as defined below), has agreed to undertake the continuing
disclosure responsibilities required by the Rule. The Authority has not undertaken a
commitment to provide any continuing disclosure required by the Rule.
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The City has covenanted in the Continuing Disclosure Certificate (the "Continuing
Disclosure Certificate") to provide, or cause to be provided, to each nationally recognized
municipal securities information repository and any public or private repository or entity
designated by the State as a state repository and any public or private repository for purposes of
Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission (the "Rule") certain
annual financial information and operating data of the type set forth herein including, but not
limited to, its audited financial statements and, in a timely manner, notice of certain material
events. See "CONTINUING DISCLOSURE" and APPENDIX F—"FORM OF CONTINUING
DISCLOSURE CERTIFICATE" for a description of the specific nature of the annual report and
notices of material events and a summary description of the terms of the Continuing Disclosure
Certificate pursuant to which such reports and notices are to be made. The City has never failed
to comply with any previous undertakings with regard to said Rule to provide annual reports or
notices of material events.
Tax Matters
In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel,
subject, however, to certain qualifications described in this Official Statement, under existing
law, interest on the Bonds (i) is excludable from the gross income of the owners thereof for
federal income tax purposes, and (ii) is not included as an item of tax preference in computing
the federal alternative minimum tax for individuals and corporations,but interest on the Bonds
is taken into account, however, in computing an adjustment used in determining the federal
alternative minimum tax for certain corporations. In addition, in the opinion of Bond Counsel,
interest on the Bonds is exempt from personal income taxation imposed by the State of
California. The Bonds are "qualified tax-exempt obligations" under Section 265(b)(3) of the
Internal Revenue Code of 1986,as amended.See"TAX MATTERS."
Certain Risk Factors
Certain events could affect the ability of the City to make the Lease Payments when due.
See "CERTAIN RISK FACTORS" for a discussion of certain factors that should be considered,in
addition to other matters set forth herein,in evaluating an investment in the Bonds.
Other Information
The descriptions herein of the Indenture,the Lease Agreement and any other agreements
relating to the Bonds are qualified in their entirety by reference to such documents, and the
descriptions herein of the Bonds are qualified in their entirety by the forms thereof and the
information with respect thereto included in the aforementioned documents. See APPENDIX
D—"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS."
Copies of the documents are on file and, upon request and payment to the City of a charge for
copying,mailing and handling,from the Finance Director,City of Huntington Beach,2000 Main I
Street,Huntington Beach,CA 92648,telephone(714)536-5630.
The information and expressions of opinion herein speak only as of their date and are
subject to change without notice. Neither the delivery of this Official Statement nor any sale
made hereunder nor any future use of this Official Statement, under any circumstances, creates
any implication that there has been no change in the affairs of the City or the Authority since the
date hereof.
The presentation of information, including tables of receipt of revenues, is intended to
show recent historical information and is not intended to indicate future or continuing trends in
the financial position or other affairs of the City or the Authority.No representation is made that
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past experience, as it might be shown by such financial and other information, will necessarily
continue or be repeated in the future.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds realized upon the sale of,or in connection with,
the Bonds as follows:
Estimated Sources and Uses of Funds
Estimated Sources:
Principal Amount of Bonds
Plus:Net Original Issue Premium
Plus:Released 1997 Bonds Moneys
Plus:Released 2000 Bonds Moneys
Total Sources
Estimated Uses:
Deposit to 1997 Escrow Fund(1)
Deposit to 2000 Escrow Fund(2)
Deposit to Reserve Account(3)
Deposit to Costs of Issuance Fund(4)
Total Uses
(1) Represents the amount estimated to be necessary to refund the 1997 Bonds. See "THE REFUNDING PLAN—
Refunding of the 1997 Bonds."
(2) Represents the amount estimated to be necessary to refund the 2000 Bonds. See "THE REFUNDING PLAN—
Refunding of the 2000 Bonds."
(3) Represents the Reserve Requirement.
(4) Includes,but is not limited to, the Underwriter's discount, the fees and expenses of Bond Counsel, Disclosure
Counsel,the Financial Advisor,the Trustee,the 1997 Escrow Bank,the 2001 Escrow Bank and the rating agencies,
costs of printing the Official Statement,the premium for title insurance and other costs incurred by the Authority
and the City in connection with the issuance and delivery of the Bonds.
THE PROPERTY
The Property consists of the Donald W. Kiser Corporation Yard and the site thereof. the
Donald W. Kiser Corporation Yard consists of a main building, four large warehouse type
structures, equipment and materials storage and office space. The two-story 7,200 square foot
administration building was constructed in 1972 and is used for centralized customer service
operations and office space. The City Yard buildings provide operations bases for a variety of
maintenance services.Building B is approximately 26,000 square feet and was also constructed in
1972. Building B houses the fleet maintenance facility that includes mechanics bays and parts
storage for servicing vehicles, large and small equipment and fire engines. Building C,
constructed in 1973, is approximately 19,000 square feet. The building holds materials and
equipment used in traffic signal, signs and markings maintenance. Building C also includes
facility maintenance small equipment such as carpentry, locksmith, plumbing and electrical
tools. Building D is approximately 7,500 square feet and was built in 1983. It is used for
mechanical services to police vehicles, motorcycles, and radio equipment. This facility includes
mechanics bays and parts storage. Building E, approximately 14,600 square feet is a storage
warehouse for parts, supplies and equipment. Building E was finished in 1988. The lot includes
several small sheds as well as storage for sand, gravel and loose construction materials. A fuel
island contains four gasoline, two diesel, and one propane pumps that service all city owned
vehicles and equipment. The City estimates that the value of the Property, including land and
building,to be approximately$29,500,000.
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THE REFUNDING PLAN
The Bonds are being issued to (a) refund the 1997 Bonds, (b) refund the 2000 Bonds, (c)
fund a reserve fund for the Bonds,and(d)pay costs of issuance of the Bonds.
Refunding of the 1997 Bonds
The 1997 Bonds were issued pursuant to the terms of an indenture,dated as May 1, 1997,
by and between the Authority and First Trust of California, National Association, since
succeeded by U.S. Bank National Association, as trustee thereunder. In order to provide for the
repayment of the 1997 Bonds, the Authority leased certain real property and improvements to
the City pursuant to a lease agreement, dated as of May 1, 1997, under which the City agreed to
make lease payments to the Authority from moneys in its General Fund and the City has
budgeted and appropriated sufficient amounts in each year to pay the full amount of principal of
and interest on the 1997 Bonds. The 1997 Bonds were issued to finance a portion of the City's
share of the costs of a countywide 800 Mhz coordinated communications system and a portion of
ahe cost of public facilities installed as part of the City's Pier Plaza project.
A portion of the proceeds of the Bonds will be deposited in an escrow fund (the "1997
Bonds Escrow Fund")held in trust by U.S.Bank National Association,as escrow bank(the"1997
Escrow Bank"),under an escrow deposit and trust agreement with the Authority and the City.A
Portion of the proceeds of the Bonds and other amounts deposited in the 1997 Bonds Escrow
Fund will be invested in direct obligations of the United States (the "1997 Bonds Federal
Securities") in an amount sufficient to redeem the outstanding 1997 Bonds in full on June 10,
2010,at a redemption price equal to 100%of the principal amount thereof,plus accrued interest.
Upon the issuance of the Bonds and the deposit in the 1997 Bonds Escrow Fund of
moneys sufficient to provide for the refunding of the 1997 Bonds,the 1997 Bonds will be deemed
defeased and no longer outstanding. The holders of the 1997 Bonds will be entitled to payment
solely out of the moneys or securities deposited in the 1997 Bonds Escrow Fund.
Refunding of the 2000 Bonds
The 2000 Bonds were issued pursuant to the terms of an indenture, dated as August 1,
2000,by and between the Authority and BNY Western Trust Company, since succeeded by The
ilca:rak of New York Trust Company, N.A., as trustee thereunder. In order to provide for the
repayment of the 2000 Bonds, the Authority leased certain real property and improvements to
the City pursuant to a lease agreement,dated as of August 1,2000, under which the City agreed
to make lease payments to the Authority from moneys in its General Fund and the City has
budgeted and appropriated sufficient amounts in each year to pay the full amount of principal of
and interest on the 2000 Bonds. The 2000 Bonds were issued to refinance the City's Emerald
Cove Senior Housing Project and to finance several capital projects including South Beach Phase
I iartprovements,South Beach Phase II improvements,a new Beach Maintenance Facility,energy
retrofitting of various facilities, the design costs of the City's Sports Complex and water system
improvements.
A portion of the proceeds of the Bonds will be deposited in an escrow fund (the "2000
Bonds Escrow Fund") held in trust by The Bank of New York Trust Company,N.A., as escrow
bank(the"2000 Escrow Bank"),under an escrow deposit and trust agreement with the Authority
and the City. A portion of the proceeds of the Bonds and other amounts deposited in the 2000
Bonds Escrow Fund will be invested in direct obligations of the United States (the "2000 Bonds
Federal Securities") in an amount which, together with investment earnings thereon and the
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uninvested cash in the 2000 Bonds Escrow Fund, will be sufficient to redeem all outstanding
2000 Bonds in full on September 1, 2010, at the redemption price equal to 100% of the principal
amount thereof,plus accrued interest
The sufficiency of the moneys, investment earnings and maturing 2000 Bonds Federal
Securities such purposes will be verified by (the
"Verification Agent").See"VERIFICATION OF MATHEMATICAL COMPUTATIONS"herein.
Upon the issuance of the Bonds and the deposit in the 2000 Bonds Escrow Fund of
moneys sufficient to provide for the refunding of the 2000 Bonds, and assuming the accuracy of
the Verification Agent's computations, the 2000 Bonds will be deemed defeased and no longer
outstanding. The holders of the 2000 Bonds will be entitled to payment solely out of the moneys
or securities deposited in the 2000 Bonds Escrow Fund.
THE BONDS
General
The Bonds will be issued in fully registered form without coupons in denominations of
$5,000 or any integral multiple thereof. The Bonds will mature on September 1 in each of the
years and in the amounts, and will bear interest (calculated on the basis of a 360-day year of
twelve 30-day months)at the rates set forth on the cover page hereof.
Interest on the Bonds will be payable semiannually on each March 1 and September 1,
commencing September 1, 2010 (each, an "Interest Payment Date"), to the person whose name
appears on the Registration Books as the Owner thereof as of the fifteenth calendar day of the
month immediately preceding each such Interest Payment Date (each, a "Record Date"), such
interest to be paid by check of the Trustee mailed by first-class mail to the Owners at the
respective addresses of such Owners as they appear on the Registration Books; provided,
however,that payment of interest may be made by wire transfer in immediately available funds
to an account in the United States of America to any Owner of Bonds in the aggregate principal
amount of$1,000,000 or more who furnishes written wire instructions to the Trustee at least five
days before the applicable Record Date. Principal of any Bond and any premium upon
redemption will be paid by check of the Trustee upon presentation and surrender thereof at the
corporate trust office of the Trustee, except as provided in APPENDIX.G—"BOOK-ENTRY
ONLY SYSTEM."Principal of and interest and premium (if any) on the Bonds will be payable in
lawful money of the United States of America.
Each Bond will be dated as of its date of delivery and will bear interest from the Interest
Payment Date next preceding such date of authentication thereof, unless (a) it is authenticated
after a Record Date and on or before the following Interest Payment Date,in which event it will
bear interest from such Interest Payment Date,or (b) it is authenticated on or before August 15,
2010,in which event it will bear interest from the Closing Date;provided,however,that if, as of
the date of authentication of any Bond,interest thereon is in default,such Bond will bear interest
from the Interest Payment Date to which interest has previously been paid or made available for
payment thereon.
The Bonds, when issued, will be registered in the name of Cede & Co., as registered
owner and nominee of The Depository Trust Company, New York, New York ("DTC," and
together with any successor securities depository, the "Securities Depository"). DTC will act as
Securities Depository for the Bonds. Individual purchases of the Bonds will be made in book-
entry form. Purchasers will not receive certificates representing their ownership interest in the
Bonds. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC,
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references herein to the Bondholders or registered owners thereof means Cede & Co. as
aforesaid, and not the Beneficial Owners of the Bonds. So long as Cede & Co. is the registered
owner of the Bonds,principal of and interest on the Bonds are payable by wire transfer of same
day funds by the Trustee to Cede&Co.,as nominee for DTC. DTC is obligated,in turn,to remit
such amounts to the Participants for subsequent disbursement to the Beneficial Owners. See
APPENDIX G—"BOOK-ENTRY ONLY SYSTEM."
Transfer and Exchange of Bonds
Any Bond may,in accordance with its terms,be transferred on the Registration Books by
the person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Bond for cancellation, accompanied by delivery of a written instrument of
transfer, duly executed in a form acceptable to the Trustee. Transfer of any Bond will not be
permitted by the Trustee during the period established by the Trustee for selection of Bonds for
redemption or if such Bond has been selected for redemption pursuant to the Indenture.
Whenever any Bond or Bonds are required to be surrendered for transfer, the Authority will
execute and the Trustee will authenticate and will deliver a new Bond or Bonds for a like
aggregate principal amount and of like maturity. The Trustee may require the Bond Owner
requesting such transfer to pay any tax or other governmental charge required to be paid with
respect to such transfer.
Any Bond may be exchanged at the corporate trust office of the Trustee for a like
aggregate principal amount of Bonds of other authorized denominations and of like maturity.
Exchange of any Bond will not be permitted during the period established by the Trustee for
selection of Bonds for redemption or if such Bond has been selected for redemption.The Trustee
may require the Bond Owner requesting such exchange to pay any tax or other governmental
charge required to be paid with respect to such exchange.
Optional Redemption
The Bonds maturing on September 1, , are subject to optional redemption prior to
their stated maturity date, at the written direction of the Authority, from moneys deposited by
the Authority or the City,in whole, or in part, on any date on or after September 1, from
any available source of funds, at a redemption price equal to the principal amount of Bonds
called for redemption, together with interest accrued thereon to the date fixed for redemption,
without premium.
Mandatory Sinking Account Redemption
The Bonds maturing on September 1, (the "Term Bonds") are also subject to
mandatory sinking fund redemption in part by lot on September 1, , and on September 1,
,from Mandatory Sinking Account Payments made by the Authority at a redemption price
equal to the principal amount thereof to be redeemed together with accrued interest thereon to
the redemption date, without premium, in the aggregate respective principal amounts and on
the respective dates as set forth in the following table;provided,however,that if some but not all
of the Term Bonds have been optionally redeemed, the total amount of all future Sinking
Account payments will be reduced by the aggregate principal amount of Term Bonds so
redeemed, to be allocated among the Mandatory Sinking Account Payments as are thereafter
payable on a pro rata basis in integral multiples of$5,000 as determined by the Authority(notice
of which determination is required to be given by the Authority to the Trustee).
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Sinking Account
Redemption Date Principal Amount to be
(September 1) Redeemed or Purchased
taturity
In lieu of redemption of the Term Bonds, amounts on deposit as Mandatory Sinking
Account payments may also be used and withdrawn by the Trustee, at the written direction of
the Authority,at any time for the purchase of Term Bonds otherwise required to be redeemed on
the following September 1 at public or private sale as and when and at such prices (including
brokerage and other charges and including accrued interest) as the Authority may in its
discretion determine. The par amount of any of the Term Bonds so purchased by the Authority
and surrendered to the Trustee for cancellation in any 12-month period ending on September 1
in any year are required to be credited towards and will reduce the par amount of the Term
Bonds otherwise required to be redeemed on the following September 1.
Extraordinary Redemption from Insurance or Condemnation Proceeds
The Bonds are also subject to redemption as a whole,or in part on a pro rata basis among
maturities,on any date,in integral multiples of$5,000,to the extent of prepayments made by the
City from insurance proceeds or condemnation proceeds not used to repair, reconstruct or
replace any portion of the Property damaged or destroyed or elected by the City to be used for
such purpose,at a redemption price equal to 100%of the principal amount thereof plus interest
accrued thereon to the date fixed for redemption,without premium.
Selection of Bonds for Redemption
Whenever provision is made for the redemption of less than all of the Bonds of a
particular maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such
maturity or such given portion thereof not previously called for redemption, by lot in any
manner which the Trustee in its sole discretion deems appropriate. For purposes of such
selection,the Trustee will treat each Bond as consisting of separate$5,000 portions and each such
portion will be subject to redemption as if such portion were a separate Bond.
Notice of Redemption
Notice of redemption will be mailed by first-class mail, postage prepaid, not less than 30
nor more than 60 days before any redemption date, to the respective Owners of any Bonds
designated for redemption at their addresses appearing on the Registration Books maintained by
the Trustee, and to the Municipal Securities Rulemaking Board, the Securities Depositories and
the Information Services. Each notice of redemption will state the date of the notice, the
redemption date, the place or places of redemption, whether less than all of the Bonds (or all
Bonds of a single maturity) are to be redeemed,the CUSIP numbers and(in the event that not all
Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be redeemed,
the maturity or maturities of the Bonds to be redeemed and in the case of Bonds to be redeemed
in part only, the respective portions of the principal amount thereof to be redeemed. Each such
notice will also state that on the redemption date there will become due and payable on each of
said Bonds the redemption price thereof, and that from and after such redemption date interest
thereon will cease to accrue and will require that such Bonds be then surrendered. Neither the
failure to receive any notice nor any defect therein will affect the sufficiency of the proceedings
for such redemption or the cessation of accrual of interest from and after the redemption date.
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Notice of redemption of Bonds will be given by the Trustee, at the expense of the Authority, for
and on behalf of the Authority.
So long as the book-entry system is used for the Bonds,the Trustee will give any notice of
redemption or any other notices required to be given to registered Owners of Bonds only to
DTC. Any failure of DTC to advise any Participant,or of any Participant to notify the Beneficial
Owner, of any such notice and its content or effect will not affect the validity of the redemption
of the Bonds called for redemption or any other action premised on such notice. Beneficial
Owners may desire to make arrangements with a Participant so that all notices of redemption or
other communications to DTC which affect such Beneficial Owners, and notification of all
interest payments, will be forwarded in writing by such Participant. See APPENDIX G—
"BOOK-ENTRY ONLY SYSTEM."
Partial Redemption of Bonds
Upon surrender of any Bonds redeemed in part only, the Authority will execute and the
Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a
new Bond or Bonds of authorized denominations equal in aggregate principal amount to the
unredeemed portion of the Bonds surrendered.
Effect of Redemption
If notice of redemption has been given, and moneys for payment of the redemption price
of, together with interest accrued to the date fixed for redemption on, the Bonds (or portions
thereof) so called for redemption are being held by the Trustee, on the redemption date
designated in such notice, the Bonds (or portions thereof) so called for redemption will become
due and payable,interest on the Bonds so called for redemption will cease to accrue,said Bonds
(or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and
the Owners of said Bonds will have no rights in respect thereof except to receive payment of the
redemption price thereof.
All Bonds redeemed pursuant to the provisions of the Indenture will be canceled by the
Trustee upon surrender thereof and destroyed.
SECURITY FOR THE BONDS
General
The Bonds are special limited obligations of the Authority payable solely from and
secured solely by the Revenues pledged therefor under the Indenture,together with amounts on
deposit from time to time in the funds and accounts held by the Trustee, including proceeds of
the sale of the Bonds.
Under the Indenture, the Authority assigns to the Trustee, for the benefit of the Owners
from time to time of the Bonds, all of the Revenues and all of the rights of the Authority in the
Lease Agreement (except for the right to receive any Additional Payments to the extent payable
to the Authority and certain rights to indemnification set forth therein).The Trustee is entitled to
collect and receive all of the Revenues,and any Revenues collected or received by the Authority
are required to be held,and to have been collected or received,by the Authority as the agent of
the Trustee and must be paid by the Authority to the Trustee.
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THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY FROM AND SECURED SOLELY BY THE REVENUES AND OTHER MONEYS
PLEDGED THERETO IN THE INDENTURE. THE BONDS ARE NOT A DEBT OF THE
AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS AND
NEITHER THE AUTHORITY, THE CITY, THE STATE NOR ANY OF ITS POLITICAL
SUBDIVISIONS, EXCEPT THE AUTHORITY TO THE EXTENT DESCRIBED HEREIN, IS
LIABLE THEREON.IN NO EVENT WILL THE BONDS OR ANY INTEREST OR REDEMPTION
PREMIUM THEREON BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN
THOSE OF THE AUTHORITY AS SET FORTH IN THE INDENTURE. THE BONDS DO NOT
CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL
OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE
AUTHORITY NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY
ON THE BONDS BY REASON OF THEIR ISSUANCE.
Lease Payments and Additional Payments
The Lease Agreement requires the City, subject to abatement as provided therein, to
deposit with the Trustee, as assignee of the Authority, on each February 15 and August 15,
commnencing on August 15,2010(the"Lease Payment Dates"),an amount equal to the aggregate
Lease Payment coming due and payable on each such Lease Payment Date. The Lease Payments
payable in any fiscal year of the City constitute payment for the use and possession of the
Property during such fiscal year. The City will receive a credit towards payment of Lease
Payments for amounts on deposit in the Revenue Fund (including the Interest Account and the
Principal Account therein)on each Lease Payment Date.
The obligation of the City to make Lease Payments is subject to annual appropriations of
the City from funds lawfully available therefor. The obligation of the City to make Lease
Payments under the Lease Agreement does not constitute an obligation of the City for which the
City is obligated to levy or pledge any form of taxation or for which the City has levied or
pledged any form of taxation. Neither the full faith and credit nor the taxing power of the City,
the State or any of its political subdivisions is pledged to make Lease Payments under the Lease
Agreement. The Authority has no taxing power. The Lease Payments are calculated to be
sufficient to pay,when due,the principal of and interest on the Bonds.
In addition to the Lease Payments, the City is required to pay when due the following
Additional Payments: (a) any fees and expenses incurred by the Authority in connection with or
by reason of its leasehold estate in the Property as and when the same become due and payable;
(b)any amount due to the Trustee pursuant to the terms of the Indenture; (c)any reasonable fees
and expenses of such accountants, consultants, attorneys, and other experts as may be engaged
by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or
provide such other services required under the Lease Agreement or the Indenture; and (d) any
reasonable out-of-pocket expenses of the Authority in connection with the execution and
delivery of the Lease Agreement, the Indenture or the Continuing Disclosure Certificate or in
connection with the issuance of the Bonds.
Pursuant to the Lease Agreement, the City covenants to take such action as may be
necessary to include all Lease Payments and Additional Payments due thereunder in its annual
budgets and to make annual appropriations therefor. As provided in the Lease Agreement, the
covenants of the City thereunder are duties imposed by law,and it is the duty of each and every
public official of the City to take such action and to do such things as are required by law in the
performance of the official duty of such officials to enable the City to carry out and perform the
covenants and agreements in the Lease Agreement agreed to be carried out and performed by
the City.
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California law requires, and the Lease Agreement provides, that Lease Payments are
required to be abated in whole or in part during any period in which there is substantial
interference with the use and occupancy of the Property by the City due to damage,destruction
or taking in eminent domain proceedings.Under these circumstances,failure to make any Lease
Payment will not be an event of default under the Lease Agreement. See "SECURITY FOR THE
BONDS—Abatement"below.
Lease Payments made by the City to the Authority are payable from any revenues
lawfully available to the City therefor. The Lease Agreement and the Indenture require that
I_,ease Payments be deposited in the Revenue Fund maintained by the Trustee, which fund is
weld for the benefit of the owners of the Bonds.
Insurance and Condemnation Awards
In the event of any damage to or destruction of any part of the Property covered by
insurance, the Authority, except as hereinafter provided, is required to cause the proceeds of
such insurance to be utilized for the repair, reconstruction or replacement of the damaged or
destroyed portion of the Property, and the Trustee is required to hold said proceeds in a fund
established by the Trustee for such purpose separate and apart from all other funds, to the end
that such proceeds are required to be applied to the repair, reconstruction or replacement of the
Property to at least the same good order, repair and condition as was the case prior to the
damage or destruction, insofar as the same may be accomplished by the use of said proceeds.
