The URL can be used to link to this page

Home My WebLink AboutFile 2 of 3 - Mello Roos Community Facilities District - CFD CERTIFICATE OF AUTHORIZED OFFICERS Name of (Huntington Beach Ccmnmity Obligor/Issuer CITY OF HUNTINGTON BEACH Facilities Dist. 1990-1 Special Tax Bonds Address 2000 Main Street, Huntington Beach, California 92648 To: Bank of America National Trust and Savinxp Assoc atitn oxupraate Teat Divi Sian Sys With Flcww Street, Sth Floor Us Angeles, Ch 90071 I, the igned o ni - Br kwaWt ri tW r1 ark Of the C'i t:W of Huntington Beach hereby certify that, pursuant to resolution duly adopted by the , those officers named upon face of this 'ficate have been duly authorized, are now acting are ed to sign written instructions, consents, certificates or other ties, etc., on behalf of this mLmicipality/company, that spec signatures appearing opposite the names and titles are the g signatures o officers and that said resolutions electing/ rizing these offi are now in full force and effect. You are. authorized to reoognize signatures until you receive our writ instructions to the contrary. (Print) (Signature) Grace Wi ncht-11 Mayor, will sign Ray Silver- _ Asst. City A�^i lwill sign I'i�l►'r1�h!S�`f'� Michael Uberuaga - City XaaagatI will Si Donald Watson Treasurer, will sign Dan T. Villella Finance Director, will si Connie Brockway City Clerk , will sign Wn� &D , will sign s , will sign Certified on , 19-D—. (SEAL) I, the undersigned City Clerk of_ Huntington Beach, California, hereby certify .that the specimen signatures appearing opposite the names and titles are the genuine signatures of such officers. ' Name: ' L-��4 r- — - Title: rztnla4/doo 06/90 En Bank of America Corporate Trust Administration --- June 17, 1993 City of Huntington Beach 2000 Main Street Huntington Beach, Ca 92648 Attn: Dan Villella Director of Finance RE: Huntington Beach 1970 Park Bonds 78209 �-�i Huntington Beach Assessment Dist. #88-1 79903 Huntington Beach Comm. Fac Dist. 1990-1 Spec. Tax Bonds 79967 Huntington Beach Parking Authority, 1968 Revenue Bonds 77972 \ Huntington Beach, Public Fac Corp. LHD Mtg. Bonds 9-1-72 78269 l Huntington Beach, Public Fac Corp., Escrow 79767 Dear Mr. Villella: Enclosed is a copy of our Certificate of Authority of Officers. In order to insure that the Trustee/Fiscal Agent/Paying Agent takes directions from authorized officers, please complete the Certificate and return to us within 15 days after your receipt of this letter. If there has been no change from the current list (copy enclosed) , please indicate "no change" on the Certificate, date and sign it, and return it to us. If you have any questions, please call. Sincerely, Kathy Valdivia Assistant Vice President KV:jn Tel: (213) 228-4146 Enclosure i WP51\L.ETTERS\CERTAU.KVE231 Bank of America National Trust and Savings Association 555 South Flower Street Los Angeles,California 90071 213/228-4146 CITY OF HUNTINGTON BEACH coo 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK July 16, 1993 Kathryn M. Valdivia Assistant Vice President Bank of America Corporate Trust 8510 Sth Floor Los Angeles, CA 90071 Dear Ms. Valdivia: Pursuant to our telephone conversation of July 15, 1993, I am returning the certification appropriately reworded. In order to certify the document as originally worded it would be necessary that the Council adopt a new resolution specifying the individuals who now occupy each of these positions. If you decide a resolution is required, please notify me by letter and I will transmit a request to the City Attorney and to the Finance Director that such resolution be prepared for Council adoption. Sincerely, Connie Brockway, CMC City Clerk CB:ln 1273I (Telephone:714-536-5227) 'Jd1VES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTOVI EYS AT LAW CHANCES F.ADAMS FOUR EMBARCADERO CENTER HAROLD W.BANK. SUITE 1950 U x R. ALEppIo BRCE R HBUCE R.COLELEMAN SAN FRANCISCO,CA 94111 THOMAS A.DOWNEY (415)391-5780 ANDREW C.HALL,JR. KENNETH I.JONES FACSIMILE WILLIAM H.MADISON DAVID J.OSTER (415)391-5784 BRIAN D.QUINT July�'1990 ll+dJ 1.7a7V 1416►391-6786 PAUL J.THIMMIG C (415)056-8308 SHARON STANTON WHITE . •ADIQrrED TO NEW YOBH AND DDTIBlC7 OF COLIINHIA HAp8 ONLY ROBERT J.H;LL(1922.1988) , N VU l'iJ'1JL'ilAL L'AFT"S To: Distribution RE: City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Enclosed are revised drafts of the Fiscal Agent Agreement and Acquisition Agreement for the above-referenced financing, marked to show the changes made to them since they were last distributed to the working group. Also enclosed is a revised draft of the homeowner disclosure form. In order to finalize the Acquisition Agreement, I need David Dahl or Lou McDevitt to provide the information for Exhibit B to the Agreement. My office will distribute closing papers for the financing next week. In the meantime, if you have any questions_ and/or comments with respect to any of the enclosed documents, please give me a call. Very truly yours, V Q Paul J. Thimmig Enclosures J8141 PJT:sef CITY OF HUNTINGTON BEACH PROPOSED COMMUNITY FACILITY DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) DISTRIBUTION LIST (July 25, 1990) CITY. UNDERWRITER: CITY OF HUNTINGTON BEACH CHILTON & O'CONNOR -Mr. Robert J. Franz -Mr. Tony Wetherbee Deputy City Administrator/ 1901 Avenue of the Stars, Suite 1400 Administrative Services Los Angeles, California 90067 -Mr. Louis F. Sandoval, (213) 203-0966 Director of Public Works (213) 201-5091 [FAX] -Mr. Robert E. Eichblatt, City Engineer -Mr. Dan T. Villella, FINANCIAL CONSULTANT: Director of Finance -Ms. Connie Brockway, GRC MUNICIPAL FINANCE, INC. City Clerk -Mr. Rod Gunn -Mr. Arthur J. Folger, Principal Deputy City Attorney 3010 Old Ranch Parkway, Suite 330 2000 Main Street Seal Beach,California 90740 Huntington Beach, CA 92648 (213) 598-7677 (714) 536-52.36[Franz] (213) 431-5446[FAX] (714)-536-5432[Sandoval] (714)536-5431 [Eichblatt] (714)536-5228[Villella) BOND COUNSEL: (714) 536-5404[Brockway] (714) 536-5555[Folger] JONES HALL HILL &.WHITE -Paul J. Thimmig, Esq. (714) 536-4182[Franz FAX] -Glenda F. Bell, Project Coordinator (714) 536-6473 [Sandoval FAX] Four Embarcadero Center, 19th Floor (714) 536-6473[Eichblatt FAX] San Francisco, CA 94111 (714)536-4182[Villella FAX] (415) 391-5780 (714) 536-4693 [Brockway FAX] (714) 536-4693 [Folger FAX] FISCAL AGENT DEVELOPER.• BANK OF AMERICA .' THE DAHL COMPANY -Marion Reyes, Trust Officer -Mr. David Dahl Corporate Trust Administration . - -Mr. Ron McDevitt 555 S. Flower Street, 5th Floor 505 Park Avenue - Los Angeles,CA 90071.. Balboa Island, CA 92662 (213) 228-4146 (714) 673-0127 (213) 689-4772[FAX] (714) 72370269[FAX] 9019-30 JMM:P]T:xr 7.25190 J7647 FISCAL AGENT AGREEMENT by and between CITY OF HUNTINGTON BEACH and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Fiscal Agent Dated as of June 1, 1990 Relating to City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds r TABLE OF CONTENTS Eat ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement..... ....................................................3 Section 1.02. Agreement for Benefit of Bondowners..............................................3 Section 1.03. Definitions..... .........................................................................3 ARTICLE lI THE BONDS Section 2.01. Principal Amount;Designation....................................................... 12 Section 2.02. Terms of Bonds......................................................................... 12 Section2.03. Redemption............................................................................. 13 Section 2.04. Form of Bonds......................................................................... 15 Section 2.05. Execution of Bonds.................................................................... 16 Section 2.06. Transfer of Bonds...................................................................... 16 Section 2.07. Exchange of Bonds.................................................................... 16 Section 2.08. Bond Register..... ..................................................................... 16 Section 2.09. Temporary Bonds...................................................................... 17 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen........................................ 17 Section 2.11. Limited Obligation.... ................................................................ 17 Section 2.12 Book-Entry Only Sysytem............................................................ 18 Section.2.13 No Additional Bonds.................................................................. 19 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of Bonds...................................................... 18 Section 3.02. Application of Proceeds of Sale of Bonds..... ..................................... 18 Section3.03. Improvement Fund..................................................................... 18 Section 3.04. Special Tax Fund....................................................................... 19 Section 3.05. Administrative Expense Fund..... ...................................................20 Section3.06. Costs of Issuance Fund..... ..........................................................20 Section 3.07. Validity of Bonds..... .................................................................21 -i- ARTICLE IV SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND Section 4.01. Pledge of Special Tax Revenues..... ................................................22 Section 4.02: Bond Fund..............................................................................22 Section 4.03. Reserve Fund...........................................................................23 ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment......................................................................25 Section 5.02. Limited Obligation..... ................................................................25 Section 5.03. Extension of Time for Payment..... .................................................25 Section 5.04. Against Encumbrances..... ...........................................................25 Section 5.05. Books and Records....................................................................25 Section 5.06. Protection of Security and Rights of Owners.......................................26 Section 5.07. Compliance with Law, Completion of Project......................................26 Section 5.08. Private Business Use Limitation..... ................................................26 Section 5.09. Private Loan Limitation....................:...........................................26 Section 5.10. Collection of Special Tax Revenues..... ............................................26 Section 5.11. Further Assurances..... ...............................................................27 Section 5.12. No Arbitrage.............................................................................27 Section 5.13. Federal Guarantee Prohibition........................................................27 Section 5.14. Compliance with the Code............................................................28 Section 5.15. Covenant to Foreclose.................................................................28 ARTICLE VI INVESTMENTS;DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds.......................................29 Section 6.02. Rebate of Excess Investment Earnings to the United States..... .................30 Section 6.03. Limited Obligation..... ................................................................33 Section 6.04. Liability of City.........................................................................33 Section 6.05. Employment of Agents by City.......................................................34 ARTICLE VII THE FISCAL AGENT Section 7.01. Appointment of Fiscal Agent..... ....................................................35 Section 7.02. Liability of Fiscal Agent...............................................................36 Section7.03. Information..... ........................................................................37 -ii- Section 7.04. Notice to Fiscal Agent..... Section 7.05. Compensation, Indemnification......................................................37 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 8.01. Amendments Permitted................................................................38 Section 8.02. Owners' Meetings......................................................................38 Section 8.03. Procedure for Amendment with Written Consent of Owners.....................39 Section 8.04. Disqualified Bonds.....................................................................39 Section 8.05. Effect of Supplemental Agreement.............:.....................................39 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments..............40 Section 8.07. Amendatory Endorsement of Bonds.................................................40 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties..... ......................................41 Section 9.02. Successor is Deemed Included in All References to Predecessor..... ...........41 Section 9.03. Discharge of Agreement...............................................................41 Section 9.04. Execution of Documents and Proof of Ownership by Owners...................42 Section 9.05. Waiver of Personal Liability..........................................................42 Section 9.06. Notices to and Demands on City and Fiscal Agent.................................42 Section 9.07. Partial Invalidity........................................................................43 Section 9.08. Unclaimed Moneys..... ...............................................................43 Section9.09. Applicable Law.........................................................................43 Section 9.10. Conflict with Act.......................................................................43 Section 9.11. Conclusive Evidence of Regularity..... ............. ...............................43 Section 9.12. Payment on Business Day..... .......................................................43 Section 9.13. Counterparts............................................................................43 EXHIBIT A-FORM OF BOND -iii- FISCAL AGENT AGREEMENT THIS FISCAL AGENT AGREEMENT (the "Agreement") is made and entered into as of June 1, .1990, by and between the City of Huntington Beach, California, a municipal corporation,organized and existing under and by virtue of the Constitution and laws of the State of California (the "City") for and on behalf of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"), and Bank of America National Trust and Savings Association, a national banking association, duly organized and existing under the laws of the United States of America with its principal corporate trust office located in Los Angeles,as fiscal agent(the"Fiscal Agent"), WITNESSETH: WHEREAS,the City Council of the City has formed the District under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the California Government Code)(the "Act")and Resolution No.filU of the City Council adopted on June 18, 1990, WHEREAS, the City Council, as the legislative body with respect to the District, is authorized under the Act to levy special taxes to pay for the costs of facilities and services within the District and to authorize the issuance of bonds secured by said special taxes under the Act; WHEREAS, under the provisions of the Act, on June"25. 1990, the City Council of the City adopted its Resolution No. 6174 (the "Resolution"), which resolution, among other matters, authorized the issuance of the City of Huntington Beach,Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds (the "Bonds")in the aggregate principal amount of not to exceed ,500,000 upon the security of the unpaid special taxes and provided that said issuance would be in accordance with the Act and this Agreement, and authorized the execution hereof; WHEREAS, it is in the public interest and for the benefit of the City, the District, the persons responsible for the payment of special taxes and the owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds,the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds and the administration and payment of the Bonds; and WHEREAS, all things necessary to cause the Bonds, when authenticated by the City for the District and issued as in the Act,the Resolution and this Agreement provided,to be legal,valid and binding and special obligations of the City for the District in accordance with their terms,and all things necessary to cause the creation, authorization;execution and delivery of this Agreement and the creation, authorization,execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: -1- r ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Act and the Resolution. Section 1.02. Agreement for Benefit of Bondowners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference,priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent. Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall,for all purposes of this Agreement,of any Supplemental Agreement,and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein," "hereof;" "hereunder"and other words of similar import refer to this Agreement as a whole and not to any particular Article,Section or subdivision hereof. "Acquisition Agreement" means the Acquisition Agreement, dated as of Luly 1, 1990, between the City and David D. Dahl. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its.duties hereunder (including, but not limited to, the levying and collection of the Special Taxes)including the fees and expenses of its counsel,an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City .general administrative overhead related thereto,and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties hereunder and,in the case of the City,in any way related to the administration of the District. "Administrative Expense Fund" means the fund by that name established by Section 3.05(A) hereof. "Agreement"means this Fiscal Agent Agreement,as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. "Annual Debt Service" means, for each Bond Year, the sum of(i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled,and(ii)the principal amount of the Outstanding Bonds due in such Bond Year. "Auditor"means the auditor-controller of the County of Orange. -2- "Authorized Officer" means the City Administrator, the City Finance Director, the City Clerk,the Director of Public Works of the City or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorizcd Officer. "Bond Counser' means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund"means the fund by that name established by Section 4.02(A)hereof. "Bond Year" means the one-year period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "Bonds"means the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds at any time Outstanding under this Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "City"means the City of Huntington Beach,California, and any successor thereto. "Closing Date" means the date upon which there is a physical delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds by the Original Purchaser. "Code"means the Internal Revenue Code of 1986, as amended. "Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization,sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent . including its first annual administration fee,expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges,including bond counsel,and counsel to the financial consultant,financial consultants' fees, charges for execution,transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing. "Cost of Issuance Fund" means the fund by that name established by Section 3.06(A) hereof. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation,excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Depository" means(a) initially, DTC,and (b) any other Securities Depository acting as Depository pursuant to Section 2.12. "District" means Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) formed pursuant to the Resolution of Formation. -3- "DTC" means the Depository Trust Company, New York, New York, and its successors and assigns. "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: (i) direct general obligations of the United States of America(including obligations issued or held in book entry form on the books of the United States Department of the Treasury)and obligations,the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America,including, without limitation, such of the foregoing which are commonly referred to as "stripped"obligations and coupons; or (ii) any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii)certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or pass- through obligations issued and guaranteed by the Government National Mortgage Association, (v) project notes issued by the United States Department of Housing and Urban Development, and (vi) public housing notes and bonds guaranteed by the United States of America. "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01. "Fiscal Year"means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year,both dates inclusive. "Gross Proceeds"means the sum of the following amounts: (i) original proceeds, namely, net amounts received by or for the City or the District as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds(determined in accordance with applicable Regulations)of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds,namely,amounts received at any time by or for the City or the District,such as interest and dividends,resulting from the investment of any original proceeds (as referenced in clause (i) above) or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Investments, increased by any profits and decreased (if necessary,below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds(determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds (as referenced in clauses(i)above)of the Bonds, which are held in the Bond Fund and any other fund to the extent that the City reasonably expects to use such other fund to pay Debt Service; (iv) amounts in the Reserve Fund and in any other fund established as a reasonably required reserve for payment of Debt Service; (v)- Investment Property pledged as security for payment of Debt Service; -4- t� (vi) Special Taxes and amounts,other than as specified in this definition, used to pay Debt Service; and (vii) amounts received as a result of investing amounts described in this definition. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service", 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government", 99 Church Street, New York,New York 10007,Attention: Municipal News Reports; Standard&Poors Corporation "Called Bond Record", 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Improvement Fund" means the fund by that name created by and"held by the Fiscal Agent pursuant to Section 3.03(A)hereof. "Interest Payment Dates" means April 1 and October 1 of each year, commencing April 1, 1991. "Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement. "Investment Property" means any security (as said term is defined in Section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations (other than specified private activity bonds as defined in section 57(e)(5)(6)of the Code)the interest on which is excluded from gross income under Section 103 of the Code for federal income tax purposes. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Nonpurpose Investment"means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired in order to carry out the governmental purpose of the Bonds. "Original Purchaser"means the fast purchaser of the Bonds from the City. "Officer's Cer*flcate" means a written certificate of the City signed by an Authorized Officer of the City. "Ordinance"means any ordinance of the City levying the Special Taxes. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04)all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and -5- (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. "Permitted Investments" means (a) Federal Securities; (b)^ any of the following obligations or indebtedness issued or guaranteed by any of the followinp, federal agencies and entities: Rome Loan Bank System; ii participation certificates of the Federal Home Loan Mortgage Corporation: (iii) mortgage-backed securiges or senior debt obligations of the Federal National Mortgage Association: or(iv)senior debt obligations of the Student Loan Marketing Association; (c) interest-bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in national or state banks (including the Fiscal Agent), provided that either: (i) such deposits shall be fully insured by the Federal Deposit Insurance Corporation, or (ii) the unsecured obligations of such association or bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in a Rating Category; . (d) obligations issued by any corporation organized and operating within the United States of America having,assets in excess of$500,000,000. which obligations are rated in a Rating Categ rv: (e) commercial paper which is backed by a letter of credit or line_ of credit which is rated in a Rating Category (f) money market funds the policy of which is to invest in Federal Securities; (g) bills of exchange or time drafts drawn on and accepted by a commercial bank,_ otherwise known as bankers acceptances, which are eligible for purchase by the Federal Reserve Svstem and the obligations of which commercial bank or the obligations of the holding company of which are rated in a Rating Category (h) obligations the interest on which is excluded from gross income for purposes of federal income taxation under Section 103 of the Code and which are rated in a Rating Category; and (i) investment agreements which are the obligations of, or which are secured or guaranteed by the obligations of a financial institution whose long-term unsecured obligations are rated in a Rating Category "Principal Office" means the principal corporate trust office of the Fiscal Agent at= South Flower Street, 5th F100L Los Angeles, California 90071 Attention: Corporate Trust Administration or such other or additional offices as may be designated by the Fiscal Agent; provided that,for purposes of the payment of debt service on the Bonds. TdnaWW Office"means_ the principal corporate trust office of the Fiscal Agent at 55 Hawthorne Street. loth Floor, San Francisco,CA 94104 Attention: Corporate Trust Department. -6- vate Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however,use by a governmental unit and use by a nongovernmental unit as a member of the general public. "Proceeds" when used with reference to the Bonds, means the face amount of the Bonds, plus accrued interest and premium, if any, less original issue discount and less proceeds from the sale of the Bonds deposited in the Reserve Fund. "Project" means the facilities more particularly described as such in Exhibit A to the Resolution of Formation. "Purchase Price," for the purpose of computation of the Yield of the Bonds, has the same meaning as the term "issue price"in sections 1273(b)and 1274 of the Code, and,in general, means the initial offering price of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or if the Bonds are privately placed,the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term 'Purchase Price," for the purpose of computation of the Yield of Nonpurpose Investments, means the fair market value of the Nonpurpose Investments on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. "Rating Category" means one of the two highest rating categories then in effect under the rating systems of Moody's Investors Service or Standard and Poor's Corporation, without regard to plus or minus sign or numerical or other qualifying designation. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date. "Regulations"means temporary and permanent regulations promulgated under the Code. "Reserve Fund" means the fund by that name established pursuant to Section 4.03(A) hereof. "Reserve Requirement' means an amount equal to $192,000. "Resolution" means Resolution No. 6174, adopted by the City Council of the City on June� 1990. "Resolution of Formation" means Resolution No. 6161. adopted by the City Council on June 18, 1990. "Resolution of Intention" means Resolution No. 6142. adopted by the City Council on May 7, 1990. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification,440 South LaSalle Street,Chicago,Illinois 60605, Fax-012) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496- 5058;and,in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. -7- ' "Services" means the services more particularly described as such in Exhibit A to the Resolution of Formation. "Services Fund"means the fund by that name established by Section 3.07(A) hereof. "Special Taxes" means the special taxes levied within the District pursuant to the Act, the.Ordinance and this Agreement. "Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof,interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest and penalties thereon. "Special Tax Fund" means the fund by that name established by Section 3.04(A) hereof. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to this Agreement,but only if and to the extent that such agreement is specifically authorized hereunder. "Treasurer"means the Finance Director of the City. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of. Nonpurpose Investments which require payments in a form not characterized as principal and interest) on a Nonpurpose Investment or on the Bonds,produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds,all computed as prescribed in applicable Regulations. -8- ARTICLE 11 THE BONDS Section 2.01. Principal. Amount: Designation. Bonds in the aggregate principal amount of Two Million Four Hundred Thousand Dollars ($2,400,000) are hereby authorized to be issued by the City for the District under and subject to the terms of the Resolution and this Agreement, the Act and other applicable laws of the State of California. The Bonds shall be designated the "City of Huntington Beach, Community Facilities District No. 1990-1 (Goldenwest/EWs Area) 1990 Special Tax Bonds"and shall be secured by the Special Taxes. Section 2.02. Terms of Bonds. (A) Form: Denominations. The Bonds shall be issued as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent. (B) Date of Bonds. The Bonds shall be dated August 1, 1990. (C) CUSIP Identification Numbers. "CUSIP" identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice. to Owners shall not constitute an event of default or any violation of the City's contract with such Owners and,shall not impair the effectiveness of any such notice. (D) Maturities- Interest Rates. The Bonds shall mature and become payable on October 1 of each year,and shall bear interest at the rates, as follows: Maturity Date Principal Interest (October 1) Amount $fig 1992 $25,000 % 1993 25,000 1994 30,000 1995 30,000 1996 30,000 1997 35,000 1998 40,000 1999 40,000 2000 45,000 2001 45,000 2002 50,000 2003 55,000 2020 1,950,000 -9- (E) Interest. The Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360- day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or(ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or(iii)it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from August 1, 1990; provided, however, that if at the time of authentication of a Bond,interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. (F) Method of Payment. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check or draft of the Fiscal Agent mailed on the Interest Payment Dates by first class mail to the registered Owner thereof at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon instructions of any Owner of$1,000,000 or more in aggregate principal amount of Bonds. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City. Section 2.03. RedemQjjQll. (A) RedemQtion Dates. (i) The Bonds maturing on and after October 1, 1998, are subject to redemption prior to their stated maturities on any Interest Payment Date on or after October 1, 1997, as a whole or in part, upon payment from any source of funds available for that purpose,including, but not limited to,prepayments of Special Taxes,at a redemption price (expressed as a percentage of the principal amount of Bonds to be redeemed) as set forth below, together with accrued interest thereon to the date fixed for redemption: Redemption Dates Redemption Prices October 1, 1997 or April 1, 1998 102.5% October 1, 1998 or April 1, 1999 102.0 October 1, 1999 or April 1,2000 101.5 October 1,2000 or April 1,2001 101.0 October 1,2001 or April 1,2002 100.5 October 1,2002 and thereafter 100.0 (ii) The outstanding Bonds maturing on October 1,24ZQare subject to mandatory sinking payment redemption in part on October 1,24I and on each October 1 thereafter to maturity, by lot, at a redemption price equal.to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium,from sinking payments as follows: -10- Redemption Date (October 1) Sinking Payment 2004 $60,000 2005 65,000 2006 70,000 2007 75,000 2008 80,000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145,000 2017 155,000 2018 170,000 2019 180,000 2020 195,000 The amounts in the foregoing table shall be reduced pro rata, in order to maintain substantially level debt service, as a result of any prior partial redemption of the Bonds pursuant to Section 2.03(A)(i)above. In lieu of redemption under this Section 2.03(A)(ii),moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and when,and at such prices(including brokerage and other charges) as such Officer's Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof,plus interest accrued to the date of purchase. (B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem Bonds pursuant to subsection (A)(i)not less than sixty(60)days prior.to the applicable redemption date. (C) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption,at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. The Fiscal Agent, in addition to mailed notice, shall publish notice in a newspaper of general circulation circulated in the area of the District. The first such publication of the redemption notice shall not be less than 30 nor more than 60 days prior to the date fixed for redemption. -11- Such notice shall state the redemption date and the redemption price and,if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the-principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed,each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, of the Bonds being redeemed with the proceeds of such check or other transfer. Whenever provision is made in this Agreement for the redemption of less than all of the Bonds or any given portion thereof, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption,in inverse order of maturity and by lot within a maturity in any manner which the Fiscal Agent in its sole discretion shall deem appropriate and fair. Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity,of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. (D) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price,and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City. Section 2.04. Form of Bonds. The Bonds, the form of Fiscal Agent's certificate of authentication and the form of assignment,to appear thereon, shall be substantially in the forms, respectively,set forth-in Exhibit A attached hereto and by this reference incorporated herein,with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement,the Resolution and the Act. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the facsimile signatures of its Mayor and City Clerk who are in office on the date of adoption of this Agreement or at any time thereafter,and the seal of the City shall be impressed,imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the owner, such signature shall nevertheless be as effective as if the officer had remained in office until the.delivery of the Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. -12- Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A,executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated,registered and delivered hereunder and are entitled to the benefits of this Agreement. Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 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 duly written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge Required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds,for like aggregate principal amount. No transfers of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or(ii) with respect to a Bond after such Bond has been selected for redemption. Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or(ii) with respect to a Bond after such Bond has been selected for redemption. Section.2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall show the series number, date, amount,rate of interest and last known owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe,register or transfer or cause to be registered or transferred,on said books,the ownership of the Bonds as hereinbefore provided. Section 2.09. Temnorary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered,for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate,and the Fiscal Agent 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 -13- be entitled to the same benefits under to this Agreement as definitive Bonds authenticated and delivered hereunder. Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated,the City,at the expense of the Owner of said Bond,shall execute,and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be cancelled by it and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the expense of the Owner, shall execute,and the Fiscal Agent shall authenticate and deliver,a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation,execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to.be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost,destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement. Section 2.11.Limited Obli$ to ion. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Section 2.12. DTC shall act as the initial Depository for the Bonds Ong Bond for each maturity of the Bonds shall be initially executed authenticated and delivered as set forth herein with-a separate fully registered certificate (in print or typewritten form). Upon initial execution authentication and delivery, the ownership of the Bonds shalt be registered in the Bond Register(as defined in Section 2.08)kept by the Fiscal Agent for the Bonds in the name of Cede &Co..as nominee of DTC or such nominee as DTC shall appoint in writing, The Authorized Officers and the Fiscal Agent and the Trustee are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Bonds for the Depository's book-entry system. including the execution of the Depository's wired representation letter. With_resnect to Bonds registered in the Bond Resister in the name of Cede & Co., as nominee of DTC, the Fiscal Agent shall not have any responsibility or obligation to any broker- dealer,bank or other financial institution for which DTC holds Bonds as Depository from time to time the 'DTC Participants")or to any person for which a DTC Participant acquires as interest in she Bonds (the "Beneficial Owners"). Without limiting the immediately preceding sentence, the Fiscal shall not have any responsibility or obligation with respect to(D the accuracy of the records of DTC.Cede&Co. or an�DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner,or any other person, other than DTC, of anv notice with respect to the Bonds, including any notice of redemption or mandatory tender,(iii)the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event.the City elects to redeem the Bonds in part, (iv) the payment to any DTC Partici ant, anv Beneficial Owner, or any other person, other than DTC of any amount with res t to the principal of or interest on the Bonds or Man n nt given or other action taken by e Devositoly as Ownero long as any Hand is regisak-.red in the -14- name of Cede & Co., as nominee of DTC, any Beneficial Owner of $1.000.000 or more in aggregate principal amount of any series of Bonds who has filed a written request to receive notices, containing such Beneficial Owner's name and address, with the Fiscal Agent shall be provided with all notices relating to such Bonds by the Fiscal Agent. Except as set forth above the Fiscal A ent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Del2ository for the purpose of payment of the principal of and interest on such Bonds,for the purpose of giving notices of prepayment and other matters with respect to such Bonds, for the purRose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall gjv all_pdncnal of and interest on the Bonds only to or up2n the order of the Owners as shown on the Bond Register, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respert to the principal of and interest on the Bonds to the extent of the sums or sums so,paid. No Amon other than an Owner, as shown on the Bond Register, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06 hereof,references to "Cede & Co." in this Section 2.09 shall refer to such new nominee of DTC. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding. and dischanxinp, its responsibilities with resWct thereto under a2plicable law, terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book- entry transfers through DTC is not in the best interest of the Beneficial Owners and the City shall mail notice of such termination to the Fiscal Agent. Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute De osn it= willing to undertake the functions hereunder can he found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest if the Beneficial Owners of the Bonds that they be able to obtain certificated Bonds the Bonds shall no longer be restricted to being registered in the Bond Register of the Trustee in the name of Cede & Co.. as nominee of DTC.but maybe registered in whatpv r namp or name the Owners shaU designate at that time in accordance with Section 2.06 To the extent that the Beneficial Owners are designated as the transferee by the Owners.in accordance.with Section 2.06.the Bonds will be delivered to such Beneficial Owners. Section 2.13. No Additional Bonds. No Bonds, other than as described in Section 2.01 and 3.01,are authorized to be issued hereunder. -15- ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds for the District in the aggregate principal amount set forth in Section 2.01 and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of the Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser. Section 3.02. Application of Proceeds of Sale of Bonds. The proceeds of the purchase of the Bonds by the Original Purchaser shall be paid to the Fiscal Agent, who shall forthwith set aside,pay over and deposit such proceeds on the Closing Date as follows: (A) Deposit in the Bond Fund $ , (being an amount equal to $ with respect to the accrued interest paid on the Closing Date by the Original Purchaser and 14 40 with respect to capitalized interest on the Bonds); (B) Deposit in the Reserve Fund $ 192.000 (an amount equal the Reserve Requirement); (C)Deposit in the Costs of Issuance Fund an amount equal to$225.280 and (D)Deposit in the Improvement Fund $1.726.4M0,being the remaining proceeds of the Bonds paid on the Closing Date by the Original Purchaser. Section 3.03. IImprovement Fund. (A) Establishment of Improvement Fund. There is hereby established as a separate account to be held by the^Fiscal Agent. the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds,Improvement Fund,to the credit of which a deposit shall be made as required by clauseV of Section 3.02, and deposits shall be made as provided in Sections 4.02(C). Moneys in the Improvement Fund shall be held in trust by the`ViwALA&Un for the benefit of the City and the Owners of the Bonds, shall be disbursed, except as otherwise provided in subsection (D) of this Section,for the payment or reimbursement of costs of the Project and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed,the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (ii)certify that the disbursement is in accordance with the provisions of the Acquisition Agreement or is otherwise for a facility, and that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting disbursement. -16- (C) Investment. Moneys in the Improvement Fund shall be invested and deposited in-accordance with Section 6.01. Interest earnings and profits from such investment and deposit shall be transferred by thiMscal Agent on each Interest Payment Date to the Bond Fund, to be used for the purposes of such fund. (D) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund,the4Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund toNhe Bond Fund for application to the payment of debt service on the Bonds in accordance with Section 4.02, and the Improvement Fund shall be closed. Section 3.04. SQecial Tax Fund. (A) Establishment of Special Tax Fund. There is hereby established as a separate account to be held by the Treasurer,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Special Tax Fund to the credit of which the City shall deposit, immediately upon receipt,all Special Tax Revenue received by the City and any amounts required by Section 3.05 (B) or 3.07 (B) to be deposited therein. Moneys in the Special Tax Fund shall be held in trust by the Treasurer for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending and disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursements. As soon as practicable after the receipt by the City of any Special Tax Revenues,but no later than ten Business Days after such receipt,the Treasurer shall withdraw from the Special Tax Fund and transfer(i)to the Fiscal Agent for deposit in the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund equals the Reserve Requirement,and (ii) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds on the next two Interest Payment Dates with respect to Special Tax Revenues received during the period from October 1 through the last day of March in any Fiscal Year, and on the next Interest Payment Date with respect to Special Tax Revenues received during the period from April 1 through September 30 in any Fiscal Year. All other amounts then in the Special Tax Fund shall, concurrently with the foregoing transfers"(i) be transferred by the Treasurer to the Fiscal Agent for deposit in the Administrative Expense Fund, in an amount taking into account any amounts then on deposit in the Administrative Expense Fund, such that the amount therein equals the estimated Administrative Expenses to be incurred in the then Fiscal Year and(H)all remaining amounts de sited by the Treasurer in the Services Fund. n (C)Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. Section 3.05. Administrative Exuense Fund. (A) Establishment of Admi.nistraflyg Eggense, Fund. There is hereby established as a separate account to be held by theMscal Agent,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Administrative Expense Fund to the credit of which deposits shall be made as required by Sections -17- 3.04(B) and 3.06(B). Moneys in the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the City, and shall be disbursed as provided below. (B) Dishtirsement. Amounts in the Administrative Expense Fund shall be withdrawn by th Fisch c and paid to the City or its order upon receipt by the"Fiscal Alt of an Officer's Certificate stating the amount to be withdraw,that such amount is to be used to pay an Administrative Expense (or a Costs of Issuance),and the nature of such Administrative Expense (or Costs of Issuance). Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered,and transfer such amounts to the Special Tax Fund. (C) Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the �g in the Administrative Expense Fund to be used for the purposes of such fund. Section 3.06. Costs of Issuance Fund. (A) Establishment of Costs of Issuance Fund. There is hereby established as a separate account to be held by the Fiscal Agent,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Costs of Issuance Fund, to the credit of which a deposit shall be made as required by clause(C)of Section 3.02. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance. (B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set.forth in a requisition containing respective amounts to be paid to the designated payees, signed by the Treasurer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such-requisition, or upon receipt of an Officer's Certificate. requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent shall maintain the Cost of Issuance Fund for a period of 180 days from the date of delivery of the Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the ^Administrative Expense Fund for payment of any unpaid Costs of Issuance. (C) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund. Section 3.07. Services Fund (A) Establishment of Services Fund. There is hereby established as a separate account to be held by the Treasurer,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area),a Services Fund to the credit of which deposits shall be made as required by Section 3.04(B). Moneys in the Services Fund shall be held in trust by the Treasurer for the benefit of the City,and shall be disbursed as provided below. -18- (B) Disbursement. Amounts in the Services Fund shall be withdrawn by the Treasurer and paid to the City or its order upon receipt by the Treasurer of an Officer's Certificate stating the amount to be withdraw,that such amount is used to pay for a Service and the nature of such Service. Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amounts then remaining in the Services Fund that have not been allocated to pay Services incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund. (C) Investment. Moneys in the Services Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Services Fund to be used for the purposes of such fund. Section 3.08. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the acquisition of the Project or upon the performance by any person of his obligation with respect to the Project. -19- ARTICLE IV SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND Section 4.01. Pledge of Sgecial Tax Revenues. The Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed as provided herein, in the Improvement Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein)are hereby dedicated to the payment of the principal of,and interest and any premium on,the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03, and to the other purposes set forth herein. Section 4.02. Bond Fund. (A) Establishment of Bond Fund. There is hereby established as a separate account to be held by the Fiscal Agent the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Bond Fund to the credit of which deposits shall be made as required by clause (A)of Section 3.02, Section 3.03(D), Section 3.04(B), Section 4.03 and any other amounts required to be deposited therein by this Agreement or the Act. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of,and interest and any premium on,the Bonds as provided below,and,pending such disbursement,shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium,then due and payable on the Bonds,including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(ii) and any other redemption of Bonds pursuant to Section 2.03(A). Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to Section 3.03(D) shall be used to pay the principal of and interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose. In the event that amounts in.the Bond Fund are insufficient for the purpose set forth in the preceding sentence, the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Reserve Fund insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the fast sentence of the first paragraph of this Section 4.02(B),the Fiscal Agent shall apply the available funds fast to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments,and then to payment of principal due on the bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. (C) Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment -20- and deposit of amounts in the Bond Fund shall be retained in the Bond Fund to be used for the purposes of the Bond Fund. Section 4.03. Reserve Fund. (A) Establishment of Fund. There is hereby established as a separate account to be held by the Fiscal Agent the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Reserve Fund to the credit of which a deposit shall be made as required by clause (B) of Section 3.02, which deposit is equal to the initial Reserve Requirement, and deposits shall be made as provided in Section 3.04(B). Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section,for the purpose of redeeming Bonds from the Bond Fund. (C) Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund,the Fiscal Agent shall provide written notice thereof to the Treasurer. (D) Transfer of Excess of Reserve Requirement. Whenever, on the day prior to any Interest Payment Date^the amount in the Reserve Fund exceeds the Reserve Requirement,the Fiscal Agent shall provide written notice to the Treasurer of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of the Bonds in accordance with Section 4.02. (E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any,due upon redemption, the Fiscal Agent shall transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 4.02 or 2.03, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the Treasurer'lo be used for lawful 12z=se of the City. (F) Transfer for Rebate Purneses."Investment earnings on amounts in the Reserve Fund shall be withdrawn for purposes of making payment to the federal government to comply with Section 6.02. (G) Investment. Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained in the Reserve Fund to be used for the purposes of such fund. -21- ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds. Section 5.02. Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund,the Reserve Fund, the Improvement Fund and the Special Tax Fund created hereunder. Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly,extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.04. Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special-Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement. Section 5.05. Books and Records. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and connect entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Services Fund and the Special Tax Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent(100/c) of the principal amount of the Bonds then Outstanding,or their representatives duly authorized in writing. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund.the Administrative Exvense Fund. the Bond Fund, the Reserve Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent(10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Section. 5.06. Protection of Security aand Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners,and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City,the Bonds shall be incontestable by the City. -22- Section 5.07. Compliance with Law: Completion of Project: Payment for Services. The City will comply with all applicable provisions of the Act and law in completing the acquisition of the Project and in disbursing funds for the payment of the costs of Services. Section 5.08.Private Business Use Limitation. The City shall assure that: (a) not in excess of ten percent (10%) of the Proceeds of the Bonds is used for Private Business Use if,in addition,the payment of the principal of, or the interest on more than 10 percent of the Proceeds of the Bonds is (under the terms of the Bonds or any underlying arrangement) directly or indirectly, (i) secured by any interest in property, or payments in respect of property,used or to be used for a Private Business Use,or(ii)to be derived from payments (whether or not to the City) in respect of property, or borrowed money,used or to be used for a Private Business Use; and (b) in the event that in excess of 5 percent of the Proceeds of the Bonds is used for a Private Business Use,and,in addition,the payment of the principal of, or the interest on, more than 5 percent of the Proceeds of the Bonds is, (under the terms of the Bonds or any underlying arrangement) directly or indirectly, secured by any interest in property, or payments in respect of property, used or to be used for said Private Business Use or is to be derived from payments (whether or not to the City)in respect of property, or borrowed money, used or to be used for a Private Business Use, then, (A) said excess over said 5 percent of the Proceeds of the Bonds which is used for a Private Business Use shall be used for a Private Business Use related to a government use of such Proceeds and (B)each such Private Business use over five percent of the Proceeds of the Bonds which is related to a government use of such Proceeds shall not exceed the amount of such Proceeds which is used for the government use of Proceeds to which such Private Business Use is related. Section 5.09. Private Loan Limitation. The City shall assure that not in excess of the lesser of five percent (5%) of the Proceeds of the Bonds or$5,000,000 is to be used, directly or indirectly, to make or finance loans (other than loans constituting Nonpurpose Investments and other than loans which enable the borrower to finance any governmental tax or assessment of general application for a specific essential governmental function) to persons other than state or local government units. Section 5.10. Collection of Special Tax Revenues. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation,the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1,commencing June 1. 1991,the Fiscal Agent shall provide the Treasurer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund, and informing the City that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for Annual Debt Service, Administrative Expenses,replenishment(if necessary) of the Reserve Fund so that the balance therein equals the Reserve Requirement, and for the payment of Services. The receipt of such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs. Upon receipt of such notice, the Treasurer shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied,taking into account any parcel splits during the preceding and then current year. The Treasurer shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 (commencing August 1. 1991)that the Bonds are outstanding, such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next tax roll. Upon the completion of the computation of the amounts of the levy, the Treasurer -23- shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next tax roll. The Treasurer shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses and Services during such year. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority,become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property- Section 5.11. Further Assurances. The City will adopt, make, execute and deliver any and aU such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement. Section 5.12. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the Gross 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(a) of the Code and Regulations. Section 5.13. 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 the Bonds to be "federally guaranteed"within the meaning of Section 149(b)of the Code and Regulations. Section 5.14. Compliance with the Code. The City covenants to take any and all action and to refrain from taking such action,which is necessary in order to comply with the Code or amendments thereto in order to maintain the exclusion from federal gross income,pursuant to Section 103 of the Code,of the interest_on the Bonds paid by the City and received by the Owners. Section 5.15. Covenant to Foreclose. Pursuant to Section 53356:1 of the Act, the City hereby covenants with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of notice to the City of a delinquency, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due. The Treasurer shall notify the City Attorney of any such delinquency of which it is aware, and the City Attorney shall commence, or cause to be commenced,such proceedings. -24- ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deuosit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause NO of the definition thereof or in Federal Securities which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Subject in all respects to the provisions of Section 6.02,moneys in any fund or account created or established by this Agreement and held by the Treasurer shall be invested by the Treasurer in any lawful investments that the City may make or in any Permitted Investment, which in any event by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a.like amount of Permitted Investments. The Fiscal Agent or the Treasurer may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any investments made pursuant to this Section. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions,if any). Subject in all respects to the provisions of Section 6.02, investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making,holding and disposing of investments,notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Treasurer hereunder, provided that the-Fiscal Agent or the Treasurer, 'as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement. The Fiscal Agent or the Treasurer,as applicable, shall sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment,transfer,withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. Section 6.02. Rebate of Excess Investment Earnings to the United States, The City covenants to calculate and rebate to the federal government,in accordance with the Regulations,excess investment earnings to the extent required by section 148(f)of that Code. Any fees or expenses incurred by the Fiscal Agent or the City under or pursuant to this Section 6.02 shall be Administrative Expenses. -25- Section 6.03. Limited Obligation. The City's obligations hereunder are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Improvement Fund, the Bond Fund (including the Capitalized Interest Account therein) and the Reserve Fund created hereunder. Section 6.04. Liability of City. The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder,except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Fiscal Agent herein or of any.of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder. In the absence of bad faith, the City, including the Treasurer,may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City, including the Treasurer, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers,if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel,who may be the City Attorney,with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established,if disputed. Whenever in the administration of its duties under this Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder,such matter(unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent,and such certificate shall be full warrant to the City for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the City may,in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.05. Employment of Agents,by City. In order to perform its duties and obligations hereunder, the City and/or the Treasurer may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder,and shall be entitled to rely,and shall be -26- fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. -27- ARTICLE VII THE FISCAL AGENT Section 7.01. AQuointment of Fiscal Agent. Bank Of America National Trust and Savings Association, at its principal corporate trust office in Los Angeles, California is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties,and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent. Any company into which the Fiscal Agent 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 Fiscal Agent may sell or transfer all or substantially all of its corporate trust business,provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act,anything herein to the contrary notwithstanding. The City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually,pursuant to law or to the requirements of any supervising or examining authority above referred to,then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing.Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent. If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five(45)days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any,as such court may deem proper,appoint a successor Fiscal Agent. If, by reason of the judgment of any court,the Fiscal Agent is rendered unable to perform its duties hereunder,all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Treasurer of the City in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its Treasurer in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder,and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder,in trust for the benefit of the Owners of the Bonds. Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds,or shall incur any responsibility in respect thereof,other than in connection with the duties -28- or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder,except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement,affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder,or in.the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs,expenses and liabilities which might be incurred by it in compliance with such request or direction. The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent. Section 7.03.Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request,including but not limited to quarterly statements reporting funds held and transactions by the Fiscal Agent. Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice,resolution,request, consent, order, certificate,report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. -29- The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established,if disputed. Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)may,in the absence of willful misconduct on the part of the Fiscal Agent,be deemed to be conclusively proved and established by a certificate of the City,and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the Fiscal Agent may, in lieu thereof,accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges,counsel fees and other disbursements, including those of their attorneys,agents and employees, incurred in and about the performance of their powers and duties under this Agreement,but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement, but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund. -30- ARTICLE VIIl MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or(ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act,the laws of the State of California or this Agreement),or (iii) reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (A)to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed,or to limit or surrender any right or power herein reserved to or conferred upon the City; (B) to make modifications not adversely affecting affecting any outstanding series of Bonds of the City in any material respect; (C)to make such provisions for the purpose of curing any ambiguity,or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement,and which shall not adversely affect the rights of the Owners of the Bonds; (D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with section 148 of the Code relating to required rebate of Excess Investment Earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Section 8.02. Owners' Meetings. The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof,and to fix and adopt rules and regulations for the conduct of said meeting. Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement,to the extent that such amendment is permitted by Section 8.01,to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds -31- Outstanding,but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided. Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04 and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement,stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent.A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 8.04. D qualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds.provided for in this Article VM,and shall not be entitled to vote upon,consent to, or take any other action provided for in this Article VM. Section 8.05. Effect of Suoolemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VHI,this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined,exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes. Section 8.06. Endorsement or ReQlacement of Bonds Issued After Anwridntents. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VM shall bear a notation,by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners' action, shall be prepared,executed and delivered. In that case,upon demand of the Owner of any Bonds -32- then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VM shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him,provided that due notation thereof is made on such Bonds. -33- ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent. Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent 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 Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03. Doscharge of Agreement. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (A)by well and truly paying or causing to be paid the principal of, and interest and any premium on,such Bonds Outstanding,as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which,together with,in the case of all Outstanding Bonds,the amounts then on deposit in the funds and accounts provided for in Sections 4.02 and 4.03 is fully sufficient to pay such Bonds Outstanding, including all principal,interest and redemption premiums; or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the Treasurer shall determine as confirmed by an independent certified public accountant will,together with the interest to accrue thereon and,in the case of all Outstanding Bonds,moneys then on deposit in the fund and accounts provided for in Sections 4.02 and 4.03, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice,then, at the election of the City,and notwithstanding that any Bonds shall not have been surrendered for payment,the pledge of the Special Taxes and other funds.provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate.Notice of such election shall be filed-with the Fiscal Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to Section 7.05 shall continue in any event. Upon compliance by the City with the foregoing with respect to all Outstanding Bonds,any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City for deposit in the Special Tax Fund and any Special Taxes thereafter received by the City shall not be -34- . remitted to the Fiscal Agent but shall be deposited by the City to be used for the purposes specified in the last sentence of the first paragraph of Section 3.04(B) hereof. The Special Tax Fund, Services Fund and Administrative Expense Fund shall survive payment and discharge of the Bonds. Section 9.04. Execution of Documents and -Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request,declaration or other instrument or writing 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. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount,maturity,number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith. Section 9.05. Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of,or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer,agent or employee from the performance of any official duty provided by law. Section 9.06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows: City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: Finance Director Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City)as follows: Bank of America National Trust and Savings Association -555 South Flower Street.5th Floor Los An¢eles,California 90071 Attention: Comorate Trust Administration Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it -35- would have adopted this Agreement and each and every other Section,paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal,invalid or unenforceable. Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding,any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on,the Bonds which remains unclaimed for six (6) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust,and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bondowners shall look only to the City for the payment of the principal of, and interest and any premium on,such Bonds. Section 9.09. Annlicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date,the provision of the Act shall prevail over the conflicting provision of this Agreement. Section 9.11. Conclusive Evidence of Regul� Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes. Section 9.12. Payment on Business DM. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any)or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period after such date. Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. -36- IN WITNESS WHEREOF, the City has caused this Agreement to be executed'in its name and the Fiscal Agent has caused this Agreement to be executed in its name,all as of June 1, 1990. CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) By: City Administrator BANK OF AMERICA NATIONAL TRUST D SAVINGS ASSOCIATION, as Fiscal Agent Authorized Officer -37- EXHIBIT A FORM OF BOND No. $ UNTIED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BOND INTEREST RATE MATURITY DATE BOND DATE CUSIP Augus 1, 1990 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Huntington Beach (the "City") for and on behalf of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the 'District"),for value received,hereby promises to pay solely from the Special Tax (as hereinafter defined)to be collected in the District or amounts in certain funds and accounts held under the Agreement (as hereinafter defined),to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from August 1, 1990, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on April 1 and October 1, commencing 1, 1990,at the interest rate set forth above,until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of Bank of America National T ist and Saving Association in Los Angeles,California(the "Fiscal Agent"). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each interest payment date to the registered owner hereof as of the close of business on the 15th day of the month preceding the month-in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent. This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $2,400,000 approved by the qualified electors of the District on June"25, 1990 pursuant to the A-1 Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the "Mello-Roos Act")for the purpose of financing the acquisition of certain facilities in the vicinity of the District (the "Project") and the provision of additional olice, fire protection and paramedic services in the District and is one of the series-7-Bonds designated "City of Huntington Beach, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds" (the 'Bonds"). The creation of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City of Huntington Beach on June"25, 1990 (the "Resolution"), and the Fiscal Agent Agreement, dated as of June 1, 1990, between the City and the Fiscal Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Resolution is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the annual special tax authorized under the Mello- Roos Act to be collected within the District (the "Special Tax") and certain funds held under the Agreement. Interest on this Bond shall be payable from the interest payment date next preceding the date of authentication hereof,unless(i)it is authorized on an interest payment date,in which event it shall bear interest'Trom such interest payment date, or(ii) such date of authentication is after a Record Date but on or prior to an interest payment date, in which event interest will be payable from such interest payment date,or(iii) such date of authentication is prior to the first Record Date, in which event interest will be payable from August 1, 1990; provided however,that if at the time of authentication of this Bond, interest is in default hereon,this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment hereon. Any tax for the payment hereof shall be limited to the Special Tax,except to the extent that provision for payment has been made by the City of Huntington Beach, as may be permitted by law. The Bonds do not constitute obligations of the City of Huntington Beach for which said City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The City has covenanted for the benefit of the owners of the Bonds that it will commence within 150 days of notification of a delinquency and diligently pursue to completion appropriate foreclosure actions in the event of delinquencies of any Special Tax installments levied for payment of principal and interest. The Bonds maturing on or after October 1, 1998 may be redeemed prior to maturity, in whole or in part, at the option of the City on October 1, 1997 or an any interest payment date thereafter, upon at least 30 days, but not more than 60 days, prior written notice mailed to the registered owners at the addresses appearing on the bond registry books, at the following redemption prices,expressed as a percentage of par value,together with accrued interest to the date of redemption: Redem9li� Redemption Prices October 1, 1997 or April 1, 1998 102.5% October 1, 1998 or April 1, 1999 102.0 October 1, 1999 or April 1,2000 101.5 October 1,2000 or April 1,2001 101.0 October 1,2001 or April 1,2002 100.5 October 1,2002 and thereafter 100.0 A-2 The outstanding Bonds maturing on October 1,2M are subject to mandatory 'sinking payment redemption in part on October 1,2004, and on each October 1 thereafter to maturity,by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date_fixed for redemption, without premium, from sinking payments as follows: Redemption Date (October 1) Sinking Payment 2004 $60,000 2005 65,000 2006 70,000 2007 75,000 2009 80,000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145;000 2017 155,000 2018 170,000 2019 180,000 2020 195,000 Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof,interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order.The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i)fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or(ii)with respect to a Bond after such Bond has been selected for redemption. A-3 The"Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed,happened and been performed in due time,form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF, City of Huntington Beach has caused this Bond to be dated August 1, 1990, to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signature of the City Clerk. [S E A L] CITY OF HUNTINGTON BEACH ATTEST. City Clerk Mayor A-4 i FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the Resolution and the Agreement which has been authenticated on BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Fiscal Agent By: Authorized Officer ASSIGNMENT FOR VALUE RECEIVED,the undersigned do(es)hereby sell,assign and transfer unto the -within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Registrar with full power of substitution in the premises. Dated: By: A-5 30012-06 JHIIV1`:rJTslc 05.05`90 J7731 0725,90 ACQUISITION AGREEMENT By and Between CITY OF HUNTINGTON BEACH and DAVID D. DAHL, dba THE DAHL COMPANY CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWESVELLIS AREA) ACQUISITION AGREEMENT CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) THIS AGREEMENT, dated as of'7uly 1, 1990, is by and between the City of Huntington Beach, a municipal corporation and a political subdivision of the State of California (the "City"), for the benefit of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the 'District"), and David D. Dahl (the 'Developer"). WHEREAS, the City Council at the City has established the District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, (commencing with Section 53311)of Part I of Division 2 of Title 5 of the California Government Code (the "Act") to provide financing for, among other things, the public facilities described on Exhibit A attached hereto and by this reference incorporated herein (the "Facilities"); and WHEREAS, the Developer is an owner of land within the District and is developing single-family homes thereon; and WHEREAS, the Facilities are adjacent to said homes and the City will benefit from a common plan of construction of the Facilities and the homes; and WHEREAS, the Developer has expertise in the construction of homes and public facilities of the character of the Facilities; and WHEREAS, the City has determined that it will obtain no advantage from undertaking the construction of the Facilities pursuant to public bid and will realize economic benefit if the Developer constructs the Facilities as provided herein; and WHEREAS, the City is proceeding with the authorization and issuance of bonds for the District(the "Bonds") to finance the Facilities pursuant to the Act. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the sufficiency and receipt of which are hereby acknowledged,the parties hereto agree as follows: 1. Recitals. Each of the parties hereto represent and warrant, each to the other, that the above recitals are true and correct. 2. Sale of Bonds. The City shall continue to completion all necessary proceedings pursuant to the Act for the sale and delivery of the Bonds; provided that each step in the proceedings and the principal amount and timing of sale of the Bonds shall be in all respects subject to the approval of the City Council or its designee, and nothing contained herein shall be construed as requiring the City to issue the Bonds for the District. The estimated principal amount' of the Bonds is"$2 500,000. 3. Reimbursement of District Formation Costs by the Developer. By execution of this Agreement,the Developer agrees to indemnify the City against any cost it may pay or incur in good faith in the formation of the District and the issuance of the Bonds. -1- The Developer has submitted to the City a deposit in the amount of$100,000 to pay the costs of the City in connection with the District. If additional funds are needed for reasonable costs relating to the processing of the proceedings with respect to the District and the sale of the Bonds therefor, the Finance Director of the City shall make written demand upon the Developer therefore, and the Developer shall remit to the City the amount specified in each demand within 10 business days thereafter. 4. Reimbursements to the Developer. Upon completion of the sale and delivery of the Bonds, the City shall reimburse, without interest, the Developer, solely from Bond proceeds and then only to the extent available for such purpose and permitted under the Act, the amount of any costs paid from such Developer deposit or any Developer advances hereunder. If for any reason the Bonds are not issued,neither the District nor the City shall have any obligation to reimburse the Developer for any costs and expenses advanced or paid from the Developer's advances, except that the City in any event agrees to return to the Developer any moneys advanced by the Developer in excess of the amount needed for payment(or provision therefor) of the costs and expenses relating to the formation of the District and the authorization and efforts to issue and sell the Bonds. The City agrees to keep records with respect to any disbursement of funds advanced to the City by the Developer. Such records shall be available for inspection by the Developer in the offices of the Finance Director of the City upon reasonable notice and during normal business hours. 5. Use of Bond Proceeds. The proceeds of the Bonds shall be deposited, held, invested, fl reinvested and disbursed as provided in the fiscal agent agreement(the "Fiscal Agent Agreement") pursuant to which the Bonds are issued. A portion of the proceeds of the Bonds shall be set aside under a fiscal agent agreement in a separate improvement fund (the "Improvement Fund") to pay the cost of the acquisition of the Facilities as provided below. The Developer reasonably expects to complete the Facilities and request payment therefor hereunder within 8 months of the date of this Agreement. 6. Construction of and Payment for Facilities. a. Plans and Specifications, Prevailing Wages. The Developer represents that it has obtained or will obtain approval by all appropriate City departments of the plans and specifications for the Facilities that are to be acquired by the City and that all of such Facilities have been or will be constructed by the Developer in full compliance with the current City standards applicable to the construction of public improvements and in compliance with any applicable law or regulation with respect to the payment of prevailing wages. The City and the Developer agree that the Facilities are of local, not statewide concern, and that the provisions of the Public Contracts Code shall not apply to the construction of the Facilities. The City and the Developer agree that this Agreement is necessary to assure timely and satisfactory completion of the Facilities and that compliance with the Public Contracts Code with respect to the Facilities would work an incongruity and would not produce an advantage to the City or the District. The Developer agrees to comply with all City or other applicable bonding requirements applicable to construction of the Facilities, and to provide the City Director of Public Works (all references herein to the City Director of Public Works include any official of the City acting in such capacity or any designee of the City Director of Public Works) with copies of any change orders relative to the construction of any Facilities to be acquired by the City and the plans and specifications therefor. The City hereby acknowledges that funds on deposit in the Improvement Fund will be considered the -2- equivalent of a construction bond for a commensurate portion of the Purchase Price (as defined below) of the Facilities to be acquired with such funds. b. Purchase Price. The amount to be paid by the City for the Facilities (hereafter the "Purchase Price" as to each such Facility), shall be determined by the City Director of Public Works and shall not exceed and shall be substantially the cost thereof,including the reasonable cost of appurtenant facilities and of preparing plans and specifications as well as the construction contracts and all costs of construction reasonably determined by the City Director of Public Works to be eligible under the Act to be part of the Purchase Price (said determination to be made'consistent with the terms of this Agreement), such as fees and costs incurred in obtaining permits, licenses, rights of way or-easements, the costs of change orders,engineering, legal,fiscal and inspection fees constituting a part of the public improvements. The Purchase Price may include a reasonable charge for contract administration,by the Developer, not to exceed 4% of the related construction cost. The Developer shall provide any documentation substantiating the cost of the Facilities reasonably requested by the City Director of Public Works or the City Finance Director. There shall be a presumption of reasonableness as to costs incurred under a construction contract entered into as a result of a call for bids by the Developer, provided that no extraordinary limitations or requirements (such as short time frame) are imposed by the Developer on the performance of such contract. c. Inspection and Acceptance. The Facilities to be acquired by the City, when fully completed, shall be accepted in accordance with adopted City policy, and the Purchase Price for each such Facility promptly paid from Bond proceeds if completed substantially in accordance with the approved plans and specifications for such Facilities and pursuant to the requirements of Section 53313.5 of the Act. The City shall accept no liability or responsibility for any such Facility or the maintenance thereof until all work with respect thereto has been completed to the satisfaction of the City Director of Public Works. Any Facilities to be acquired by other public agencies, shall be accepted subject to the relevant public agencies'policies and procedures. The Facilities shall be subject at all reasonable times prior to their acquisition to inspection by the City Director of Public Works, which inspection shall be accomplished in a timely manner. Prior to acceptance of any Facility by the City, the Developer shall provide as-built drawings or other similar plans and specifications of such Facility in the form required under City standards applicable to the construction of public improvements and otherwise by applicable law or regulation, along with evidence satisfactory to the City Director of Public Works that all costs of the Facility have been fully paid by the Developer to the party or parties entitled to be paid for such costs. The Developer shall obtain from any public agency (other than the City) acquiring a Facility a written statement to the effect that such Facility has been accepted by such public agency and all costs with respect thereto have been paid. All warranties,guarantees or other evidence of contingent obligations of third persons with respect to Facilities to be acquired by the City shall be delivered to the City Director of Public Works prior to acceptance thereof. If applicable,all documentation evidencing dedication and/or transfer of ownership of the Facilities shall be delivered to the City prior to the acceptance thereof and payment therefor, as further provided in Section 6e below. d. Payments to Developer. The Developer may request in writing a payment on the Purchase Price of any Facility or portion thereof described in Exhibit A hereto. Such payments shall be made only in the amount determined reasonable by the City Director of Public Works with respect to the Facility to be acquired,as specified in a cost certificate for each Facility or group of related Facilities completed by the City Director of Public Works. -3- A ten percent retainage shall be held by the City in the Improvement Fund with respect to the cost of any Facility acquired by the City (no such retainage being required with respect to any Facility to be acquired by a public agency other than the City) pending final completion and acceptance of the related Facility and a one-year maintenance period for each such Facility except landscaping, which shall have a three-year maintenance period. In lieu of such retainage,the Developer shall be permitted to provide to the City a letter of credit in form and substance satisfactory to the City Director of Public Works and the City Finance Director. Any such Facility or portion thereof to be acquired by the City must be completed in accordance with the approved plans and specifications. Any Facility to be accepted by the City must be in such condition that it is ready for use by the City or the public as determined by the City Director of Public Works (said determination to be based on current City standards applicable to the construction of public improvements, wherever relevant), or is otherwise a discrete portion of a Facility that is determined by the City Director of Public Works to be complete. For purposes of this Agreement, attached hereto as Exhibit B is a description of discrete portions of the Facilities upon completion of which payment may be requested by the Developer. It is hereby acknowledged by the Developer that the discrete portions of. the Facilities listed