The Trustee is required to invest said proceeds in Permitted Investments pursuant to the Written
Request of the City, as agent for the Authority under the Lease Agreement, and withdrawals of
said proceeds are required to be made from time to time upon the filing of a Written Request of
the City with the Trustee, stating that the City has expended moneys or incurred liabilities in an
amount equal to the amount therein stated for the purpose of the repair, reconstruction or
replacement of the Property,and specifying the items for which such moneys were expended,or
such liabilities were incurred,in reasonable detail.The City is required to file a written certificate
with the Trustee to the effect that sufficient funds from insurance proceeds or from any funds
legally available to the City, or from any combination thereof, are available in the event it elects
to repair,reconstruct or replace the Property.Any balance of such proceeds not required for such
repair, reconstruction or replacement and the proceeds of use and occupancy insurance are
required to be treated by the Trustee as Lease Payments. Alternatively, the City, at its option, if
the proceeds of such insurance together with any other moneys then available for such purpose
are sufficient to prepay all, in case of damage or destruction in whole of the Property, or that
portion, in the case of partial damage or destruction of the Property, of the Lease Payments
relating to the damaged or destroyed portion of the Property,may elect not to repair,reconstruct
or replace the damaged or destroyed portion of the Property and thereupon is required to cause
said proceeds to be used for the redemption of Outstanding Bonds. The City is not required to
apply the proceeds of insurance to redeem the Bonds in part due to damage or destruction of a
portion of the Property unless the Trustee receives a written certificate of the Authority to the
effect that the Lease Payments on the undamaged portion of the Property will be sufficient to
pay the initially-scheduled principal and interest on the Bonds remaining unpaid after such
redemption.
No assurance can be given that the proceeds of any insurance or condemnation award
will be sufficient under all circumstances to repair or replace any damaged or taken Property or
to prepay all Lease Payments with respect to the Property. Also, the City makes no
representation as to the sufficiency of any insurance awards or the adequacy of any self-
insurance to pay,when and as due,amounts payable under the Lease Agreement or the Bonds.
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Reserve Account
The Reserve Account is established under the Indenture in an amount equal to the
Reserve Requirement, which is $ . As defined in the Indenture, the term "Reserve
Requirement" means a fixed amount equal to the least of (a) maximum annual debt service on
the Bonds, (b) 125%of average annual debt service on the Bonds,and (c) 10%of the par amount
of the Bonds, determined on the Closing Date. All amounts in the Reserve Account are required
to be used and withdrawn by the Trustee solely for the purpose of (x) paying principal of or
interest on the Bonds when due and payable to the extent that moneys deposited in the Interest
Account or the Principal Account are not sufficient for such purpose, and (y) making the final
payments of principal of and interest on Bonds on the date on which such Bonds are required to
be retired or provision made therefor.
Abatement
The Lease Agreement provides for the abatement of Lease Payments during any period
in which by reason of damage to or destruction of the Property (other than by eminent domain
which may cause abatement of Lease Payments as described below), which causes substantial
interference with the use and occupancy by the City of the Property or any portion thereof. The
amount of such abatement will be an amount agreed upon by the City and the Authority such
that the resulting Lease Payments represent fair consideration for the use and occupancy of the
portions of the Property not damaged or destroyed or the portion of the Property completed and
available for use and possession by the City. Such abatement will continue for the period
commencing with such damage or destruction and ending with the substantial completion of the
work of repair or reconstruction. In the event of any such damage or destruction, the Lease
Agreement will continue in full force and effect and the City waives any right to terminate the
Lease Agreement by virtue of any such damage and destruction. There will be no abatement of
the Lease Payments to the extent that moneys derived from any person as a result of such
damage or destruction are available to pay the amount which would otherwise be abated or if
there is any money available in the Bond Fund or the Reserve Account to pay the amount which
would otherwise be abated.See"—Insurance—Rental Interruption Insurance."
If all of the Property is taken permanently under the power of eminent domain or sold to
a government threatening to exercise the power of eminent domain, the Lease Agreement will
terminate with respect to the Property as of the day possession is so taken. If less than all of the
Property is taken permanently, or if all of the Property or any part thereof is taken temporarily
under the power of eminent domain, (a) the Lease Agreement will continue in full force and
effect, and (b) there will be a partial abatement of Lease Payments in an amount to be agreed
upon by the City and the Authority such that the resulting Lease Payments for the Property
represent fair consideration for the use and occupancy of the remaining usable portion of the
Property.
Insurance
Fire and Extended Coverage Insurance. The City is required under the Lease Agreement to
procure and maintain or cause to be procured and maintained,throughout the term of the Lease
Agreement, insurance against loss or damage to any structures constituting any part of the
Property by fire and lightning,with extended coverage insurance,vandalism,malicious mischief
insurance and sprinkler system leakage insurance. Said extended coverage insurance is required
to, as nearly as practicable,cover loss or damage by explosion,windstorm, riot, aircraft,vehicle
damage, smoke and such other hazards as are normally covered by such insurance. Such
insurance is required to be in an amount equal to the replacement cost (without deduction for
depreciation) of all structures constituting any part of the Property, excluding the cost of
excavations, of grading and filling, and of the land (except that insurance may be subject to
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deductible clauses for any one loss of not to exceed two hundred fifty thousand dollars
($250,000) or a comparable deductible adjusted for inflation),or,in the alternative,is required to
be in an amount and in a form sufficient, in the event of total or partial loss, to enable a portion
of all Bonds then Outstanding equal to the amount of such Bonds to be paid from Lease
Payments to be redeemed. The City currently carries earthquake insurance on the Property
although the Lease Agreement does not require it to do so. The City plans to continue to
purchase earthquake insurance on the Property so long as such insurance can be obtained on the
open market at reasonable rates. See "CERTAIN RISK FACTORS—Earthquakes." The net
proceeds of such insurance will be applied as provided under the caption"SECURITY FOR THE
BONDS—Insurance and Condemnation Awards"above.
Rental Interruption Insurance. The Lease Agreement requires the City to procure and
maintain or cause to be procured and maintained rental interruption or use and occupancy
insurance to cover loss,total or partial,of the use of the Property as a result of certain hazards,in
an amount at least equal to the maximum Lease Payments coming due and payable during any
future 24-month period.Such insurance may be maintained as part of or in conjunction with any
other property insurance coverage carried by the City, and may be maintained in whole or in
pars: in the form of the participation by the City in a joint powers agency or other program
providing pooled insurance;provided that such insurance may not be maintained in the form of
self-insurance except for a time element deductible not to exceed sixty days in duration. The
proceeds of such insurance, if any, will be paid to the Trustee and deposited in the Revenue
Fund, and will be credited towards the payment of the Lease Payments as the same become due
and payable.
Title Insurance. The City is required to obtain upon the execution and delivery of the
Lease Agreement, title insurance on the Property, in an amount not less than the aggregate
principal amount of Bonds issued by a company of recognized standing duly authorized to issue
the same,subject only to Permitted Encumbrances.Proceeds of such insurance are required to be
delivered to the Trustee as a prepayment of rent and are required to be applied by the Trustee to
the redemption of Bonds.
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Debt Service Schedule
The following table sets forth the debt service due on the Bonds.
Debt Service Schedule
Principal and
Year Mandatory
Ending Sinking Fund
September 1 Installments Interest Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Pursuant to the Lease Agreement, the City is required to make Lease Payments which
have been calculated to be sufficient to make the interest and principal payments due on the
Bonds. The City's Lease Payments are due on the fifteenth calendar day of the month preceding
each Interest Payment Date.
Additional Bonds
Pursuant to the Indenture, the Authority may not issue additional bonds, notes or other
indebtedness which would be payable out of the Revenues in whole or in part. See "THE
AUTHORITY."
THE AUTHORITY
The Authority is a public agency duly organized and existing pursuant to a Joint Exercise
of Powers Agreement (the "JPA Agreement")between the City and the Agency, dated March 8,
1988. The Authority is governed by a board of directors comprised of the five member City
Council of the City.The Authority is statutorily authorized by Article 4 of Chapter 5 of Division
7 of Title 1 of the Government Code of the State of California and is empowered under the JPA
Agreement to issue its bonds for, among other things, the purposes of the plan of financing
described herein.The Authority is administered by the City staff.
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THE CITY
Founded in the late 1880s, Huntington Beach was incorporated as a general law city in
1909 and became a charter city in 1937.The City has a City Council/City Administrator form of
government. The City Council has seven members, each of whom is elected to a four-year term.
City Council Members are limited to two consecutive terms. There are three elected department
heads, the City Attorney, City Clerk and City Treasurer. The position of Mayor is filled on a
rotating basis.
The City encompasses 31.6 square miles (26.4 square miles is land, 5.2 square miles is
water) in the coastal area of Orange County, California, adjacent to the Cities of Costa Mesa,
Fountain Valley, Newport Beach, Seal Beach and Westminster. The City is approximately 40
miles southeast of Los Angeles and 90 miles northwest of San Diego. As of January 1, 2009, the
State of California Finance Department estimated its population at 202,480.
See APPENDIX A—"GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION
RELATING TO THE CITY" for a general description of the City as well as certain demographic
and statistical information.
CITY FINANCIAL INFORMATION
Financial Statements
The City's accounting policies conform to generally accepted accounting principles. The
audited financial statements also conform to the principles and standards for public financial
reporting established by the Governmental Accounting Standards Board.
Basis of Accounting and Financial Statement Presentation. The government-wide financial
statements are reported using the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred,regardless of the timing of related
cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
Governmental fund financial statements are reported using the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or
soon enough thereafter to pay liabilities of the current period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures are recorded only when payment is due.
State and Loeal G t " on rune 30/ 1999. StatementNo. 34 provides guideplines W.effeetive date on the basie prolvisiong for all major general infrastmeture assets that were
in fiseal
l LL111.U1 l V V 1. years
1 •O J or-that reeeived V L
ending after-june 30, 1980.The City wag required to implement the pr-evisien of GASB 34 for-the
/ •
Audited Financial Statements. The City retained the firm of Diehl. Evans and Company.
UP, Certified Public Accountants & Consultants, Irvin , California, to examine the general
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purpose financial statements of the City as of and for the year ended September 30, 2009. The
City is the recipient of the Government Finance Officers Association Certificate of Achievement
for Excellence in Financial Reporting for the fiscal year ended September 30, 2008. The audited
financial statements for fiscal year ended September 30,2009, are attached hereto as APPENDIX
B—"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL
YEAR ENDED SEPTEMBER 30, 2009." The City has not requested, and the auditor has not
provided,any review or update of such financial statements in connection with their inclusion in
this Official Statement.
Budgetary Process
The City Council adopts an annual budget with appropriations for all City funds rip 'or to
the beginning of the fiscal year,which begins on October 1 of each year.The City Council has the
Iez,al authority to amend the budget at any time during the fiscal year. The City maintains
budgetary controls to ensure compliance with legal provisions embodied in the appropriated
budget approved by the City Council The level of budgetary control (that is, the level at which
expenditures cannot legally exceed the appropriated amount) for the Ci 's operating buffet is
the area within each fund and for the capital improvement budget it is each individual
coital improvement project within each fund. For the operating budget. the City Manager has
the authority to move appropriations between accounts (without dollar limitation) within a
budget and within the same fund as long as the transfers are within the same program
area. For t_ he capital improvemenprogram, the City Manager has the authority to transfer
appropriations (with no dollar limitation)between capital proiects within the same fund as long
as the transfers are within the responsibility of the same department All other appropriation
changes require the approval of the City Council.
All appropriations lapse at the end of the fiscal year unless specific carryovers are
approved by the City Council.
On March 1 2010 the City Council approved a plan to deal with the continuing revenue
shortfalls facine the City of Huntington Beach for fiscal year 200940 This involved concessions
from bargaining units totaling$1,090,000 and departmental budget cuts totaling$3,430.000.This
121an will enable the Ci to create an additional $520,000 as a contingency for possible future
revenue declines or emergency expenditures,
The recommended general fund expenditures in fiscal year 2009-10 total $1 1.334.000
which represents a 2.9% decrease when compared to fiscal year 2008-09 expenditures. General
fiutd revenues for fiscal year 2009-10 are projected to be$1 L34h,000,which represents a O.Q01%
decrease when compared to fiscal year 2008-09 revenue.
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The following table shows the City's budget and actual results for general fund revenues
and expenditures for fiscal years 2007-08 and 2008-09 and the adopted budget for fiscal year
2009-10.
City of Huntington Beach
General Fund Budget Summary
Fiscal Years 2007-08 through 2009-10
(in thousands)
FY 07-08 FY 07-08 FY 08-09 FY 08-09 FY 09-10
Budget Actual Budget Actual Budget
REVENUES
Property taxes $ 65,001 11 714 67 227 4 2
Sales taxes 26,060 1�57
Utility taxes 23,125 21 1 13-1-ffi 217-25
Other taxes 14,580 15�6_ 15-4ffl 12 1 M5
License and permits 9,803 77_ 1 7�3_1 5. 6,982
Fines,forfeitures and penalties 4,969 aw 4" 4. 444 4.2hO
Use of money and property 14,126 1�.21Q
From other agencies 5,565 4,50 1�1 4 716
Charges for services 15,722 16 19 22 5 2 22 97
Other 1,212 LM L5815=5=2 iaii
TOTAL REVENUES $180,163 -LZa&77 188,954 171,729 172
EXPENDITURES
City Council $ 305 295 -305 295 296
City Administrator 1,943 LM8 1 Z 1 774
City Treasurer 1,335 UK 14 i'm L493
City Attorney 2,824 2. 771 2� 2� 2�
City Clerk 980 _992 1 18 148 956
Finance 4,955 402 162 4IA% 4�z2
Human Resources 5,730 40.5 52M 4229- 47_0
Planning 4,755 3.856 3
Building 4,546 3.844 4 47 3 259
Fire 27,414 a2-8503
Information Services 7,598 6.=
Police 61,043 6=15
Economic development 2,147 100 1.961 L426 1.584
Community services 14,353 13 19� 1
Library services 4,030 I Q1
Public Works 28,753 21824 21.152 111_2
Non-Department 14,226 21 _2 24&9-5 1 6$3 1
Debt Service
Principal 551 600 507 520 4922
Interest 0 10 1y$5 158 0
TOTAL EXPENDITURES $187,488 177 $1 4 79 4 17�
Source:City of Huntington Beach Finance Department.
City Financial Management Policies
The City Council has adopted a comprehensive set of financial management policies to
provide for: (i) establishing targeted general fund reserves; (ii) the prudent investment of City
funds;and (iii) establishing parameters for issuing and managing debt supported by the general
fund,Enterprise Funds and any other related funding entity of the City.
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General Fund Reserve Policy. The City Council has adopted a general fund reserve policy,
confirmed annually, that established the goal of achieving reserve balances of 50% of revenues
for budgetary/economic uncertainty and asset replacement. Appropriations from these reserves
require approval by the City Council. At the time of adoption of this reserve policy the City
Council voiced a commitment to fund these reserve levels over the subsequent future years.
Investment Policy. The investment of funds of the City (except pension and retirement
funds) is made in accordance with the City's Investment Policy, as amended on September 21,
2009 (the"Investment Policy"),and section 53601 et seq.of the California Government Code.The
Investment Policy is subject to revision at any time and is reviewed at least annually to ensure
compliance with the stated objectives of safety, liquidity, yield, and current laws and financial
trends. All amounts held under the Trust Agreement are invested at the direction of the City in
Permitted Investments, as defined in the Trust Agreement, and are subject to certain limitations
contained therein. See APPENDIX C—"CITY INVESTMENT POLICY" and APPENDIX D—
"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS—TRUST
AGREEMENT—Investments."
Current Investments
The assets of the City's investment portfolio, as of November 30, 2010, are shown in the
following table:
Investment Portfolio of the City
(As of November 30,2010)
Policy Days to YTM
Tvve %of Total Limit Maturfty Int.Rate
Federal Agency Issues—Coupon 65.966,907 4 °° N�n_e 1057 2. 2°°
Local Agency Inv.Fund(LAIF� 51,199.071 °L $60 million 1 0. 1°°
Medium Term Notes 27.163,001 18% 2046 830 2. 1°°
Money Market Account 2,851.025 2% 1 1 0.05 L.
1147,180.004 1 2277 L-85OLO
Source:City of Huntington Beach.
Reliance on State Budget
Approximately 49�%of the City's general fund revenues for fiscal year 2008-09 consisted
of payments collected by the State and passed-through to local governments or collected by the
County and allocated to local governments by State law. Approximately AW10 of the City's
general fund revenues for fiscal year 2009-10 are expected to come from such sources. There can
be no assurance that current or future State budget difficulties will not adversely affect the City's
revenues or its ability to make payments under the Lease Agreement. See "RISK FACTORS—
State Budgets."
Principal Sources of General Fund Revenues
Property taxes were the single largest revenue source to the general fund in fiscal year
2008-09, representing approximately EX% of revenues, followed by sales taxes representing
approximately 11.2%. These sources represented an aggregate of approximately 4$ % of the
general fund revenues for fiscal year 2008-09 and represent an aggregate of approximately 47.4%
of general fund revenues in the City's fiscal year 2009-10 adopted budget. For a discussion of
potential State Budget impacts on general fund revenues,see"—State Budgets."For a discussion
of sales tax revenues and property taxes, see "—Sales Tax" and Ad valorem Property
Taxation,"
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In addition,the City receives the following local taxes:
Franchise Taxes. The City levies a franchise tax on its gas, electric, cable television and
trash collection franchises.
Transient Occupancy Taxes. The City levies a 10% transient occupancy tax on hotel and
motel bills.
Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real
property transfers.
The following table shows the City's general fund tax revenues by source for the most
recent five fiscal years:
City of Huntington Beach
Tax Revenues By Source
(in thousands)
Actual Actual Actual Actual Budget
Source 2005-06 2006-07 2007-08 2008-09 2009-10
Property Taxes $55,168 $60,606 �1 22
Sales and Use Tax 24,003 23,724 24 191575
Utility Taxes 21,170 21,479 21 11 22A1� 21 72
Other Taxes 13,226 13,776
Total Tax Revenues $113,567 $119,585 12 ,7W SIZ1234 1�9_7.,ZO2
Source:City of Huntington Beach Finance Department.
In addition,the City receives the following general fund revenues:
Licenses and Permits. These revenues consist primarily of building construction permit
fees.
Fines, Forfeitures and Penalties. These revenues include parking citations and other fines
for municipal code violations.
Use of Money and Property. These revenues consist primarily of investment earnings and
rental/concession income.
Charges for Services. The City charges fees for plan checking, building inspection and a
variety of other municipal services.
-20-
The following table illustrates other revenue sources:
Other Revenue Sources
(in thousands)
Actual Actual Actual Actual Budget
Source 2005-06 2006-07 2007-08 2008-09 2009-10
Licenses and Permits $7,209 $10,026 7 1 $4 $ 2$4
Fines and Forfeitures 4,288 4,165 4M 4 444 4,260
Use of Money and Property 12,084 14,032 13�875 1 14 91
From.tither Agencies 5,367 5,348 450-9 4,716 3o
Charges for Services 13,876 15,695 1 _129 21342 2 17
Total Other Revenues $42,824 $49,266 6 2 4 1 67
Source:City of Huntington Beach Finance Department.,
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General Fund Revenues and Expenditures
The following two tables summarize the General Fund Balance Sheet and Statement of
Revenues, Expenditures and Changes in Fund Balance of the City's general fund for the fiscal
years 2004-05 through 2008-09.
City of Huntington Beach
General Fund Balance Sheet
Fiscal Years 2004-05 through 2008-09
(in thousands)
Fiscal Year Ended September 30,
2005 2006 2007 2008 2009
Assets:
Cash and Investments $22,268 $25,714 $29,0102 � $
Taxes Receivable 22,735 21,281 26,355 26529 23$39
Other Receivables 4,120 2,993 4,047 4.55-6 4.663
Unbilled Receivables - - - - -
Due from Other Funds - - - -
Advances to Other Funds 1,836 1,836 1,620 1121 1
Land Held for Resale - - - - -
Other Assets - - - - -
Prepaid Expenses 11,830 11,201 11,163 12�5$ 111T I
Total Assets $62,789 $63,025 $72,195 74 92
Liabilities and Fund Balances:
Liabilities
Accounts Payable $3,116 $3,644 $3,971 $�Q Zf12 I
Accrued Payroll 2,245 2,326 2,548 33M 3.637
Due to Other Funds - - -
Deposits Payable 1,834 1,591 1,824 $14 L230I
Deferred Revenue 11,364 9,078 14,632 120-9
TRAN - - - - -
Claims Payable 5,944 5,800 5,524 ML4 612
Total Liabilities $24,503 $22,439 $28,499 47 7 9
Fund Balances
Reserved $5,915 $7,382 $10,679
Unreserved:
Designated 28,404 29,632 32,355 3
Undesignated 3,967 3,572 2,662 174
Nonspendable -
Restricted - - - - LM
Committed
Assim e - - _ - 11735
Unassi�-n�d
Total Fund Balances 38,286 40,586 43,696 X91M
Total Liabilities and Fund Balances $62,789 $63,025 $72,195 74 92 $ 6
Source:City of Huntington Beach.
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City of Huntington Beach
General Fund
Statement of Revenues,Expenditures and Changes in Fund Balance
For the year ended September 30,
(in thousands)
Fiscal Year Ended September 30,
2005 2006 2007 2008 2009
Revenues:
Property Taxes $48,119 $55,168 $60,606 11 67 227
Sales Taxes 22,122 24,003 23,724 4
Illility Taxes 20,004 21,170 21,479 2 20,616
Other Taxes 13,068 13,226 13,776 15 065 !ZD85
Licenses and permits 7,432 7,209 10,026 Z1831
Fines,Forfeitures and Penalties 4,365 4,288 4,165 4 0O
From Use of Money and Property 9,736 12,084 14,032 1 13 9
From Other Agencies 9,672 5,367 6,140 45M 4�
Charges for Current Service 7,419 13,876 15,695 16 019 ZU42
Other 7,416 3,224 2,252 1883 2
Total Revenues $149,353 $159,615 $171,895 IZU77 17
Expenditures:
Current:
City Council $ 254 $ 271 $ 287 S 295 _295-
City Administrator 1,582 5,504 1,490 L588 1-839
City Treasurer 1,547 1,446 1,060 1.357 1130$
City Attorney 2,771 2,272 2,438 2,
1771 206
City Clerk 679 828 932 992 130 4
Administrative Services 5,731 0 0 Q 0
Finance 2,501 3,310 4,400 402 U56
Human Resources 0 0 4,202 4, 225 4, 229
Planning 2,403 2,661 2,949 S 32
Building 3,291 3,576 4,193 3,844 a-9959
Fire 22,022 23,918 25,935 26 38 3
Information Services 5,726 6,540 6,437 6-Ml 7.M
Police 45,466 49,708 54,973 5 9$
Economic Development 776 1,121 1,538 1, 550
Community Services 11,030 13,179 13,258 14,039
Library Services 2,707 3,129 4,145 4"1 4J68
Public Works 19,124 24,752 23,488 21,824 19,573
Non-Departmental 12,145 12,793 12,873 2
Debt Service:
Principal 2,053 1,216 729 600 520
Interest 194 145 129 140 1z$
Total Expenditures $142,002 $156,369 $165,456 �
Excess of Revenues Over(Under)
Expenditures 7,351 3,246 6,439 (3,1631 (7.8751
Other Financing Sources(Uses)
Transfers In 11,873 7,305 4,632 1_1,a2l. 9
Proceeds of Long-Term Debt(Capital
Leases) 342 35 Q
Transfers Out (7,612) (8,251) (7,996) (7,4111 AU291
Total Other Financing Sources 4,603 (946) (3,329) 3 1 2
(Uses)
Net Change in Fund Balances 11,954 2,300 3,110 15,3551
Fund Balance-Beginning of Year 26,332 38,286 40,586
Faznd Balance-End of Year $38,286 $40,586 $43,696 $44 44
Source,City of Huntington Beach Comprehensive Annual Financial Report.
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Sales Taxes
A sales tax is imposed on retail sales or consumption of personal property. As shown in
the table above, sales tax revenues represented approximately 11.2% of the City's total general
fund revenues in fiscal year 2008-09 and represent an aggregate of approximately 10.8% of
general fund revenues in the City's fiscal year 2009-10 adopted budget.
Triple Flip. On March 2, 2004, voters approved a bond initiative formally known as the
AA ��
California Economic Recovery Act. This act authorized the issuance of$15 billion of economic
recovery bonds to finance ongoing State budget deficits, which are payable from a fund
established by the redirection of tax revenues known as the "Triple Flip." Currently, the State
has issued approximately $14.07 billion of economic recovery bonds. Under the "Triple Flip,"
one-quarter of local governments' 1% share of the sales tax imposed on taxable transactions
within their jurisdiction was redirected to the State. In an effort to eliminate the adverse impact
of the sales tax revenue redirection on local government, State legislation provided for certain
property taxes to be redirected to local government. Because these property tax monies were
previously earmarked for schools, the legislation provided for schools to receive other State
general fund revenues. It is expected that the swap of sales taxes for property taxes will
terminate once the economic recovery bonds are repaid,which is currently expected to occur in
approximately 14 years.
Sales Tax Rates. The City's sales tax revenue represents the City's share of the sales and
use tax, imposed on taxable transactions occurring within the City's boundaries. Sales and use
taxes are imposed under the Bradley-Burns Uniform Local Sales and Use Tax Law.As of April 1,
2009, the basic statewide sales and use tax rate is 8.25%. Many of the State's cities, counties,
towns and communities have special taxing jurisdictions (districts),which impose a transactions
(sales) and use tax. These districts increase the tax rate in a particular area by adding the district
tax to the combined statewide tax rate of 8.25%.The rates for these districts range from 0.10%to
1.00%per district.More than one district tax may be in effect in a given area.
The following table shows components of the City's current 8.75%sales and use tax rate.
City of Huntington Beach
Sales Tax Rate
As of April 1,2009
Jurisdiction Rate
State 6.25%
State(1) 1.00
City portion of State 5Q0 I
Orange County Transportation Authority 0.50
Total $5%
Source State of California,Board of Equalization
(1) As of April 1,2009,the State temporarily increased its sales tax by 1%,which will be in effect until July 1,2011
Motor Vehicle In-Lieu Tax
Vehicle license fees are assessed in the amount of 2% of a vehicle's depreciation market
value for the privilege of operating a vehicle on California's public highways. A program to
offset (or reduce) a portion of the vehicle license fees ("VLF") paid by vehicle owners was
established by Chapter 322, Statutes of 1998. Beginning January 1, 1999, a permanent offset of
25%of the VLF paid by vehicle owners became operative.Various pieces of legislation increased
the amount of the offset in subsequent years to the existing statutory level of 67.5% of 2%
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(resulting in the current effective rate of 0.65%). This level of offset was estimated to provide tax
relief of $3.95 billion in the fiscal year 2003-04. Beginning in fiscal year 2004-05, the State-local
agencies agreement permanently reduced the VLF rate to 0.65% and eliminated the VLF offset
program.
In connection with the offset of the VLF, the Legislature authorized appropriations from
the State general fund to "backfill" the offset so that the local governments,which receive all of
the vehicle license fee revenues, would not experience any loss of revenues.The legislation that
established the VLF offset program also provided that if there were insufficient general fund
moneys to fully backfill the VLF offset, the percentage offset would be reduced proportionately
(i.e., the license fee payable by drivers would be increased) to assure that local governments
would not be disadvantaged. In June 2003, the State Director of Finance ordered the suspension
of VLF offsets due to a determination that insufficient general fund moneys would be available
for this purpose, and,beginning in October 2003, VLF paid by vehicle owners were restored to
the 1998 level. However,the offset suspension was rescinded by the Governor on November 17,
2003, and offset payments to local governments resumed. Local governments received backfill
payments totaling $3.80 billion in fiscal year 2002-03. Backfill payments totaling $2.65 billion
were expected to be paid to local governments in fiscal year 2003-04. The State-local agreement
also provided for the repayment in August 2006 of approximately $1.2 billion that was not
received by local governments during the time period between the suspension of the offsets and
the implementation of higher fees. This repayment obligation was codified by Proposition 1A,
which was approved by voters in the November 2004 general election and was repaid early by
the State in August 2005. For a description of Proposition 1A, see CONSTITUTIONAL AND
STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS—Proposition
1A.09
The following table sets forth the Motor Vehicle In-Lieu Tax received by the City for the
last five fiscal years.
City of Huntington Beach
In-Lieu Payments
(in thousands)
2005-06 2006-07 2007-08 2008-09 2009-10
In-Lieu of VLF $11,1067 $14,077,556 $14,719 L4� ,921,724 15.200.000
Source:City of Huntington Beach Finance Department.
Transient Occupancy Taxes
The City levies a 10% transient occupancy tax on hotel and motel bills. The-Cites
0
Pier "eet sub area, Nvith the exeeption of the transient oeeupaney tax from one hotel, all Of
whieh is reeeived by the Revenues from transient occupancy taxes represented
approximately 3_Q%of the City's general fund revenues in fiscal year 2008-09.
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PROPERTY TAXES
Ad Valorem Property Taxes
Tax Levies, Collections and Delinquencies. Property taxes are levied by the County for each
fiscal year on taxable real and personal property which is situated in the County. Property taxes
collected in advance are recorded as deferred revenue and recognized as revenue in the year
they become available. The County levies,bills and collects property taxes for the City. Property
taxes paid to the City by the County within 60 days after the end of the fiscal year are"available'
and are,therefore,recognized as revenue.
For assessment and collection purposes, property is classified either as "secured" or
"unsecured"and is listed accordingly on separate parts of the assessment roll.The"secured roll"
is that part of the assessment roll containing State/assessed public utilities property and
property the taxes on which are a lien on real property sufficient, in the opinion of the County
Assessor,to secure payment of the taxes.Other property is assessed on the"unsecured roll."
Secured and unsecured property taxes are levied based on the assessed value as of
January 1,the lien date, of the preceding fiscal year.Secured property tax is levied on October 1
and due in two installments, on November 1 and March 1.Collection dates are December 10 and
April 10 which are also the delinquent dates. At that time, delinquent accounts are assessed a
penalty of 10%. Accounts that remain unpaid on June 30 are charged an additional 1.5 % per
month.Such property may thereafter be redeemed by payment of a penalty of 1.5%per month to
the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five
years or more, the property is deeded to the State and then is subject to sale by the County
Treasurer.
Unsecured property tax is levied on July 1 and due on July 31,and has a collection date of
August 31 which is also the delinquent date. A 10% penalty attaches to delinquent unsecured
taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1.5%
attaches to them on the first day of each month until paid. The taxing authority has four ways of
collecting delinquent unsecured personal property taxes: (1) bringing a civil action against the
taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order
to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for
record in the County Clerk and County Recorder's office in order to obtain a lien on certain
property of the taxpayer; and (4) seizing and selling personal property, improvements, or
possessory interests belonging or assessed to the assessee.
Assessed Valuation. All property is assessed using full cash value as defined by Article
XIIIA of the State Constitution. State law provides exemptions from ad valorem property
taxation for certain classes of property such as churches, colleges, nonprofit hospitals and
charitable institutions.
Future assessed valuation growth allowed under Article XIIIA (new construction,certain
changes of ownership, 2% inflation) will be allocated on the basis of "sites" among the
jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and
schools will share the growth of "base" revenues from the tax rate area. Each year's growth
allocation becomes part of each agency's allocation in the following year. The availability of
revenue from growth in tax bases to such entities may be affected by the establishment of
redevelopment agencies which, under certain circumstances, may be entitled to revenues
resulting from the increase in certain property values.
The passage of Assembly Bill 454 in 1987 changed the manner in which unitary and
operating nommitary property is assessed by the State Board of Equalization. The legislation
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deleted the formula for the allocation of assessed value attributed to such property and imposed
a State-mandated local program requiring the assignment of the assessment value of all unitary
and operating non-unitary property in each county of each State assessee other than a regulated
railway company.The legislation established formulas for the computation of applicable county-
wide rates for such property and for the allocation of property tax revenues attributable to such
property among taxing jurisdictions in the county beginning in fiscal year 1988-89. This
legislation requires each County to issue each State assessee, other than a regulated railway
company,a single tax bill for all unitary and operating nommitary property.
Assessment Appeals. Property tax values determined by the County Assessor may be
subject to appeal by property owners. Assessment appeals are annually filed with the
Assessment Appeals Board for a hearing and resolution. The resolution of an appeal may result
in a reduction to the County Assessor's original taxable value and a tax refund to the
applicant/property owner.
Each assessment appeal could result in a reduction of the taxable value of the real
property, personal property or possessory interest of the property which is the subject of the
appeal. Alternatively,an appeal may be withdrawn by the applicant or the Assessment Appeals
Board may deny or modify the appeal at a hearing or by stipulation.
Effect of Delinquencies and Foreclosures on Property Tax Collections.As described above,once
an installment of property tax becomes delinquent, penalties are assessed commencing on the
applicable delinquency date until the delinquent installment(s) and all assessed penalties are
paid.In the event of foreclosure and sale of property by a mortgage holder,all past due property
taxes, penalties and interest are required to be paid before the property can be transferred to a
new owner.
The level of default and foreclosure activity has affected certain homeowners nationwide.
Within the State, the greatest impacts to date are in regions of the Central Valley, the Inland
Empire,and other areas in the State where the large numbers of new mortgages were originated
in more affordable areas. The increased level of default and foreclosure activity has resulted in
downward pressure on home prices in the affected areas.
Set forth in the tables below are assessed valuation for secured and unsecured property
within the City of Huntington Beach and tax levies and collections (as of the close of each fiscal
year)for the five most recent fiscal years.
Gross Assessed Value of All Taxable Property
(in thousands)
Fiscal Year Secured Unsecured Total(1)
2005-06 20.926.71 $ 790,513 21.717.225
2006-07 22.819.074 219 23.781.272
2007-08 24,294,709 1 66. 668 25,361.37
2008-09 1 39�.636 2 1 2
2009-10 2 .150,876 26,23g•218
Source:City of Huntington Beach Finance Department.
(1)Includes redevelopment project area incremental assessed valuation.
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General Fund Property Tax Levies and Collections
Secured Taxes
(in thousands)
Total Delinquency Delinquency
Fiscal Year Total Levy Collections Amount Percent
2004-05 $34,403 $33,857 $ 570 1.7%
2005-06 36,556 35,816 795 2.2
2006-07 39,174 37,816 1,278 3.3
2007-08 42_269 1734 4.1
2008-09 41569 1 2 3_7
Source:City of Huntington Beach Finance Department.
In 1978, the voters of the State passed Proposition 8, a constitutional amendment to
Article XIIIA that allows a temporary reduction in assessed value when real property suffers a
decline in value.A decline in value occurs when the current market value of real property is less
than the current assessed(taxable)factored base year value as of the lien date,January 1.
See also "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS---Article XIIIA of the California Constitution."
Principal Taxpayers. The following table sets forth the principal secured property
taxpayers in the City as of fiscal year 2009-10,the most current information available.
Principal Secured Property Taxpayers
Fiscal Year 2009-10
(dollars in thousands)
2009-10 Assessed %of
Property Owner Primary Land Use Valuation Total(1)
1. Mayer Financial LP Possessory Int• 51.944&06.04 .37°°
2. Bella Terra Associates LLC Commercial 1.925.246.28 3.34
3. Bella Terra OfficeJY LLC* Commercial 1.284.601.18 223
4. AES Huntington Beach LLC L Ttilitiess 876,314.45
5. CIM Huntington LLC CIN4 Huntington-LLC Commercial 823,904.82 1-
6. NF Huntington Plaza LP* Corr mercial 0,2
T The Boeing Company/McDonnell Douglas* Unsecured 9 55
8. Waterfront Construction Int 4 4 724.90.75
9, Essex Huntington Breakers Residential 2 42 . 9_5
10. Atl_anta Huntington Beach LLC* Commercial. 2 9 247. 9 52
8,786,421.38 1 .2 °°
Source:California Municipal Statistics,Inc.
(1) 2009-10 Local Secured Assessed Valuation: ?631533.09
*Pending appeals on parcels
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OTHER FINANCIAL INFORMATION
Labor Relations
City employees are represented by eight labor union associations,the principal one being
Municipal Employees Association which represents approximately 43% of all City employees.
Currently 99% of all permanent City employees are covered by negotiated agreements.
Negotiated agreements have the following expiration dates:
Negotiated Employee Agreements
Contract Number of
Bargaining Unit Expiration Date Employees
Management Employees Organization 12/19/2011 11
Municipal Employees Association 6/30/2012 4�8�2�
Police Officer's Association 3/31/2072 245
Police Management Association 6/30/2010 14
Firefighters'Association 6/24/2011 121
Fire Management Association 6/30/2012 6
Marine Safety Officers'Association 9/30/2011 13
Surf City Lifeguard Employees'Association x i 112
Source:City of Huntington Beach Finance Department.
Expired contracts are currently under negotiation. The City has never had an employee
work stoppage.
Risk Management
The City is exposed to various risks of losses related to torts; theft of, damage to and
destruction of assets;errors and omissions;injuries to employees,and natural disasters.The City
records all of these claims as expenditures in the General Fund. The liability for these claims is
recorded as part of long-term obligations in the government-wide financial statements. The City
records the amount of claims payable at year-end that is due and payable at year-end in the fund
financial statements. The full amount of claims is reported as a liability in the government-wide
financial statements.Liabilities include amounts incurred,but not reported.
Claims of up to $1,000,000 are paid from the General Fund. The City is also a participant
in the Big Independent Cities Excess Pool Joint Powers Authority (BICEP), which shares
payments for claims between $1,000,000 and $2,000,000. It also provides general liability
insurance of $25,000,000 above the City's retention of $1,000,000. BICEP was created by a joint
powers agreement between the City of Huntington Beach and four other local entities for the
purpose of providing joint insurance coverage and related risk management services for member
cities.BICEP allows member entities to finance claims payment pool for certain liability claims in
excess of $1,000,000 to a limit of 27.000.00 . BICEP's governing board has one representative
from each city (either a member of the City Council or designate). Current members must
approve any changes to the board. Each participating City pays an insurance premium to BICEP
that is used to fund the operating and debt service requirements. Payments for claims beyond
what is covered by BICEP from $27 000 000 to $37 000 000 are paid by excess insurance
coverages There were no liability claims in the last three years that exceeded the coverage limi
Workers' compensation claims of up to $1,000,000 per claim are paid from the General
Fund. The BICEP is a member of CSAC-Excess Insurance Authority for excess workers'
compensation coverage.Payments for claims from$1,000,000 to$5,000,000 are shared.Payments
for claims between$5,000,000 and$200,000,000 are paid by excess insurance coverage.
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All funds of the City participate in the program and make payments to these funds based
on estimated cost information.
Claims activity and liabilities relating to the current and prior year are(in thousands):
Workers Liability
Compensation Insurance Total
Balance September 30,2007 %,M6 $ 1 RUM
Additions Z2% 2268 4 4844
Reductions (22M 55 JZ4
Net Increase(Decrease) 82 1 71 LhM
Balance September 30,2008 5Q4 5 22$ 1
Additions 381_ Z-655 2MM
Reductions f5"604) 2 7 f8.3681
Net Increase(Decrease) 777 1Q 668
Balance September 30,2009 $$1,2$ 5 2 Y504
Below is a reconciliation of the above schedule of total claims payable to the financial
statements(in thousands):
Current Claims Payable-Reported on the Balance Sheet of Both the Government- $
Wide and Fund Statements
Claims Payable-Long-Term(Greater than One Year)-Reported in Government-
Wide Statements,but not in Fund Statements ka72I
Total $12
Employee Retirement Plans
The City provides a supplemental retirement plan for all employees hired prior to L27
(exact dates are different for various associations). It is a single-employer defined benefit lam.I
is a defined benefit plan and will pay the retiree an additional amount to his or her normal
amount for life The City s contracts with employee bargaining associations establish the plan
These associations must agree to any changes to the plan The amount will cease upon the
employee's death The amount that is computed as a factor of an employee's normal retirement
allowance is computed at retirement and remains constant for his or her life Of the 1,143 active
Qrnployees reported on the September 30 2009 data only 541 were eligible for plan benefits. No
separately Prepared financial statements are prepared for this plan and it is not included in the
financial report of any other pension plan In prior years the City had prefunded these benefits
and recorded the amounts in a fiduciary fund During the year, the City established the
Supplemental Employee Retirement Plan and Trust and transferred $24 918 000 to an
irrevocable trust from the prefunded amounts The plan and trust are still reported as a fiduciary
fund pension trust.
The City annually transfers amounts from the various City funds to a pension trust fund.
The City is required to contribute the actuarially determined rate of 4 23%of total payroll for all
permanent employees Administrative costs of this plan are financed through investment
earnings.
The Ci i s annual pension cost and net pension obligation for this plan fiscal year 2008-09
were(in thousands):
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Annual required contribution 3 47
Interest on net pension obligation 244
Adjustment to annual required contribution Q72
Annual pension cost 3,348
Contributions made (3.4761
Increase(decreasel in net pension obligation 12
Net Pension Obligation-Beginning of Year
Net Pension Obligation-End of Year 12
The annual required contribution was determined as part of an independent actuarial
yaluation using the Entree Normal Actuarial Cost Method which is a prTQjected benefit full-
cost method which takes into account those benefits that are expected to be earned in the future
as—W .11 as those already accrued.The actuarial assumptions used were:
• Rate of return on present and future assets-5 5%per annum
• Projected salary increases for covered employees due to inflation - 3.0% to 15.0% per
annum depending on years of service
• Projected salary increases due to merit-0%
-Inflation rate-3.0%
• Post employment benefit increases-0%
• Amortization of unfunded liability-level percentage of nay ending in 2034(closed)
° Actuarial value of assets-market value
Below is the required three-year trend information(dollar amounts in thousands):
Annual Percentage of Net Pension
Fiscal Year Pension Cost APC Funded li ati n
2006 QZ $2.691 166% $4�7
20OZ-0$ 2 2 11 °°
2008-09 $3� 1 4°° 12
Below is other required trend information(dollar amounts in thousands):
Fiscal Year Annual Percentage
Ending Required f AR
September 30 Contribution COntrjbuted
2007 2$5Q 1 7°°
2008 41 9 1OWL.
2009 47 100%
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Below is the five-year trend of funding progress(dollar amounts in thousands):
Schedule of Funding Progress
Retirement Plan-Sugplemental
(in thousands)
Er UAAL as
Actuarial Normal Actuarial Unfunded a°o f
Valuation Accrued Value of AAL Funded Covered Gov r d
Date Liabi i Assets fUAAL) Rati11 Payroll
20M-05-05 4Q$7 14 22 (26MM . °0 84 -4 . °o
2005-06 $43,066 3M 721 --36.40.
2006-07 $ 1 �45 4QX1-- -
2007-08 4.3_.1% °L
2008-09 9 7 24 9 (34.596) 41.9% -40.4°0
Source:City of Huntington Beach Finance Department.
The schedule of funding progress above presents multiyear trend information about
hetlter the actuarial value of plan assets is increasing or decreasing over time relative to the
actuarial accrued liability for benefits.
Since the City is required to adopt GASB 25 for the supplemental pension plan the
difference between the ARC and the amount of pension cost funded for the years in which there
was an actuarial study must be recorded as a liability in the government-wide financial
statements The amount of this liability 4 312 000 Benefits are recognized when-due-and
pay- able,
City's Retirement Supplement Plan Contributions
(in thousands)
Fiscal Annual Percentage of Net Pension Unfunded Actuarial
Year Pension Cost ARC Funded Obligation Liability
2004-05 $2,900 127% $7,640 $29,093
2005-06 $2,851 138° $6,548 128,796
2006-07 $2,691 166L $4,775
2007-08 $3,292 11 O 4 44 0
2008-09 $3.348 104% $4�2
Source:City of Huntington Beach Finance DepartmentDraft p.-44).
Post-Employment Medical Insurance
The City agreed via contract with each employee association to provide post-
em loyment medical insurance to retirees These Other Post Employment Benefits (OPEB) are
based on years of service and are available to all retirees who meet all three of the following
• -At the time of retirement the emploWe is employed the City
• At the time of retirement the eml2lQyee has a minimum of ten years of service credit or is grante
sea v_i-ce connected disability retire_ ment
Fallowing official separation from the City,PERS grants a retirement allowance
-32-
The City's obligation to Provide the benefits to a retiree ceases when either of the
following occurs:
® During=any period the retiree is eligible to receive health insurance at the expense of another employer
® The retiree becomes eligible to enroll automatically or voluntarily in Medicare
The maximum subsidy a retiree is entitled to is$344 Per month after 25 years of service.If
a retiree dies the benefits that would be Payable for his or her insurance are provided to the
spouse or family for 18 months Benefits for insurance premiums are payable based on the Years
of service credit for the retiree The retiree may use the subsidy for any of the medical insurance
plans that the City's active emplQyeesmay enroll.
The City utilizes the California Employers' Retiree Benefit Trust (CERBT) for the post-
m=lovment medical insurance benefit Benefits paid from the CERBT were $688 000 for fiscal
year ending September 30 2009 The assets of the CERBT are in an irrevocable trust The City's
policy is to make 100%of each year's ARC.Actuarial assumptions were:
o Entry age normal-30 year amortization of unfunded liabilities
® Discount rate-7.75%
® All other retirement assumptions equivalent to Ca1PERS assumptions used for the City's normal
retirement plan
Below are the required disclosures for this plan(in thousands):
Actuarial Accrued liability
Normal Cost 818
Assets 8 727
Funded Status
The City's actual contributions annually required contribution (ARC) Net OPEB
obligation/asset (NOO/NOA) and Annual OPEB Cost (AOCI were computed as follows (in
thousa-njj5
Direct Contributions—PERS and City Health Plan Contributions 872
Implicit Subsidy 843
Total Actual Contributions 1 71
Annual Required Contribution(ARC)
Amortization of Actuarially Accrued Liability 72
Normal Cost 843
Total ARC 1 71
Interest on(NOA)
Adjustment to the ARC 487
Total AOC $S�
Development of NOO/NOA
NM gang 't�ar
AO-C L564
EE mplover Contribution 1 71
NOA $(8.378)
The City's actual contributions of$1 715 000 for fiscal year ending September 30.2009.are
eeua to the annual required contribution The actual contribution is reported as expenses in the
non-departmental governmental activities program.
-33-
Three-year trend information is disclosed below(in thousands)
Annual OPEB Cost
AOC)(Em to er Actual Percentage of ACC Net OPEB
Fiscal Year Contribution) Contribution Contributed Obligation(Asset)
9/30/07 N/A NL N/A 1NLA
OEM/O8 2114 4W.20. 227
9/30/09 IL564 1 7 109--M.
As of September 30 2009 the most recent actuarial valuation date. the plan was 44.8%
funded. The actuarial accrued liability for benefits was $19.5 million, and the actuarial value of
assets was $8 7 million resulting in an unfunded accrued liability (UAAL) of$10 7 million. The
covered payroll (annual payroll of active employees covered by the plan) was$88.9_million,and
theratio of the UAAL to the covered payroll was 12.1%.