in Exhibit B are provided for purposes of payment only, and City acceptance of a Facility for purposes of liability and/or maintenance shall only be with respect to completion of the entire Facility and not,for example, completion of the grading incident to that Facility, and shall only be in accordance with adopted City policy. Any claim for a payment to the Developer from amounts in the Improvement Fund shall be in a form acceptable to the City and include supporting documentation (including, with respect to any Facility to be acquired by a public agency other than the City,evidence that such agency has so accepted the Facility). The Director of Public Works shall review each claim for payment and inform the Developer, in writing, within 15 business days of receipt by the Director of Public Works of the claim and all supporting documentation, of the denial of any claim for payment in whole or in part, setting forth the reasons for such denial. The Developer shall be entitled to resubmit any claim or portion thereof so denied, if it is able to address the objections to such claim. The City shall make payment within forty-five (45) days of receipt of any claim or portion thereof which is not so denied, subject to the provisions of the last sentence of the next paragraph. If requested by the City Director of Public Works, the Developer shall prepare and execute a Notice of Completion in form acceptable to the City Director of Public Works as to any Facility to be acquired by the City and record such notice with the office of the Recorder of the County of Orange, State of California and cause its contractor to provide general lien releases in form acceptable to the City Director of Public Works for such Facility. The City shall be entitled to delay payment to the Developer for any Facility to be acquired by the City until 35 days after a Notice of Completion with respect thereto has been so filed by the Developer. If any of the Facilities to be acquired hereunder were or are financed,in whole or in part,from the proceeds of any loan secured by a mortgage or deed of trust upon any lands within the District,and in the absence of contrary written instructions by any mortgagee or beneficiary of such mortgage or deed of trust, the Purchase Price shall be paid to the Developer and to such mortgagee or beneficiary, as their interests may appear. T-. Developer shall provide evidence to the City Director of Public Works as to the source of funds, if any, to pay the costs of construction of the Facilities. e. Ownership and Transfer of Facilities. The conveyance of any Facilities to be owned by a public agency other than the City, shall be in accordance with such agency's -4- policies and procedures. The provision or conveyance to the City of any Facilities to be acquired by the City shall take place as follows: (i) Land (Fee or Easement). The Developer shall cause the owners of the real property within the District to transfer to the City the appropriate rights, title and interest in and to said land to be acquired. The Developer agrees to cause the owners of the real property within the District to execute and,deliver to the City those documents required to complete the transfer of Acceptable Title (as defined herein) to the land. Acceptable Title means title to the land delivered free and clear of all liens, encumbrances, assessments, easements or leases, whether any such item is recorded or unrecorded, and taxes, except those matters which are determined by the City Director of Public Works in his reasonable discretion not to interfere with the intended use of the land and therefore are not required to be cleared from the title. Completion of transfer shall be evidenced by the recordation of an acceptance of the interest(s) in the land by the City Council or their designee. (ii) Improvements Constructed on Land Owned by Property Owners. If Facilities to be acquired by the City are located on land which is owned by the owners of the real property within the District, then such property owners shall retain the title to said land and the improvements constructed thereon until the land and improvements are acquired by the City pursuant to the provision of this Agreement. Until title to the land and the Facilities are acquired by the City, the Developer shall maintain the land and improvements in good and safe condition. Transfer of title to the land and the Facilities thereon shall be in accordance with clause (i) above. (iii) Improvements Constructed on Land Owned by City in Fee or Easement. If Facilities to be acquired by the City are on land on which the City holds fee title or easement rights, the Developer is hereby granted a license to enter said land for purposes related to the construction and maintenance (prior to acquisition by the City hereunder) of the said improvements. Upon completion of construction of any such Facility, the City Director of Public Works shall inspect the improvements in accordance with City standards applicable to the construction of public improvements, and if approved by the City Director of Public Works, the City shall give written notice of its acceptance of the Facility. (iv) Personal Property. If the Developer provides any personal property identified on Exhibit A hereto, transfer by the Developer to the City shall be accomplished by a bill of sale. (v) Funds. If the Developer provides funds for Facilities, the provision of such.funds to the City shall be acknowledged with a written receipt from the Finance Director. f. Payment of Excess Costs. The Developer hereby agrees to pay all costs of the Facilities in excess of the proceeds of the Bonds available therefore in the Improvement Fund established under the Fiscal Agent Agreement. 7. Indemnification and Hold Harmless. The Developer shall assume the defense of, indemnify and save harmless the City, its officers, directors, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expense of every type and description to which they may be subjected or put, by reason of, or resulting from, this -5- Agreement, the Developer's negligent design, the Developer's negligent engineering and construction of.the Facilities, or any claims of persons employed to construct the Facilities, provided that this indemnification as it relates to the construction of the Facilities shall terminate and be of no further force and effect for claims arising after acceptance by the City of the Facilities. No provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer or its contractors. 8. Audit. The City Director of Public Works and Finance Director shall have the right, during normal business hours and upon the giving of ten days written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing any of the Facilities. 9. Relationship to Public Works. The parties hereto agree that this Agreement is for the acquisition of certain public facilities by the City from the proceeds of the sale of the Bonds deposited in the Improvement Fund and is not,nor is it intended to be, a public works contract. In performing this Agreement, the Developer is an independent contractor and not the agent of the City or the District. Neither the City nor the District shall have responsibility for payment to any contractor or supplier of the Developer. All contracts related to the construction of the Facilities, and all change orders related thereto, shall be submitted to the City Director of Public Works for review and approval as to cost, and quantity and quality of work. Unless the City Director of Public Works submits a written denial of approval of any contract or change order to the Developer(stating the reasons therefor) within 15 business days of receipt by the City Director of Public Works of the contract or change order, the City Director of Public Works shall be deemed to have approved the contract or change order with respect to cost. . 10. Attorney's Fees. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees. 11. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California,registered or certified mail,postage prepaid, addressed as follows: Developer. David D.Dahl 505 Park avenue Balboa Island, California 92662 City or District: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Finance Director with a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Director of Public Works -6- Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. 12. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by the Developer without the prior written consent of the City. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. 14. Limited Liability. Any and all obligations of the City arising out of or related to this Agreement are the special and limited obligations of the City, in any event payable only from amounts, if any, in the Improvement Fund available therefor. In no event shall the City be obligated to advance any of its own funds hereunder,except pursuant to the provisions of Section 10 hereof. No Councilmember, staff member or agent of the City shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereunder. 15. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a parry to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other parry with the terms of this Agreement thereafter. 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. 17. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first-above written. CITY OF HUNTINGTON BEACH, for itself and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) By: Ci Administrator ^DAVID D. DAHL,dba The Dahl Company By: David D. Dahl -7- I EXHIBIT -A LIST OF FACILITIES TO BE ACQUIRED 1. Improvements to Ellis Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements; striping and related improvements. 2. Improvements to Goldenwest Avenue in the vicinity of the district, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements. striping and related improvements. 3. Improvements to Ouarterhouse Lane in the vicinity of the district, including road improvements. curb, gutter, sidewalk storm drain and signal improvements, striping and related improvements. 4. Improvements to Saddleback Lane in the vicinity of the district, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, stri2ing and related improvements. 5. Improvements to Edwards Street in the vicinity of the district, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 6. Water and sewer system improvements along Ellis Avenue, Quarterhouse Lane and Saddleback Lane in the vicinity of the District,including related improvements. 7. Undermunding of utilities along one or more of the foregoing streets in the vicinity of the District, including any related work. A-1 Acknowledgement I, the undersigned, acknowledge that I have read this disclosure and understand that a Special Tax will be collected along with regular property taxes to finance the public facilities and pay for the services as listed above. I recognize that the property I am considering for purchase is within CFD No. 1990-1, and I understand that I will be responsible for payment of the Mello-Roos Special Tax. I understand that if I fail to pay the Special Tax when levied and due, my home may be subject to foreclosure sale to MELLO-ROOS pay the delinquent Special Tax. I also understand that a copy of this brochure with SPECIAL TAX my signature may be kept on file with the City of Huntington Beach. DISCLOSURE Signed Date TO THE Signed HOMEOWNER Date THIS SUMMARY BROCHURE DOES NOT WAIVE OR ALTER ANY OF THE CONDITIONS OR PROVISIONS OF THE "NOTICE OF SPECIAL TAX LIEN" FROM THE TITLE REPORT FOR YOUR PROPERTY. FOR MORE DETAILED INFORMATION REGARDING THE SPECIAL TAX, A PROSPECTIVE HOMEOWNER SHOULD REVIEW THE ENTIRE "NOTICE OF SPECIAL TAX LIEN," A COPY OF WHICH CAN BE OBTAINED BY CALLING THE CITY OF HUNTINGTION BEACH FINANCE DEPARTMENT AT (714) 536-5228. Mello-Roos Financing Informatiuie Financing and Facilities and Services Mello-Roos Special Taxes The following information is being provided CFD No. 1990-1 has issued bonds with a As mentioned above, CFD No. 1990-1 has to prospective homebuyers to inform you that 30-year term. These bonds are secured by all issued tax exempt bonds to be repaid, and the property you intend to purchase is located real property within CFD No. 1990-1 and will provide services to be paid, by the levy in a Mello-Roos Community Facilities will be repaid by the levy of a Special Tax on of a Special Tax on each residential unit District. This means that a Mello-Roos the property located within CFD No. 1990-1. within CFD No. 1990-1. The maximum Special Tax lien has been placed on the This Special Tax will be levied to pay the annual Mello-Roos Special Tax that can be property you are purchasing, and that as a bonds and to provide funding for additional levied in any year against the property you buyer of this home, you will be responsible police, fire and paramedic services within intend to purchase is estimated to be for paying Special Taxes which are in CFD No 1990-1 beginning in the 1991-1992 approximately $2,337, assuming that at least addition to the ordinary property taxes paid tax year. The Special Tax will be collected 113 homes are built within CFD No. 1990-1. by homeowners in other parts of the City of semiannually at the same time and in the same This is in addition to the regular level of Huntington Beach. Information summarizing manner as ordinary real property taxes. The property taxes paid by property owners in the specific tax liabilities associated with this facilities and services that will be financed by the City of Huntington Beach. If less than Community Facilities District, plus the the levy of this Special Tax may include but 113 homes are built within CFD No. 1990-1, facilities to be financed, is presented in this are not limited to those listed below: the annual additional Special Tax levy may be brochure. proportionately in excess of $2,337. The Special Taxes are to be levied each year so Background • Widening of Ellis Avenue from 20 to 50 long as any bonds of the City for CFD No. feet. 1990-1 are outstanding. A Community Facilities District (CFD No. • Acquisition of land for widening of Ellis 1990-1) has been established by the City of Avenue. It is expected that the Special Taxes will be Huntington Beach pursuant to the Mello- • Raising of Ellis Avenue elevation by 10 levied each year for 30 years. The Special Roos Community Facilities Act of 1982. feet. Taxes will be collected on the general This Act was passed by the California • Provision of drainage control on Ellis property tax roll, and will be due at the same Legislature in response to public funding Avenue. time as the general property taxes, currently limitations imposed by Proposition 13, in • Improvements to Goldenwest Avenue, December 10 and April 10 of each year. The order to provide an alternative method to Quarterhorse Lane,Saddleback Lane and Special Taxes are not subject to prepayment. finance the construction of essential public Edwards Street in the vicinity of CFD Failure to pay Special Taxes when levied and facilities in a timely fashion and to provide No. 1990-1. Undergrounding of utilities due may result in a foreclosure sale of the funds to pay for additional municipal services along Ellis Avenue. property on which the Special Taxes are arising from growth in the community. • Water and sewer system improvements levied, in order to pay the delinquent Special along Ellis Avenue, Quarterhorse Lane Taxes. A CFD may issue and sell bonds to provide and Saddleback Lane in the vicinity of funds to acquire or construct public capital CFD No. 1990-1. facilities and may levy a special tax to pay • Acquisition of emergency vehicle traffic such bonds and the cost . of providing interruption devices for. the City of additional municipal services within the CFD. Huntington Beach. These bonds qualify for tax exempt status, • Provision of additional police and fire thereby providing a lower interest rate than protection services in the area of CFD conventional,taxable financing methods. No. 1990-1. 7�Op 350, ' O CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK May 18, 1990 Lee A. Branch, Recorder County of Orange P. 0. Box 238 Santa Ana, CA 92702 Transmitted herewith is the District Boundary Map filed pursuant to Resolution No. 6142 of the City of Huntington Beach. "A RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH TO ESTABLISH A COMMUNITY FACILITIES DISTRICT AND TO AUTHORIZE THE LEVY OF SPECIAL TAXES PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982." Please return a conformed copy to us. Connie Brockway, CMC City Clerk CB:me Enclosure 193. 2137k (Telephone:714-536-5227) CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK C'oPY May 18, 1990 Lee A.. Branch, Recorder County of Orange P. O. Box 238 Santa Ana, CA 92702 Transmitted herewith is the District Boundary Map filed pursuant to Resolution No. 6142 of the City of Huntington Beach. "A RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH TO ESTABLISH A COMMUNITY FACILITIES DISTRICT AND TO AUTHORIZE THE LEVY OF SPECIAL TAXES PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982." Please return a conformed copy to us. Connie Brockway, CMC 'I City Clerk CB:me Enclosure 2137k (Telephone:714-536-5227) ti t SCALE: 1- 200' PROPOSED BOUNDARY MAP SHEET I OF I COMMUNITY FACILITIESIDISTRICT NO . 1990- 1 IGOLCENWEST/ELLIS AREA) CITY OF HUNTINGTON BERCH COUNTY OF ORANGE. STATE OF CALIFORNIA PORTION OF THE SOUTHEAST'.QUARTER OF SECTION 34. TOWNSHIP 5 SOUTH. RANGE II VEST SAN BERNARDINO MERIDIAN' IN THE RANCHO LAS BOLSAS.CITY OF HUNTINGTON BEACH. COUNTY OF ORANGE. STATE OF CALIFORNIA. 1 I 1 FILED IN THE OFFICE OF THE CITY CLERK OF THE CITY OF HUNTINGTON BERCN.CRLIFORNIR. THIS OF //--f' ,� 11990O�. ELLIS AVENUE CITY CLERK OF N 59.10.20•E 659.95 N a9.10'20-E 139.98 CITY OF HUNTINGTON BEACH N 69.10'20-E 559.95 N a9.10'20•E 619.25 1 _ _ > I HEREBY CERTIFY THAT THE WITHIN MAP SH04IvG 2 213.01 TENTATIVE PROPOSED BOUNDARIES:OF.COMMUNITY FACILITIES N 0-51.25-v DISTRICT NO. 1990-1`CGOLDENWEST/ELLIS AREA) TRACT 13269 - TRACT 14109 ;w OF THE OTT OF HUNTINGTON BERCN,COUNTY OF ORANGE, _ I�e.1a STATE OF CALIFORNIA.WAS APPROVED BY THE OTT COUNCIL 21e.16 o f - OF THE CITY OF HUNTINGTON BEp V, R REGULRR.PEETING S 11851=4 a 4 / N a9.10'la-E 659.93 _N THEREOF,HELD ON THE DRY OF P' _ 8 1990. w a TENTATIVE PRRCE MAP 90-IB2 B v~i BY ITS RESOLUTION N0. H 2 > o�IIBNE _N � -W WTRACT 13270 �65 o CTTYCLERK t 0 LIT OF HUNTINGTON BEACH. CD Q _ w N 59.10.20-E 660.95 _ - N 59.10'20-E -0.03 TENTATIVE dln op! TRACT 14035 �o _ FILED THIS DAY OF 1990. AT THE ii HOUR OF_O'CLOCK MINUTES. IN ROOK AT PAGE OF MAPS OF ASSESSMENT AND COMMUNITY FACILITIES DISTRICTS IN THE OFFICE OF THE COUNTY RECORDER N 89-10.14-E 560.10 TENTATIVE > OF THE COUNTY OF GRANGE. STATE OF CALIFORNIA. TRACT 13439 a COUNTY RECORDER OF COUNTY OF ORANGE DATA O�TA/SJJIINC RADIUS LEN./DIST. TX' N 69.10'!1-E 660.06 N 0.51.52-V 40.00 N 89.10'20-E 659.96 2 N 69.05.34-E 40.00 a N 0.28.49-V al.9a 4 21.55.04- 56.00 21.42 10.84 _ 6 N 09.10.20-E 103.00 N VI a N 0.49'40'V 4.20 N N 59.10'20-E 77.00 > e N 0.49640-V ].69 TENTATIVE 9 N 69-10.20-E 76.00 TRACT 13714 10 1 N 0•+9.401V o.+s N 0.49..0.. 0.+9 N 69.10'20-E 113.50 Ul I N 69.10'21-E 699.95 Prepared by: ' Rod Gunn Associates,Inc. As of 06/18/90 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) PROJECT FINANCING TEAM City of Huntington Beach Bond Counsel Robert J. Franz,Deputy City Administrator Paull.Thimmig,Esq. Louis F. Sandoval,Director of Public Works ,Closing Agent Robert E. Eichblatt,City Engineer Jones Hall Hill&White Dan T. Villella, Director of Finance Four Embarcadero Center,Suite 1950 Connie Brockway,City Clerk San Francisco,CA 94111 Arthur J. Folger,Deputy City Attorney (415) 391-5780 2000 Main Street (415) 391-5784(FAX) Huntington Beach,CA 92648 (714) 536-5236(Franz) (714) 536-4182(Franz-FAX) (714) 536-5432(Sandoval) Developer (714) 536-6473(Sandoval-FAX) David Dahl (714) 536-5431(Eichblatt) Ron McDevitt (714) 536-6473(Eichblatt-FAX) The Dahl Company (714) 536-5228(Villella) 505 Park Avenue (714) 536-4182(Villella-FAX) Balboa Island,CA 92662 (714) 536-5404(Brockway) (714) 673-0127 (714) 536-4693(Brockway-FAX) (714) 723-0269(FAX) (714) 536-5555(Folger) (714) 536-4693(Folger-FAX) Financing Consultant Underwriter Rod Gunn,Principal Tony Wetherbee Rod Gunn Associates,Inc. Ken Caresio 3010 Old Ranch Parkway,Suite 330 Chilton&O'Connor,Inc. Seal Beach,CA 90740 1901 Avenue of the Stars,Suite 300 (213)598-7677 Los Angeles,CA 90067 (213)431-5446(FAX) (213) 203-0966 (213) 201-5091 (FAX) DRAFT MAY 19, 1990 DRAFT NEWISSUE NOT RATED In the opinion of Jones Hall Hill& White,A Professional.Law Corporation,San Francisco,California,Bond Counsel, subject,however to certain qualifications described herein,under existing law,the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes, although it is included in income and current earnings in computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel,such interest is exempt from California personal income taxes. See"TAX EXEMPTION"herein. ORANGE COUNTY STATE OF CALIFORNIA $2,8%375,000* CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS Date: July 1,1990 Due:September 1,as shown below The 1990 Special Tax Bonds(the"Bonds')are being issued as fully registered Bonds in the denomination of$5,000 each or any integral multiple thereof. Interest is payable 2ctober6eptember 1 and AprilMarelr 1 of each year commencing AnrilMarekr 1, 1991 by check or draft of ,as Fiscal Agent(the "Fiscal Agent"), mailed to the registered owners of record or by wire transfer upon the instructions of any owner of$1,000,000 or more in aggregate principal amount of Bonds. Principal of the Bonds and any premium upon redemption will be payable at the corporate trust office of the Fiscal Agent in The Bonds maturing 0ctoberSeptember 1,2020 are subject to mandatory sinking payment redemption,in part by lot, commencing on OctoberSeptember 1, 2004 and on each Octoberseptember 1 thereafter at a redemption price equal to the principal amount thereof,plus accrued interest to the date of redemption,without premium. The Bonds maturing on or after Octobe.September 1,1998 are subject to optional redemption prior to maturity,in whole or in part,in inverse order of maturity and by lot within a maturity on 2ctober6eptember 1,1997 and on any interest payment date thereafter at a redemption price equal to the principal amount thereof,plus accrued interest to the date of redemption,plus a premium,as described herein. The Bonds are being issued to finance the acquisition of certain public improvements with appurtenant work and incidental expenses ( the "Facilities") within City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)(.the"District"). The Bonds are to be issued pursuant to the Mello-Roos Community Facilities Act of 1982,as amended(Sections 53311 et seq.of the Government Code of the State of California)(the"Act"),and Resolution No._of the City of Huntington Beach, California(the"City")adopted on June i$25,1990(the"Resolution of Issuance"). The Bonds are secured under a Fiscal Agent Agreement authorized by the Resolution of Issuance(the"Fiscal Agent Agreement")dated as of July 1, 1990,between the City and the Fiscal Agent and are payable from the proceeds of a Special Tax(as defined herein)to be levied on property within the District and certain funds held pursuant to the Fiscal Agent Agreement. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER(EXCEPT TO THE LIMITED EXTENT SET FORTH HEREIN) OF THE CITY, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY,BUT ARE SPECIAL OBLIGATIONS PAYABLE SOLELY FROM THE SPECIAL TAX AND FUNDS HELD PURSUANT TO THE FISCAL AGENT AGREEMENT AUTHORIZED BY THE RESOLUTION OF ISSUANCE. SEE "BONDOWNERS'RISKS"HEREIN FOR A DISCUSSION OF SPECIAL RISK FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS. MATURITY SCHEDULE $510,0004301000*Serial Bonds Maturity Date Principal Interest Reoffering Maturity Date Principal Interest Reoffering OctoberSe ember 1 Amount* Rate Yield (Octoberftptenrber 1) Amount* Rate Yield 1992 $*620,000 1998 $4035,000 1993 0479,000 1999 46r,000 1994 0079 000 2000 60r,000 1995 &06 000 2001 667,000 1996 5M000 2002 600 000 1997 403,000 2003 667:000 $2366,0*1,945,000* % Term Bonds due October September 1,2020 (Price _%) Plus Accrued Interest The Bonds are offered when,as and if issued and delivered to the Underwriter,subject to the approval of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other conditions. It is anticipated that the Bonds in definitive form will be available for delivery in San Francisco,California on or aboutr 1990. The date of this Official Statement is 1990. CHILTON& O'CONNOR, INC. * Preliminary,subject to change. NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY . THE CITY, THE UNDERWRITER OR THE FINANCING CONSULTANT TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OR SALE OF THE BONDS DESCRIBED HEREIN, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CITY,THE UNDERWRITER OR THE FINANCING CONSULTANT. 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 ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER,SOLICITATION OR SALE. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM SOURCES WHICH ARE BELIEVED TO BE RELIABLE AND IS IN A FORM DEEMED FINAL AS OF ITS DATE, BY THE CITY FOR THE PURPOSE OF RULE 15c2-12 UNDER THE SECURITIES ACT OF 1934, AS AMENDED. THE INFORMATION HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS NOT GUARANTEED AS TO ACCURACY. 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 INFORMATION OR OPINIONS SET FORTH HEREIN AFTER THE DATE OF THIS OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE BONDS,THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATE ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. ii i 4 a CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CITY COUNCIL Tom Mays,Mayor Peter Green,Mayor Pro Tem Jim Silva,Councilmember Wes Bannister,Councilmember Grace Winchill,Councilmember Don MacAllister,Councilmember CITY STAFF Michael T.Uberuaga,City Administrator Gail Hutton,City Attorney Don Watson,City Treasurer Robert J.Franz,Deputy City Administrator Louis F. Sandoval,Director of Public Works Connie Brockway,City Clerk PROFESSIONAL SERVICES Bond Counsel Jones Hall Hill&White A Professional Law Corporation San Francisco,California Financing Consultant Rod Gunn Associates,Inc. Seal Beach,California Fiscal Agent Underwriter ` Chilton&O'Connor,Inc. Los Angeles,California iii TABLE OF CONTENTS INTRODUCTORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 DISPOSITION OF BOND PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 THEBONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Authority For Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Description of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Transfer and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Mutilated,Lost,Destroyed or Stolen Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Scheduled Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SOURCES OF PAYMENT FOR THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SpecialTaxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Covenant for Superior Court Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ReserveFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Capitalized Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 BON DOWNERS'RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 LandDevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 LandValues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Collection of the Special Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Property Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Additional Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 No Acceleration Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 THE FISCAL AGENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Creation of Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Application of Special Tax Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Description of Other Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Investment of Funds and Accounts;Disposition of Investment Proceeds . . . . . . . . . . . . . . . . . 18 Covenants of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . 20 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Remedies of Bondowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Liability of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 TheFiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 THE DISTRICT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Facilities Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Proposed Services to be Financed by the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Incidential Expenses to be Financed by the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Facilities Cost Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Rate and Method of Apportionment of the Special Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 iv t THE DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 PropertyOwnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 TheDeveloper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Description of the Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 The Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 CONCLUDING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 LegalOpinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 TaxExemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 NoLitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 The Financing Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 NoRating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 No General Obligation of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 DEFINITIONS OF CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix A v OFFICIAL STATEMENT $2,8%3759000* CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS INTRODUCTORY STATEMENT This Official Statement is provided to furnish information in connection with the issuance by the City of Huntington Beach (the "City") for and on behalf of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), State of California (the "District") of $2,8%375,000*aggregate principal amount of the District's 1990 Special Tax Bonds(the"Bonds"). The Mello-Roos Community Facilities Act of 1982, as amended, constituting Sections 53311, et seq. of the California Government Code (the "Act"), was enacted by the California Legislature to provide an alternative method of financing certain public facilities, improvements and services. The Act authorizes local governmental entities to establish community facilities districts as legally constituted governmental entities within defined boundaries, with the legislative body of the local applicable governmental entity acting on behalf of the District. Subject to approval by a two-thirds vote of the votes cast by qualified electors within the district and compliance with the provisions of the Act, the legislative body may issue bonds for the community facilities district established by it and may levy and collect a special tax within such district to repay such bonds. Pursuant to the Act, the City Council (the "City Council") of the City, acting in its capacity as the governing body of the District, adopted Resolution No. 6142 (the "Resolution of Intention") on May 7, 1990 stating its intention to establish the District and to levy special taxes (the "Special Taxes") within the District. On June +625, 1990, after holding a noticed public hearing, the City Council formed the District and, by the adoption of Resolution No. _, authorized the holding of a special election pursuant to the Act requesting authorization for the District to incur bonded indebtedness and approval of the levy of Special Taxes to pay the principal of and interest on the bonds issued. On June +825. 