Other Post Employment Benefits—Medical Retirement
Schedule of Funding Progress
(In Thousands)
Unfunded
Actuarial Actuarial Actuarial UAAL as a°
Actuarial Value of Accrued Accrued ve of Covered
Valuation Date Assets Lwwi 1Wbi1' Funded Ratio _Pamu EaYKOQII
9/30/08 Update $$81M 37.2% $7$ _ -18.70/Q
9/30/09 Actual $(10.7471 A % -12.1%
The medical trend rate represents the long-term expected growth of medical benefits paid
by the plan due to non-age-related factors such as general medical inflation. utilization. new
technology, and the like The following table sets forth the trend assumption used for the
valuation.
Year Annual Rate
2 9- 1 . °°
2 1 -11 °°
2_ 1� °°
12- 7.0%
2013-14 Lato
2014-15 5.51yo
2015-16-16 5.0%
Actuarial valuations of an ongoing=plan involve estimates of the value of reporte
amounts and assumptions about the probability of occurrence of events far into the future
Examples include assumptions about future employment mortality, and the healthcare cost
trend Amounts determined regarding the funded status of the plan and the annual required
contributions of the City are subiect to continual revision as actual results are compared with
past expectations and new estimates are made about the future The schedule of funding
progress above, presents multiyear trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial liabilities for benefits.
Proiections of benefits for financial reporting purposes are based on the substantive plan
(the flan as understood by the City and plan members) and include the types of benefits
provided at the time of each valuation The actuarial methods and assumptions used include
techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial value of assets consistent with the long-term perspective of the
calculatiorn&
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Short-Term Obligations
The City currently has no outstanding short-term obligations.
Long-Term Obligations
General Obligation Debt. As of September 30, 2M the City had no long-term general
obligation bonded indebtedness outstanding and has never defaulted on any of its bonded
indebtedness previously issued.The City has no authorized but unissued debt.
Lease Obligations. The City has made use of various lease arrangements with the
Huntington Beach Public Financing Authority to finance capital projects through the issuance of
certificates of participation and lease revenue bonds.
The following table is a summary of the City's long-term general fund-secured
obligations as of September 30,2009.
Summary of Long-Term Obligations
Total
Original Outstanding FY 2010
Issue Principal Payments
1997 Lease Revenue Bonds(1) $8,070,000 2.860.000 $
2000 Lease Revenue Bonds(1) 18,310,000 12985 M 144 0
2001A Lease Revenue Bonds 31,360,000 26,375.000 1Q7 0
2001B Lease Revenue Bonds 31,095,000 1705= 2 17
2004 Judgment Obligation Bonds 12,500,000 kZZM
Total Long Obligations $88,835,000 $66,589,000 7.315.000
Source:City of Huntington Beach Comprehensive Annual Financial Report.
(1)This issue to be refunded with the proceeds of the Bonds.
Overlapping Debt
Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by
California Municipal Statistics, Inc. and effective September 30, 2009. The Debt Report is
included for general information purposes only. The City has not reviewed the Debt Report for
completeness or accuracy and makes no representation in connection therewith.
The Debt Report generally includes long-term obligations sold in the public credit
markets by public agencies whose boundaries overlap the boundaries of the City in whole or in
part. Such long-term obligations generally are not payable from revenues of the City (except as
indicated) nor are they necessarily obligations secured by land within the City. 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.
The contents of the Debt Report are as follows: (1) the first column indicates the public
agencies which have outstanding debt as of the date of the Debt Report and whose territory
overlaps the City; (2) the second column shows the respective percentage of the assessed
valuation of the overlapping public agencies identified in column 1 which is represented by
property located in the City; and (3) the third column is an apportionment of the dollar amount
of each public agency's outstanding debt(which amount is not shown in the table)to property in
the City, as determined by multiplying the total outstanding debt of each agency by the
percentage of the City's assessed valuation represented in column 2.
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CITY OF HUNTINGTON BEACH
Direct and Overlapping Bonded Debt as of September 30,2009
2008-09 Assessed Valuation$26 362 105 672 (after deducting;$1 727 674 453)of incremental redeveloVment
valuation.
Debt Repaid with Property Taxes(Tax and Assessment Debt):
Debt
Percent Avolicable
Awkaj& jQQU
Tax Debi
Metropolitan Water District 1.42 % 4.184,241
Coast Community College District 30.2780% 1OL346-179
Huntington Beach Union High School District 78.0180% 179.827,588
Huntington Beach City School District 97.3440% 26,836,730
Los Alamitos Unified School District School Facilities District No 1 1.2290% �Q
Los Alamitos Unified School District Comm Facilities District 1990-1 1.229 °°
i of Huntington Beach Community Facilities Districts 100.0000% 4aMOM
TAX AND ASSESSMENT DEBT 56.5
Other Debt
Other Entities:
Orange County General Fund Obligations 28 7 77
Orange County Pension Obligations 41"23. 77
Orange County Board of Education Certificates of Participation 1 0
MWDOC Facilities Corporation 1 14 2
North Orange County Regional Occupation Program Certificates of
Participation 1
Huntington Beach Union High School District Certificates of 4�
Participation
Los Alamitos Unified School District Certificates of Participation 249,117
Fountain Valley School Districts Certificates of Participation) 7124
Huntington Beach City School District Certificates of Participation 21
Ocean View School District Certificates of Participation 2.409.282
Westminster School District Certificates of Participation 6,964,076
City of Huntington Beach judgment Obligation Bonds 9,285,000
City of Huntington Beach General Fund Obligations 52Aiam-
TOTAL GROSS AND OVERLAPPING BONDED DEBT NOT REPAID
BY PROPERTY TAXES 173205,876
Less Self Supporting Debt of MWDOC Water Facilities Corl2oration (1,314,239
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND
OBLIGATION DEBT 171.BR 37
CROSS COMBINED TOTAL DEBT 528.402.659-
Ratios to 2008-2009 Assessed Valuation
Total Overlapping Debt and Assessment Debt 1.27°°
Ratios to Adjusted Assessed Valuations
Combined Direct Debt($69,100.000) 0.2 °°
Gross Combined Total Debt 2. 1°°
Net Combined Total Debt 2 Q0°ls
State School Building Aid Rgpayable $ 0.00
Source:California Municipal Statistics,Inc.and City of Huntington Beach-Finance Department
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CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,REVENUES AND
APPROPRIATIONS
Article XIIIA of the California Constitution
On June 6, 1978, California voters approved an amendment (commonly known as both
Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment,
which added Article XIIIA to the California Constitution, among other things affects the
valuation of real property for the purpose of taxation in that it defines the full cash property
valve to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill
under"full cash value," or thereafter,the appraised value of real property newly constructed, or
when a change in ownership has occurred after the 1975 assessment."The full cash value may be
adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the
consumer price index or comparable local data at a rate not to exceed 2%per year,or reduced in
the event of declining property value caused by damage,destruction or other factors including a
general economic downturn.The amendment further limits the amount of any ad valorem tax on
rea'i property to one percent of the full cash value except that additional taxes may be levied to
pay debt service on indebtedness approved by the voters prior to July 1, 1978, and bonded
indebtedness for the acquisition or improvement of real property approved on or after July 1,
1978 by two-thirds of the votes cast by the voters voting on the proposition.
Legislation enacted by the California Legislature to implement Article XIIIA provides
that all taxable property is shown at full assessed value as described above. In conformity with
this procedure, all taxable property value included in this Official Statement (except as noted) is
shown at 100%of assessed value and all general tax rates reflect the$1 per$100 of taxable value.
Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100%
of assessed value.
The voters of the State subsequently approved various measures which further amended
Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real
property between spouses or (ii) the principal residence and the first$1,000,000 of the Full Cash
Value of other real property between parents and children, do not constitute a "purchase" or
"change of ownership"triggering reappraisal under Article XIIIA. Other amendments permitted
the State Legislature to allow persons over the age of 55 who meet certain criteria or "severely
disabled homeowners"who sell their residence and buy or build another of equal or lesser value
within two years in the same county, to transfer the old residence's assessed value to the new
residence. Other amendments permit the State Legislature to allow persons who are either 55
years of age or older, or who are "severely disabled," to transfer the old residence's assessed
value to their new residence located in either the same or a different county and acquired or
newly constructed within two years of the sale of their old residence.
In the November 1990 election, the voters approved an amendment of Article XIIIA to
permit the State Legislature to exclude from the definition of "new construction" certain
additions and improvements, including seismic retrofitting improvements and improvements
utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings
after November 6,1990.
Article XIIIA has also been amended to provide that there would be no increase in the
Full Cash Value base in the event of reconstruction of the property damaged or destroyed in a
disaster.
Section 51 of the Revenue and Taxation Code permits county assessors who have reduced
the assessed valuation of a property as a result of natural disasters,economic downturns or other
factors, to subsequently "recapture" such value (up to the pre-decline value of the property) at
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an annual rate higher than 2%, depending on the assessor's measure of the restoration of value
of the damaged property.
Section 4 of Article XIIIA also provides that cities, counties and special districts cannot,
without a two-thirds vote of the qualified electors, impose special taxes, which has been
interpreted to include special fees in excess of the cost of providing the services or facility for
which the fee is charged,or fees levied for general revenue purposes.
Both the California State Supreme Court and the United States Supreme Court have
upheld the validity of Article XIIIA.
Article XIIIB of the California Constitution
On November 6, 1979, California voters approved Proposition 4, the Gann Initiative,
which added Article XIIIB to the California Constitution. In June 1990, Article XIIIB was
amended by the voters through their approval of Proposition 111. Article XIIIB of the California
Constitution limits the annual appropriations of the State and any city, county, school district,
authority or other political subdivision of the State to the level of appropriations for the prior
fiscal year, as adjusted annually for changes in the cost of living, population and services
rendered by the governmental entity.The"base year'for establishing such appropriation limit is
fiscal year 1978-79. Increases in appropriations by a governmental entity are also permitted (1) if
financial responsibility for providing services is transferred to the governmental entity,or(2) for
emergencies so long as the appropriations limits for the three years following the emergency are
reduced to prevent any aggregate increase above the Constitutional limit.Decreases are required
where responsibility for providing services is transferred from the government entity.
Appropriations subject to Article XIIIB include generally any authorization to expend
during the fiscal year the proceeds of taxes levied by the State or other entity of local
government, exclusive of certain State subventions, refunds of taxes, benefit payments from
retirement, unemployment insurance and disability insurance funds. Appropriations subject to
limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or
legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according
to law by a vote of the electors of the issuing entity voting in an election for such purpose,
appropriations required to comply with mandates of courts or the Federal government,
appropriations for qualified outlay projects,and appropriations by the State of revenues derived
from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels.
"Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to any
entity of government from (1) regulatory licenses, user charges,and user fees to the extent such
proceeds exceed the cost of providing the service or regulation, (2) the investment of tax
revenues and (3) certain State subventions received by local governments. As amended by
Proposition 111,the appropriations limit is tested over consecutive two-year periods.Any excess
of the aggregate "proceeds of taxes" received by the City over such two-year period above the
combined appropriations limits for those two years is to be returned to taxpayers by reductions
in tax rates or fee schedules over the subsequent two years.
As amended in June 1990, the appropriations limit for the City in each year is based on
the limit for the prior year, adjusted annually for changes in the costs of living and changes in
population, and adjusted, where applicable, for transfer of financial responsibility of providing
services to or from another unit of government. The change in the cost of living is, at the City's
option, either (1) the percentage change in California per capita personal income, or (2) the
percentage change in the local assessment roll for the jurisdiction due to the addition of
nonresidential new construction.The measurement of change in population is a blended average
of statewide overall population growth,and change in attendance at local school and community
college("K-14")districts.
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Article XIIIB permits any government entity to change the appropriations limit by vote of
the electorate in conformity with statutory and Constitutional voting requirements,but any such
voter-approved change can only be effective for a maximum of four years.
The City's appropriations limit was$602,877,623 for fiscal year 2008-09 and$$646.330,684
for fiscal year 2009-10 which is well below the total City budget amounts for both years.
Therefore,the City did not have a need to calculate the appropriations subject to limitation.
Proposition 218
On November 5, 1996, the voters of the State approved Proposition 218, a constitutional
initiative, entitled the "Right to Vote on Taxes Act" ("Proposition 218"). Proposition 218 added
Articles XIII C and XIII D to the California Constitution and contained a number of interrelated
provisions affecting the ability of local governments, including the City, to levy and collect both
existing and future taxes, assessments, fees and charges. The City is unable to predict whether
and to what extent Proposition 218 may be held to be constitutional or how its terms will be
interpreted and applied by the courts. Proposition 218 could substantially restrict the City's
ability to raise future revenues and could subject certain existing sources of revenue to reduction
or repeal, and increase the City's costs to hold elections, calculate fees and assessments, notify
the public and defend its fees and assessments in court. However, the City does not presently
believe that the potential financial impact on the City as a result of the provisions of Proposition
218 will adversely affect the City's ability to pay its debt obligations and perform its other
obligations payable from the General Fund as and when due.
Article XIII C requires that all new local taxes be submitted to the electorate before they
become effective. Taxes for general governmental purposes of the City require a majority vote
and taxes for specific purposes, even if deposited in the City's General Fund, require a two-
thirds vote. Further, any general purpose tax that the City imposed, extended or increased
without voter approval after December 31,1994 may continue to be imposed only if approved by
a majority vote in an election held within two years of November 5, 1996. The City has not
enacted, imposed, extended or increased any tax without voter approval since January 1, 1995.
These voter approval requirements of Proposition 218 reduce the flexibility of the City to raise
revenues through General Fund taxes,and no assurance can be given that the City will be able to
impose,extend or increase such taxes in the future to meet increased expenditure requirements.
Article XIII C also expressly extends to voters the power to reduce or repeal local taxes,
assessments, fees and charges through the initiative process, regardless of the date such taxes,
assessments, fees or charges were imposed. This extension of the initiative power is not limited
by the terms of Proposition 218 to fees imposed after November 6, 1996 and absent other legal
authority could result in retroactive reduction in any existing taxes, assessments or fees and
charges. SB 919 provides that the initiative powers extended to voters under Article XIII C likely
excludes actions construed as impairment of contracts under the contract clause of the United
States Constitution. SB 919 provides that the initiative power provided for in Proposition 218
"shall not be construed to mean that any owner or beneficial owner of a municipal security,
purchased before or after November 6, 1998, assumes the risk of,or in any way consents to, any
action by initiative measure that constitutes an impairment of contractual rights" protected by
the United States Constitution. However, no assurance can be given that the voters of the City
will not, in the future, approve an initiative which reduces or repeals local taxes, assessments,
fees or charges that currently are deposited into the City's General Fund. Further, "fees" and
"charges" are not defined in Article XIII C or SB 919, and it is unclear whether these terms are
intended to have the same meanings for purposes of Article XIII C as they do in Article XIII D.
Accordingly, the scope of the initiative power under Article XIII C could include all sources of
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General Fund monies not received from or imposed by the federal or State government or
derived from investment income.
The initiative power granted under Article XIII C of Proposition 218,by its terms,applies
to all local taxes,assessments, fees and charges. The City is unable to predict whether the courts
will ultimately interpret the initiative provision to be limited to property related local taxes,
assessments, fees and charges. No assurance can be given that the voters of the City will not,in
the future, approve an initiative which reduces or repeals local taxes, assessments, fees or
charges which are deposited into the City's General Fund.The City believes that in the event that
the initiative power was exercised so that all local taxes, assessments, fees and charges which
may be subject to the provisions of Proposition 218 are reduced or substantially reduced, the
financial condition of the City, including its General Fund, would be materially adversely
affected. As a result, there can be no assurances that the City would be able to pay the
Certificates as and when due or any of its other obligations payable from the General Fund.
Article XIII D of Proposition 218 adds several new requirements to make it more difficult
for local agencies to levy and maintain "assessments' for municipal services and programs.
"Assessment" is defined in Proposition 218 and SB 919 as any levy or charge upon real property
for a special benefit conferred upon the real property. This includes maintenance assessments
imposed in City service areas and in special districts.In most instances,in the event that the City
is unable to collect assessment revenues relating to specific programs as a consequence of
Proposition 218,the City will curtail such services rather than use amounts in the General Fund
to finance such programs.Accordingly,the City anticipates that any impact Proposition 218 may
have on existing or future taxes,fees, and assessments will not adversely affect the ability of the
City to pay the Certificates as and when due. However,no assurance can be given that the City
may or will be able to reduce or eliminate such services in the event the assessments that
presently finance them are reduced or repealed.
Article XIII D also adds several provisions,including notice requirements and restrictions
on use, affecting "fees" and "charges" which are defined as "any levy other than an ad valorem
tax, a special tax, or an assessment, imposed by a local government upon a parcel or upon a
person as an incident of property ownership, including a user fee or charge for a property
related service. The annual amount of revenues that are received by the City and deposited into
its General Fund which may be considered to be property related fees and charges under Article
XIII D of Proposition 218 is not substantial. Accordingly, presently the City does not anticipate
that any impact Proposition 218 may have on future fees and charges will not adversely affect
the ability of the City to pay the principal of and interest on the Certificates as and when due.
However,no assurance can be given that the City may or will be able to reduce or eliminate such
services in the event the fees and charges that presently finance them are reduced or repealed.
Additional implementing legislation respecting Proposition 218 may be introduced in the
State legislature;from time to time that would supplement and add provisions to California
statutory law. No assurance may be given as to the terms of such legislation or its potential
impact on the City.
Proposition 1A of 2004
The California Constitution and existing statutes give the legislature authority over
property taxes, sales taxes and the vehicle license fee (the "VLF"). The legislature has authority
to change tax rates,the items subject to taxation and the distribution of tax revenues among local
governments, schools, and community college districts. The State has used this authority for
many purposes, including increasing funding for local services, reducing State costs, reducing
taxation, addressing concerns regarding funding for particular local governments, and
restructuring local finance.
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The California Constitution generally requires the State to reimburse the local
governments when the State "mandates" a new local program or higher level of service. Due to
the ongoing financial difficulties of the State,it has not provided in recent years reimbursements
for many mandated costs. In other cases, the State has "suspended" mandates, eliminating both
responsibility of the local governments for complying with the mandate and the need for State
reimbursements.
The 2004 Budget Act, related legislation and the enactment of Proposition lA of 2004
(described below) dramatically changed the State-local fiscal relationship. These constitutional
and statutory changes implemented an agreement negotiated between the Governor and local
government officials(the"State-local agreement")in connection with the 2004 Budget Act.
One change related to the reduction of the VLF rate from 2%to 0.65%of the market value
of the vehicle. In order to protect local governments, which had previously received all VLF
revenues, the 1.35 percent reduction in VLF revenue to cities and counties from this rate change
was backfilled by an increase in the amount of property tax revenues they receive. This worked
to the benefit of local governments,because the backfill amount annually increases in proportion
to the growth in secured roll property tax revenues,which has historically grown at a higher rate
than VLF revenues. Proposition 1A of 2004 requires the State to provide local governments with
equal replacement revenues.
On November 3, 2004 the voters of the State approved Proposition 1A ("Proposition 1A
of 2004").Proposition 1A of 2004 amended the State Constitution to,among other things,reduce
the Legislature's authority over local government revenue sources by placing restrictions on the
State's access to local governments' property, sales, and VLF revenues as of November 3, 2004.
Pursuant to Proposition 1A of 2004, the State is able to borrow up to 8% of local property tax
revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal
hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any
amounts borrowed are required to be repaid within three years. Proposition lA of 2004 also
permits the State to borrow from local property tax revenues for no more than two fiscal years
within a period of 10 fiscal years,and only if previous borrowings have been repaid.In addition,
the State cannot reduce the local sales tax rate or restrict the authority of the local governments
to impose or change the distribution of the Statewide local sales tax. Proposition lA of 2004
generally prohibits the State from mandating activities on cities, counties, or special districts
without providing the funding needed to comply with the mandates, and if the State does not
provide funding for the activity that has been determined to be mandated, the requirement on
cities,counties,or special districts to abide by the mandate is suspended.Proposition 1A of 2004
also expanded the definition of what constitutes a mandate to encompass State action that
transfers to cities, counties, and special districts financial responsibility for a required program
for which the State previously had partial or complete responsibility. The State mandate
provisions of Proposition lA of 2004 do not apply to schools or community colleges or to
mandates relating to employee rights.
Pursuant to statutory changes made in conjunction with amendments to the fiscal year
2008-09 State Budget Act,the fiscal year 2009-10 State Budget Act and related budget legislation
adopted by the State Legislature and signed by the Governor in February 2009 (collectively, the
"February 2009 Budget Package"),the VLF rate increased from 0.65%to 1.15% effective May 19,
2009. Of this 0.50% increase,0.35% will flow to the State General Fund, and 0.15% will support
various law enforcement programs previously funded by the State General Fund.This increased
VLF rate will be effective through fiscal year 2010-11.
See"RISK FACTORS—State Budgets" for information relating to Proposition lA and the
suspension of Proposition lA in the State's 2009-10 budget.
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Future Initiatives
Article XIIIA, Article XIIIB, Proposition 218 and Proposition lA were each adopted as
measures that qualified for the ballot pursuant to the State's initiative process.From time to time,
other initiative measures could be adopted,which may place further limitations on the ability of
the State,the City or local districts to increase revenues or to increase appropriations which may
affect the City's revenues or its ability to expend its revenues.
RISK FACTORS
This section provides a general overview of certain risk factors which should be considered, in
addition to the other matters set forth in this Official Statement,in evaluating an investment in the Bonds.
This section is not meant to be a comprehensive or definitive discussion of the risks associated with an
investment in the Bonds,and the order in which this information is presented does not necessarily reflect
the relative importance of various risks. Potential investors in the Bonds are advised to consider the
following factors, among others, and to review this entire Official Statement to obtain information
essential to the making of an informed investment decision. Any one or more of the risk factors discussed
below,among others,could lead to a decrease in the market value and/or in the marketability of the Bonds.
There can be no assurance that other risk factors not discussed herein will not become material in the
future.
Limited Obligation
The Bonds are not City debt and are limited obligations of the Authority.Neither the full
faith and credit of the Authority nor the City is pledged for the payment of the interest on or
principal of the Bonds nor for the payment of Lease Payments. The Authority has no taxing
power.The obligation of the City to pay Lease Payments when due is an obligation payable from
amounts in the general fund of the City. The obligation of the City to make Lease Payments
under the Lease Agreement does not constitute an obligation of the City for which the City is
obligated to levy or pledge any form of taxation or for which the City has levied or pledged any
form of taxation.Neither the Bonds nor the obligation of the City to make Lease Payments under
the Lease Agreement constitute a debt or indebtedness of the Authority, the City, the State or
any of its political subdivisions, within the meaning of any constitutional or statutory debt
limitation or restrictions.
Lease Payments Are Not Debt
The obligation of the City to make the Lease Payments under the Lease does not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor
the obligation of the City to make Lease Payments constitute a debt of the City, the State of
California or any political subdivision thereof (other than the Authority) within the meaning of
any constitutional or statutory debt limitation or restriction.
The Bonds are not general obligations of the Authority, but are limited obligations
payable solely from and secured by a pledge of Revenues and amounts held in the funds and
accounts created under the Indenture, consisting primarily of Lease Payments. The Authority
has no taxing power.
Although the Lease does not create a pledge, lien or encumbrance upon the funds of the
City,the City is obligated under the Lease to pay the Lease Payments from any source of legally
available funds and the City has covenanted in the Lease that, for so long as the Property is
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available for its use, it will make the necessary annual appropriations within its budget for the
Lease Payments. The City is currently liable and may become liable on other obligations payable
from general revenues, some of which may have a priority over the Lease Payments, or which
the City,in its discretion,may determine to pay prior to the Lease Payments.
The City has the capacity to enter into other obligations payable from the City's general
fund, without the consent of or prior notice to the Owners of the Bonds. To the extent that
additional obligations are incurred by the City,the funds available to make Lease Payments may
be decreased. In the event the City's revenue sources are less than its total obligations, the City
could choose to fund other municipal services before making Lease Payments. The same result
could occur if,because of State constitutional limits on expenditures,the City is not permitted to
appropriate and spend all of its available revenues. The City's appropriations, however, have
never exceeded the limitations on appropriations under Article XIIIB of the California
Constitution. For information on the City's current limitations on appropriations, see
"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND
APPROPRIATIONS-Article XIIIB of the California Constitution."
Valid and Binding Covenant to Budget and Appropriate
Pursuant to the Lease Agreement, the City covenants to take such action as may be
necessary to include Lease Payments due in its annual budgets and to make necessary
appropriations for all such payments. Such covenants are deemed to be duties imposed by law,
and it is the duty of the public officials of the City to take such action and do such things as are
required by law in the performance of the official duty of such officials to enable the City to carry
out and perform such covenants. A court,however,in its discretion may decline to enforce such
covenants. Upon issuance of the Bonds, Bond Counsel will render its opinion (substantially in
the form of APPENDIX E-"PROPOSED FORM OF BOND COUNSEL OPINION") to the effect
that, subject to the limitations and qualifications described therein, the Lease Agreement
constitutes a valid and binding obligation of the City. As to the Authority's practical realization
of remedies upon default by the City,see"-Limitations on Remedies."
Abatement
In the event of loss or substantial interference in the use and possession by the City of all
or any portion of the Property caused by material damage, title defect, destruction to or
condemnation of the Property, Lease Payments will be subject to abatement. In the event that
such component of the Property, if damaged or destroyed by an insured casualty, could not be
replaced during the period of time that proceeds of the City's rental interruption insurance will
be available in lieu of Lease Payments, or in the event that casualty insurance proceeds or
condemnation proceeds are insufficient to provide for complete repair or replacement of such
component of the Property or prepayment of the Bonds, there could be insufficient funds to
make payments to Owners in full.Reduction in Lease Payments due to abatement as provided in
the Lease does not constitute a default thereunder.
It is not possible to predict the circumstances under which such an abatement of rental
may occur.In addition,there is no statute, case or other law specifying how such an abatement
of rental should be measured. For example,it is not clear whether fair rental value is established
as of commencement of the lease or at the time of the abatement. If the latter,it may be that the
value of the Property is substantially higher or lower than its value at the time of the execution
and delivery of the Bonds. Abatement, therefore, could have an uncertain and material adverse
effect on the security for and payment of the Bonds.
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Disk of Uninsured Loss
The City covenants under the Lease to maintain certain insurance policies on the
Property.See"SECURITY FOR THE BONDS—Insurance."These insurance policies do not cover
all types of risk, and the City need not obtain insurance except as available on the open market
from reputable insurers. For instance, the City does not covenant to maintain earthquake
insurance. The City currently carries earthquake insurance on the Property although the Lease
Agreement does not require it to do so. The City plans to continue to purchase earthquake
insurance on the Property so long as such insurance can be obtained on the open market at
reasonable rates. The Property could be damaged or destroyed due to earthquake or other
casualty for which the Property is uninsured. Additionally, the Property could be the subject of
an eminent domain proceeding. Under these circumstances an abatement of Lease Payments
could occur and could continue indefinitely.There can be no assurance that the providers of the
City's liability and rental interruption insurance will in all events be able or willing to make
payments under the respective policies for such loss should a claim be made under such policies.
Further, there can be no assurances that amounts received as proceeds from insurance or from
condemnation of the Property will be sufficient to redeem the Bonds.
Under the Lease the City may obtain casualty insurance which provides for a deductible
up to$250,000. Should the City be required to meet such deductible expenses, the availability of
general fund revenues to make Lease Payments may be correspondingly affected.
The City is not obligated under the Lease Agreement to procure and maintain,or cause to
be procured and maintained, earthquake insurance on the Property. The City currently carries
earthquake insurance on the Property although the Lease Agreement does not require it to do so.
The City plans to continue to purchase earthquake insurance on the Property so long as such
insurance can be obtained on the open market at reasonable rates. Depending on its severity, an
earthquake could result in abatement of Lease Payments under the Lease.See"—Abatement."
Eminent Domain
If the Property is taken permanently under the power of eminent domain or sold to a
government threatening to exercise the power of eminent domain, the term of the Lease will
cease as of the day possession is taken. If less than all of the Property is taken permanently,or if
the Property or any part thereof is taken temporarily, under the power of eminent domain, (a)
the Lease will continue in full force and effect and will not be terminated by virtue of such
taking,and (b) there will be a partial abatement of Lease Payments as a result of the application
of net proceeds of any eminent domain award to the prepayment of the Lease Payments, in an
amount to be agreed upon by the City and the Authority such that the resulting Lease Payments
represent fair consideration for the use and occupancy of the remaining usable portion of the
Property. The City covenants in the Lease to contest any eminent domain award which is
insufficient to either:(i)prepay the Lease Payments in whole,if all the Property is condemned;or
(ii) prepay a pro rata share of Lease Payments, in the event that less than all of the Property is
condemned.
Hazardous Substances
The existence or discovery of hazardous materials may limit the beneficial use of the
Property. In general,the owners and lessees of the Property may be required by law to remedy
conditions of such parcel relating to release 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 California laws with regard to hazardous substances are also
similarly stringent. Under many of these laws, the owner or lessee is obligated to remedy a
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hazardous substance condition of the property whether or not the owner or lessee had anything
to do with creating or handling the hazardous substance.
Further it is possible that the beneficial use of the Property may be limited in the future
resulting from the current existence on the Property of a substance currently 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 current existence on the Property of a substance not
presently classified as hazardous but which may in the future be so classified. Further, such
liabilities may arise not simply from the existence of a hazardous substance but from the method
iri which it is handled. All of these possibilities could significantly limit the beneficial use of the
Property.
The City is unaware of the existence of hazardous substances on the Property site which
would materially interfere with the beneficial use thereof.
Earthquakes
Generally, within the State, some level of seismic activity occurs on a regular basis.
During the past 150 years, the Southern California area has experienced several major and
numerous minor earthquakes.The most recent major earthquake in the Southern California area
was the Northridge earthquake, which occurred on January 17, 1994. The Northridge
earthquake, with an epicenter approximately 50 miles north of the City, measured 6.5 on the
Richter scale.
The City is not legally obligated under the Lease Agreement to maintain, or cause to be
maintained,earthquake insurance on the Property and no assurance is made that any earthquake
insurance will be maintained. If there were to be an occurrence of severe seismic activity in the
City, there could be substantial damage to and interference with the City's right to use and
occupy all or a portion of the Property, which could result in Lease Payments being subject to
abatement.Additionally, severe seismic activity in the City could impact the City's general fund
expenditures.See"CERTAIN RISK FACTORS—Abatement"above.
Bankruptcy
The City is a unit of State government and therefore is not subject to the involuntary
procedures of the United States Bankruptcy Code (the "Bankruptcy Code"). However, pursuant
to Chapter 9 of the Bankruptcy Code, the City may seek voluntary protection from its creditors
for purposes of adjusting its debts. In the event the City were to become a debtor under the
Bankruptcy Code,the City would be entitled to all of the protective provisions of the Bankruptcy
Code as applicable in a Chapter 9 proceeding. Among the adverse effects of such a bankruptcy
might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which,
until relief is granted,would prevent collection of payments from the City or the commencement
of any judicial or other action for the purpose of recovering or collecting a claim against the City;
(ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing
of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which
may have a priority of payment superior to that of Owners of Bonds; and (iv) the possibility of
the adoption of a plan for the adjustment of the City's debt(a "Plan")without the consent of the
Trustee or all of the Owners of Bonds,which Plan may restructure,delay,compromise or reduce
the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and
equitable.
In addition, the City could either reject the Lease or assume the Lease despite any
provision of the Lease which makes the bankruptcy or insolvency of the City an event of default
thereunder. In the event the City rejects the Lease, the Trustee, on behalf of the Owners of the
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Bonds, would have a pre-petition claim that may be limited under the Bankruptcy Code and
treated in a manner under a Plan over the objections of the.Trustee or Owners of the Bonds.
Moreover,such rejection would terminate the Lease and the City's obligations to make payments
thereunder.
The Authority is a public agency and, like the City, is not subject to the involuntary
procedures of the Bankruptcy Code. The Authority may also seek voluntary protection under
Chapter 9 of the Bankruptcy Code.In the event the Authority were to become a debtor under the
Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the
Bankruptcy Code as applicable in a Chapter 9 proceeding. Such a bankruptcy could adversely
affect the payments under the Indenture.Among the adverse effects might be: (i)the application
of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would
prevent collection of payments from the Authority or the commencement of any judicial or other
action for the purpose of recovering or collecting a claim against the Authority;(ii)the avoidance
of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy
petition;(iii)the existence of unsecured or court-approved secured debt which may have priority
of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption
of a plan for the adjustment of the Authority's debt without the consent of the Trustee or all of
the Owners of the Bonds,which plan may restructure,delay,compromise or reduce the amount
of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.
However, the bankruptcy of the Authority, and not the City, should not affect the Trustee's
rights under the Lease. The Authority could still challenge the assignment, and the Trustee
and/or the Owners of the Bonds could be required to litigate these issues in order to protect
their interests.
Limitations on Remedies
The rights of the Owners of Bonds are subject to the limitations on legal remedies against
counties in the State, including applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors' rights generally, now or hereafter in
effect, and to the application of general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief,regardless of whether considered in a proceeding in equity or at
law.
Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs
the bankruptcy proceedings for public agencies such as the City, there are no involuntary
petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy
Code, the Owners of Bonds, the Trustee and the Authority could be prohibited from taking any
steps to enforce their rights under the Lease Agreement, and from taking any steps to collect
amounts due from the City under the Lease Agreement.
All legal opinions with respect to the enforcement of the Lease Agreement and the
Indenture will be expressly subject to a qualification that such agreements may be limited by
bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors'
rights generally and by applicable principles of equity if equitable remedies are sought.
No Liability of Authority to the Owners
Except as expressly provided in the Indenture,the Authority will not have any obligation
or liability to the Owners of the Bonds with respect to the payment when due of the Lease
Payments by the City, or with respect to the performance by the City of other agreements and
covenants required to be performed by it contained in the Lease or the Indenture,or with respect
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to the performance by the Trustee of any right or obligation required to be performed by it
contained in the Indenture.
Risk of Tax Audit
In December 1999,as a part of a larger reorganization of the Internal Revenue Service(the
"IRS"), the IRS commenced operation of its Tax Exempt and Government Entities Division (the
"TE/GE Division"), as the successor to its Employee Plans and Exempt Organizations division.
The new TE/GE Division has a subdivision that is specifically devoted to tax-exempt bond
compliance. Public statements by IRS officials indicate that the number of tax-exempt bond
examinations (which would include the issuance of securities such as the Bonds) is expected to
increase significantly under the new TE/GE Division. There is no assurance that if an IRS
examination of the Bonds was undertaken that it would not adversely affect the market value of
the Bonds.See"TAX MATTERS."
The City has not been contacted by the IRS regarding the examination of any of its bond
transactions.
State Budgets
Approximately 78% (consisting of the sales tax, property tax and the motor vehicle
license fee) of the City's fiscal year 2009-10 general fund budget consists of payments collected
by the State and passed-through to local governments or collected by the County and allocated
to local governments by State law.The financial condition of the State has an impact on the level
of these revenues. In past years the State has reduced revenues to cities and counties to help
solve the State's budget problems.
The level of intergovernmental revenues that the City received from the State in fiscal
year 2009-10 and in subsequent fiscal years are affected by the financial condition of the State.
The following information concerning the State's 2007-08 fiscal year budget, the fiscal year 2008-
0.9 Budget and the fiscal year 2009-10 Budget has been obtained from publicly available information on the
State Department of Finance, the State Treasurer and the California Legislative Analyst Office websites.
The estimates and projections provided below are based upon various assumptions, which may be affected
by numerous factors,including future economic conditions in the State and the nation,and there can be no
assurance that the estimates will be achieved. For further information and discussion of factors underlying
the State's projections, see the aforementioned websites. The City believes such information to be reliable,
however, the City takes no responsibility as to the accuracy or completeness thereof and has not
r�deperedently verified such information.
Fiscal Year 2007-08.The 2007-08 Budget Act(the"2007 State Budget Act")was adopted by
the Legislature on August 21, 2007 and signed by the Governor, after using his line item veto
authority to reduce State General Fund appropriations by$703 million, on August 24,2007. The
2007 State Budget projected $102.3 billion in budget-year revenues, an increase of 6.5% from
fiscal year 2006-07; authorized expenditures of an equal amount (an increase of 0.6% from fiscal
year 2006-07);and left the State General Fund with a year-end reserve of$4.1 billion(the same as
assumed for fiscal year 2006-07), comprised of $2.6 billion in the State's Special Fund for
Economic Uncertainties and$1.5 billion in the Budget Stabilization Account,which Account was
established when voters approved Proposition 58 in March 2004.
The 2007 State Budget Act proposed a major redirection of transportation funds,
reductions in social services, and a variety of other actions to eliminate a significant shortfall in
fiscal year 2007-08, including among other things, (i) increases in funding for county Medi-Cal
administration costs; (ii) a partial repayment of Proposition 42 transportation suspensions that
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occurred in fiscal years 2003-04 and 2004-05 as required by Proposition 1A of 2004 (defined
herein); (iii) an assumption that $1 billion in one-time revenues from the sale of EdFund, the
States nonprofit student loan guaranty agency will be received; and (iv) a suspension of a
California Work Opportunity and Responsibility to Kids cost-of-living adjustment (a "COLA")
for one year and permanently delays the State Supplemental Security income/State
Supplementary Program COLA for five months.
Based on the policies contained in the 2007 State Budget Act, according the State
Legislative Analyst's Office, the nonpartisan fiscal and policy advisor to the State, the State
would face operating shortfalls of more than$5 billion in both fiscal year 2008-09 and fiscal year
2009-10 because many of the solutions enacted in the 2007 State Budget Act were of a one-time
nature.
Fiscal Year 2008-09.The 2008-09 Budget Act(the"2008 State Budget Act")was adopted by
the Legislature on September 16, 2008 and signed by the Governor on September 23, 2008,
reflecting a reduction of$850 million from the proposed budget bill adopted by the Legislature
due to the line item veto by the Governor of$510 million in State General Fund appropriations
and $340 million in State General Fund savings due to the delay in enacting the 2008 State
Budget Act and the effect of Executive Order S-09-08 (which terminated the services of
temporary employees and reduced overtime).
The 2008-Budget Act reported that the State General Fund began fiscal year 2008-09 with
a balance of $4 billion. The 2008 State Budget Act projected State General Fund revenues and
transfers for fiscal year 2008-09 of $102 billion, a decrease of approximately 1% from the
anticipated revenues and transfers for fiscal year 2007-08, and State General Fund expenditures
of$103.4 billion,an increase of approximately 0.06%above the anticipated expenditures for fiscal
year 2007-08.The 2008 State Budget Act projected ending fiscal year 2008-09 with a State General
Fund balance of $2.6 billion, of which $885 million would be reserved for the liquidation of
encumbrances and$1.7 billion would be deposited in a reserve for economic uncertainties.
The Governor's economic forecasts for fiscal year 2008-09 reflected weaker economic
performance throughout the country and the State. The 2008 State Budget Act addressed a
projected $24.3 billion budget shortfall which was identified in the Governor's May Revision to
the Proposed 2008-09 Budget with a combination of cuts in expenditures and projections of
increased revenues. The 2008 State Budget Act included vetoes on behalf of the Governor in the
amount of$510 million of spending approved by the State legislature.The 2008 State Budget Act
included a proposal to increase the Budget Stabilization Account (the "BSA") from 5% of State
General Fund expenditures to 12.5%. In addition,the 2008 State Budget Act proposed an annual
transfer to the BSA of 3% of the General Fund and the elimination of the ability to suspend such
annual transfers. The State would only be permitted to transfer funds from the BSA if(1) actual
revenues during such fiscal year are below a specified level and (2) funds transferred from the
BSA to the State General Fund are appropriated in a stand-alone bill.
Certain of the features of the 2008 State Budget Act affecting local governments included
the following:
1. The 2008 State Budget Act proposed to fully fund the Proposition 1A of 2004 loan
repayment for fiscal year 2008-09 in the amount of $83 million and the Proposition 42
transfer in the amount of$1.4 billion,which allocation included$573 million to the State
Transportation Improvement Program and $286 million to the Public Transportation
Account.
2. The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006
("Proposition 113") authorized $19.92 billion over the next nine years to fund existing and
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new Statewide transportation-related infrastructure programs and projects. Such amount
included appropriations in fiscal year 2008-09 of $350 million for local transit, $250
million for local streets and roads,$201 million for the State&Local Partnership Program
and $21 million for local seismic funding. In addition, AB 1252, enacted in June 2008,
provided $149 million from Proposition 1B to accelerate funding for local streets and
roads projects.
3. Chapter 72 of the Statutes of 2005 requires the payment of mandated costs incurred prior
to fiscal year 2004-05 to begin in fiscal year 2006-07 and paid over a term of fifteen years.
The 2008 State Budget Act included the elimination of $75 million in estimated
reimbursement claims. The 2008 State Budget Act delayed the third payment of these
claims by one year.The 2008 State Budget Act projected that the mandated costs incurred
prior to 2004-05 is$956 million.
4. The 2008 State Budget Act included a veto from the Governor reducing proposed
Department of Social Services funding for the California Work Opportunity and
Responsibility to Kids ("CalWORKS")program in the amount of$70 million.Prior to this
veto,such funding would have been available to counties as part of their single allocation
and available for county administration,employment services,and child care.
5. The 2008 State Budget Act permanently suspended provision of the June 2008 and June
2009 State Supplementary Payment program cost of living adjustment ("COLA"). The
2008 State Budget Act provided the State Director of Finance with mid-year authority to
freeze the COLA,rate increases or increases in State participation in local costs for up to
120 days and require the Governor to submit urgency legislation to permanently suspend
the COLA and other rate increases;provided,however,if the Governor fails to act within
120 days, or the State legislature fails to adopt the suspension, the COLA and other rate
increases are reinstated.
5. The 2008 State Budget Act reflected savings to the State of$107.2 million, of which $53.4
million was attributed to the General Fund, in funding for counties to determine
eligibility for Medi-Cal services.
7. The 2008 State Budget Act included $1.49 billion in Mental Health Services Act
("MHSA") funds for Proposition 63,of which$100 million was committed by counties to
the MHSA Housing Program. This funding was in addition to$300 million identified by
counties in fiscal year 2007-08. This program makes funding available through the
California Housing Finance Agency to develop permanent supportive housing serving
persons with serious mental illness who are homeless or at risk of homelessness.
8. The 2008 State Budget Act included a veto from the Governor, which reduced proposed
funding for the Department of Social Services for County Administration and
Automation Projects to$1,192,736,000 from$1,194,774,000.By eliminating funding for the
Work Incentive Nutritional Supplement program in the amount of by $2,038,000, the
Governor delayed implementation of this program for one year in order to allow the
:department of Social Services to study this program and ensure it is consistent with
federal rules.
9. The 2008 State Budget Act included a veto from the Governor reducing proposed
Department of Corrections funding for Adult Corrections and Rehabilitation Operations
by approximately$28 million to approximately$4.9 billion.
Fiscal Year 2009-10. On February 20, 2009, the Governor signed into law the budget for
fiscal year 2009-10 (the"2009 State Budget Act"). The 2009 State Budget Act proposes to address
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the State's projected $41 billion deficit and contains mid-year reductions to the 2008 State Budget
Act.
The following are some of the major impacts of the 2009 State Budget Act on local
governments throughout the State,including the City:
1. The 2009 State Budget Act includes deferrals of payments to counties for social services
and transportation. For February,March and April 2009, monthly transfers of fuel excise
tax allocations to cities and counties will be deferred. Payments are scheduled to resume
and deferred payments will be paid in May 2009. The 2009 State Budget Act also
authorizes two-month deferrals of health and social services payments to counties from
July and August to September 2009.Counties are scheduled to receive deferred payments
from the State by September 30, 2009. Counties with populations under 40,000 persons
are exempt from the deferral of payments for social services.
2. The 2009 State Budget Act increases personal income tax liability by 0.25% in each
personal income tax bracket, although the rate will drop to 0.125% if revenues from the
ARRA reach$10 billion.
3. The 2009 State Budget Act increases the VLF rate from 0.65% to 1.15%, 0.15% of which
will be dedicated to local public safety programs. The remaining 0.35% of the increase
will be deposited into the State's General Fund.The 2009 State Budget Act also imposes a
0.65% rate on commercial vehicles effective May 19, 2009 through July 1, 2011 with a
possible two-year extension under certain circumstances. See "-Motor Vehicle License
Fees."
4. Under the 2009 State Budget Act, the State's portion of the sales and use taxes would
increase by 1%, beginning April 1, 2009 through July 1, 2011, with a possible one-year
extension under certain circumstances.
5. Generation of approximately$6 billion in revenues for fiscal year 2009-10 based on voter
approval of three propositions on the ballot for the May 19, 2009 special election,
including a proposed$5 billion borrowing from future lottery revenues(Proposition 1C).
Each of these measures was defeated.
Impact of the American Recovery and Reinvestment Act of 2009 on the State. The 2009 State
Budget Act also includes a number of reductions and revenues tied to the ARRA. Certain
reductions to CalWORKS grants, Medi-Cal benefits and reimbursements, SSI/SSP grants, in-
home support services ("IHSS"), the judicial branch and higher education are scheduled to be
enacted in statute and could be suspended if expected revenues from the ARRA are certified by
the Department of Finance to equal$10 billion, including revenues anticipated to be received by
June 30, 2010. If revenues from the ARRA are not sufficient to meet the $10 billion target, the
reductions would be permanent. If revenues from the ARRA reach $10 billion, the reductions
would not go into effect.A future statute would be required to enact the reductions should they
become necessary.On March 4,2009, the Department of Finance released a preliminary estimate
that the State would receive approximately $8 billion in federal economic stimulus funds, $2
billion short of what is required to prevent the cuts. The Department of Finance and the State
Treasurer's Office are working with various interested entities to analyze the Department of
Finance's preliminary estimates.
May Revision to the 2009 State Budget Act.On May 14,2009,the Governor released the May
Revision to the 2009 State Budget Act (together with the contingency proposals referenced
therein,the"2009 May Revision").The 2009 May Revision projected a budget gap of$21.3 billion
through the remainder of fiscal year 2008-09 and fiscal year 2009-10 due to continued shortfalls
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in revenue collections and increased costs and the failure of five budget-related propositions
included in the May 19,2009 special election,which the 2009 May Revision proposed to address
through program reductions and additional borrowings.The 2009 May Revision estimated fiscal
year 2008-09 revenues and transfers of$85.95 billion, total expenditures of $91.89 billion and a
year-end deficit of $3.63 billion, which includes a $2.31 billion prior-year State General Fund
balance,a$4.71 billion withdrawal from the reserve for economic uncertainties and an allocation
of $1.08 billion to the reserve for the liquidation of encumbrances. The 2009 May Revision
projected fiscal year 2009-10 revenues and transfers of$92.22 billion,total expenditures of$85.46
billion and a year-end surplus of 53.13 billion (net of the $3.63 billion deficit from fiscal year
2008-09),of which$1.08 billion would be reserved for the liquidation of encumbrances and $2.05
billion would be deposited in a reserve for economic uncertainties. The 2009 May Revision
indicated that the State's economic outlook included negative growth for calendar year 2009,
followed by weak growth in calendar year 2010 and increased growth in calendar year 2011.
Features of the 2009 May Revision affecting local government included the following:
1. The 2009 May Revision proposed to reduce program expenditures by approximately
$2.64 billion in fiscal year 2008-09 and $6.36 billion in fiscal year 2009-10, primarily
through reductions in education funding and health and social services programs,
including in-home support services, Ca1WORKS, immigrant assistance programs, child
welfare services and SSI/SSP.