1990, at an election held pursuant to the Act, the electors at that time within the boundaries of the District voted in favor of the ballot proposition. The Bonds are being issued pursuant to Resolution No. _of the City adopted on June+925, 1990 (the "Resolution of Issuance"). The Bonds are secured under a fiscal agent agreement dated as of July 1, 1990(the"Fiscal Agent Agreement"),between the City and , as fiscal agent(the"Fiscal Agent"),and are payable solely from the proceeds of the Special Taxes and certain funds and amounts held under the Fiscal Agent Agreement. The City has covenanted in the Fiscal Agent Agreement to levy in each fiscal year the Special Taxes (see "THE DISTRICT - Rate and Method of Apportionment of the Special Tax" herein) in an amount sufficient to pay annual debt service on the Bonds and administrative expenses of the City including Fiscal Agent fees, plus the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement(see Appendix A-"DEFINITIONS OF CERTAIN TERMS") and subject to the limitation on the maximum amount of the Special Taxes within the District(see"THE DISTRICT * Preliminary,subject to change. 1 Rate and Method of Apportionment of the Special Tax" herein for a description of the Special Tax). The Special Taxes will be collected by the County of Orange (the "County")in the same manner and at the same time as regular ad valorem property taxes are collected by the Treasurer-Tax Collector of the County. The District has established a maximum amount of Special Taxes which may be levied each fiscal year. The maximum amount of Special Taxes within the District is expected by the City to be a minimum of 120%of the annual debt service on the Bonds and annual administrative expenses of the District. Although the Special Taxes will constitute a lien on real property within the District, it does not constitute a personal indebtedness of the owners of that real property. As of the date hereof there are seven (7) property owners: 1. Central Park #8, A California Limited Partnership, David D. Dahl, .General Partner, 505 Park Avenue, Balboa Island, CA 92662; 2. Central Park #12, A California Limited Partnership,David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662; 3. Central Park #15, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue, Balboa Island, CA 92662; 4. Southwest Diversified, A California General Partnership, William D.Foote,President, 18400 Von Karman, Suite 400,Irvine,CA 92715; 5. Emil Walter Plegel and Ruby Lucille Plegel,Trustees,7071 Thomas Street,Buena Park,CA 90621; 6. Audrey DeNubila Panabaker;Virginia May Denubila, 11728 Chaparal Street, Los Angeles, CA 90049; 7. William Landis, 1901 Avenue of the Stars, Suite 1060, Los Angeles, CA 90067, et al (collectively referred to herein as the "Property Owners"), of the land within the District. The property in the District is anticipated to be subdivided and developed primarily for single family homes by a single developer, The Dahl Company. Upon sale of the single family homes, the homeowners will become responsible for paying the Special Taxes on their homes. There is no assurance that the owners of property within the District will be financially able to pay the Special Taxes or will pay such tax even if financially able to do so. (See"BONDOWNERS'RISKS"and"THE DEVELOPMENT-Property Ownership"herein). The City has covenanted in the Fiscal Agent Agreement for the benefit of the owners of the Bonds that the City will cause foreclosure proceedings to be commenced within 150 days of receipt of notification from the County Treasurer-Tax Collector of a delinquency in the payment of any Special Taxes and will cause such foreclosure action to be diligently prosecuted to judgment and sale (see "SOURCES OF PAYMENT FOR THE BONDS-Covenant for Superior Court Foreclosure"herein). The Bonds are being sold to provide the District with funds to construct certain public facilities,to establish a Reserve Fund, to provide for capitalized interest until October 1s—epterriber 1, 1991,and to pay the expenses of the District in connection with the issuance of the Bonds. The amount of Bond proceeds deposited into the Reserve Fund will equal 8% of the aggregate principal amount of the Bonds. Proceeds from the Bonds initially deposited in the Improvement Fund,Reserve Fund and Bond Fund will be invested under Investment Agreements with (the "Investment Agreements"). The District consists of three noncontiguous areas all within the same general area of the City. The three areas consist of seven separately owned parcels that are in the process of being subdivided and developed by a single developer (see "DISTRICT BOUNDARY MAP" herein). The area within the District consists of approximately 36 acres. The City has approved tentative tract maps for the entire area within the District. The tentative tract maps provide for the development of 113 residential lots with single family detached homes. It is anticipated by the Developer that the sales price of homes constructed within the District will range from approximately $680,000 to $825,000 (see "THE DEVELOPMENTS"herein). Property within the District has not been independently appraised. The 1989/90 Orange County Assessment Rolls lists the "full cash value" of the land in the District at $25,206,947 (see "BONDOWNERS' RISKS - Land Values" herein). This represents a ratio of fair market value as 2 determined by the Orange County Assessor to initial aggregate principal amount of Bonds of 10.61 to 1. Proceeds from the Bonds will be used to acquire the certain public facilities(the"Facilities"). The Facilities proposed to be acquired with the Bonds generally include construction of street improvements including the acquisition of certain right-of-way,certain storm drain, water and sewer improvements, fire station improvements and emergency vehicle traffic interruption devices (see "THE DISTRICT-Facilities Description")herein. The brief descriptions and references contained herein to the City, the District, the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, the Acquisition Agreement, the Act, the property owners within the District and the Investment Agreement do not purport to be comprehensive or definitive and are qualified in their entirety by reference to such documents,and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Fiscal Agent Agreement. Copies of the Fiscal Agent Agreement are available for inspection during the initial offering of the Bonds at the offices of the Underwriter,Chilton& O'Connor,Inc., 1901 Avenue of the Stars,Suite 1400, Los Angeles, CA 90067, (213) 203-0966 and the Financing Consultant, Rod Gunn Associates, Inc.,3010 Old Ranch Parkway,Suite 330,Seal Beach,California 90740,(213)598-7677. Copies of the Fiscal Agent Agreement may be obtained after delivery of the Bonds at the corporate trust office of the Fiscal Agent. 3 DISPOSITION OF BOND PROCEEDS Proceeds from the sale of the Bonds are expected to be used to acquire the Facilities,to establish a Reserve Fund,to provide for approximately one years'capitalized interest on the Bonds and to pay the expenses of the District in connection with the issuance of the Bonds. Under the provisions of the Fiscal Agent Agreement, the Fiscal Agent will receive the proceeds from the sale of the Bonds and will apply them as follows (other than accrued interest which will be deposited in the Bond Fund): Source of Funds Principal Amount of Bonds $2,8%375,000* Application of Funds Improvement Fund $2,230,5681,826,480* Bond Fund(1) 226,9 g201,957* Costs of Issuance Fund(2) 13$;969115,000* Reserve Fund(3) 280,0)9190,000* Initial Purchaser's Discount 6-7 5 41,563* Total $2,8%375,000* (1) This amount, together with accrued interest received on the date of delivery of the Bonds and estimated interest earnings on such amount (at a rate of 8%), are calculated to be sufficient to pay the interest due on the Bonds to and including October 1$eptem+e �, 1991. (2) Includes fees of Bond Counsel and the Financing Consultant, initial fees of the Fiscal Agent, costs of printing the Bonds and Official Statement, administrative fees of the City and other costs of issuance. (3) An amount equal to 8%of the aggregate principal amount of the Bonds. THE BONDS Authority For Issuance The District was established and bonded indebtedness was authorized pursuant to provisions of the Act. In accordance with such provisions,qualified electors within the District were entitled to cast one vote for each acre, or portion of an acre, of land they owned within the District. The property owners within the District at the time of the election cast_ votes at the election held on June +825, 1990 in favor of the levy of the Special Taxes and the issuance of the Bonds. The Bonds will be issued pursuant to the Act and Resolution No. _, adopted on June +825, 1990 (the "Resolution of Issuance"). The Bonds are secured under an fiscal agent agreement dated July 1, 1990 (the "Fiscal Agent Agreement"), between the City and as the Fiscal Agent. * Preliminary,subject to change. 4 Description of the Bonds The Bonds will be issued only as fully registered Bonds without coupons, in the denomination of $5,000 each or any integral multiple thereof,will be dated,and will mature in the years,and will bear interest at the rates shown on the cover page hereof. Interest with respect to the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. The principal of and premium,if any, on the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in , upon presentation and surrender of the Bonds. Payment of interest on the Bonds will be made to the owner thereof by check or draft of the Fiscal Agent, mailed on the Interest Payment Date to the owner at his address as it appears on the bond register to be kept by the Fiscal Agent at its principal corporate trust office in , as of the close of business on the fifteenth day of the month preceding any Interest Payment Date (the "Record Date"), or at such other address as is furnished to the Fiscal Agent in writing by such owner at least fifteen (15) Business Days prior to such Interest Payment Date, or by wire transfer made on such Interest Payment Date upon instructions of any owner of$1,000,000 or more in aggregate principal amount of Bonds. Optional Redemption The Bonds maturing on or before October 1�, 1997, are not subject to call and redemption prior to maturity. The Bonds maturing on or after October 1September1, 1998, may be called before maturity and redeemed at the option of the City, from any source of funds, on October 1Septemb , 1997,or on any interest payment date thereafter as a whole or in part,in inverse order of maturity and as the Fiscal Agent shall select within any one maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Price October 1September1, 1997 or April tMarch 1,1998 102.5% October 1September1, 1998 or April LM&reh 1,1999 102.0% October 18eptember 1, 1999 or April 1March 1,2000 101.5% October 18eptember 1,2000 or April IMarch 1,2001 101.0% October lSeptember 1,2001 or April 11March 1,2002 100.5% October lSeptember 1,2002 and thereafter 100.0% The City is required to give the Fiscal Agent written notice of its intention to optionally redeem Bonds not less than sixty(60)days prior to the applicable redemption date. Mandatory Redemption The Bonds maturing on October 1September+, 2020, are subject to mandatory sinking payment redemption in part on October 16eptember1, 2004, and on each October 1Septernber 1 thereafter to maturity,by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption without premium as follows: 5 Redemption Date Mandatory (October lSevtember I-) Payment* 2004 $ 4955,000 2005 7-5�0,000 2006 8901000 2007 8670,000 2008 9691000 2009 +$9$3,000 2010 i1-990—,000 2011 +29100,000 2012 }3$1�,000 2013 i4-911 ,000 2014 4-%TM 000 2015 +66139,000 2016 i941Z,000 2017 +9A16,000 2018 S+6170,000 2019 2%19 000 2020 £45 M:000 (Maturity) The amounts in the foregoing table will be reduced pro rata as a result of any prior partial redemption of the Bonds as described under"Optional Redemption"above. All moneys deposited in the Bond Fund from sinking payments will be used and withdrawn by the Fiscal Agent upon receipt of a written request from the City for the purchase of Bonds at public or private sale,as and when and at such prices (including brokerage and other charges) as the City may in its discretion determine,but not to exceed the principal amount of such Bonds,and accrued interest thereon. Notice of Redemption Notice of redemption will be mailed by first class mail by the Fiscal Agent to (i) the registered owners of the Bonds at their addresses appearing on the books kept for registration and transfer of the Bonds,(ii)the Securities Depositories,and(iii)one or more Information Services, in each case not less than thirty(30)nor more than sixty(60)days prior to the redemption date. Each notice of redemption shall state the date of such notice,the Bonds to be redeemed,the date of issue of such Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses of the Fiscal Agent), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity, the distinctive numbers of the Bonds of such maturity 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 said redemption date there will become due and payable on each of said Bonds the redemption price thereof or of said specified portion of the principal amount thereof, in the case of a Bond to be redeemed in part only, and that interest thereon shall cease to accrue, and each such notice shall require that such Bonds be then surrendered at the address or addresses of the Fiscal Agent specified in the redemption notice. Failure by the Fiscal Agent to mail notice of redemption to any one or more of the respective owners of any Bonds designated for redemption or to any one or more of the Information Services or Securities Depositories shall not affect the sufficiency of the proceedings for redemption. Failure to receive any notice mailed or any defect in any notice shall not affect the sufficiency of the proceedings for redemption of the Bonds. * Preliminary,subject to change. 6 Transfer and Registration Registration of the Bonds may be transferred only upon the books kept for registration and transfer of the Bonds and may be exchanged upon surrender thereof to the Fiscal Agent together with an assignment duly executed by the registered owner or his other duly authorized attorney or legal representative in such form as set forth in the Bond and otherwise as is satisfactory to the Fiscal Agent. The Fiscal Agent may require payment from the owner of a sum sufficient to cover any tax, or other governmental fee or charge imposed with respect to such transfer or exchange. Neither the City nor the Fiscal Agent will be required to issue or register the transfer of any Bonds during a period beginning on the fifteenth day before any selection of Bonds for redemption and ending on the day Bonds are so selected or to register the transfer of any Bonds selected, called or being called for redemption in whole or in part. The City and the Fiscal Agent will treat the owner of a Bond, as shown on the registration books kept by the Fiscal Agent, as the person exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that all interest payments will be made to the owner of record as of the fifteenth day of the month preceding any Interest Payment Date. Mutilated, Lost,Destroyed or Stolen Bonds If any Bond is mutilated, lost, stolen or destroyed, the City will execute and the Fiscal Agent will authenticate a new Bond or Bonds in replacement thereof in the same aggregate principal amount and of the same maturity, as the case may be. In the case of a lost, stolen, or destroyed Bond, the Fiscal Agent may require satisfactory indemnity prior to authenticating a new Bond. The City and the Fiscal Agent may charge the owners of the Bonds for their reasonable fees and expenses in connection with replacing mutilated,lost,stolen or destroyed Bonds. Additional Bonds The District, at any time after the issuance and delivery of the Bonds under the Resolution of Issuance, may issue Additional Bonds presently authorized by the District, payable from the Special Taxes and secured by a lien and charge upon the Special Taxes equal to the lien and charge securing the outstanding Bonds theretofore issued by the District subject only to the following specific conditions,which are conditions precedent to the issuance of any such Additional Bonds: (a) The District shall be in compliance with all covenants set forth in the Fiscal Agent Agreement and any supplement thereto and a certificate of the District to that effect shall have been filed with the Fiscal Agent; provided, however, that Additional Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Additional Bonds the District will be in compliance with all such covenants; (b) The issuance of the Additional Bonds shall have been duly authorized pursuant to the Act and all applicable laws and the issuance of such Additional Bonds shall have been provided for by a supplemental resolution which meets the requirements set forth in the Fiscal Agent Agreement; (c) The District shall have received the certificate of an Independent Financial Consultant (as defined in the Fiscal Agent Agreement)certifying that(i) the amount of maximum Special Taxes that may be levied by the District pursuant to the Act and the applicable resolutions and ordinances of the District is at least 1.15 times Maximum Annual Debt Service on all outstanding Bonds and the Additional Bonds proposed to be issued, and (ii) the fair market value of the land and then existing improvements in the District is at least 3.00 times the sum of(A)the aggregate principal amount of all Bonds of the District then outstanding, plus (B) the aggregate principal amount of all Additional Bonds proposed to be issued by the District. For purposes of making the certifications required by this paragraph (c), the Independent Financial Consultant may rely on reports or certificates of such other persons as may be acceptable to the District and Bond Counsel; (d) The District shall have received an opinion of Bond Counsel substantially to the effect that the issuance of such Additional Bonds has been duly and validly authorized, that all requirements under the Fiscal Agent Agreement precedent to the delivery of such Additional Bonds have been satisfied and that such Additional Bonds and the Resolution of Issuance are valid and binding obligations enforceable in accordance with their terms (subject to any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditor's rights generally and subject also to the application of equitable principles if equitable remedies are sought) and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain covenants, the issuance of the Additional Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any outstanding Bonds of the District or the exemption from State of California personal income taxation of such interest;and (e) Provision shall have been made for the deposit into the Reserve Fund of an amount at least equal to the amount necessary to cause the amount on deposit in the Reserve Fund to equal the Reserve Requirement,as calculated immediately after the issuance of such Additional Bonds. 8 Sc 06 06 06 Od Od Od Od Od Od Od Od 06 Od Od 0 c: Od oc. Od QLC Od Od 06 Od Od Od Od Od Od oc. o c. Scheduled Debt Service Debt Service Principal/ Interest Total Annual Date Redemptions* Payments Debt Service A rail li 1990 e i-1, Oc 06 September-�, 1990 r��i , 1991 O 1991 A , 1992 Oc To er ISe ember, 1992 $£520,000 Apri� , 1993 — Oc oo r t6ernem� ,1 993 %25,000'99 Oc o er Septembers, 1994 3925,000 ri , 1995 Oc o er Septembers, 1995 3630,000 rri , 1996 Oc oo-UerZ6epteml�9,�996 -8 0,000 Oc of terZ6epterr'-` 1997 4935,000 ri OctOT)CZSeptember�, 1998 4935,000 rrii ,1999 OctOT)eZ$eptemiser-1, 1999 4540,000 Sri � ,2000 Octo erZSeptember-�,2000 5040,000 Sri T ,2001 — Oc o ear T6eptember�,2001 5945,000 2002 O 2002 6050,000 OPT� ,2003 OctTrZ6eptenrher-�,2003 6&55,000 ri 12004 Octo—ber TSept 2004 %55,000 2005 Oc 5 e 1 2005 %60,000 rri ,2006 Oc offer ep 1Stm cber 112006 6065,000 ri 12007 — Oct TZfieptentber-�,2007 8570,000 rim 12008 0c1=6 e=r tneptemtaer1,2008 9580,000 r1 ,2009 Oc o er September- ,2009 +$985,000 � rim� ,2010 — OctoTTSeptember4,2010 �1990,000 rri ,2011 Oc�o ear TSeptember�,2011 1%100,000 April ,2012 Oc'to6— 012 +30105.000 � rim� ,2013 OctTZ£iepternber},2013 +49115,000 2014 Oc�o6er T�er�,2014 +59125,000 MIT 12015 Octoser ,2015 +65135,000 April 12016 Octo r I' ,2016 + 5145,000 r��i ,2017 OcroberZSepterrtberl1,2017 +99160,000 rri ,2018 Oc offer 2018 9,+6170,000 �ri� ,2019 Oc to e ISeptem 2019 £R5185,000 p ri ,2020 Oc ,2020 245200,000 Preliminary,subject o change. 9 SOURCES OF PAYMENT FOR THE BONDS Special Taxes The principal of, premium, if any, and the interest on the Bonds, the administrative expenses of the City and any amounts required to replace moneys withdrawn from the Reserve Fund in order to maintain the Reserve Fund at the Reserve Requirement are payable from the Special Taxes collected on property within the District and interest earned on funds held in the Reserve Fund and the Bond Fund and available for that purpose pursuant to the Fiscal Agent Agreement. The Special Taxes are excepted from the tax rate limitation of California Constitution Article XIIIA pursuant to Section 4 thereof as a"special taxes"authorized by a two-thirds vote of the qualified electors as set forth in the Act. Consequently, the City Council of the City as the governing board of the District has the power and is obligated by the Fiscal Agent Agreement to cause the levy and collection of the Special Taxes. The City has covenanted in the Fiscal Agent Agreement to levy (subject to the limitation on the maximum amount of the Special Taxes)in each fiscal year the Special Taxes in an amount sufficient to pay the debt service on the Bonds, if any, for the next Bond Year, and administrative expenses of the City including Fiscal Agent fees, plus the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement. The Special Taxes are designed to collect the full amount of such Annual Debt Service plus administrative expenses of the City,and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement,and may be adjusted annually so as to maintain the City's ability to collect the full amount required to pay such amounts. The Special Taxes are to be levied and collected according to the Rate and Method of Apportionment described in the section entitled"THE DISTRICT-Rate and Method of Apportionment of the Special Tax" herein. The maximum tax levy pursuant to the Rate and Method of Apportionment escalates each fiscal year 102%of the maximum annual Special Tax in the prior fiscal year. Revenues that may be raised from the levy of the maximum Special Taxes are expected to be a minimum of 120% of the revenues actually needed for debt service on the Bonds. The Special Taxes with respect to any parcel within the District will not be affected by any changes in the zoning of such parcel or the failure to develop the parcel as contemplated by the Property Owner. Subject to the limitation on the maximum amount of the Special Taxes that may be levied on any parcel in the District, the annual levy of the Special Taxes may be increased to the extent necessary to replenish the Reserve Fund if amounts have been withdrawn from such fund to pay debt service on the Bonds due to delinquencies in payment of the Special Taxes. Although the Special Taxes will constitute a lien on parcels within the District, it does not constitute a personal indebtedness of the owners of property within the District. There is no assurance that the property owners will pay the annual Special Taxes (see "BONDOWNERS' RISKS" and "THE DEVELOPMENT-Property Ownership"herein). The Special Taxes will be collected by the County in the same manner and at the same time as ad valorem property taxes are collected by the Tax Collector-Treasurer of the County. When received, such Special Taxes will be deposited in the Special Taxes Fund to be held by the City and transferred by the City to the Fiscal Agent(after deductions for the City's administrative expenses)for payment of debt service on the Bonds, if any, or for deposit, if required, in the Reserve Fund to be held by the Fiscal Agent in order to restore the balance therein to the Reserve Requirement. 10 Covenant for Superior Court Foreclosure Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Taxes, the City may order the institution of a superior court action to foreclose the lien therefor,provided such action is brought not later than four years after the final maturity date of the Bonds. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. If foreclosure is necessary, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale if the Reserve Fund is depleted. Although, as provided in the Rate and Method of Apportionment of the Special Tax,the City may adjust the Special Taxes on all property within the District to provide an amount required to pay principal of and interest on the Bonds, plus administrative expenses and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement, any such adjustment is limited by the maximum amount of Special Taxes and may not be sufficient to ensure timely payment of principal of and interest on the Bonds (see "BONDOWNERS' RISKS"herein). Furthermore,no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Taxes installment. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify the obligations of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the execution sale pursuant to the judgment in any such action if there is no other purchaser at such sale, nor does the Act specify the priority relationship, if any, between the Special Taxes and other taxes and assessment liens. A judgment debtor (property owner) has 140 days from the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to so redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within six (6) months of the date of sale. If,as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made. The constitutionality of the aforementioned legislation, which repeals the former one-year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. As a result of the foregoing, in the event of a delinquency or nonpayment of one or more Special Taxes installments, there can be no assurance that there would be available to the Fiscal Agent sufficient funds to pay when due the principal of and the interest on the Bonds. Reserve Fund In order to secure further the timely payment of principal of and interest on the Bonds,the City is required,upon delivery of the Bonds, to deposit in the Reserve Fund an amount equal to the 8%of the aggregate principal amount of the Bonds (the "Reserve Requirement"). Thereafter, the City is required to deposit from the Special Taxes and maintain an amount of money equal to the Reserve Requirement in the Reserve Fund at all times while the Bonds are outstanding. Amounts in the Reserve Fund will be used to pay debt service on the Bonds to the extent other moneys are not available therefor. Earnings on amounts in the Reserve Fund may be deposited into the Bond Fund to the extent not required to be deposited into the Earnings Account to be used to make payments to the United States. Amounts in the Reserve Fund may be used to pay the final year's debt service on the Bonds(see"THE FISCAL AGENT AGREEMENT"herein). 11 Capitalized Interest There will be an initial deposit to the Bond Fund out of Bond proceeds which, together with accrued interest on the Bonds and investment earnings on such amounts, has been calculated to be sufficient to make the interest payments on the Bonds to and including October 1Septenmber)•, 1991. BONDOWNERS' RISKS Land Development As discussed under"THE DEVELOPMENT"herein, the Property Owners anticipate subdividing the land within the District, and constructing single family detached homes within certain tracts. The development and subsequent home sales may be adversely affected by changes in general economic conditions,fluctuations in the real estate market, and other similar factors,including development in surrounding areas which may compete with the developments within the District. The Special Taxes are to be collected from the owners of property located within the District, and levy of the Special Taxes are not dependent on the selling of homes and the completion of the development of the properties within the District. Nevertheless, the extent of completion of the development of the property within the District may affect the ability and willingness of landowners to pay the Special Taxes and may affect the market value of any property foreclosed upon for nonpayment of installments of the Special Taxes. -Land Values Customarily, the issuers of Special Tax Bonds obtain an appraisal of the market value of the property subject to the Special Tax in order to have an estimate of the security value of the parcels relative to the amount of the outstanding indebtedness of the Special Tax Bonds. In this case, the City is providing the County Appraiser's estimate of "full cash value" (the "Assessed Value") of the property as opposed to an appraisal. The Assessed Value of the parcels in the District as carried on the assessment rolls of the County is $ . The Assessed Value is approximately times the initial aggregate principal amount of the Bonds. While, in general, market value is in excess of Assessed Values, and in some cases well in excess of Assessed Value, no assurance can be given that should a parcel or lot with delinquent installments of the Special Tax be foreclosed, that any bid will be received for such property or, if a bid is received, that such bid will be sufficient to pay delinquent installments of unpaid taxes. However, since the Act requires that a property be sold only for the amount delinquent, it is anticipated that the value of the land as appraised by the County Assessor should be sufficient to secure any delinquent installments of unpaid reassessments. Collection of the Special Taxes In order to pay debt service on the Bonds,it is necessary that the Special Taxes levied against land within the District be paid in a timely manner. The interest payments on the Bonds through and including October 1SeVtember+, 1991,will be funded from Bond proceeds. The first levy of the Special Taxes will occur in the tax year 1991/92, with the first installment due and payable on December 10, 1991, and the second installment due and payable on April 10, 1992. Taxes collected from payments on the first levy of the Special Taxes will be available to pay interest coming due on April 1march 1 1992 and principal and interest coming due on October lSeptentber-+, 1992. Should the Special Taxes not be paid on time,the District has established a Reserve Fund to pay debt service on the Bonds to the extent other funds are not available therefor. 