2. The 2009 May Revision proposed that the State borrow 8%of property tax revenues from
counties, cities and special districts for fiscal year 2009-10, totaling approximately $2
billion, which amount would be repaid within three years, all in accordance with
Proposition 1A of 2004. The manner in which the borrowing would be allocated (i.e., the
amount to be borrowed from particular local agencies), and whether the property taxes
paid to local agencies by the State in-lieu of vehicle license fees and in-lieu of sales tax,
remained subject to determination. The 2009 May Revision proposed to create a joint
powers entity to allow local agencies to borrow against the State repayment as a group.
3. The 2009 May Revision proposed $750 million in reductions to the federal Medi-Cal
program,subject to receipt of a federal waiver.
4. The 2009 May Revision proposed to redirect$60 million in cigarette and tobacco products
surtax revenues from county health programs.
5. The 2009 May Revision proposed to change sentencing options for low-level offenders
such that an offense that could be charged as a misdemeanor or felony would be
punishable only by a term in county jail. The 2009 May Revision estimated that the State
would save approximately $100 million from such shift. The potential impact of this
proposal on counties is currently unknown as the details of the proposal have not yet
been disclosed.
LAO May Overview of the 2009 May Revision. On May 21, 2009, the Legislative Analyst's
Office, the State's nonpartisan fiscal and policy advisor (the "LAO") released an analysis of the
2009 May Revision entitled Overview of the 2009-10 May Revision (the "LAO 2009 May
Overview"). The LAO 2009 May Overview stated that the economic and revenue forecasts and
assessments of the State's budgetary problems set forth in the 2009 May Revision were generally
reasonable in light of the effects of the economic slowdown throughout the United States, but
indicated that State General Fund expenditures across fiscal year 2008-09 and fiscal year 2009-10
could exceed revenues by approximately $3 billion more than the amount estimated in the 2009
May Revision.
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The LAO 2009 May Overview stated that the 2009 May Revision relied on a number of
proposals that could return the budget to balance and result in a State General Fund reserve at
the end of fiscal year 2009-10 of $2.1 billion, but that the largest proposals carried the largest
risks. The LAO also noted that many of the proposals contained in the 2009 May Revision were
one-time in nature and recommended that the State Legislature reduce its reliance on one-time
measures,which could contribute to long-term negative effects for taxpayers and programs. The
LAO 2009 May Overview set forth several budget recommendations for the State Legislature,
including eliminating certain duplicative, inefficient, ineffective or over-budgeted education
programs, borrowing additional transportation funds, increasing community college fees,
reconsidering the dedication of certain vehicle license fees to local public safety programs,
implementing additional user fees for government services, modifying the proposed property
tax revenues borrowing to target specific agencies and reconsidering the use of revenue
anticipation warrants for budget balancing and reserve building purposes, which, according to
the LAO,sets a bad precedent and presents serious legal concerns.
The LAO 2009 May Overview stated that the State Legislature would face a significant
challenge to address the projected budget deficit in fiscal year 2008-09 and projected revenue
shortfalls in fiscal year 2009-10 and must pay particular attention to closing the State's ongoing
structural mismatch between revenues and spending for future years. The LAO 2009 May
Overview reiterated that the State Legislature should avoid proposed solutions that do not
prioritize program reductions,add additional borrowing or debt and lead to a diminution of the
State Legislature's authority.
Governor's Update to the 2009 May Revision. On May 26, 2009 and May 29, 2009, the
Governor released updates to the 2009 May Revision (collectively, the "2009 May Revision
Update"). The 2009 May Revision Update projected a budget deficit of$3.10 billion through the
remainder of fiscal year 2008-09 due to shortfalls in revenue collections and increased costs and
the failure of five of the six budget-related propositions included in the May 19, 2009 special
election ballot. The 2009 May Revision Update estimated fiscal year 2008-09 General Fund
revenues and transfers of$85.95 billion,total General Fund expenditures of$91.35 billion and a
year-end deficit of $3.10 billion, which included a $2.31 billion prior-year State General Fund
balance and an allocation of$1.08 billion to the reserve for the liquidation of encumbrances. The
2009 May Revision Update projected fiscal year 2009-10 revenues and transfers of$92.22 billion,
total expenditures of$83.52 billion and a year-end surplus of$5.60 billion(net of the$3.10 billion
deficit from fiscal year 2008-09), of which $1.08 billion would be reserved for the liquidation of
encumbrances and $4.52 billion would be deposited in a reserve for economic uncertainties.The
2009 May Revision and the 2009 May Revision Update collectively included proposals to reduce
State General Fund spending in the amount of$3.12 billion during the remainder of fiscal year
2008-09 and $20.85 billion during fiscal year 2009-10. The 2009 May Revision Update withdrew
the Governor's 2009 May Revision proposal to issue revenue anticipation warrants in the
amount of$5.6 billion to address a portion of the State General Fund deficit.
Features of the 2009 May Revision Update affecting local governments include the
following:
1. The 2009 May Revision Update proposed to eliminate CalWORKS, which was expected
to reduce State General Fund spending by approximately$1.31 billion in fiscal year 2009-
10.In the event the State eliminated Ca1WORKS,federal matching funds for the program
would be eliminated.
2. The 2009 May Revision Update proposed to eliminate General Fund expenditures for
county programs relating to the Healthy Families Programs, Maternal, Child, and
Adolescent Health, Mental Health Managed Care Services and the Early and Periodic
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Screening, Diagnosis, and Treatment Services program. The proposals were expected to
reduce General Fund expenditures by$424.2 million.
3. The 2009 May Revision Update proposed to reduce the local share of the gasoline tax
from $1.05 billion to $300 million. Pursuant to this proposal, the State would apply the
$750 million to pay current and prior year debt service on highway bonds.
Issuance of Registered Warrants. On June 24, 2009, the State Controller announced that the
State would issue registered warrants ("IOUs") beginning July 2, 2009, to local governments for
social services,private contractors,State vendors,taxpayers entitled to income and corporate tax
refunds, and for payments for other State operations if immediate budget and cash solutions
were not quickly adopted by the Governor and the State Legislature. All IOUs issued by the
State in 2009 have been paid.
Amendment of the 2009 State Budget Act. On July 23, 2009 through July 24, 2009, State
Legislature voted on, and passed, a majority of the budget solutions amending the 2009 State
Budget Act to address the combined$60 billion budget deficit over fiscal years 2008-09 and 2009
10 that resulted from the deepening recession. The amendments included spending cuts,
borrowing, redirecting revenues from local governments, accounting maneuvers, and a $921
million reserve.
On July 28, 2009, the Governor signed an amendment to the 2009 State Budget Act (the
"Amended 2009 State Budget Act") to include an additional $24.2 billion in budget solutions to
address the further deterioration of the fiscal situation of the State identified in the 2009 May
Revision.Because the State Legislature did not adopt budget solutions that eliminated the entire
projected deficit, the Governor used his veto power to eliminate an additional $489 million in
spending,leaving the State with a$500 million reserve.
The $24.2 billion in budget solutions contained in the Amended 2009 State Budget
include: (i) expenditure reductions of$8.5 billion from K-14 education and additional cuts to the
State colleges and university systems (just under$2 billion total for fiscal year 2008-09 and fiscal
year 2009-10); $785 million from the Department of Corrections, with specific program reforms
to be determined upon the return of the State Legislature in August 2009, $1.7 billion from
General Government, by suspending COLAs; leveraging State assets, consolidating and
reorganizing boards and commissions ($50 million in fiscal year 2009-10) and IT procurement
reform ($100 million); $820 million from State Employee Compensation by adopting third
Furlough day ($425 million), eliminating rural health care, and scoring health care savings; $3.0
billion from Health and Human Services by adopting long-term reforms to CaIWORKS ($510
million in fiscal year 2009-10),changes and improvements to Medi-Cal eligibility and improved
care coordination($1.4 billion);reducing In-Home Supportive Services (IHSS) services for all but
the most severely disabled and implementing anti-fraud initiatives ($264 million), funding to
counties for Child Welfare Services ($80 million), changes to eligibility in the Healthy Families
program and freezing of COLAs for IHSS and the Department of Developmental Services long-
term care providers ($76 million) and elimination of funding for the Williamson Act Program
which backfills property tax revenues that local governments forego when property is preserved
for agriculture or open space uses; (ii) $1.0 billion in fund shifts, including a shift of
redevelopment agency funds to schools ($1.7 billion) with the same amount of base school
property tax shifted to the county-level Supplemental Revenue Augmentation Funds, from
which $850 million will be used to fund courts, prisons, Medi-Cal, hospital, and K-12 school
bond expenses that would otherwise be funded from the State General Fund and the remaining
$850 million used to fund K-12 school costs offsetting Proposition 98 State General Fund costs;
(iii) $3.5 billion in revenue augmentations, including optional personal income tax withholding
changes; tax enforcement; permitting the State Compensation Insurance Fund (the "SCIF") to
invest in bonds issued by the State Treasurer to raise cash, and special fund transfers; (iv) $2.2
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billion in borrowing, including suspension of Proposition lA of 2004 ($1.9 billion), a loan from
the State Highway Account($135 million) and various loans and fund shifts to keep State parks
open;and(v)pushing the last State worker payday of the fiscal year from June 30,2010,to July 1,
2010,the start of the next fiscal year($1.4 billion).
The Amended 2009 State Budget Act reflects the harsh reality of diminished resources
forced by the recession and the impact of the cuts are across the board.It expected that there will
be a number of lawsuits by local governments resulting from the passage of the Amended 2009
State Budget Act over the suspension of Prop lA of 2004, the redevelopment fund shift,
securitization and other issues.
On July 28, 2009, the Governor announced that he will call a special session in late
September for legislators to consider the recommendations of the Commission on the 21st
Century Economy for overhauling the State's tax system.
City Responses to the Amended 2009 State Budget Act. Pursuant to Proposition 1A of 2004
approved by the voters of the State in November 2004,the State may shift up to eight percent of
local government property tax revenues to schools and community colleges during severe State
financial hardship.
The City has estimated the potential effect of the State budget adopted in July,
particularly the Proposition 1A of 2004 borrowing proposal. The City currently projects that up
to approximately 5.1% of its general fund revenues in fiscal year 2009-10 may be subject to State
suspension of Proposition 1A of 2004.
Through the adoption of the 09-10 Fiscal Year Budget, the State elected to suspend Prop
IA payments to cities, counties, and special districts. The State adopted legislation allowing the
California Statewide Communities Development Authority ("CSCDA") to securitize those
receivables. The State agreed to cover all issuance expenses so that the agencies would receive
100%of the suspended Prop lA monies.The City enrolled in the CSCDA program and obtained
Council adoption of resolutions and sales agreements for the City.
In connection with its approval of the budget for the State for the 1992-93, 1993-94, 1994-
95, 2002-03, 2003-04, and 2004-05 Fiscal Years, the State Legislature enacted legislation which,
among other things, reallocated funds from redevelopment agencies to school districts by
shifting a portion of each agency's tax increment,net of amounts due to other taxing agencies,to
school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund
("ERAF"). The amount required to be paid by a redevelopment agency under such legislation
was apportioned among all of its redevelopment project areas on a collective basis, and was not
allocated separately to individual project areas.The State budgets for 2005-06,2006-07 and 2007-
08 had no new ERAF payment requirements. However, in connection with the State budget for
Fiscal Year 2008-09,on September 30, 2008, the California Legislature enacted AB 1389. AB 1389
requires a one-time shift of$350 million from redevelopment agencies to their respective ERAF.
The validity of AB 1389 was challenged in litigation in the Superior Court for Sacramento
County, California Redevelopment Association et al v. Genest et al., Case No. 34-2008-00028334-
CUWM-GDS ("CRA v. Genest"). On April 30, 2009, the Sacramento Superior Court invalidated
AB 1389. The State appealed the decision; however, on September 23, 2009, the State filed a
notice of abandonment of its appeal with the Court,so that the Superior Court judgment became
final and no longer subject to appeal on that date.
In connection with legislation related to the budget for the State for Fiscal Year 2009-10,
on July 24, 2009, the State Legislature adopted AB 26, which was signed by the Governor and
became law on July 28, 2009. AB 26 requires a $1.7 billion one-year transfer, in the aggregate,
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from redevelopment agencies to their respective County Supplemental Educational Revenue
Augmentation Fund ("SERAF") in 2009-10,plus another$350 million aggregate transfer in 2010-
11..A SF.RAF is similar to an ERAF,except that there is an additional requirement for the SERAF
(in response,in part,to the CRA v. Genest litigation) that moneys in the SERAFs must be used by
school districts and county offices of education to serve pupils living in redevelopment areas or
in housing supported by redevelopment agency funds.The Agency's 2009-10 SERAF payment is
estimated by the California Redevelopment Association(the"CRA")to be$1,774,161,and is due
by May 10,2010. The Agency's 2010-11 SERAF payment is estimated by the CRA to be$365,268,
and is due by May 10, 2011. The Agency fully expects to fund the entire amount of its 2009-10
SERAF payment by the May 10, 2010, deadline and the entire amount of its 2010-11 SERAF
payment by the May 10,2011,deadline.
On October 20, 2009, the CRA filed a lawsuit in Sacramento Superior Court challenging
the constitutionality of AB 26 and seeking to prevent the State from taking redevelopment funds
for non-redevelopment purposes.
The Agency is currently evaluating its programs to determine the most optimal allocation
of monies from the various sources of funding available to it in order to make the 2009-10 SERAF
payment, including but not limited to tax increment funds on hand and housing set aside
monies, to the extent available for such purpose. In any event, it is not anticipated that the City
or any General Fund moneys will be used to make the Agency's 2009-10 SERAF payment or its
2010-11 SERAF payment,if either is ultimately required.
The City cannot predict the extent of the budgetary problems the State will encounter in
this or in any future fiscal year, and,it is not clear what measures would eventually be taken by
the State to balance its budget,as required by law.Accordingly, the City cannot predict the final
outcome of future State budget negotiations, the impact that such budgets will have on its
finances and operations or the actions to be taken in the future.
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS," in order to maintain the exclusion
from gross income for federal income tax purposes of the interest on the Bonds, the City has
covenanted in the Lease 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 Internal Revenue Code of 1986, as amended. Interest on the
Bonds could become includable in gross income for purposes of Federal income taxation
retroactive to the date the Bonds were issued, as a result of acts or omissions of the City in
violation 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 prepaid under the optional
redemption or mandatory sinking fund redemption provisions of the Indenture.
Limited Secondary Market
As stated herein,investment in the Bonds poses certain economic risks which may not be
appropriate for certain investors, and only persons with substantial financial resources who
understand the risk of investment in the Bonds should consider such investment. There can be
no guarantee that there will be a secondary market for purchase or sale of the Bonds or, if a
secondary market exists,that the Bonds can or could be sold for any particular price.
Changes in Law
There can be no assurance that the electorate of the State will not at some future time
adopt additional initiatives or that the Legislature will not enact legislation that will amend the
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laws or the Constitution of the State resulting in a reduction of the general fund revenues of the
City and consequently,having an adverse effect on the security for the Bonds.
TAX MATTERS
Federal tax law contains a number of requirements and restrictions which apply to the
Bonds, including investment restrictions, periodic payments of arbitrage profits to the United
States, requirements regarding the proper use of bond proceeds and the facilities financed
therewith, and certain other matters. The Authority and the City have covenanted to comply
with all requirements that must be satisfied in order for the interest on the Bonds to be
excludable from gross income for federal income tax purposes. Failure to comply with certain of
such covenants could cause interest on the Bonds to become includable in gross income for
federal income tax purposes retroactively to the date of issuance of the Bonds.
Subject to the Authority's and the City's compliance with the above referenced
covenants, under present law, in the opinion of Quint & Thimmig LLP, Bond Counsel, interest
on the Bonds(i)is excludable from the gross income of the owners thereof for federal income tax
purposes, and (ii) is not included as an item of tax preference in computing the federal
alternative minimum tax for individuals and corporations,but interest on the Bonds is taken into
account, however, in computing an adjustment used in determining the federal alternative
minimum tax for certain corporations.
In addition, subject to the Authority's and the City's compliance with certain covenants,
in the opinion of Bond Counsel, the Bonds are "qualified tax-exempt obligations" under the
small issuer exception provided under section 265(b)(3) of the Code, which affords banks and
certain other financial institutions more favorable treatment of their deduction for interest
expense than would otherwise be allowed under section 265(b)(2)of the Code.
Bond Counsel expects to deliver an opinion at the time of delivery of the Bonds in
substantially the form set forth in APPENDIX E—"FORM OF BOND COUNSEL'S OPINION."
Bond Counsel's opinion represents its legal judgment based upon its review of the law
and the facts that it deems relevant to render such opinion and is not a guarantee of a result.
The Internal Revenue Code of 1986, as amended (the "Code"),includes provisions for an
alternative minimum tax ("AMT") for corporations in addition to the corporate regular tax in
certain cases. The AMT, if any, depends upon the corporations alternative minimum taxable
lncoirie ("AMTI"), which is the corporations taxable income with certain adjustments. One of
the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is
an amount equal to 75% of the excess of such corporations "adjusted current earnings" over an
amount equal to its AMTI(before such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" would include certain tax exempt interest, including
interest on the Bonds.
Ownership of the Bonds may result in collateral federal income tax consequences to
certain taxpayers, including, without limitation, corporations subject to the branch profits tax,
financial institutions, certain insurance companies, certain S corporations, individual recipients
of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have
incurred (or continued) indebtedness to purchase or carry tax exempt obligations. Prospective
purchasers of the Bonds should consult their tax advisors as to applicability of any such
collateral consequences.
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The issue price (the "Issue Price") for each maturity of the Bonds is the price at which a
substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a
maturity of the Bonds may be different from the price set forth,or the price corresponding to the
yield set forth,on the cover page hereof.
If the Issue Price of a maturity of the Bonds is less than the principal amount payable at
maturity, the difference between the Issue Price of each such maturity, if any, of the Bonds (the
"OID Bonds")and the principal amount payable at maturity is original issue discount.
For an investor who purchases an OID Bond in the initial public offering at the Issue
Price for such maturity and who holds such OID Bond to its stated maturity, subject to the
condition that the Authority and the City comply with the covenants discussed above, (a)the full
amount of original issue discount with respect to such OID Bond constitutes interest which is
excludable from the gross income of the owner thereof for federal income tax purposes; (b) such
owner will not realize taxable capital gain or market discount upon payment of such OID Bond
at its stated maturity;(c)such original issue discount is not included as an item of tax preference
in computing the alternative minimum tax for individuals and corporations under the Code,but
is taken into account in computing an adjustment used in determining the alternative minimum
tax for certain corporations under the Code,as described above;and (d) the accretion of original
issue discount in each year may result in an alternative minimum tax liability for corporations or
certain other collateral federal income tax consequences in each year even though a
corresponding cash payment may not be received until a later year. Owners of OID Bonds
should consult their own tax advisors with respect to the state and local tax consequences of
original issue discount on such OID Bonds.
Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale,
redemption or otherwise), purchase Bonds in the initial public offering, but at a price different
from the Issue Price or purchase Bonds subsequent to the initial public offering should consult
their own tax advisors.
If a Bond is purchased at any time for a price that is less than the Bond's stated
redemption price at maturity or,in the case of an OID Bond,its Issue Price plus accreted original
issue discount reduced by payments of interest included in the computation of original issue
discount and previously paid(the"Revised Issue Price"),the purchaser will be treated as having
purchased a Bond with market discount subject to the market discount rules of the Code (unless
a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary
income and is recognized when a Bond is disposed of (to the extent such accrued discount does
not exceed gain realized) or, at the purchaser's election, as it accrues. Such treatment would
apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue
Price even if the purchase price exceeds par. The applicability of the market discount rules may
adversely affect the liquidity or secondary market price of such Bond.Purchasers should consult
their own tax advisors regarding the potential implications of market discount with respect to
the Bonds.
An investor may purchase a Bond at a price in excess of its stated principal amount.Such
excess is characterized for federal income tax purposes as "bond premium" and must be
amortized by an investor on a constant yield basis over the remaining term of the Bond in a
manner that takes into account potential call dates and call prices. An investor cannot deduct
amortized bond premium relating to a tax exempt bond.The amortized bond premium is treated
as a .reduction in the tax exempt interest received.As bond premium is amortized,it reduces the
investor's basis in the Bond. Investors who purchase a Bond at a premium should consult their
own tax advisors regarding the amortization of bond premium and its effect on the Bond's basis
for purposes of computing gain or loss in connection with the sale, exchange, redemption or
early retirement of the Bond.
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There are or may be pending in the Congress of the United States legislative proposals,
including some that carry retroactive effective dates, that, if enacted, could alter or amend the
federal tax matters referred to above or affect the market value of the Bonds. It cannot be
predicted whether or in what form any such proposal might be enacted or whether,if enacted,it
would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should
consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond
Counsel expresses no opinion regarding any pending or proposed federal tax legislation.
The Internal Revenue Service (the "Service") has an ongoing program of auditing tax
exempt obligations to determine whether,in the view of the Service,interest on such tax exempt
obligations is includable in the gross income of the owners thereof for federal income tax
purposes. It cannot be predicted whether or not the Service will commence an audit of the
Bonds. If an audit is commenced, under current procedures the Service may treat the Authority
as a taxpayer and the Bondholders may have no right to participate in such procedure. The
commencement of an audit could adversely affect the market value and liquidity of the Bonds
until the audit is concluded,regardless of the ultimate outcome.
Payments of interest on, and proceeds of the sale,redemption or maturity of,tax exempt
obligations, including the Bonds, are in certain cases required to be reported to the Service.
Additionally, backup withholding may apply to any such payments to any Bond owner who
fails to provide an accurate Form W 9 Request for Taxpayer Identification Number and
Certification, or a substantially identical form, or to any Bond owner who is notified by the
Service of a failure to report any interest or dividends required to be shown on federal income
tax returns. The reporting and backup withholding requirements do not affect the excludability
of such interest from gross income for federal tax purposes.
The Bonds are issued to refund bonds issued before January 1, 2009, and therefore are
treated as issued before 2009 for purposes of section 265(b)(7) of the Code relating to interest
expense deductibility for financial institutions. The treatment of interest expense for financial
institutions owning such Bonds may be less favorable than the treatment provided to owners of
tax exempt bonds treated as issued in 2009 or 2010.Financial institutions should consult their tax
advisors concerning such treatment.
In the further opinion of Bond Counsel, interest on the Bonds is exempt from California
personal income taxes.
Ownership of the Bonds may result in other state and local tax consequences.to certain
taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences
arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax
advisors regarding the applicability of any such state and local taxes.
CERTAIN LEGAL MATTERS
Legal matters incident to the authorization, issuance, sale and delivery by the Authority
of the Bonds are subject to the approval as to their validity of Quint & Thimmig LLP, San
Francisco, California, Bond Counsel. Bond Counsel undertakes no responsibility for the
accuracy,completeness or fairness of this Official Statement. Certain legal matters will be passed
upon for the City and the Authority by the City Attorney, and by Quint & Thimmig LLP, San
Francisco,California,Disclosure Counsel.Certain compensation of Bond Counsel and Disclosure
Counsel is contingent upon the issuance and delivery of the Bonds.
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FINANCIAL STATEMENTS
The City's financial statements for the fiscal year ended September 30,2009, included in
APPENDIX B—"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 2009," have been audited by , Certified
Public Accountants & Consultants, Los Angeles, California, as stated in their reports appearing
in such appendix. has not undertaken to update its reports or to take any action
intended or likely to elicit information concerning the accuracy, completeness or fairness of the
statements made in this Official Statement, and no opinion is expressed by . with
respect to any event subsequent to its report.
LITIGATION
To the best knowledge of the Authority and the City,except as otherwise disclosed in this
Official Statement, there is no pending or threatened litigation concerning the validity of the
Bonds or the pledge of the Revenues or challenging any action taken by the Authority or the City
in connection with the authorization of the Indenture or the Lease Agreement, or any other
document relating to the Bonds or the defeasance and prepayment of the Bonds to which the
Authority or the City is or is to be become a party or the performance by the Authority or the
City of any of their obligations under any of the foregoing.
RATING
Standard & Poor's Ratings Services ("S&P") has assigned its municipal bond rating of
to the Bonds. Such rating reflects only the views of S&P and an explanation of the
significance of such rating may be obtained from S&P as follows: Standard & Poor's Ratings
Services, 55 Water Street, New York, NY 10041. There is no assurance that such rating will
continue for any given period of time or that it 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 market price of the
Bonds.
UNDERWRITING
The Bonds are being purchased by Piper Jaffray & Co.. (the "Underwriter"). The
Underwriter has agreed to purchase the Bonds at a price of $ which amount
represents the principal amount of the Bonds of$ ,less$ representing the
Underwriter's discount,plus$ ,representing net original issue premium.The contract
of purchase pursuant to which the Bonds are being purchased by the Underwriter provides that
the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the
Underwriter to make such purchase is subject to certain terms and conditions set forth in such
contract of purchase.The Underwriter may offer and sell the Bonds to certain dealers and others
at prices different from the prices stated on the inside cover page of this Official Statement. The
offering prices may be changed from time to time by the Underwriter.
The Underwriter has entered into an agreement (the "Distribution Agreement") with
Advisors Asset Management, Inc. ("AAM") for the distribution of certain municipal securities
offerings allocated to the Underwriter at the original offering prices. Under the Distribution
Agreement,if applicable to the Bonds,the Underwriter will share with AAM a portion of the fee
or cornmission,exclusive of management fees,paid to the Underwriter.
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VERIFICATION OF MATHEMATICAL COMPUTATIONS
The Verification Agent will verify,from the information provided to it,the mathematical
accuracy as of the date of the closing of the Bonds of(a)computations relating to the adequacy of
the amounts deposited in the 2000 Bonds Escrow Fund for the defeasance of the 2000 Bonds.The
Verification Agent will restrict its procedures to examining the arithmetical accuracy of certain
computations and will not make a study or evaluation of the information and assumptions on
which such computations are based and, accordingly, will not express an opinion on the data
used,the reasonableness of the assumptions or the achievability of the forecasted outcome.
FINANCIAL ADVISOR
Public Financial Management, Inc., Los Angeles, California, has served as Financial
Advisor in connection with the authorization and delivery of the Bonds.The Financial Advisor is
not obligated to undertake, and has not undertaken to make, an independent verification or to
assume responsibility for the accuracy, completeness or fairness of the information contained in
the Official Statement. The fees of the Financial Advisor are contingent upon the sale and
delivery of the Bonds.Public Financial Management,Inc. is an independent advisory firm and is
not engaged in the business of underwriting, trading or distributing municipal or other public
securities.
CONTINUING DISCLOSURE
The ultimate security for the payments of principal and interest on the Bonds comes from
the Lease Payments to be made by the City and, therefore, the City, as an obligated person
within the meaning of the Rule,has agreed to undertake the disclosure responsibilities required
by the Rule. The Authority has not undertaken to provide any continuing disclosure required by
the Rule.
The City has covenanted to provide such annual financial statements and other
information in the manner required by Rule 15c2-12 of the Securities and Exchange Commission
(17 C.F.R. § 240.15c-2-12) (the "Rule'). These covenants have been made in order to assist the
Underwriter in complying with the Rule.The City will execute a continuing disclosure certificate
(the "Continuing Disclosure Certificate") for the benefit of the owners of the Bonds to provide
certain financial information and operating data concerning the City to the Municipal Securities
Rulemaking Board via its Electronic Municipal Market Access system of certain events,pursuant
to the requirements of section (b)(5)(i) of Rule 15c2-12. See APPENDIX F—"FORM OF
CONTINUING DISCLOSURE CERTIFICATE" for a description of the Continuing Disclosure
Certificate. A failure by the City to provide any information required thereunder will not
constitute an Event of Default under the Indenture or the Lease Agreement. The City has never
failed to comply with any previous undertakings with regard to said Rule to provide annual
reports or notices of material events.
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ADDITIONAL.INFORMATION
Summaries and explanations of the Bonds and documents contained in this Official
Staterent do not purport to be complete, and reference is made to such documents for full and
complete statements of their provisions.
The preparation and distribution of this Official Statement have been authorized by the
Authority and the City.
HUNTINGTON BEACH PUBLIC
FINANCING AUTHORITY
By
Executive Director
CITY OF HUNTINGTON BEACH
By
City Administrator
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APPENDIX A
GENERAL,ECONOMIC AND DEMOGRAPHIC
INFORMATION RELATING TO THE CITY
General Information
Founded in the late 1880s, Huntington Beach was incorporated as a general law city in
1909 and became a charter city in 1937. The City encompasses 31.6 square miles (26.4 square
miles is land, 5.2 square miles is water) in the coastal area of Orange County, California,
adjacent to the Cities of Costa Mesa, Fountain Valley, Newport Beach, Seal Beach and
Westminster. The City is approximately 40 miles southeast of Los Angeles and 90 miles
northwest of San Diego. As January 1,2009,the population was estimated at 202,480,according
to the State of California's Department of Finance.
The City is a full service city. Its major departments include the City Administrator's
office, Administrative Services, Building and Safety, Planning, Library Services, Public Works,
Community Services, Economic Development and Police and Fire. The city has approximately
1,144 employees and a total budget of approximately$330,000,000.
Internationally known as Surf City, the City boasts eight miles of scenic, accessible
beachfront,the largest stretch of uninterrupted beachfront on the West Coast. Tourism remains
a vital part of the economy, as over 11 million visitors flock to the city during the summer, on
weekends and for special events. The City's parks and recreation features one of the largest
recreational piers in the world,public parks,riding stables and equestrian trails,a marina,and a
wildlife preserve, and an eight-mile biking, inline skating,jogging, and walking trail along the
ocean. The crown jewel of the City's recreation system is the wide expanse of beautiful and
spacious beaches,where large crowds gather to watch professional sporting events as the U.S.
Open of Surfing,AVP Pro Beach Volleyball and Van's World Championship of Skateboarding.
The Huntington Beach Art Center and the Huntington Beach Playhouse provide a wide
variety of fine arts, and the excellent library system and numerous museums provide a strong
cultural foundation. The educational system, with five city high schools and 35 elementary
schools, is excellent. The City is home to Golden West Community College and nearby UC
Irvine and Cal State Long Beach and Fullerton.
Government Organization
The City has a council/administrator form of government. The City Council is
comprised of seven members elected bi-annually at large to four-year terms and the Mayor is
selected by the Council Members to a one-year term. The City Council appoints the City
Administrator who is responsible for the day-to-day administration of City business and the
coordination of all departments of the City. As of September 30 2009 the City had 1,143 full-
time budgeted employees.
The members of the City Council, the expiration dates of their terms and key
administrative personnel are set forth in the charts below.
Appendix A
Page 1
CITY COUNCIL
Council Member Term Expires
Cathy Green,Mayor November 2010
Jill Hardy,Mayor Pro Tem November 2010 I
Keith Bohr,Member November 2012
Joe Carchio,Member November 2010
Gil Coerper,Member November 2010
Devin Dwyer,Member November 2012
Don Hansen,Member November 2012
KEY ADMINISTRATIVE PERSONNEL
Fred Wilson City Administrator
Paul Emery Deputy City Administrator
Robert Hall Deputy City Administrator
Bob Wingenroth Finance Director
Robert Sedlak Accounting Manager
Jennifer Lampman Budget Manager
Jennifer McGrath,Esq. City Attorney
Joan L.Flynn City Clerk
Governmental Services
Public Safety and Welfare-Law enforcement and fire protection services are provided by
the City. The Huntington Beach Police Department currently employs 220 sworn officers. The
Huntington Beach Fire Department employs 131 sworn fire fighters operating out of eight fire
stations and maintains a Hazardous Materials Response Unit operating as a part of a county-
wide response team.Other services provided by the City include emergency medical aid,traffic
safety maintenance,and building safety regulation and inspection.
Public Services-Water service is provided to City residents through the City's municipal
water department.
Public Works/Planning - Additional services include parkway and median maintenance
and improvements, refuse management, sewer and storm drain maintenance, zoning and
development administration, environmental review, code enforcement and street tree
maintenance.
Leisure and Community Services-The City operates the Huntington Beach Library which
includes the central library and four branches. The City's Community Services Department
provides citizens with a variety of park and recreational and marine safety (lifeguard) services
on a year round basis.Facilities include the Huntington Beach Art Center,fifty-six park sites,8.5
miles of public beach,a public golf course,an Equestrian Center and two senior centers.
Community Information
Public school education is available through four elementary school districts and one
high school district. There are 26 elementary schools, 4 middle schools and 5 high schools.
Students are also served by 10 parochial and private schools. Area colleges and universities
include Orange Coast College, Goldenwest College, Long Beach State University and the
University of California at Irvine.
Appendix A
Page 2
Health Care services available within the immediate area are provided by Huntington
Beach Hospital in Huntington Beach,Hoag Memorial Hospital in Newport Beach and Fountain
Valley Regional Hospital.
Area attractions include Disneyland, Knott's Berry Farm, the Aquarium of the Pacific
and Wild Rivers Aquatic Park. Locally, the City's public beaches are the site of the Men's and
Women's Professional Beach Volleyball Tour and the International Surfing and World Cup
event. Other attractions include the Bolsa Chica Ecological Reserve, a restored wetlands area
known for winter bird watching,and the International Surf Museum.
Transportation
The City is 12 miles from the John Wayne/Orange County Airport(SNA), 18 miles from
the Long Beach Airport (LGB), 38 miles from Los Angeles International (LAX) and 48 miles
from the Ontario International Airport(ONT).
Greyhound Lines serves the City with stops in Santa Ana and Irvine.In Orange County,
the Orange County Transportation Authority (OCTA) provides convenient service and
connections to bus lines serving the greater Los Angeles (Metro Transit Authority) and San
Diego areas.
The City is accessible by train. The nearest train depots are in Santa Ana, Anaheim and
Irvine.
Population
The following table provides a comparison of population growth for Huntington Beach
and Orange County between 2000 and 2009.
Population
City of Huntington Beach and Orange County
2000-2009
Huntington Orange
Year Beach County
2000 189,627 2,846,289
2001 192,340 2,890,473
2002 194,729 2,938,731
2003 196,999 2,980,547
2004 198,731 3,016,874
2005 199,820 3,044,980
2006 200,423 3,063,159
2007 200,736 3,080,383
2008 201,127 3,170,500
2009 202,480 3,139,017
Source; State of California Department of Finance,Population Research Unit,"Population Estimates for California
Cities and Counties."
Personal Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments,a number often referred to as"disposable" or"after-tax" income. Personal income is
the aggregate of wages and salaries,other labor-related income(such as employer contributions
to private pension funds), proprietor's income, rental income (which includes imputed rental
income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest
Appendix A
Page 3
incory..k(F. from all sources, and transfer payments (such as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state and local), nontax payments (fines,
fees, Penalties, etc.) and personal contributions to social insurance. According to U.S.
gov errurnent definitions, the resultant figure is commonly known as "disposable personal
income."
City of Huntington Beach,State of California and United States
Median Household Effective Buying Income
City of Orange State of United
Year Huntington Beach County California States
2004 $55,440 $51,823 $43,915 $39,324
2.005 57,241 53,099 44,681 40,529
2006 59,662 55,370 46,275 41,255
2007 63,846 58,727 48,203 41,792
2008 64,254 58,979 48,952 42,303
Sou cce--: "Survey of Buying Power,"Sales and Marketing Management Magazine(2004);Nielsen Claritas,Inc(2005-
2008)
NcITE: In 2005, Sales and Marketing Management ceased publishing the "Survey of Buying Power" report;
however, subsequent years' data has been obtained from Nielsen Claritas, Inc., who had previously
prepared the data each year for the"Survey of Buying Power."
Appendix A
Page 4
Employment and Industry
The following table sets forth labor force, employment and unemployment for the
period from 2004 to 2008,in the City,the County,the State and the United States:
HUNTINGTON BEACH LABOR MARKET
Labor Force,Employment and Unemployment
Annual Average
Civilian Civilian Unemployment
Year and Area Labor Force Employment Unemployment Rate(%)
2004
City of Huntington Beach 121,400 117,200 4,200 3.4%
Orange County 1,575,100 1,508,000 67,100 4.3
California 17,444,400 16,354,800 1,089,700 6.2
United States 146,401,167 139,251,917 8,149,250 5.5
2005
City of Huntington Beach 123,000 119,300 3,700 3.0%
Orange County 1,594,500 1,534,400 60,100 3.8
California 17,629,200 16,671,900 957,200 5.4
United States 149,297,833 141,707,250 7,590,583 5.1
2006
City of Huntington Beach 124,600 121,200 3,400 2.8%
Change County 1,613,900 1,558,900 54,900 3.4
California 17,821,100 16,948,400 872,700 4.9
United States 151,427,583 144,427,000 7,000,583 4.6
2007
City of Huntington Beach
Orange County 1,623,000 1,559,900 63,100 3.9%
California 18,078,000 17,108,700 969,300 5.4
United States 153,167,750 146,093,917 7,073,833 4.6
2008(1)
City of Huntington Beach
Orange County 1,638,600 1,552,300 86,200 5.3%
California 18,391,800 17,059,600 1,332,300 7.2
Und.ed States 153,124,000 146,047,000 7,078,000 4.6
Soars e: alifomia Employment Development Department;United States Department of Labor.
(1_)Latest available full-year data.
Appendix A
Page 5
The major employers operating within the City and their respective number of
employees as of September 30,2009,are as follows:
CITY OF HUNTINGTON BEACH
Largest Employers
Number of
Name of Employer Employees
lain5,638
iksilver 1.120
Cambro Manufacturing 951
riz n 7011
Hyatt Regency Huntington Beach 641
C&D Aerospace 618
Huntington Beach Hospital
Fisher&Paykel 442
Rainbow Disposal 40$
Home Depot(including Expo) 386
Total of top 10 11.432
All others Mzkw
Total employment(public and riles 1 41_Q
Source;City of Huntington Beach.
Commercial Activity
The following charts summarize the volume of retail sales and taxable transactions for
the City of Huntington Beach for 2004 through 2008.
CITY OF HUNTINGTON BEACH
Total Taxable Transactions
(in Thousands)
2004-2008
Retail Retail Total Taxable Issued
Sales Sales Transactions Sales
Year ($000's) Permits ($000's) Permits
2004 1,983,581 2,758 2,411,197 7,404
2005 2,021,550 2,842 2,479,780 7,381
2006 2,122,983 2,934 2,594,565 7,365
2007 2,096,249 2,985 2,631,199 7,177
2008(1) 1,916,823 3,105 2,563,546 7,127
Source.' State Board of Equalization,"Taxable Sales in California,"published annually in November for prior year.
(1)Latest available full-year data.
Appendix A
Page 6
Taxable transactions by type of business for the City of Huntington Beach for 2004
through 2008 are summarized in the table below.
CITY OF HUNTINGTON BEACH
Taxable Transactions by Type of Business
2004-2008
2004 2005 2006 2007 2008(1)
Retail Stores
Apparel Stores $ 106,093 $ 99,076 $ 110,818 $ 110,443 $ 94,593
General Merchandise Stores 198,527 181,694 213,964 214,686 216,311
Food Stores 108,393 11,881 115,689 122,625 121,443
Eating/Drinking Places 253,912 275,806 302,294 320,143 320,626
Home Furnishings/Appliances 106,429 112,035 107,385 102,428 90,650
Building Materials/Farm
Implements 244,606 275,580 266,383 218,725 158,741
Auto Dealers/Suppliers 468,743 454,408 439,957 456,067 368,764
Service Stations 154,898 170,941 207,894 213,160 243,676
Other Retail Stores 341,980 333,198 358,599 337,972 299,018
Total Retail Stores $1,983,581 $2,021,550 $2,122,983 2,096,249 1,916,823
All Other Outlets 427,616 458,230 471,582 534,950 646,723
Total All Outlets $2,411,197 $2,479,780 $2,594,565 $2,631,199 $2,563,546
Source. State Board of Equalization,"Taxable Sales in California,"published annually in November for prior year.
(1)Latest available full-year data.
Construction Activity
The following charts summarize building activity valuations for the City of Huntington
Beach for the five-year period from 2004 through 2008.
CITY OF HUNTINGTON BEACH
Building Activity and Valuation
(Valuation in Thousands of Dollars)
2004 2005 2006 2007 2008
Residential:
New Single-Family $55,353 $32,041 $28,746 $ 55,353 $ 7,149
ate� Multi-Family 16,803 3,407 0 16,803 0
Additions,alterations 33,277 39,717 51,381 33,277 31,966
Total Residential 105,434 75,164 80,128 105,434 39,114
Commercial:
New Commercial $25,725 $12,741 $51,808 25,725 32,963
New Industrial 8,000 13,215 2,304 8,000 0
Other 21,836 20,349 22,392 21,836 12,152
Additions,alterations 26,011 26,345 26,469 26,011 21,362
Total Nonresidential 81,572 72,649 102,973 81,572 66,477
Total Valuation $187,006 $147,813 $183,100 $187,006 $105,591
No.of New Dwelling Units:
Single-Dwelling 191 125 106 191 20
Multi-Dwelling 5 40 0 85 0
Total New Units 276 165 106 276 20
Sources Construction Industry Research Board,'Building Permit Summary."
Appendix A
Page 7
APPENDIX B
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2009
Appendix B
APPENDIX C
CITY INVESTMENT POLICY
Appendix C
APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE LEGAL DOCUMENTS
[TO COME]
Appendix D
APPENDIX E
PROPOSED FORM OF BOND COUNSEL OPINION
[Letterhead of Quint&Thimmig LLP]
[Closing Date]
i-Lwatington Beach Public Financing Authority
2000 Main Street
i Itiabngt'on Beach,California 92648
OPINION: $ * Huntington Beach Public Financing Authority Lease Revenue
Refunding Bonds,2010 Series A
Niie n:bers of the Authority:
We have acted as bond counsel in connection with the delivery by the Huntington Beach Public
Financing Authority (the "Authority') of$ * aggregate principal amount of the bonds of the
Authority designated the "Huntington Beach Public Financing Authority Lease Revenue Refunding
Bonds, 2010 Series A" (the "Bonds"), pursuant to the provisions of Article 4 (commencing with section
6584)of Chapter 5 of Division 7 of Title 1 of the California Government Code(the"Law"),and pursuant
to ara indenture of trust, dated as of Tune 1, 2010 (the "Indenture"),by and between the Authority and I
r_ as trustee,and a resolution of the Authority adopted on A np 1 29,2010.The Bonds are
secured by Revenues (as defined in the Indenture), including certain payments made by the City of
Huntington Beach (the "City") under a lease agreement, dated as of Tune 1. 2010 (the "Lease
Agreement"),by and'between the Authority and the City.We have examined the Law and such certified
proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the
Authority and the City contained in the Indenture and Lease Agreement, as applicable, and in the
certified proceedings, and upon other certifications furnished to us, without undertaking to verify the
same by independent investigation.
Based upon our examination we are of the opinion,under existing law,that:
1. The Authority is a duly constituted joint exercise of powers authority under the laws of the
�1;taie of California with power to enter into the Indenture, to perform the agreements on its part
contained therein and to issue the Bonds.
2. The Bonds constitute legal,valid and binding special obligations of the Authority enforceable
in accordance with their terms and payable solely from the sources provided therefor in the Indenture.
3, The Indenture has been duly approved by the Authority and constitutes a legal, valid and
binding obligation of the Authority enforceable against the Authority in accordance with its terms.
4. The Indenture establishes a valid first and exclusive Iien on and pledge of the Revenues (as
such a vrm is defined in the Indenture)and other funds pledged thereby for the security of the Bonds,in
accordance with the terms of the Indenture.
5. Subject to the Authority's and the City's compliance with certain covenants, interest on the
Bond (i)is excludable from gross income of the owners thereof for federal income tax purposes,and (ii)
cia �aaary,subject to change.
Appendix E
Page 1
is not included as an item of tax preference in computing the alternative minimum tax for individuals
and corporations under the Internal Revenue Code of 1986,as amended (the"Code"). Failure to comply
with certain of such covenants could cause interest on the Bonds to be includable in gross income for
federal income tax purposes retroactively to the date of issuance of the Bonds. It is also our opinion that
the Bonds are"qualified tax exempt obligations"under section 265(b)(3)of the Code.
6. Interest on the Bonds is exempt from personal income taxation imposed by the State of
California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we
express no opinion regarding any such collateral consequences arising with respect to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds,the Indenture and the
Lease Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights heretofore or hereafter enacted and also may be subject to the
exercise of judicial discretion in accordance with general principles of equity.
In rendering this opinion,we have relied upon certifications of the Authority,the City and others
with respect to certain material facts.Our opinion represents our legal judgment based upon such review
of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result.
This olpA' xion is given as of the date hereof and we assume no obligation to revise or supplement this
opiidoja to reflect any facts or circumstances that may hereafter come to our attention or any changes in
law that may hereafter occur.
Respectfully submitted,
Appendix E
Page 2
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (the"Disclosure Certificate") is executed and
delivered by the CITY OF HUNTINGTON BEACH (the "City") in connection with the issuance by the
Huntington Beach Public Financing Authority (the "Authority") of $ * aggregate principal
amount of Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,2010 Series A
(the"Bonds").The Bonds are being issued pursuant to an indenture of trust,dated as of une 1,2010(the
"Indenture"),by and between the Authority and as trustee (the "Trustee"). The City
covenants and agrees as follows:
Section 1.Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and
delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to
assist the Participating Underwriter in complying with S.E.C.Rule 15c2-12(b)(5).
Section 2.Definitions.In addition to the definitions set forth in the Indenture,which apply to any
capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in,Sections 3 and 4 of this Disclosure Certificate.
"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 tax purposes.
"Dissemination Agent" shall mean Harrell & Company Advisors. LLC or any successor
Dissemination Agent designated in writing by the City and which has filed with the City a written
acceptance of such designation. In the absence of such a designation, the City shall act as the
Dissemination Agent.
"EMMA" or "Electronic Municipal Market Access" means the centralized on-line repository for
documents filed with the MSRB, such as official statements and disclosure information relating to
municipal bonds,notes and other securities as issued by state and local governments or similar medium
should EMMA no longer exist.
"Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Certificate.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the
Securities and Exchange Commission as the sole repository of disclosure information for purposes of the
Rule, or any other repository of disclosure information which may be designated by the Securities and
Exchange Commission as such for purposes of the Rule in the future.
"Participating Underwriter"shall mean the original underwriter of the Bonds,required to comply
with the Rule in connection with offering of the Bonds.
"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 may be amended from time to time.
Section 3.Provision of Annual Reports.
(a) Delivery of Annual Report to MSRB. The City shall,or shall cause the Dissemination Agent to,
not later than March 31 of each year(being the last day of the 9th month after the end of the City's fiscal
year, which ends on June 30), commencing with the report for the 2008-2009 fiscal year, provide to the
*Preliminary,subject to change.
Appendix F
Page 1
Participating Underwriter and to file with EMMA, in a readable PDF or other electronic format as
prescribed by the MSRB,an Annual Report prepared by or on behalf of the City that is consistent with the
requirements of Section 4 of this Disclosure Certificate.The Annual Report may be submitted as a single
document or as separate documents comprising a package,and may cross-reference other information as
provided in Section 4 of this Disclosure Certificate;provided that the audited financial statements of the
City may be submitted separately from the balance of the Annual Report and later than the date required
above for the filing of the Annual Report if they are not available by that date.The filing with EMMA of
the final official statement for the Bonds shall satisfy the filing requirement for the 2008-09 fiscal year.