12 Records of the Orange County Treasurer-Tax Collector reveal no current property tax delinquencies on the parcels comprising the District. The City has covenanted to institute foreclosure proceedings to sell any property delinquent in the Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could,but would not be required to,advance the amount of the delinquent Special Taxes to protect its security interest. (See "SOURCES OF PAYMENT FOR THE BONDS - Covenant for Superior Court Foreclosure" for provisions which apply in the event foreclosure is required and which the District is required to follow in the event of delinquency in the payment of the Special Taxes). If any property within the District becomes exempt from taxation through ownership by a non- taxable entity such as the State of California or a local government,for a public purpose (for example, through dedication or condemnation of property for use as a public street or highway), the Special Taxes will be reallocated to the taxable properties within the District. This would result in the owners of such properties paying a greater amount of the Special Taxes and could have an adverse impact upon the payment of the Special Taxes. Property Ownership The real property in the District is owned by seven property owners and is in the process of being acquired by a partnership in which the general partner is the Developer. Failure of the owners to pay installments of taxes when due could result in the depletion of the Reserve Fund prior to reimbursement from the resales of property or delinquent redemptions. The only asset of the property owners which constitute security for the Bonds is their respective property holdings located within the District(see"THE DEVELOPMENT-Assessed Values"herein). Bankruptcy The payment of the Special Taxes and the ability of the District to foreclose the lien of a delinquent unpaid tax,as discussed in the section herein entitled"SOURCES OF PAYMENT FOR THE BONDS", may be limited by bankruptcy, insolvency,or other laws generally affecting creditors'rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors gene'rally. Although bankruptcy proceedings would not cause the taxes to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. To the extent all of the property in the District continues to be owned by a single property owner, the payment of the Special Taxes and the ability of the District to foreclose the lien of a delinquent unpaid tax could be delayed by bankruptcy, insolvency,or other laws generally affecting creditors'rights or by the laws of the State relating to judicial foreclosure. Additional Taxation On June 3, 1986, California voters approved an amendment to Article XIIIA of the California Constitution to allow local governments and school districts to raise their property tax rates above the constitutionally mandated 1%ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast 13 by the qualified electorate. If any such voter-approved debt is issued, it may be on a parity with the lien of the Special Taxes on the parcels within the District. No Acceleration Provision The Fiscal Agent Agreement does not contain a provision allowing for the acceleration of the principal of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, any owner of any of the Bonds is given the right for the equal benefit and protection of all owners similarly situated to pursue certain remedies described under"THE FISCAL AGENT AGREEMENT-Remedies of Bondowners". THE FISCAL AGENT AGREEMENT The following is a summary of certain provisions of the Fiscal Agent Agreement and does not purport to be a complete restatement thereof. Reference is hereby made to the Fiscal Agent Agreement for further information in this regard. Copies of the Fiscal Agent Agreement are available from the City upon request. Creation of Funds and Accounts The Fiscal Agent Agreement establishes the following funds and accounts: 1. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Bond Fund (the "Bond Fund") which will be held by the Fiscal Agent. The moneys transferred to the Bond Fund by the Fiscal Agent are to be used for paying principal of (including mandatory redemption payments) and all of the interest, and any premium, due and payable on all of the Bonds. 2. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Reserve Fund (the "Reserve Fund") which will be held by the Fiscal Agent. The moneys placed in the Reserve Fund upon sale and delivery of the Bonds and moneys,and any amounts, subsequently deposited to replenish the Reserve Fund will be used only for payment of the principal of and interest, and any premium, on the Bonds, including mandatory redemption payments,in the event that the moneys in the Bond Fund are insufficient therefor. 3. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds,Improvement Fund(the "Improvement Fund") will be held by the City. The moneys set aside and placed in the Improvement Fund will be used exclusively for the purpose of acquiring public improvements to be constructed as part of the Project and defraying other related costs of the Project. Upon completion of the Project, any surplus remaining in the Improvement Fund will be transferred to the Bond Fund. 4. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Cost of Issuance Fund (the "Cost of Issuance Fund") will be used to defray the necessary expenses in connection with the issuance and sale of the Bonds. The Cost of Issuance Fund will initially be held by the Fiscal Agent;any moneys remaining in the Cost of Issuance Fund after 180 days will be transferred to the Administrative Expense Fund. 5. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Special Tax Fund (the "Special Tax Fund") which will be held by the Treasurer of the City. Special Taxes which have been collected by the Treasurer will be deposited in the Special Taxes Fund and a portion transferred to the Fiscal Agent for deposit into the funds and 14 accounts established in the Fiscal Agent Agreement in the amounts set forth therein. The balance then in the Special Tax Fund will be transferred for deposit in the Administrative Expense Fund and the Services Fund as provided in the Fiscal Agent Agreement. 6. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Administrative Expense Fund (the "Administrative Expense Fund") which will be held by the Treasurer of the City. The Administrative Expense Fund will be used to pay all administrative expenses as defined in the Fiscal Agent Agreement. 7. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Rebate Fund(the "Rebate Fund") to be held by the Fiscal Agent. The Fiscal Agent is required to direct and control a Rebate Fund separate and apart from the other funds established under the Fiscal Agent Agreement (the "Earnings Account"), and is required to deposit into the Earnings Account all interest, profits and other income derived from certain investments earned by amounts in the Reserve Fund and the Bond Fund, as described in the Fiscal Agent Agreement. 8. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Services Fund (the "Services Fund") which will be held by the Treasurer of the City and disbursed as required as defined in the Fiscal Agent Agreement. Application of Special Tax Revenues Pledge of the Special Taxes. The Bonds shall be secured by a first pledge(which shall be effected in the manner and to the extent provided in the Fiscal Agent Agreement) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed, the Improvement Fund. The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided with respect to moneys disbursed from the Improvement Fund) are dedicated in their entirety to the payment of the principal of, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Act until all the Bonds have been paid and retired or until moneys or noncallable Federal Securities have been set aside irrevocably for that purpose. All Special Tax Revenues transferred to the Fiscal Agent and will be used solely for the following purposes and in the following priority: Bond Fund (A) Disbursements. On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of and interest and any premium then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth herein. In the event that amounts in the Bond Fund are insufficient, the Fiscal Agent will withdraw from the Reserve Fund to the extent of any funds therein,and then will provide written notice to the Treasurer of the amounts so withdrawn from the Reserve Fund. (B) Investment. Moneys initially deposited in the Bond Fund will be invested under the Investment Agreement with . Thereafter moneys in the Bond Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from such investment will be retained in the Bond Fund. Reserve Fund (A) Use of Fund. Except as otherwise described below, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond 15 Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or for the purpose of redeeming Outstanding Bonds from the Bond Fund. (B) Transfer Due to Deficiency in Bond Fund. Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent will provide written notice thereof to the Treasurer. (C) Transfer of Excess of Reserve Requirement. Whenever, on the day prior to any Interest Payment Date, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent will provide written notice to the Treasurer of the amount of the excess and will transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of the principal of and interest on the Bonds on the next succeeding Interest Payment Date. (D) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied,on the next succeeding Interest Payment Date to the payment and redemption of all Outstanding Bonds, with any balance being transferred to the City to be used for any lawful purpose of the City. (E) Investment. Moneys in the Reserve Fund will be invested pursuant to the Investment Agreement. Interest earnings and profits from investment of moneys in the Reserve Fund will be retained in the Reserve Fund. (F) Transfer for Rebate Purposes. Amounts in the Reserve Fund are required to be withdrawn for purposes of making payment to the Federal Government as specified in the Fiscal Agent Agreement. Description of Other Funds and Accounts Improvement Fund (A) Procedure for Disbursement. Disbursements from the Improvement Fund will be made by the City upon receipt of an Officer's Certificate which will: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (ii) certify that the disbursement is in accordance with the Acquisition Agreement and that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting disbursement. (B) Investment. Moneys in the Improvement Fund will be invested pursuant to the Investment Agreement. Interest earnings and profits from such investment and deposit will be deposited by the Fiscal Agent in the Bond Fund. (C) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, the City will transfer the amount, if any, remaining in the Improvement Fund to the Fiscal Agent for deposit in the Bond Fund for application to 16 the payment of principal of and interest on the Bonds and the Improvement Fund will be closed. Special Taxes Fund (A) Disbursements. As soon as practicable after the receipt by the City of any Special Tax Revenues, but no later than ten Business Days after such receipt, the City will withdraw from the Special Tax Fund and transfer to the Fiscal Agent for deposit in the Reserve Fund until the amount then on deposit therein is equal to the Reserve Requirement and an amount sufficient, together with the amounts then on deposit in the Bond Fund to pay principal, premium, if any, and interest on the Bonds as specified in the Fiscal Agent Agreement. All other amounts then in the Special Tax Fund will, concurrently with the foregoing transfer, be transferred to the Administrative Expense Fund in an amount, together with the amounts then on deposit in the Administrative Expense Fund, to pay the estimated expenses to be incurred in the then current Fiscal Year and the balance transferred to the Services Fund for the purposes of such Fund. Notwithstanding the foregoing, if the Bonds have been defeased as provided in the Fiscal Agent Agreement, the Treasurer is required to maintain the Special Tax Fund for transfers to the Administrative Expense Fund and Services Fund for the purposes of such Funds. (B) Investment. Moneys in the Special Tax Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit will be retained in the Special Tax Fund to be used for the purposes thereof. Administrative Expense Fund (A) Disbursement. Amounts in the Administrative Expense Fund will be withdrawn by the Treasurer and paid to the City or its order upon receipt by the Treasurer of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense(or a Cost of Issuance)and the nature thereof. Annually, on the last day of each Fiscal Year, the Treasurer will withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid and transfer such amounts to the Special Tax Fund. (B) Investment. Moneys in the Administrative Expense Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Treasurer in the Administrative Expense Fund to be used for the purposes of such fund. Cost of Issuance Fund (A) Disbursement. Amounts in the Cost of Issuance Fund will be disbursed from time to time to pay Cost of Issuance,as set forth in a requisition containing respective amounts to be paid to the designated payees,signed by an Authorized Officer and delivered to the Fiscal Agent. The Fiscal Agent will pay all Cost of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent will maintain the Cost 17 of Issuance Fund for a period of 180 days from the date of delivery of the Bonds and then will transfer any moneys remaining therein, including any investment earnings thereon, to the Treasurer for deposit in the Administrative Expense Fund for payment of any unpaid Cost of Issuance and every invoice and requisition received thereafter by the Fiscal Agent will be submitted to the Treasurer for payment. (B) Investment. Moneys in the Cost of Issuance Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund. Services Fund (A) Disbursement. Amounts in the Services Fund shall be withdrawn by the Treasurer and paid to the City or its order upon receipt by the Treasurer of an Officer's Certificate stating the Amount to be withdrawn, that such amount is used to pay for a Service and the nature of such Service. Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amount then remaining in the Services Fund that have not been allocated to pay Services incurred but not yet paid, and which are otherwise encumbered, and transfer such amounts to the Special Tax Fund. (B) Investment. Moneys in the Services Fund shall be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Services Fund to be used for the purposes of such fund. Investment of Funds and Accounts; Disposition of Investment Proceeds Moneys initially deposited in the Reserve Fund, Bond Fund and the Improvement Fund will be invested under the Investment Agreements. Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent, will be invested by the Fiscal Agent in Permitted Investments which by their terms mature prior to the date on which such moneys are needed under the Fiscal Agent Agreement or are otherwise available on such date. Subject in all respects to the provisions of rebate of excess investment earnings to the United States,moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Treasurer will be invested by the Treasurer in any lawful investments that the City may make, which by their terms mature prior to the date on which such moneys are required to be paid out thereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of interest earnings and profits resulting from investment of amounts in the funds and accounts. The Fiscal Agent or the Treasurer may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer will incur any liability for losses arising from any investments made in accordance with the Fiscal Agent Agreement. For purposes of determining the amount on deposit in any fund or account held under the Fiscal Agent Agreement,all investments credited to such fund or account will be valued at the cost thereof (excluding accrued interest and brokerage commissions,if any). The Fiscal Agent or the Treasurer, as applicable, will sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it will be necessary to 18 I provide moneys to meet any required payment,transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer will be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance with the provisions of the Fiscal Agent Agreement. Rebate of Excess Investment Earnings to the United States (A) Duties of City In General. The City covenants to comply with Section 148(f) of the Code and to that end to take or cause the Fiscal Agent to take or otherwise cause to be taken all actions required by the Fiscal Agent Agreement. (B) Rebate Fund. The Fiscal Agent Agreement creates,as a separate account,distinct from all other funds and accounts held by the Fiscal Agent under the Fiscal Agent Agreement, the Rebate Fund. Within twenty (20) days following the last day of each Bond Year, and within fifty (50) days following the date of payment in full of the Bonds, the Rebate Administrator, on behalf of the City, will calculate Excess Investment Earnings during the preceding Bond Year or such other period as may be appropriate under applicable Regulations and shall provide written notice to the Fiscal Agent and the City of the amount thereof. Upon delivery of such notice,the Fiscal Agent shall withdraw from the Bond Fund an amount equal to Excess Investment Earnings as so calculated, shall deposit such amount in the Rebate Fund. In the event that the amount on deposit in the Bond Fund is less than the amount of Excess Investment Earnings,the Fiscal Agent shall withdraw the differential from the Reserve Fund and shall deposit the same in the Rebate Fund; provided, however, that in no event shall the Fiscal Agent withdraw an amount from the Reserve Fund which will cause the amount remaining in the Reserve Fund together with amounts to be deposited in the Bond Fund prior to the next Interest Payment Date to be less than the amount necessary to pay the principal of, and interest and any premium on, the Bonds due on the next succeeding Interest Payment Date; and provided, further, that if such withdrawal would cause the amount remaining in the Reserve Fund, together with amounts to be deposited in the Bond Fund on the next succeeding Interest Payment Date,to be less than the amount necessary to pay the principal of,and interest and premium on, the Bonds due on the next succeeding Interest Payment Date, then the Fiscal Agent shall withdraw from the Reserve Fund only such amount as shall not cause the Reserve Fund to be so deficient and shall provide written notice directing the City to pay to the Fiscal Agent for deposit in the Rebate Fund, an amount which, together with amounts in said Account, will equal Excess Investment Earnings as so calculated. Within five (5) days following receipt of such notice, the City shall pay to the Fiscal Agent for deposit in the Rebate Fund, the amount set forth in such notice from any legally available source of funds of the City. (C) Payment to the United States. The Fiscal Agent will pay from the Rebate Fund an amount equal to Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty(30)days after the end of the fifth Bond Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The Fiscal Agent shall assure that each such installment is in an amount equal to at least 90 percent of the Excess Investment Earnings as of the end of the Bond Year immediately preceding the date of such payment. Not later than sixty(60) days after the retirement of the Bonds, the Fiscal Agent will pay from the Rebate Fund to the United States an amount equal to 100 percent of the theretofore unpaid Excess Investment Earnings as certified in writing by the Rebate Administrator. In the event that there are any amounts remaining in the Rebate Fund following the payment required by the preceding sentence, the Fiscal Agent shall pay said amounts to the City to be used for any lawful purpose of the City. The Fiscal Agent shall remit payments to the United States at the address prescribed by the Regulations as the same may be from time to time in effect with such reports and statements as may be prescribed by such Regulations. In the event 19 that, for any reason, amounts in the Rebate Fund are insufficient to make the payments to the United States which are required by the Fiscal Agent Agreement, the Fiscal Agent shall notify the City of such fact and the City shall assure that such payments are made by the City to the United States,on a timely basis,from any funds lawfully available therefor. (D) Further Obligation of City. The City and the Fiscal Agent shall assure that Excess Investment Earnings are not paid or disbursed except as required by the Fiscal Agent Agreement. To that end the City and the Fiscal Agent shall assure that investment transactions are on an arm's length basis and that nonpurpose investments are acquired at their fair market value. In the event that nonpurpose investments consist of certificates of deposit or investment contracts,investments in such nonpurpose investments shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. (E) Maintenance of Records. The Fiscal Agent and the Rebate Administrator shall keep,and retain for a period of six(6)years following the retirement of the Bonds, records of the determinations made pursuant to this Section. Covenants of the City So long as any of the Bonds are outstanding and unpaid, the City is required (through its proper members, officers, agents or employees) to faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Fiscal Agent Agreement or in any Bond issued thereunder,including the following covenants for the benefit of the Bondowners: Punctual Payment. The City will punctually pay or cause to be paid the principal of,and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental Agreement,and it will faithfully observe and perform all.of the conditions,covenants and requirements of the Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds. Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the funds and accounts created under the Fiscal Agent Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, the City is not obligated to advance funds from the City treasury to cure any deficiency in the Bond Fund, the Reserve Fund, or the Administrative Expense Fund; provided, however, that nothing in the Fiscal Agent Agreement shall prevent the City, in its sole and absolute discretion and pursuant to such terms and conditions as it shall determine appropriate, from making such advances for the purpose of curing such deficiency. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not,directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in the case of default under the Fiscal Agent Agreement, to the benefits of the Fiscal Agent Agreement, except subject to the prior payment in full of the principal of all the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon the Special Taxes Revenues or other amounts pledged to the Bonds superior to or on a parity 20 with the pledge and lien created in the Fiscal Agent Agreement for the benefit of the Bonds, except as permitted by the Fiscal Agent Agreement. Books and Records. The City will keep, or cause to be kept, proper books of record and accounts,separate from all other records and accounts of the City which may be the books and records of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund, the Special Tax Fund and the Administrative Expense Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent,and the owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent,in which complete and correct entries will be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund, the Reserve Fund, the Improvement Fund and the Costs of Issuance Fund. Such books of record and accounts will at all times during business hours be subject to the inspection of the City and the owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the owners,and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City. Compliance with Law, Completion of the Project; Payment for Services. The City will comply with all applicable provisions of the Act and law in completing the acquisition of the Project and in disbursing funds for the payment of the costs of services. Private Business Use Limitation. The City shall assure that: (a) not in excess of ten percent (10%) of the proceeds of the Bonds is used for Private Business Use if, in addition, the payment of the principal of, or the interest on more than ten percent (10%) of the proceeds of the Bonds is (under the terms of the Bonds or any underlying arrangement) directly or indirectly,(i) secured by any interest in property, or payments in respect of property, used or to be used for a Private Business Use,or(ii)to be derived from payments(whether or not to the City or the District) in respect of property, or borrowed money, used or to be used for a Private Business Use;and (b)in the event that in excess of five percent(5%) of the proceeds of the Bonds are used for a Private Business Use, and, in addition, the payment of the principal of, or the interest on, more than five percent (5%) of the proceeds of the Bonds is, (under the terms of the Bonds or any underlying arrangement) directly or indirectly, secured by any interest in property, or payments in respect of property, used or to be used for said Private Business Use or is to be derived from payments (whether or not to the City)in respect of property,or borrowed money,used or to be used for a Private Business Use, then (A) said excess over said five percent (5%) of the proceeds of the Bonds which is used for a Private Business Use shall be used for a Private Business Use related to a government use of such proceeds and (B) each such Private Business Use over five percent (5%) of the proceeds of the Bonds which is related to a government use of such Proceeds shall not exceed the amount of such Proceeds which is used for the government use of Proceeds to which such Private Business Use is related. Private Loan Limitation. The City shall assure that not in excess of the lesser of five percent(5%)of the proceeds of the Bonds or$5,000,000 is to be used,directly or indirectly, to make or finance a loans (other than loans constituting Nonpurpose Investments and other than loans which 21 enable the borrower to finance any governmental tax or assessment of general application for a specific essential governmental function)to persons other than state or local government units. Collection of Special Taxes. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues,including without limitation, the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1, the Fiscal Agent will provide the Treasurer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund, and informing the City that Special Taxes are to be levied as necessary to provide for annual debt service and administrative expenses and replenishment(if necessary) of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs. Upon receipt of such notice,the Treasurer will communicate with the County Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied,taking into account any parcel splits during the preceding and then current year. The Treasurer will effect the levy of the Special Taxes each Fiscal Year, in accordance with the ordinance of the City levying the tax by each August 1 that the Bonds are outstanding, such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Taxes amounts for the parcels within the District for inclusion on the next tax roll. Upon the completion of the computation, the Treasurer will prepare or cause to be prepared, and will transmit to the County Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next tax roll. The City shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any Outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable,and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions,instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in the Fiscal Agent Agreement. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the Gross 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 date of delivery of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148(a)of the Code and the Regulations. 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 the Bonds to be "federally guaranteed"within the meaning of Section 149(b)of the Code and the Regulations. 