(b)Change of Fiscal Year.If the City's fiscal year changes,it shall give notice of such change in the
same manner as for a Listed Event under Section 5(d).
(c)Delivery of Annual Report to Dissemination Agent.Not later than fifteen(15)Business Days prior
to the date specified in subsection(a)for providing the Annual Report to EMMA,the City shall provide
the Annual Report to the Dissemination Agent(if other than the City).If by such date,the Dissemination
Agent has not received a copy of the Annual Report,the Dissemination Agent shall notify the City.
(d) Report of Non-Compliance. If the City is unable to provide an Annual Report by the date
required in subsection (a), the Dissemination Agent shall send a notice to EMMA in substantially the
form attached as Exhibit A.
(e)Annual Compliance Certification. The Dissemination Agent shall,if the Dissemination Agent is
other than the City, file a report with the City certifying that the Annual Report has been provided
pursuant to this Disclosure Certificate,stating the date it was provided.
Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by
reference the following:
(a)Audited financial statements of the City for the preceding fiscal year,prepared in accordance
with the laws of the State and including all statements and information prescribed for inclusion therein
by the Controller of the State. If the City's audited financial statements are not available by the time the
Annual Report is required to be filed pursuant to Section 3(a),the Annual Report shall contain unaudited
financial statements in a format similar to the financial statements contained in the final Official
Statement,and the audited financial statements shall be filed in the same manner as the Annual Report
when they become available.
(b) To the extent not included in the audited financial statements of the City,the Annual Report
shall also include operating data with respect to the City for the preceding fiscal year, substantially
similar to that provided in the corresponding tables and charts in the official statement for the Bonds,as
follows:
(i) General Fund Budget Summary;
(ii) Investment Portfolio of the City;
(iii) Tax Revenues By Source,Governmental Funds;
(iv) Sales Tax Rate;
(v) Motor Vehicle In-Lieu Tax;
(vi) Assessed Full Cash Value of All Taxable Property;
(vii) Property Tax Levies and Tax Collections;
(viii) Principal Secured Property Taxpayers;
(ix) Annual Pension Cost;
(x) Annual OPEB Cost;and
(xi) Direct and Overlapping Debt Report
(c)Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the City or related public entities,which are available to the
public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The City
shall clearly identify each such other document so included by reference.
Appendix F
Page 2
If the document included by reference is a final official statement, it must be available from
EMMA.
(d) In addition to any of the information expressly required to be provided under paragraph (b)
of this Section 4,the City shall provide such further information,if any,as may be necessary to make the
specifically required statements, in the light of the circumstances under which they are made, not
misleading.
Section 5.Reporting of Significant Events.
(a) Listed Events. Pursuant to the provisions of this Section 5, the City shall give, or cause to be
givers,notice of the occurrence of any of the following events with respect to the Bonds,if material:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults.
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.
(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.
(v) Substitution of credit or liquidity providers,or their failure to perform.
(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.
(vii) Modifications to rights of security holders.
(viii) Contingent or unscheduled bond calls.
(ix) Defeasances.
(x) Release,substitution,or sale of property securing repayment of the securities.
(xi) Rating changes.
(b) Determination of Materiality of Listed Events. Whenever the City obtains knowledge of the
occurrence of a Listed Event,the City shall as soon as possible determine if such event would be material
under applicable federal securities laws.
(c)Notice to Dissemination Agent.If the City has determined that knowledge of the occurrence of a
Listed Event would be material under applicable federal securities laws, the City shall promptly notify
the Dissemination Agent(if other than the City) in writing. Such notice shall instruct the Dissemination
Agent to report the occurrence pursuant to subsection(d).
(d)Notice of Listed Events.The City shall file,or cause the Dissemination Agent to file,a notice of
the occurrence of a Listed Event,if material,with EMMA,in a readable PDF or other electronic format as
prescribed by EMMA, with a copy to the Participating Underwriter. Notwithstanding the foregoing,
notice of Listed Events described in subsections (a)(viii) and (ix) (defeasances)need not be given under
this subsection any earlier than the notice (if any) of the underlying event is given to Bondholders of
affected Bonds.
Section 6. Identifying Information for Filings with EMMA. All documents provided to EMMA
under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the
MSRB.
Section 7. Termination of Reporting Obligation. The City's obligations under this Disclosure
Certificate shall terminate upon the 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 City shall give notice of such
termination in the same manner as for a Listed Event under Section 5.
Section 8.Dissemination Agent.
(a) Appointment of Dissemination Agent. The initial Dissemination Agent shall be Harrell & I
Compapy Advisors,L .C. The City may,from time to time,appoint or engage a Dissemination Agent to
assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such
agent,with or without appointing a successor Dissemination Agent.If the Dissemination Agent is not the
City, the Dissemination Agent shall not be responsible in any manner for the content of any notice or
report prepared by the City pursuant to this Disclosure Certificate. It is understood and agreed that any
information that the Dissemination Agent may be instructed to file with EMMA shall be prepared and
Appendix F
Page 3
provided to it by the City.The Dissemination Agent has undertaken no responsibility with respect to any
reports, notices or disclosures provided to it under this Continuing Disclosure Certificate, and has no
liability to any person,including any Owner,with respect to any such reports,notices or disclosures.The
fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship
with the City shall not be construed to mean that the Dissemination Agent has actual knowledge of any
event or condition except as may be provided by written notice from the City.
(b) Compensation of Dissemination Agent.The Dissemination Agent shall be paid compensation by
the City for its services provided hereunder in accordance with its schedule of fees as agreed to between
the Dissemination Agent and the City from time to time and all expenses,legal fees and advances made
or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination
Agent shall not be deemed to be acting in any fiduciary capacity for the City, Holders or Beneficial
Owners, or any other party. The Dissemination Agent may rely and shall be protected in acting or
refraining from acting upon any direction from the City or an opinion of nationally recognized bond
counsel.The Dissemination Agent may at any time resign by giving written notice of such resignation to
the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate (and the Dissemination Agent shall agree to
any amendment so requested by the City that does not impose any greater duties or risk of liability on the
:dissemination Agent),and any provision of this Disclosure Certificate may be waived,provided that the
following conditions are satisfied:
(a) Change in Circumstances.If the amendment or waiver relates to the provisions of Sections 3(a),
4 or 5(a),it may only be made in connection with a change in circumstances that arises from a change in
legal requirements,change in law,or change in the identity,nature,or status of an obligated person with
respect to the Bonds,or the type of business conducted;
(b) Compliance as of Issue Date.The undertaking,as amended or taking into account such waiver,
would,in the opinion of a nationally recognized bond counsel,have complied with the requirements of
the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or
interpretations of the Rule,as well as any change in circumstances;and
(c)Consent of Holders,Non-impairment Opinion.The amendment or waiver either(i)is approved by
the Bondholders in the same manner as provided in the Indenture for amendments to the Indenture with
the consent of Bondholders, or (ii) does not, in the opinion of nationally recognized bond counsel
provided to the Dissemination Agent, materially impair the interests of the Bondholders or Beneficial
Owners.
If this Disclosure Certificate is amended or any provision of this Disclosure Certificate is waived,
lite City shall describe such amendment or waiver in the next following Annual Report and shall include,
as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the
+:ype (or in the case of a change of accounting principles,on the presentation) of financial information or
operating data being presented by the City. In addition, if the amendment relates to the accounting
principles to be followed in preparing financial statements, (i)notice of such change shall be given in the
same manner as for a Listed Event under Section 5(d),and (ii) the Annual Report for the year in which
the change is made should present a comparison (in narrative form and also, if feasible, in quantitative
form) between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the City from disseminating any other information,using the means of dissemination set forth in
this Disclosure Certificate 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 Certificate. If the City 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
Certificate,the City shall have no obligation under this Disclosure Certificate to update such information
or include it in any future Annual Report or notice of occurrence of a Listed Event.
Appendix F
Page 4
Section 11. Default. In the event of a failure of the City to comply with any provision of this
Disclosure Certificate, any Bondholder or Beneficial Owner may take such actions as may be necessary
and appropriate,including seeking mandate or specific performance by court order,to cause the City to
comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure
Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an
action to compel performance.
Section 12.Duties,Immunities and Liabilities of Dissemination Agent.The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Certificate,and the City agrees to
indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless
against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys
fee6 and expenses) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent's negligence or willful misconduct. The obligations of the City under this Section
shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City,
the Dissemination Agent,the Participating Underwriters and Holders and Beneficial Owners from time
to ihne of the Bonds,and shall create no rights in any other person or entity.
Date, ((Closing Date]
CITY OF HUNTINGTON BEACH
By
Authorized Officer
ACKNOWLEDGED:
HARRELL&COMPANY ADVISORS LLC,as
Dissemination Agent
By
Authorized Officer
Appendix F
Page 5
EXHIBIT A
NOTICE TO EMMA OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Huntington Beach Public Financing Authority
Name of Obligor: City of Huntington Beach,California
Name of Issue: Huntington Beach Public Financing Authority Lease Revenue Refunding Bonds,
2010 Series A
Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the City of Huntington Beach has not provided an Annual
Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate
dated December 16,2009,furnished by the City in connection with the Bond Issue. The City anticipates
that the Annual Report will be filed by
Dated.
as Dissemination Agent
By
Name
Title
cc:Trustee
Appendix F
Page 6
APPENDIX G
BOOK-ENTRY ONLY SYSTEM
The following description of the procedures and record keeping with respect to beneficial
ownership interests in the Bonds,payment of principal, redemption premium, if any, and interest with
respect to the Bonds to The Depository Trust Company ("DTC"), New York, NY, its Participants or
Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other
related transactions by and between DTC, its Participants and the Beneficial Owners is based solely on
the understanding of the Authority of such procedures and record keeping from information provided by
DTC. Accordingly, no representations can be made concerning these matters and neither DTC, its
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 its Participants,as the case may be. The City,
the Authority, the Trustee and the Underwriter understand that the current "Rules" applicable to DTC
are on file with the Securities and Exchange Commission and that the current"Procedures"of DTC to be
followed in dealing with Participants are on file with DTC.
DTC 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 certificate will be issued
for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be
deposited with DTC.
DTC, the world's largest 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 3.5 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.DTTC is owned by 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,
a td clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest
rating: AAA. 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 and www.dtc.org.
Purchases of the 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 certificates representing their ownership
interests in the 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 the Bonds with DTC and their
Appendix G
Page 1
registration in the name of Cede&Co.or such other DTC nominee do not effect 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 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 the 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 redemptions, tenders, defaults, and proposed amendments to the Trust Agreement. For
example, Beneficial Owners of the 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
redeemed. DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
each issue to be redeemed.
Neither DTC nor Cede &Co. (nor any other DTC nominee)will consent or vote with respect to
the 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 Issuer 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 the Bonds are credited on the record date(identified in a listing attached to the Omnibus
Proxy).
Payments of principal of,premium,if any,and interest 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 City,the Authority 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
inshuctions 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,the City or the Authority,subject to any statutory or regulatory requirements as may be
in effect from time to time.Payments of principal of,premium,if any,and interest on the Bonds by Cede
& Co (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City, the Authority 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.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the City, the Authority or the Trustee. Under such circumstances, in the
event that a successor depository is not obtained, Bond certificates are required to be printed and
delivered.
The Authority may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor securities depository).In that event,Bond certificates will be printed and delivered.
The foregoing information concerning DTC and DTC's book-entry system has been provided by
DTC,and neither the Authority nor the Trustee takes any responsibility for the accuracy thereof.
NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS,INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH
RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS,
INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR
REDEMPTION.
Appendix G
Page 2
Neither the Authority nor the Trustee can give any assurances that DTC, DTC Participants,
Indirect Participants or others will distribute payments of principal of,premium,if any, and interest on
the Bonds paid to DTC or its nominee,as the registered Owner,or any redemption or other notice,to the
Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner
described in this Official Statement.
In the event that the book-entry system is discontinued as described above, the requirements of
the Trust Agreement will apply.
The City, the Authority and the Trustee cannot and do not give any assurances that DTC, the
Participants or others will distribute payments of principal,interest or premium,if any,evidenced by the
Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or
other notices,to the Beneficial Owners,or that they will do so on a timely basis or will serve and act in the
manner described in this Official Statement. Neither the Authority nor the Trustee are responsible or
liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial
Owner with respect to the Bonds or an error or delay relating thereto.
Appendix G
Page 3
NOTICE OF PUBLIC HEARING
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
NOTICE IS HEREBY GIVEN that the City Council of the City of Huntington
Beach (the "City"), on Monday, May 3, 2010, at the hour of 6:00 P.M., in the City
Council Chambers, located in the Huntington Beach City Council Chambers at 2000
Main Street, Huntington Beach, California, will hold a public hearing in accordance with
section 6586.5(a)(2) of the California Government Code with respect to the issuance of
revenue bonds (the "Bonds") by the Huntington Beach Public Financing Authority (the
"Authority",) in an amount not to exceed $16,500,000. The Bonds are being issued to
refinance the costs of the acquisition, construction, installation and equipping of certain
public capital improvements, including the refunding of the Authority's outstanding
Huntington Beach Public Financing Authority Lease Revenue Bonds, 1997 Series A
(Public Facilities Project,) and the refunding of the Authority's outstanding Huntington
Beach Public Financing Authority Lease Revenue Bonds, 2000 Series A (Capital
Improvement Financing Project.)
Notice is further given that at said hearing all interested persons will have an
opportunity to be heard with respect to the financing and the public benefits arising from
the financing. Written comments may be submitted at or before the hearing to Joan L.
Flynn, City Clerk, City of Huntington Beach, 2000 Main Street, Huntington Beach, CA
92648-2702.
Dated: April 22, 2010 City Council of the City of Huntington Beach
By: Joan Flynn, City Clerk
2000 Main Street
Huntington Beach, CA 92648-2702
Telephone: (714) 536-5227
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County, State of California,under date of Aug. 24, 1994.case
A50479.
PROOF OF
PUBLICATION
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE }
I am the Citizen of the United States and a
resident of the County aforesaid; I am over
the age of eighteen years, and not a party
to or interested in the below entitled matter. NOTICE OF PUBLIC HEARING
I am a principal clerk of the HUNTINGTON CITY COUNCIL OF THE CITY OF
BEACH INDEPENDENT, a newspaper of NOTICEHUIS NTINGREBBEAGIVEN that
general circulation; printed and published in the City Council of the City ofHuntington Beach (the "City"), on
Monday, May
the City of Huntington Beach, County of of 6:00 3, 2010, at the ,hour
P.
in"the City council
Chambers, located in the Hunting-
Orange, State of California, and the ton Beach. City council Chambers
at 2000 Main Street, Huntington
attached Notice is a true and complete copy I Beach,"California; will hold a public
hearing in accordance with.section
as was printed and published on the 6586.5(a)(2) of the.California Gov-
ernment Code with respect to the
following date(s): issuance of revenue bonds (the
"Bonds") by the Huntington Beach
Public Financing Authority (the
"Authority",) in an amount not to
exceed $16,500,000. The Bonds are
being issued to refinance the costs
i of the acquisition, construction,
installation' and equipping of cer-
tain public capital improvements,
including .the refunding of the Au-
thority's outstanding Huntington I
I Beach Public Financing Authority
April 22, 2010 Lease Revenue Bonds, 1997 Series
A (Public Facilities Project,) and
the refunding of the Authority's
outstanding Huntington Beach Pub-
lic Financing Authority Lease Rev-
enue_Bonds, 2000 Series iA (Capital
Improvement Financing Project.)
Notice is further' given that at
said hearing all interested persons
will have an opportunity to be
declare, under penalty of perjury, that the heard with respect to the financing !
and.the public-benefits arising from
foregoing is true and correct• the financing. Written comments
may be submitted at or before the
hearing to" Joan- L. Flynn, 'City i
Clerk, City of, Huntington Beach, I
2000 Main Street, Huntington
Beach,CA 92648-2702.
Executed on April 22, 2010 Dated:April 22,2010
at Costa Mesa, California ti City CouBeach it of the, City of Hun-
By:Joan Flynn, City Clerk
2000 Main Street
Huntington Beach,CA 92648-2702
Telephone: (714)536-5227
Published Huntington Beach Inde-
pendent April 22,2010 044-594
Signat
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County, State of California.under date of Aug. 24, 1994. case
A50479.
PROOF'OF
PUBLICATION
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
I am the Citizen of the United States and a
resident of the County aforesaid; I am over
the age of eighteen years, and not a party NOTICE OF PUBLIC HEARING
to or interested in the below entitled matter. CITY COUNCIL OF THE CITY OF
OH
I am a principal clerk of the HUNTINGTON NOTICEHUIS NTINGREBBEAGIVEN that
the City 'Council of the City of
BEACH INDEPENDENT, a newspaper of Huntington Beach (the "City"), on
Monday, May 3, 2010; at the hour
general circulation, printed and published in of,6:00 P.M., in .the City Council
Chambers, 'located in the Hunting-
the City of Huntington Beach, County of ton Beach City Council" Chambers
at 2000 Main, Street, Huntington
Orange, State of California, and the Beach, California, will hold a public
attached Notice is a true and complete copy hearing in accordance with section
6586.5(a)(2) of the California Gov- I
ernment Code with respect to the
as was printed and published on the issuance of revenue 'bonds (the j
"Bonds") by the.Huntington Beach
following date(s): Public Financing 'Authority (the I
"Authority",) in an amount not to
exceed $16,500,000. The Bonds are
being issued to refinance the costs
of the.'acquisition, construction,
installation and"equipping of cer-
tain public capital improvements,
including the refunding of the Au-
thority's outstanding Huntington
Beach Public Financing Authority
Lease Revenue Bonds, 1997 Series
A (Public Facilities Project,) and
April 22, 2010 the refunding of the Authority's
outstanding Huntington Beach Pub-
lic Financing Authority Lease Rev-
enue Bonds, 2000 Series A (Capital
Improvement Financing Project.) .
Notice is further given that at
said hearing all interested persons
will have an opportunity to be
heard with respect to the financing
and the public benefits arising from
declare, under penalty of perjury, that the the financing.. Written comments
may be submitted at or before the
foregoing is true and correct. hearing to Clerk, City of aHu Huntington nBeach i
2000 Main Street,L Huntington
Beach,CA 92648-2702.
Dated:April 22,2010
City Council of the City of Hun-
Executed on April 22 2010 tington Beach
, By: Joan Flynn, City Clerk2000 Main ree
1
at Costa Mesa, California Huntington Beach,CA 2648 2702 I
Telephone: (714) 536-5227
Published Huntington Beach Inde-
pendent April 22,2010 '044-594
Sign re
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County, State of California,under date of Aug. 24, 1994,case
A50479.
PROOF OF
PUBLICATION
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE
NOTICE OF PUBLIC HEARING
I am the Citizen of the United States and a
resident of the County aforesaid; I am over CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
the age of eighteen years, and not a party
to or interested in the below entitled matter. NOTICE IS HEREBY GIVEN that the City Council of
am a principal clerk of the HUNTINGTON the City of Huntington Beach(the"City"),on Monday, May 3, I
BEACH INDEPENDENT, a newspaper of 2010,at the hour of 6:00 P.M.,in the City Council Chambers,
general circulation, printed and published in located in the Huntington Beach City Council Chambers at
2000,Main Street;Huntington Beach; California, will hold a
the City of Huntington Beach, County of .a
public hearing in accordance with.section 6586.5(a)(2)of the
Orange, State of California, and the
attached Notice is a true and complete co California Government Code with respect to,the issuance of
P copy revenue bonds(the"Bonds")by the Huntington Beach Public
as was printed and published on the Financing Authority (the "Authority",) in an amount not to
following date(s): ecceed$16,500,000;The Bondsare being issued to refinance
the costs of the acquisition; construction, installation and
equipping of certain public capital improvements, including
the refunding of the Authority's outstanding Huntington Beach
Public Financing Authority Lease,Revenue Bonds, .19,97
.Series A(Public Facilities Project,)and the refunding of the
April 22, 2010 ! Authority's outstanding Huntington Beach Public Financing
Authority Lease Revenue Bonds,.2000 Series A (Capital I
Improvement Financing Project.)
Notice is further given that at said hearing all interested
declare, under penalty of perjury, that the persons will have an opportunity to be heard with respect to
foregoing is true and Correct. the financing�and the public benefitsarising from the financing. ;
Written comments-may be submitted at or before the hearing i
to Joan L. Flynn, City Clerk,City of Huntington Beach,2000
Executed on April 22, 2010 I Main Street,Huntington Beach,CA92648-2702
at Costa Mesa, California
Dated:April 22,2010 City CouncilW the City
of Huntington Beach
I By: Joan Flynn,City Clerk
j 2000 Main Street
° Huntington Beach,CA 92648-2702
C Signatur Telephone: (714),536-5227
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County,State of California,under date of Aug.24, 1994,case
A50479.
PROOF OF
PUBLICATION
STATE OF CALIFORNIA ) 4 _
) SS. NOTICE OF PUBLIC HEARING
COUNTY OF ORANGE )
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
am the Citizen of the United States and a
resident of the County aforesaid; I am over NOTICE IS HEREBY GIVEN that the City Council of
the age of eighteen years, and not a party the City of Huntington Beach(the"City"),on Monday, May 3,
to or interested in the below entitled matter. 2010,at the hour of 6'00 P.M.,in the City`Council Chambers,
am a principal clerk of the HUNTINGTON located in the Huntington Beach City Council Chambers at
BEACH INDEPENDENT, a newspaper of 2.000_Main Street;Huntington Beach,'California,.will'hold`a
general circulation, printed and published !n .public hearing in accordance with section 6586.5(a)(2)of the" �
the City of Huntington Beach, County of California Government Code with.respect to the issuance of
revenue bonds(the"Bonds")by the Huntington Beach Public
Orange, State of California, and the Financing Authority (the "Authority",) in an amount not to I
attached Notice is a true and complete copy exceed$16,500,000.The Bonds are being issued torefinance
as was printed and published on the the costs of the acquisition, construction, installation,and
following date(s): equipping of certain.public capital improvements, including
the refunding of the Authority's outstanding Huntington Beach.
Public Financing Authority Lease.Revenue Bonds, 1997.
-Series A(Public Facilities Project,) and the refunding of.the
Authority's outstanding Huntington Beach Public Financing '
Authority Lease Revenue Bonds, 2000 Series A' (Capital
April 22, 2010 ! Improvement Financing Project.)
Notice is further given that,at said hearing all interested
persons will.have an opportunity to be heard with respectto
the financing-and the public benefits arising from the financing.
declare, under penalty of per;ury, that the Written comments may be submitted at or before the.hearing
foregoing is true and correct. �to Joan L. Flynn, City Clerk, City of Huntington Beach, 2000 '.
Main Street, Huntington Beach,CA92648-2702
Dated:April 22;2010 . City Council of the City .
Executed on April 22, 2010 of Huntington Beach
at Costa Mesa California By: Joan Flynn,City Clerk
2000 Main Street
Huntington Beach,CA 92648-2702.
Telephone: (714)536-5227
Signatur - - - -
4/30/2010
Huntington Beach
Public Financing Authority
Lease Refunding Bonds 2010 m Series A
May 3, 2010
Transaction Description
• New bond issue refunds two existing bond issues
® 1997 Lease Revenue Bonds-Original issue amount
$8,070,000 with$2,770,000 to be refunded
• 2000 Lease Revenue Bonds Series A-Original issue amount
$31,360,000 with$12,785,000 still outstanding and
$12,025,000 to be refunded
• Bonds sold via negotiated sale - underwriter Piper Jaffray
• New term of bonds identical to remaining term of refunded
bonds - 20 years
• Average annual General Fund debt service savings of
$65,000
mac.
4/30/2010
Summary of Savings
Existing Proposed New Savings
Debt Debt
Total cash flows $23,785,037 $22,107,519 $1,249,918
Present value of
cash flows $16,575,708 $15,585,958 $989,750
Average coupon
rate of bonds 5.48% 4.51% .97%
2