22 Compliance with the Code. The City covenants to take any and all action and to refrain from taking such action, which is necessary in order to comply with the Code or amendments thereto in order to maintain the exclusion from federal gross income, pursuant to Section 103 of the Code, of the interest on the Bonds paid by the City and received by the Owners. Covenant to Foreclose. The City covenants in the Fiscal Agent Agreement with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of notice to the City of a delinquency, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due. The Treasurer will notify the City Attorney of any such delinquency of which it is aware, and the Treasurer will instruct the City Attorney to commence,or cause to be commenced,such proceedings. Amendments The Fiscal Agent Agreement and the rights and obligations of the District, the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Fiscal Agent Agreement pursuant to the affirmative vote at a meeting of the Owners, or with the written consent without a meeting, of the owners of at least 60% in aggregate principal amount of the Bonds then Outstanding are filed with the City,exclusive of disqualified Bonds. No such modification or amendment may (i) extend the maturity of any Bond or reduce the interest rate thereon or otherwise alter or impair the obligation of the City on behalf of the District to pay the interest on or principal or redemption premium, if any, on any Bond without the express written consent of the owner of such Bond, or (ii) permit the creation of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent Agreement), or (iii) reduce the percentage of Bonds required for the amendment of the Fiscal Agent Agreement, or (iv) modify any rights or obligations of the Fiscal Agent without its prior written consent. The Fiscal Agent may obtain an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of the Fiscal Agent Agreement and the Fiscal Agent may conclusively rely on such opinion. The Fiscal Agent Agreement and the rights and obligations of the District, the City and of the owners of the Bonds may also be modified or amended at any time by a Supplemental Fiscal Agent Agreement without the consent of any owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the covenants and agreements of the City contained in the Fiscal Agent Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power reserved to or conferred upon the City in the Fiscal Agent Agreement;or (b) to make modifications not adversely affecting any outstanding series of Bonds of the District in any material respect; (c) to make provisions for the purpose of curing any ambiguity,or of curing,correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement,as the City and Fiscal Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; (d) to make such additions, deletions or modifications as may be necessary to assure compliance with section 148 of the Code relating to required rebate of Excess Investment Earnings to the United States or otherwise as may be necessary to assure exclusion from 23 gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Remedies of Bondowners The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Resolution of Issuance. Liability of the City The City will not incur any responsibility in respect of the Bonds or the Fiscal Agent Agreement other than in connection with the duties or obligations explicitly in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The City will not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful default. The City will not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent in the Fiscal Agent Agreement or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder. In the absence of bad faith, the City, including the Treasurer, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of the Fiscal Agent Agreement. The City, including the Treasurer, will not be liable for any error of judgment made in good faith unless it is proved that it was negligent in ascertaining the pertinent facts. No provision of the Fiscal Agent Agreement will require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City may rely and will be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal question, and the opinion of such counsel will be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith. Whenever in the administration of its duties under the Fiscal Agent Agreement the City will deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action thereunder, such matter (unless other evidence in respect thereof be therein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent,and such certificate will be full warrant to the City for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the City may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. In order to perform its duties and obligations under the Fiscal Agent Agreement, the City may employ such persons or entities as it deems necessary or advisable. The City will not be liable for any of the acts or omissions of such persons or entities employed by it in good faith under the Fiscal Agent Agreement, and will be entitled to rely, and will be fully protected in doing so, upon the opinions, calculations,determinations and directions of such persons or entities. 24 The Fiscal Agent The Fiscal Agent will act as the agent and depository of the District for the purpose of receiving all moneys required to be paid to the Fiscal Agent, to allocate, use and apply the same, to hold, receive and disburse the Special Tax Revenues and other funds held under the Fiscal Agent Agreement, and otherwise to hold all the offices and perform all the functions and duties provided in the Fiscal Agent Agreement to be held and performed by the Fiscal Agent. The Fiscal Agent will signify its acceptance of the duties and obligations imposed upon it by executing and delivering to the District a written acceptance thereof,and by executing and delivering such acceptance, the Fiscal Agent will be deemed to have accepted such duties and obligations, but only upon the terms and conditions set forth in the Fiscal Agent Agreement. THE DISTRICT General The District consist of three noncontiguous areas with the City of Huntington Beach, California, generally located south of Ellis Avenue between Edwards Street and Goldenwest Street. The three areas consist of seven separately owned parcels that are in the process of being subdivided and developed by a single developer (see "THE DEVELOPMENT - The Developer" herein). The Developer, which is a general partner in several of the partnerships currently owning the land,is in the process of acquiring all the land in the District. The boundaries of the District approved and designated in the Resolution are legally described and shown on the Boundary Map prepared by Huntington Beach, California included herein. Facilities Description A community facilities district may,pursuant to State law,provide for the purchase,construction, expansion or rehabilitation of any real or tangible property with an estimated useful life of five (5) years or longer. The public facilities proposed to be financed need not be physically located within the proposed community facilities district. Public facilities proposed to be financed from proceeds of the Bonds, and pursuant to the Resolution of Formation,public facilities that may be financed(the"Facilities") generally include the following: 1. Improvements to Ellis Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 2. Improvements to Goldenwest Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 3. Improvements to Quarterhorse Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 25 4. Improvements to Saddleback Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 5. Improvements to Edwards Street in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 6. Water and sewer system improvements along Ellis Avenue,Quarterhorse Lane and Saddleback Lane in the vicinity of the District,including related improvements. 7. Undergrounding of utilities along one or more of the foregoing streets in the vicinity of the District,including any related work. 8. Fire station improvements,including construction and related costs. 9. Acquisition of emergency vehicle traffic interruption devices. Proposed Services to be Financed by the District The Act provides that a Community Facilities District may finance certain specified services within the boundaries of the District. The Community Facilities District may only finance services that are in addition to services that were provided to the District prior to the District being created. Those additional services proposed to be financed in part by the District are as follows: 1. Police and Fire protection services, Paramedic services, in each case in addition to those currently provided in the District. Incidential Expenses to be Financed by the District 1. Costs of engineering,design,planning and coordination related to the above-listed facilities. 2. Bond related expenses, including underwriter's discount, reserve fund, capitalized interest, bond counsel and all other incidental expenses. 3. Administrative fees of the City and the Bond trustee or fiscal agent related to the District and the Bonds. In addition, the incidental costs as defined in the Act and the Resolution of Formation may be financed. Facilities Cost Estimate The Bonds are proposed to be issued based upon the estimates shown below. Prior to the delivery of the Bonds, the Property Owner will enter into a Acquisition Agreement with the City in which the Property Owner agrees to pay any costs overruns, inspection fees,and the costs of administrating the public works contract. The City's Engineer reviewed the reasonableness of the cost estimates. 26 SUMMARY OF COSTS OF CONSTRUCTION OF PUBLIC IMPROVEMENTS TO BE FINANCED WITH BOND PROCEEDS 1-1144;;4 costs 217 offo G— era!Administration nstruction TOTAL7 9 lets nnn nn $ [�Jn_nIIVno T ) V� Gity Fees mitt qraj�ngfu� yards mA An no 19 each �'IO �� . 3-�_L L 4 each ; p� 6 a ) nn 11 n)T_ _ O nnn �PTn_ C f inn Bends O T__L !a eachEF f f ber -an gn- 129.320 f f f ) f f T_ vFF1994123m 27 Land Costs $ 110,118 Construction Related Costs Police&Fire $ 50,000 offsites 1, 23, 22 Indirect Costs 1 33 General ministration Total Construction $1316,292 TOTAL $1,826,480 CONSTRUCTION COST DETAIL Land and Acquisition Costs Land ost- ncv $ 99,000 Escrow Title 693 Legal osts Total 110,1 Police&Fire Facilities and Equipment $ 50,000 Offsite Construction-Land Development Demo&Grubbina $ 16,526 Survey 20,000 Grading-Cut/Fill 1,731 ra ina- mport 4 ,6 Sewer Manholes 27,500 Sewer 8 Inch19,099 Water 12 Inch Water 8 Inch1 1000 Water 6 Inch 29760 Fire Hydrants 48,000 Hot Taps 12 Inch 10,000 Hot Taps 8 Inch12,000 Valves 8 Inch a ves 12 nc h 6,37 Blow Off Assembly 11, 00 Bends 8 Inch1,300 Drainage Facility 262,454 Curb utter 3 30 Rolled ur i ewa I Ks 47,850 Concrete Aprons 3 021 Asphalt avin 27 72 Street Base Grading A-,71 Asphalt Paving ReD ill ,120 Stripping Street Signs 2,600 Barricades , 00 n eraroun ina 117,000 ontinaencies 72544 Total $1,523,422 28 Indirect Costs emporary Toilets $ 2,400 Temporary Power 2,400 Construction bhack 1 00 Field ice Expense e ep one 1,800 Water Truck 3,200 ontinaencies .133 Total $ 15.933 General Administration Supervision $ 45,000 Office Overhead 6,000 General Contractor 60,937 General Labor Total $ 126.937 Tn 1!__eeL GasLs 6 me T6 mo , �Ge�gCye� CLa 6 in _ !1A 1'CfAA Te}ep LIVTC�1 � aer�rzrck 4mn- U44 ^^ "--structien ixsuranc- "M Eens` 99� General Administration 986 L�, � /�AAA f ��Q1�I1TtLL2IILr1*e � Total $ , Rate and Method of Apportionment of the Special Tax The Special Tax is to be levied by the Finance Director of the City on behalf of the District each Fiscal Year on all parcels within the District in an amount equal to the maximum Special Tax, less any Services Credit, as such terms are defined below. On March 1 of each year all taxable Parcels within the District shall be categorized by the Finance Director either as Developed Parcels or Undeveloped Parcels,and shall be subject to a Special Tax in accordance with the Rate and Method of Apportionment specified below. Undeveloped Parcels A Special Tax shall be levied on each Undeveloped Parcel as follows: (Taxable S .Ft.of Parcel g Maximum) — Services = Special (Taxable Sq.Ft.of District Special Tax) Credit Tax 29 I Developed Parcels A Special Tax shall be levied on each Developed Parcel as follows: 1 ) (Maximum _ Total Special Tax Levied X Total Number of) _ Services = Special (Special Tax on Undeveloped Parcels Developed Parcels) Credit Tax Definitions Act means the Mello-Roos Community Facilities Act of 1982,as amended. The Bonds means the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, and any other bonds of the District payable from the Special Tax. The City means the City of Huntington Beach,California. Developed Parcel (1) is any Parcel that is within the boundaries of the District based on the latest available equalized rolls of the County of Orange as of March 1 of the applicable year which is not exempt from the Special Tax pursuant to Section 53311,et seq. of the California Government Code,(2) is not greater than 50,000 square feet in total square footage and (3) with respect to which a building permit for a single family dwelling has been issued as of March 1 of the current year. The District is Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) of the City of Huntington Beach,California. Fiscal Agent means the fiscal agent for the Bonds appointed under the Fiscal Agent Agreement. Fiscal Agent Agreement means the agreement by that name approved by the Resolution of Issuance. Fiscal Year means the period starting on July land ending the following June 30. Maximum Special Tax is an amount for any Fiscal Year determined by reference to Attachment I hereto. Resolution of Issuance is any Resolution adopted by the City Council of the City authorizing the issuance of Bonds. Services Credit is an amount equal to any proceeds of the Special Tax Levied within the District which has been allocated by the City to the payment of police and fire protection services and/or paramedic services authorized under the Act which have not been expended for such purpose by the last day of the prior Fiscal Year. Special Tax is any tax authorized by Section 53340 of the California Government Code adopted by Ordinance of the City and levied within the District. Taxable Square Footage of Parcels is all of the area within any Parcel within the District which is not exempt from the Special Tax pursuant to Section 53311, et. seq. of the California Government Code. 30 Total Taxable Square Footage of the District means the aggregate Taxable Square Footage for all Parcels within the District. Undeveloped Parcel is any Parcel within the boundaries of the District (based on the latest equalized rolls of the County of Orange as of March 1 of each year) which is not a Developed Parcel, and is not exempt from the Special Tax under the provisions of the Act. 31 Fis, End MAXIMUM SPECIAL TAX BY FISCAL YEAR Fiscal Year Maximum End June 30 SReciaall Tax 199n AL 1 n n9_ n n nZLV 1994 3,3A6 v�rc 1 nnn nn nn1 nnnn non)— FJV non 2001 nnnn nnn'oon r 2886 Annr 2007 _A r 291 2069 }n '1 on AMff 2012 00p 2013 A } n no 2816 n n 1 n c,3� IrnJ]g 261 n r J�TGII z+� f 2028 e 282+ mL 1991 j72 4,000 ZUU9 TIT Zulu 384, ZUZI and Frevious Fiscal Year Thereatter Increased by—TZTo 32 THE DEVELOPMENT The information set forth below regarding ownership and development of properties in the District was provided by the Property Owners or the Developer and has not been independently verged. This information has been included because it is considered relevant to an informed evaluation of the District and the Project. As development of the properties has not commenced, no assurance can be given that it will occur, or that it will occur in a timely manner. The information should not be construed to suggest that the Bonds or the Special Taxes that will be used to pay the Bonds are personal obligations of the Property Owners. The Property Owners do not intend to acquire any substantial assets or engage in any substantial business activities other than those related to the ownership of their respective Developments. However, the general partners may engage in the acquisition, development, ownership and management of similar types of projects. The Property Owners will not be personally liable for payments of the Special Taxes to be applied to pay the principal of and interest on the Bonds. Furthermore,except to the extent expressly set forth herein, no representation is made that the Property Owners will have substantial funds available for the Development. Accordingly, the Property Owners' financial statements are not included in this Official Statement. Property Ownership According to the preliminary title reports, there are seven Property Owners of the land in the District. The current ownership is shown below: 1. Central Park #8, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 2. Central Park #12, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 3. Central Park #15,A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 4. Southwest Diversified, A California General Partnership, William D. Foote, President, 18400 Von Karman,Suite 400,Irvine,CA 92715. 5. Emil Walter Plegel and Ruby Lucille Plegel, Trustees, 7071 Thomas Street, Buena Park, CA 90621. 6. Audrey DeNubila Panabaker,Virginia May Denubila, 11728 Chaparal Street, Los Angeles, CA 90049. 7. William Landis, 1901 Avenue of the Stars,Suite 1060,Los Angeles,CA 90067. The Developer To Be Provided 33 Description of the Development To Come The Appraised Value The table entitled"Assessment Roll Data"includes the Assessor's 1988/89"full cash value" (land and improvements), as of the date of lay conveyance and ownership of parcels as shown on the Assessment Roll. Beginning with the 1981/82 fiscal year, property in California is assessed at 100% of"full cash value". Article XIIIA of the California Constitution defines such "full cash value" as the appraised value of of March 1, 1975,plus adjustments not to exceed 2%per year to reflect inflation and requires reassessment of"full cash value" upon change of ownership or new construction. Accordingly, the assessed values in the table reflect only 1975 values as increased by 2%per year unless the parcel has changed ownership or has had new construction thereon, in which case the assessment shown will more closely approximate current market value. AssessoiJ9-PareelNo. Full Gash«Siic_ As of He 'nn nn 4 n, n no OW89 HO inn nn nn r682 OWS9 110206 04 56,870 _ 1 neon e 110 2 rZen i 0/89 , fie 260 c 78 OW89 r 692 OWN lie ciin ni 92,491 82P7 r 0 Assessor's Parcel No. Full Cash Value Sales Price As of 110-186-15 $ $ 25,000 09/89 1-3 1-01 1,72 20 05/88 1-3 1-02 833,000 02799 591-391-04 69.619 02/89 110-200-04 3,000,000 10/89 110-200-05 3,000,000 10/89 110-200-10 19,256 10/89 110-200-11 41,131 10/89 110-200-16 6, 00,000 08799 110- 00-23 3,000,000 10 110-210-01 92,491 02/77 110-210-02 300,000 10 TUTAL $25,206,947 The ratio of the Assessor's full cash value to the proposed principal amount of Bonds is 10.61 to 1. 34 BOUNDARY MAP To Come 35 CONCLUDING INFORMATION Underwriting The Bonds were purchased through negotiation by Chilton & O'Connor, Inc. (the "Underwriter"). The Underwriter agreed to purchase the Bonds at a discount from the initial public offering price equal to$ . The initial public offering prices set forth on the cover page may be changed by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers and others at lower than the public offering prices set forth on the cover page hereof. Legal Opinion The legal opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, approving the validity of the Bonds will be made available to purchasers at the time of original delivery. A copy of the legal opinion will be printed on the back of each definitive bond. Fees payable to Bond Counsel are contingent upon the sale and delivery of the Bonds. Tax Exemption The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements which must be met subsequent to the issuance of the Bonds for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. These requirements include, but are not limited to, restrictions on the use of bond proceeds and provisions which prescribe yield and other limits within which the proceeds of the Bonds are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the United States of America. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Pursuant to the Indenture,the Authority has covenanted to comply with the requirements of the Code and to cause the payment to the United States Treasury of any and all amounts required to be rebated under the Code with respect to the outstanding bonds of the Agency being refunded with proceeds of the Bonds. In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject to the qualifications set forth below, under existing statutes, regulations, rulings and court decisions, assuming compliance by the Authority with the aforementioned covenants,interest on the Bonds is excluded from gross income for purposes of federal income taxation. Bond Counsel is further of the opinion that interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax provisions of the Code. However,interest on the Bonds received by corporations will be included in corporate adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. Although Bond Counsel has rendered an opinion that the interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient's particular tax status or other items of income or deduction and Bond Counsel expresses no opinion regarding any such consequences. Additionally,Bond Counsel has not undertaken to determine(or to inform any person) whether any actions taken (or not taken)or events occurring after the date of delivery of the Bonds may affect the tax status of the Bonds. 36 Bond Counsel is further of the opinion that under existing statutes, regulations,rulings and court decisions, interest on the Bonds is exempt from personal income taxation imposed by the State of California. No Litigation At the time of delivery of and payment for the Bonds, the City Attorney will deliver its opinion that to the best of its knowledge there is no action, suit,proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency against the City or the District affecting their existence or the titles of their respective officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Taxes to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds,the Resolution of Issuance, the Fiscal Agent Agreement,or any other applicable agreements or any action of the City or the District contemplated by any of said documents,or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or the District or their authority with respect to the Bonds or any action of the City or the District contemplated by any of said documents. The Financing Consultant The material contained in this Official Statement was prepared by Rod Gunn Associates,Inc.,Seal Beach,California,an independent financial consulting firm,which advised the City as to the financial structure and certain other financial matters relating to the Bonds. Fees paid to Rod Gunn Associates, Inc.are contingent upon the sale and delivery of the Bonds. The information set forth herein has been obtained by Rod Gunn Associates, Inc. from sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness,nor has it been independently verified. No Rating The City has not made and does not contemplate making application to any rating agency for the assignment of a rating to the Bonds. No General Obligation of the City The Bonds are not general obligations of the City but are limited obligations of the District payable solely from the proceeds of the Special Taxes and proceeds of the Bonds, including capitalized interest and amounts deposited in the Reserve Fund and investment income thereon, and the proceeds,if any,from the sale of property in the event of a foreclosure. See"SOURCE OF PAYMENT FOR THE BONDS-Covenant for Superior Court Foreclosure". Any tax for the payment of the Bonds will be limited to the Special Taxes to be collected within the jurisdiction of the District. 37 References The preceding summaries of the Resolution of Issuance, the Fiscal Agent Agreement, other applicable legislation, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Execution The execution and delivery of this Official Statement by the City Administrator has been duly authorized by the City Council of the City on behalf of the District. CITY OF HUNTINGTON BEACH By:/s/ City Administrator 38 i APPENDIX A DEFINITIONS OF CERTAIN TERMS "Acquisition Agreement" means the Acquisition Agreement, dated as of July 1, 1990, between the City and "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq.of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent(including any fees or expenses of its counsel),the expenses of the City in carrying out its duties under the Fiscal Agent Agreement (including, but not limited to, the levying and collection of the Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto,and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties under the Fiscal Agent Agreement and,in the case of the City,in any way related to the administration of the District. "Administrative Expense Fund" means the fund by that name established by the Fiscal Agent Agreement. "Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled,and(ii)the principal amount of the Outstanding Bonds due in such Bond Year. "Auditor" means the Auditor-Controller of the County of Orange. "Authorized Officer" means the City Administrator, the City Finance Director, the City Clerk, the Director of Public Works of the City or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in the Fiscal Agent Agreement as required to be undertaken by an Authorized Officer. "Bond Counsel" means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund" means the fund by that name established by the Fiscal Agent Agreement. A-1 "Bond Year" means the one-year period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "Bonds" means the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds at any time Outstanding under the Fiscal Agent Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "City" means the City of Huntington Beach,California,and any successor thereto. "Closing Date" means the date upon which there is a physical delivery of the Bonds in exchange for the amount representing he purchase price of the Bonds by the Original Purchaser. "Code" means the Internal Revenue Code of 1986,as amended. "Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization,sale and issuance of the Bonds, which items of expense shall include,but not be limited to,printing costs,costs of reproducing and binding documents,closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee,expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond counsel, and counsel to the financial consultant, financial consultant's fees, charges for execution, transportation and safekeeping of the Bonds and other costs,charges and fees in connection with the foregoing. "Cost of Issuance Fund" means the fund by that name established by the Fiscal Agent Agreement. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which is scheduled to be retired before the beginning of such period. "District" means Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) formed pursuant to the Resolution of Formation. A-2 "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: (i) Direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations,the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America,including,without limitation,such of the foregoing which are commonly referred to as"stripped"obligations and coupons;or (ii) Any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii) certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, (v)project notes issued by the United States Department of Housing and Urban Development, and (vi) public housing notes and bonds guaranteed by the United States of America. "Financial Consultant" means Rod Gunn Associates, Inc., or such other independent financial consulting firm appointed by the District to advise the District as to financial matters relating to the Bonds. "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement, its successors and assigns,and any other corporation or association which may at any time be substituted in its place as provided in the Fiscal Agent Agreement. "Fiscal Agent Agreement" means the Agreement by that name approved by the Resolution of Issuance. "Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year,both dates inclusive. "Gross Proceeds" means the sum of the following amounts: (i) original proceeds, namely, net amounts received by or for the City or the District as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds, namely, amounts received at any time by or for the City or the District, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause(i) above) or investment proceeds(as referenced in this clause(ii)) in Nonpurpose Investments, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds (determined in accordance with applicable Regulations)of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, namely, amounts, other than original.proceeds, investment proceeds (as referenced in clause (ii) above) of the Bonds, which are held in the Bond Fund and any A-3 other fund to the extent that the City reasonably expects to use such other fund to pay the Debt Service; (iv) amounts in the Reserve Fund and in any other fund established as a reasonably required reserve for the payment of Debt Service; (v) Investment Property pledged as security for payment of Debt service; (vi) Special Taxes and amounts, other than as specified in this definition, used to pay Debt Service;and (vii) amounts received as a result of investing amounts described in this definition. "Improvement Fund" means the fund by that name created by and held by the Fiscal Agent pursuant the Fiscal Agent Agreement. "Information Services" means Financial Information, Inc.'s"Daily Called Bond Service," 30 Montgomery Street, loth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services'"Called Bond Service,"55 Broad Street,28th Floor,New York, New York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, New York, New York 10007,Attention: Municipal News Reports; Standard & Poor's Corporation"Called Bond Record," 25 Broadway,Third Floor, New York,New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Interest Payment Dates" means Mare tAuril 1 and SeptenrberOctober 1 of each year, commencing Mare tApril 1, 1991. "Investment Agreement" means one or more agreements with respect to the investment of the proceeds of the Bonds recommended by the Financial Consultant to be entered into between the District and/or the Fiscal Agent and an entity or entities whose long-term debt (or claims-paying ability) is rated in either of the two highest(excluding any modifier) categories by Standard& Poor's Corporation or Moody's Investors Service,Inc. "Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by the Fiscal Agent Agreement. "Investment Property" means any security(as said term is defined in Section 165(g)(2)(A)or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations (other than specified private activity bonds as defined in Section 57(e)(5)(6) of the Code) the interest on which is excluded from gross income under Section 103 of the Code for federal income tax purposes. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. A-4 "Nonpurpose Investment" means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired in order to carry out the governmental purpose of the Bonds. "Original Purchaser" means the first purchaser of the Bonds from the City. "Officer's Certificate" means a written certificate of the City signed by an Authorized Officer of the City. "Ordinance" means any ordinance of the City levying the Special Taxes. "Outstanding", when used as of any particular time with reference to Bonds, means(subject to the provisions of the Fiscal Agent Agreement)all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement;and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. "Permitted Investments" means (i) Federal Securities; (ii) obligations of states or of any political subdivision thereof, provided that the payment of principal thereof and interest thereon is fully secured by obligations described in(i)above; (iii) any of the following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations or other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development, with a member bank or banks of the Federal Reserve System; (iv) interest-bearing demand or time deposits (including certificates of deposit) in federal or State chartered savings and loan associations or in a federal or State banks (including the Fiscal A-5 I Agent), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in a Rating Category (as defined in the Fiscal Agent Agreement), and(b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in a Rating Category; (v) written repurchase agreements with any bank, savings institution or trust company (other than the Fiscal Agent) which is insured by the Federal Deposit Insurance Corporation,or with any broker-dealer with retail customers which falls under Securities Investors Protection Corporation protection, provided that such repurchase agreements are fully secured by Federal Securities or obligations of any agency of instrumentality of the United States of America and provided further that (a)such collateral is held by the Fiscal Agent or any agent acting solely for the Fiscal Agent during the term of such repurchase agreement,(b) such collateral is not subject to liens or claims of third parties, (c) such collateral has a market value (determined at least once every 14 days) at least equal to the amount invested in the repurchase agreement, (d) the Fiscal Agent has a perfected first security interest in the collateral, (e) the agreement shall be for a term not longer than 270 days and (f) the failure to maintain such collateral at the level required in (c) above will require the Fiscal Agent to liquidate the collateral; (vi) taxable money market fund portfolios restricted to obligations with maturities on one year or less issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America and repurchase agreements collateralized by such obligations; (vii) commercial paper having original maturities of not more than 365 days and rated in a Rating Category; (viii) bankers acceptances rated in a Rating Category, endorsed and guaranteed by banks described in clause(v)of this definition;and (ix) obligations the interest on which is excluded from gross income for purposes of federal income taxation under Section 103 of the Code and which are rated in a Rating Category. "Principal Office" means the principal corporate trust office of the Fiscal Agent at or such other or additional offices as may be designated by the Fiscal Agent. "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use by a nongovernmental unit as a member of the general public. "Proceeds", when used with reference to the Bonds, means the face amount of the Bonds,plus accrued interest and premium,if any,less original issue discount and less proceeds from the sale of the Bonds deposited in the Reserve Fund. "Project" means the facilities more particularly described as such in the"Report"attached as Exhibit A to the Resolution of Formation. A-6 "Purchase Price", for the purpose of computation of the Yield of the Bonds, has the same meaning as the term"issue price"in Sections 1273(b) and 1274 of the Code,and,in general,means the initial offering price of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers). at which price a substantial amount of the Bonds are sold or if the Bonds are privately placed,the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Purchase Price", for the purpose of computation of the Yield of Nonpurpose Investments, means the fair market value of the Nonpurpose Investments on the date of use of Gross Proceeds of the Bonds for acquisition thereof,or if later, on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. "Rating Category" means one of the two highest rating categories then in effect under the rating systems of Moody's Investors Service or Standard and Poor's Corporation, without regard to plus or minus sign or numerical or other qualifying designation. "Record Date" means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date. "Regulations" means temporary and permanent regulations promulgated under the Code. "Reserve Fund" means the fund by that name established pursuant to the Fiscal Agent Agreement. "Reserve Requirement" means an amount equal to$ "Resolution" means Resolution No. , adopted by the City Council of the City on June +825, 1990. "Resolution of Formation" means Resolution No. adopted by the City Council of the City on June 4825, 1990. "Resolution of Intention" means Resolution No. ,adopted by the City Council on May 7, 1990. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax - (516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax - (312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex - (215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. A-7 J • "Services" means the services more particularly described as such in the"Report"attached as Exhibit A to the Resolution of Formation. "Services Fund" means the fund by that name established pursuant to the Fiscal Agent Agreement. "Special Taxes" means the special taxes levied within the District pursuant to the Act, the Ordinance and Fiscal Agent Agreement. "Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest and penalties thereon. "Special Tax Fund" means the fund by that name established by the Fiscal Agent Agreement. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to the Fiscal Agent Agreement,but only if and to the extent that such agreement is specifically authorized by the Fiscal Agent Agreement. "Treasurer" means the Finance Director of the City. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Investments which require payments in a form not characterized as principal and interest)on a Nonpurpose Investment or on the Bonds, produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds, all computed as prescribed in the applicable Regulations. A-8 Prepared by: r q Rod Gunn Associates, Inc. As of 07/16/90 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) PROJECT FINANCING TEAM City of Huntington Beach Bond Counsel Robert J. Franz, Deputy City Administrator Paul J.Thimmig, Esq. Louis F. Sandoval,Director of Public Works ,Closing Agent Robert E.Eichblatt,City Engineer Jones Hall Hill& White Dan T. Villella,Director of Finance Four Embarcadero Center,Suite 1950 Connie Brockway,City Clerk San Francisco,CA 94111 Arthur J. Folger, Deputy City Attorney (415) 391-5780 2000 Main Street (415) 391-5784(FAX) Huntington Beach,CA 92648 (714) 536-5236(Franz) (714) 536-4182(Franz-FAX) (714) 536-5432(Sandoval) Developer (714) 536-6473(Sandoval-FAX) David Dahl (714) 536-5431 (Eichblatt) Ron McDevitt (714) 536-6473(Eichblatt-FAX) The Dahl Company (714) 536-5225(Villella) 505 Park Avenue (714) 536-4182(Villella-FAX) Balboa Island,CA 92662 (714) 536-5404(Brockway)- (714) 673-0127 (714) 536-4693(Brockway-FAX) (714) 723-0269(FAX) (714) 536-5555(Folger) (714) 536-4693(Folger-FAX) Financing Consultant Property Owners Rod Gunn,Principal Central Park#8,A California Limited Partnership Rod Gunn Associates,Inc. David D. Dahl, General Partner 3010 Old Ranch Parkway,Suite 330 505 Park Avenue Seal Beach,CA 90740 Balboa Island,CA 92662 (213)598-7677 Central Park#12, A California Limited Partnership (213)431-5446(FAX) David D. Dahl,General Partner 505 Park Avenue Balboa Island,CA 92662 Fiscal Agent Central Park#15, A California Limited Partnership Peter C.Gerrer David D. Dahl,General Partner Bank of America NT&SA 505 Park Avenue 555 S. Flower Street,5th Floor Balboa Island,CA 92662 Los Angeles,CA 90071 Southwest Diversified,A California General Partnership (213) 228-4146 William D. Foote, Managing Partner (213) (FAX) 19200 Von Karman,Suite 400 Irvine,CA 92715 Emil Walter Plegel and Ruby Lucille Plegel,Trustees Underwriter 7071 Thomas Street Tony Wetherbee Buena Park,CA 90621 Ken Caresio Audrey DeNubila Panabaker,Virginia May Denubila Chilton&O'Connor,Inc. 11728 Chaparal Street 1901 Avenue of the Stars,Suite 300 Los Angeles,CA 90049 Los Angeles,CA 90067 William Landis (213) 203-0966 1901 Avenue of the Stars,Suite 1060 (213) 201-5091 (FAX) Los Angeles,CA 90067. DRAFT July 16, 1990 DRAFT NF_A'ISSUE NOT RATED In the opinion of Jones Hall Hill& White,A Professional Law Corporation,San Francisco,California,Bond Counsel, subject, however to certain qualifications described herein,under existing law,the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes, although it is included in certain income and earnings in_computing the alternative minimum tax imposed on corporations. In the further opinion of Bond Counsel,such interest is exempt from California personal income taxes. See"TAX EXEMPTION"herein. ORANGE COUNTY STATE OF CALIFORNIA $2,3f54009000* CITY OF HUNTT19VxTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS ' Date: 4vl7Ampst 1,1990 Due:September 1,as shown below The 1990 Special Tax Bonds (the "Bonds") are being issued as fully registered Bonds and when delivered will be registered in the name of The Depository Trust Company,New York,New York("DTC"). DTC will act as securities depository for the Bonds. Individual purchasers of Bonds will not receive certificates representing their Bonds purchased. Individual purchase of Bonds will be made in book entry form only in the principal amount in the denemination f$5,000 each or any t integral multiple thereof. Interest is payable October 1 and April 1 of each year commencing April 1,1991 by check or draft of Bank of America National Trust and Savings Association, San Francisco, California, as Fiscal Agent(the "Fiscal Agent"), mailed to the registered owners of record or by wire transfer upon the instructions of any owner of$1,000,000 or more in aggregate principal amount of Bonds. Principal of the Bonds and any premium upon redemption will be payable at the corporate trust office of the Fiscal Agent in San Francisco,California. The Bonds maturing October 1,2020 are subject to mandatory sinking payment redemption,in part by lot,commencing on October I,2004 and on each October 1 thereafter at a redemption price equal to the principal amount thereof,plus accrued i interest to the date of redemption,without premium. The Bonds maturing on or after October 1,1998 are subject to optional redemption prior to maturity,in whole or in part, in inverse order of maturity and by lot within a maturity on October 1,1997 and on any interest payment date thereafter at a redemption price equal to the principal amount thereof,plus accrued interest to the date of redemption, plus a premium, as described herein. The Bonds are being issued to finance the acquisition of certain public improvements with appurtenant work and incidental expenses ( the "Facilities") within City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)(the"District"). The Bonds are to be issued pursuant to the Mello-Roos Community Facilities Act of 1982,as amended(Sections 53311 et seq.of the Government Code of the State of California)(the"Act"),and Resolution No.6174 of the City of Huntington Beach, California(the"City-)adopted on June 25, 1990(the "Resolution of Issuance"). The Bonds are secured under a Fiscal Agent Agreement authorized by the Resolution of Issuance(the"Fiscal Agent Agreement")dated as of June 1,1990,between the City and the Fiscal Agent and are payable from the proceeds of a Special Tax(as defined herein)to be levied on property within the District and certain funds held pursuant to the Fiscal Agent Agreement. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER(EXCEPT TO THE LIMITED EXTENT SET FORTH HEREIN) OF THE CITY, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY,BUT ARE SPECIAL OBLIGATIONS PAYABLE SOLELY FROM THE SPECIAL TAX AND FUNDS HELD PURSUANT TO THE FISCAL AGENT AGREEMENT AUTHORIZED BY THE RESOLUTION OF ISSUANCE. SEE "BONDOWNERS'RISKS"HEREIN FOR A DISCUSSION OF SPECIAL RISK FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS. MATURITY SCHEDULE $436450,000A Serial Bonds Maturity Date Principal Interest Reoffering Maturity Date Principal Interest Reoffering (October 1) Amounts Rate Yield (October 1) Amounts Rate Yield 1992 S1-A925,000 1998 $3fl40,000 1993 M000 1999 T6,000 1994 ?530,000 2000 44945000 1995 76,000 2001 0000 1996 30,000 2002 50,000 1997 35,000 2003 55,000 $1,945950,000" % Term Bonds due October 1,2020 (Price _90) Plus Accrued Interest t The Bonds are offered when,as and if issued and delivered to the Underwriter,subject to the approval as to their legality of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other 1 conditions. It is anticipated that the Bonds in definitive form will be available for delivery in San Francisco, California on or aboutAu ust9 1990. The date of this Official Statement is Jul 1990. r r1411 rprim R, n1rr1wMr1P two DRAFT July 16, 1990 DRAFT i i NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE CITY, THE UNDERWRITER OR THE FINANCING CONSULTANT TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OR SALE OF THE BONDS DESCRIBED HEREIN, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CITY,THE UNDERWRITER OR THE FINANCING CONSULTANT. 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 ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER,SOLICITATION OR SALE. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM SOURCES WHICH ARE BELIEVED TO BE RELIABLE AND IS IN A FORM DEEMED FINAL AS OF ITS DATE, BY THE CITY FOR THE PURPOSE OF RULE 15c2-12 UNDER THE SECURITIES ACT OF 1934, AS AMENDED. THE INFORMATION HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED AND IS NOT GUARANTEED AS TO ACCURACY. 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 INFORMATION OR OPINIONS SET FORTH HEREIN AFTER THE DATE OF THIS OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE BONDS,THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATE ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. ii CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CITY COUNCIL Tom Mays,Mayor Peter Green,Mayor Pro Tem Jim Silva,Councilmember Wes Bannister,Councilmember Grace Winchill,Councilmember Don MacAllister,Councilmember CITY STAFF Michael T. Uberuaga,City Administrator Gail Hutton,City Attorney kDon Watson,City Treasurer Robert J. Franz,Deputy City Administrator Louis F.Sandoval,Director of Public Works Dan T.Villella,Director of Finance Connie Brockway,City Clerk ` PROFESSIONAL SERVICES Bond Counsel Jones Hall Hill&White A Professional Law Corporation San Francisco,California Financing Consultant Rod Gunn Associates, Inc. Seal Beach,California Fiscal Agent Bank of America National Trust and Savings Association San Francisco,California Underwriter Chilton&O'Connor,Inc. Los Angeles,California • iii TABLE OF CONTENTS INTRODUCTORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . DISPOSITION OF BOND PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . 5 THE BO N D S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Authority For Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Description of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Book-Entry-Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 6 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . 7 Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 9 Transfer and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Mutilated, Lost,Destroyed or Stolen Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 11 Scheduled Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SOURCES OF PAYMENT FOR THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SpecialTaxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Covenant for Superior Court Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ReserveFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Capitalized Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 BON DOWNERS' RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Concentration of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Land Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 LandValues . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 18 Collection of the Special Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Additional Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Parity Taxes and Special Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Future Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 No Acceleration Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 THE FISCAL AGENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 20 Creation of Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Application of Special Tax Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Description of Other Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment of Funds and Accounts; Disposition of Investment Proceeds . . . . . . . . . . . . . . . . . 24 Covenants of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 26 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Remedies of Bondowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Liability of the City . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 30 The Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 31 iv i i THEDISTRICT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 31 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 31 Facilities Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Proposed Services to be Financed by the District . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 32 Incidential Expenses to be Financed by the District . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . 32 BoundaryMap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Facilities Cost Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Rate and Method of Apportionment of the Special Tax . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . 36 THE DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 PropertyOwnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 39 The Developers and the Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 The Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 CONCLUDING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 43 LegalOpinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... . . . . . . . . . . . . . . . . . . . . 43 ` Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. .. . . . . . . . . . . . . . . . . . . . 43 NoLitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . 44 The Financing Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 NoRating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . 44 No General Obligation of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 45 Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . . . . . . . . . . 45 DEFINITIONS OF CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . Appendix A SUPPLEMENTAL INFORMATION ON THE CITY OF HUNTINGTON BEACH Appendix B , i i v IA ..:'Y:'ri.rx,•n.q>',a.:.tN•'sr'Y,?l.:J,;.::a ha.<•ke•x.x !(R 7'xMl:'1Tia;<:Y.�a.M;E4X:YJEMS:X:%#tfE91{:%::4tk:{:J:%wY:X!E;Ek:f Y�l'x:f:Y:xkx w;R<;'x;a:hY�acia�: 'A.rt A x1.k,lir?: 'xYa, ..:a'i:�K_¢.kw.klX.R .„XaX.. x;,.Y.Y%t:i:k4,�fi�ww>X:'f:1:+1;!'f''�X.TiY,%GY:w x.x. .�}!a;lf:'.3Y:FA'A�;E....xyY..:,^^AY..E..� ^ •kF.". :? y;t4x. p:Y,�;t:,Es:a:,: x7 x, r.�w ,; 9'krr:,,T»:«xl:„ ,:<. ?,�::nti!.:kTiR:K:Jx .�:.. nh. A"•X,<!$ ": «„i y;�;< '"a'�::.:^ti!t;x;.k!gtiAa...L>.. '��:•k x:.a. ..�:.•.: N.y, s,i�.... �•..:.. ..,,.!: �:�w. x'xYY #:,»x 'xyx;.In r.Faw :♦x.�s•.11ax :A4"`ii:S«k.,,,a'�i:N. yy._.x.x." is<x�` .ij.<?G.w x.�a...«��G"i::$Y:':�i:v �-� �>.' ...k.. .Yk�;:,w :xey:°,. ;:k!f,a.x ,:':r•.f:Y��Fx'FF:ax:.:s:.. r.'wr.' tY:,.,..dk,.'.„K�iw. «�,!„F.,a� «+"sofa .. ''F�f:x: :i:i!Ry:�i>•x x.k,. ..Y,° x•;M:pY.:4!i. rYt.. -b'a::A:kY:onX:!x!;,.'H„Y>. :i�kfiay. ^.1:•,:. :y";qx,':: �A't�sxi'f;F: .<w 3:>::r:, `:v' •s:•, v::F: '`.M,...x, _*x y.x;% ywx:i"a:x.,»x.xx,:>`�F:Ja6 r:l'xXk".:-X:Y<tY.+y4:ex a� :.J•�'AM�1;lxXiN..,_„kY:X.Sa:+tM:1iRGYt%1:%Rk Y,<iSx:/:!';!k%'.a.: :3:3'>:",:•".:; '4:/:KY::: YYkMS;f.t:EiFx. a.RA x>:f'."1•xya:`�:5:1!:a x!'k...A•'MA',. Y ,.w::.;R .r +t`>.'xKr•`.:np..j....:,rS�;!:P's:<:FY.9:,k-r:%:x.k.,xx,wti..u«,:, x.J.Ox.,: x,i;i{�M:�S 'A'f:%%:x=k$:G:EaF:#rfi.x4�r:� £�i�' .';;;ia'#:'k`t�><:::4a:s:.X.x::�la:s;q'; 'Aa::. Yx.w:ila.k.,:c:Ptl F4a:Ex. :S:Y:NA:�a.>.w.(«.I.x.•.Px.•.k6:a._ .t.x. ;4_..k...,.kx.y „t.x,,.x. >kY'Y'.:�+:.•p!gx,i:f.Yr,x.k«x': !:;if�;�AtlYkY:�n►::;:GX.«x«.x.w: x.Y.7.'F�rk:a'.�;.:Ay,Y.}.xfyy�axx rKktl:Y•:vt:kwxfv,.4x;xk xy��u;xgr xr..w..:<.> :;�,tx,x;;:,��.f<„FA'4:x.#'.+E1.: :1 x• .Y.�i:x.Yk�.R:x+Xxq:y:J:+'Ab.F:'GYYx,„r,.nx i•tY?'..1y Yma�kx:«k.x"�E,w x,;a Sfy kEaSq X'Y-_•1 Y ^ICE �k--:?x«i i.�.Yw<x,x,t:n:kY:Lr{:X.`�:g. ,:k r,y>t`'x•k?4Y::• 1'f:}•..%:«kA:.::„'x.O:PS.x:{•:<r.:...Y.:,.�1:'+j;r.A'S,>..<x j:f>jfSA'k�S.�;i kXia:i.KxF:;S.bwz.x.xa.fx.x.x.a.awx.xk,wx,.l.4x x.3.sL f.X.X4 kyr:kY:)k'f. r.Yxs:•..Y�,:< �«x#'#•t:u.;f �i:sx.: Y,tI x r Y•sN. eX;,•:• #.•.: k aw.,x t'k�kx.«..>!�.ff;;:%. ..14�k �k?�:E:<.x,�i�•<�� .:xJ:� ,.iy,;r., y.��Zlt ..k..r. Ea,ix x�..,:A:gx.x:FkJti�i 1,.% ti.d'txrn;wG, !QVf:/:..,;,1`YTS:x:Er::1..: :;r?s;>:(:s:'k A'r:EA::EF.:;i:f.; :Ixfx.x:Y•k!4wk kY.:i kX:X::k.r;a«x,: ":ss ¢ x.f •.fv;;.... 4 ,f'Xx AX,t.k.);,• 'JtX:a�wk}>.:k�rfiK,:, wwk:a:fif:!S:x)xf.d.x «,rP r:r;X:%:kY:X:.d:`�:;fit:' x.^i^Nk'kx.r''k'k{!:q:F'F�k?`a4:kX;aal:.i,k'�S:I:k.•k,i,;•.1.xkY:M:M',F�4tl:a:,,(�z;n,:i ri t sls:r"ixx wx,:kw,:n .:A fC::AS t i C 4 GI►.aq.x <t�4yx.wxy a.k:f�'yEYq_ :.i.4..w,A(.YY:rA!.S.:.F::,):t1:!,'aM:tf&a:..Y'Ft/..!(.x:w,1A''x!kfY.;.,ffxA:>.x::S£:f:,,tY,staEfA:f.a,Y;Sf;::ip•ff::::.Y<EX..xki:.A,l�,Y..:�,k:::;.Jy..:!>!ra:.;,a.y:r:�,k..k':«k;.axaM.:.:A::Y k.f:.j•$.Sl.:aasn:;;•xXc:.A+Xk:Y.iEra.'xw..<Y'.%.M:klo::::�:4�.x4.:x,;lw.:r1,k::x,tt:.:'«Ex�;:k':;:R:,Y:�jC.::,ri!:.fa.s.xk;:;:i a;:..k.f.•.<::Y6Y:.k.F::;.:d.fhk:•,R;..f.rt�.::.Ye�^:YK;;.pxsM,«1.aG tk:kyarxEx%?xx aA.k:Y y4yAtx�x."xXAk:. xRx:f ya:%•::t.�'iS;MY?fG:;k Y�M�;.aE.x:..�k.{A :kd ,n.rx 1d kaky�x:,ks.,!�>:; >Ts�ik'E�1:x:Y:.i,,yy:'t26isra>k�'A' kxl #d:bg k r fk�k:k&k;isA:>irf:r.;::i;A;•s:Eix:i�sfb:kk.kY.:.kXa>A:xxa:x Y.tK: Wbi! x e.�e `'..'K,k,:tt{:Y:«f;:Y:Y,tbtF:%A:;:ezxP x;•.kx.u4:i.+k-4«.x«•,wx.:♦ 3 'kf�, t*. t„3Fb!4^ �! e:%M4.ks:R:R k>A :xrAxi:t'ne FYaA?(a,t4!a.'•.$.,:.ox#a*'::�':xf,`1NaPnj�..:;a,:;^:,t;#:ue:'w'r7ti::�r tj;:,+Ya•f«:N+',".`,�::krx,�!wk;,;<"nt,.x'eN,r�•.;.tq k�.x;,N"„;N.»kx,«!:x:;,N•$v�.�wx;E:rt;.�N�t„'."�r:i«'1kE <.:; 3x��>f.,«.�:<.xkw«w'!t:»x.rr•S.„.:x:Nx e»ke:a:ke•xwa.xtr...x»,ea.,neqa•Fo.�a .'n»xx�s::�„.6:'•>xe xo:Ta,w.x«Xx x�x��xlfn.>s<Kx' J..•:EIN* sm. za w» % u > Ni kNtn ''ac�D.4:.�4.xirz.f�;•x>:t:«>:x,z«x,3::N tlu.t>fn'ii.k`aw.:�,.axi tY „<.;,Yx<":;atr .x:. :l•Ysuk?S ix.:Fk:'S'�^k:YrRSwk:x"M k;,:,'.Y:%.:utx:,t�i.`Me:'1d3::x'ua.,„:E 3t;:xx,:x i`e ia'fi.>.zs E:q:t^:.'•�•:.f,;�.;x�•:Y�Y�w J•:a x.;A�x�:.:�:xxfa4Ye'�wx�r�fxk.:a...:•�:x�.'iR✓:.,h<e„�,a»'�3:xr..w�x:��A.;:G.'A•`u.,.,ei»sx',iGw`e�nwi''..x,x..x»w�♦».«R..xAw,.x:,xR'i.;��«w�X�,xs,»x:.�%xq Sx„�#,tk,:;��A,»�:kc a�wi.;xt�.A,..: .}y Elte;xyt x.t:nN'fi-+"A�ix.k•..%.k.»:�4a:oz.xowx::ox.xxx T�� e,sp .:ek: ,s:f�"•, x. '; ,4,i„, "!' S.4.:. q:fq... k}xi..i �a.:h.' wx x.kex.,... :aN.x.::.x,x•N,xk•.�:#k xM,n��l,:sk.x.`.,:•..x.x•xin :.,�i iC%M«:« :^iE. «:',4.,,EEY•�•�k,. •,r.kO:KNxty. ,t k 0: Cx.%,:t•w:lixJ: x Xy:+�.3t•:x ..>:'k'!Ax:.4#:Ca#:•.w�x,:«w.r.�`z.x•.N.xx:Yx« ",i:;�e;•.�,.^;:K*�+'k �f x «x,t•,x.x N .Y'rkk.R�iJs:.;,�s aG� x�iR:tixi'�. :ewxnap:ex i«x,se�x�` ..�.k.,.,Ae� '�, E�P� x«ex. x. xY.#x�i:�X,«x.x.wix.x�:„'k .:.xf:��,Y:k# E :.<'.q.'•`rwa xSax:xsi.'":v��ij.x.i:>:<v•'Y<eo'F/.�.,�w;�i,:�e'e°s"v.x:�nieY.'e:k:v�>'"i.xx•w�.:<:�T:'S.f:�.. >lGae r,a t7x3 N. :::>"i.�t:b"��e;{:n;k k'E4 k.'w 111pfwM'M'>xk.t{n xu>s%xO yx.ka'N, ��<JO4S«.L� 371/,:,�x`'!qf>,:,�A.�yN4ry,�M%:•kN>:"':il:,`a;':w4'M# wR: U i:i3kkY4Ee: xy.„" xMt3A k;� 4x��iE:F,K '�:xo:..x�.:..x.�kx.x♦:�x.x;f�: "sae x'x.x.�: �.Esx�.:Ex #+sk. . eUi1B�� "q :l 4--ge-x 'A AIS.MI 7f4�: I.-- , '.r«�, .t�?��fix K"e s � x'> "arY«N: x�. A 't x k%�t. ."+Eat y x fit ' f�layy 'fit }} 1� ,a .,e Nxy>�ft x - «'..T? Y $ � '�-;l`"xXt#kN ti..G ` Ali:1rt>+43 Y `Tr+ i 'e"s3iMa. 'Sx Y �`"'n. xi`. 17s� k 'f kxNYf,YG-,ty,'�x'�t#;Kxx '•xx ,x'f �'M.«AK%j."k1`».'�,Ax,. eeES.♦x�aae �' t`1 s�iTs'. YN ff,��yxM..«:awx0 �>q NN x ♦N, qq�' S. T;Y}a•M < ,! 4_N" M S%,1.0!x nfMOk :J,- fit,,t(�T yt,,k�A11{�'k.>1�M♦> Y'kf4 �)t `�tsx 6 M k k�,Y,a x%�kn,� ��,%x^iEi:t.. �:,xl: .0 VY % Ohl a Ff a # s '' „. :}}a }}.� q. �'�:, .kw# :E ajy�jjj��•N� y�♦x�x � � ,.xx� .x ..x � k ,�"Y_x N . %"�•I>�1;�{:X'5..7:a♦:an yu`x^%4..w..t`',iK♦`�X L �`'x'f�`� Y,.a4 xh` �� 4x,pA�00. x,,e'{$,1(G�a x �4 k�,t«x.x0>,«tJ!"�SwSNf xM#n♦>l: ^xx,a4�Ox•w -N:#'.,1,�l�y ,>,%y.illtR,f iE�xt x >y,X! 4rry. : NN MX Yxh� ii >•a Yif 12>t�I »M A#3� a^' # n% # F f r xxaa�'xfXX,,�'�.ia*w- x�e.x3g�fsax,,�;iae Y,{ �e�• ��ptp#4:�e �G#"":♦ ;Ex 0x0xee,Pf:x 1,kY�♦y7�>y{� .�<yf«� xf '%A' 0{Oiai' k14%Ma:iRx:. �t\ l I�k%](,ix(x u�O,x4,' �E x�. . ' xN N kMO.x xx M a:a l a. '} :x'n : IJodMON a }»6%�A fY. x Y � wo xl � IFIR111soyf£ ^ `, x r �a ulejuno BE guy dues uilsnl r SAW R uapiea la�suiw;se/� ebuejo L wlayeuy { 4 ,) . 14unoo a8uejp i r ..i j r. 11unOO S9/9Qub Safi .1 dVlAl r]VNOIDHH OFFICIAL STATEMENT $2,3%400,000,1 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLD ENWESVELLIS AREA) 1990 SPECIAL TAX BONDS INTRODUCTORY STATEMENT This Official Statement is provided to furnish information in connection with the issuance by the f City of Huntington Beach (the "City") for and on behalf of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), State of .._,ir______ (the "District") of $2,3%400,000,L aggregate principal amount of the District's 1990 Special Tax Bonds(the"Bonds"). 1 The Mello-Roos Community Facilities Act of 1982, as amended, constituting Sections 53311, et seq. of the California Government Code (the "Act"), was enacted by the California Legislature to provide an alternative method of financing certain public facilities, improvements and services. The Act authorizes local governmental entities to establish community facilities districts as legally constituted governmental entities within defined boundaries, with the legislative body of the local applicable governmental entity acting on behalf of the District. Subject to approval by a two-thirds vote of the votes cast by qualified electors within the district and compliance with the provisions of the Act, the legislative body may issue bonds for the community facilities district established by it and may levy and collect a special tax within such district to repay such bonds. Pursuant to the Act, the City Council (the "City Council")of the City,acting in its capacity as the ' governing body of the District, adopted Resolution No. 6142 (the "Resolution of Intention") on May 7, 1990 stating its intention to establish the District and to levy special taxes (the "Special Taxes") within the District. On June 25, 1990, after holding a noticed public hearing, the City Council formed the District and, by the adoptien of Resoittbion No. , authorized the holding of a special election pursuant to the Act requesting authorization for the District to incur bonded indebtedness and approval of the levy of Special Taxes to pay the principal of and interest on the bonds issued and the costs of certain services to be provided in the District. On June 25, 1990, at an election held pursuant to the Act, the electors at that time within the boundaries of the District voted in favor of the ballot proposition. The Bonds are being issued pursuant to Resolution No. 6174 of the City adopted on June 25, 1990 (the "Resolution of Issuance"). The Bonds are secured under a fiscal agent agreement dated as of dv+yJune 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association,San Francisco, California,as fiscal agent(the "Fiscal Agent"), and are payable solely from the proceeds of the Special Taxes and certain funds and amounts held under the Fiscal Agent Agreement. The City has covenanted in the Fiscal Agent Agreement to levy in each fiscal year the Special Taxes (see "THE DISTRICT - Rate and Method of Apportionment of the Special Tax" herein) in an amount sufficient to pay annual debt service on the Bonds and administrative expenses of the City including Fiscal Agent fees, plus the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement and to pay certain expenses for city services (see Appendix A - "DEFINITIOtiS OF CERTAIN TERMS")-arwc subject to the limitation on the maximum amount of the Special Taxes that may be leviedwithin the District(see"THE DISTRICT 4 1 a. a change.Preliminary,subject to i i 2 1 d Rate and Method of apportionment of the Special Tax" herein for a description of the Special Tax). The Special Taxes will be collected by the County of Orange (the "County") in the same manner and at the same time as regu+ar-ad valorem property taxes are collected by the Treasurer-Tax Collector of the County. The District has established a maximum amount of Special Taxes which may be levied each fiscal year. The maximum amount of Special Taxes authorized to be leviedwithin the District is expected by the City to be a minimum of +20124% of the annual debt service on the Bonds and T Although the Special Taxes will constitute a lien on real property within the District, it does not constitute a personal indebtedness of the owners of that real property. As of the date hereof there are seven (7) property-owners of property within the District: 1. Central Park #8, A California Limited Partnership, David D. Dahl,General Partner,505 Park Avenue, Balboa Island,CA 92662; 2. Central Park #12, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue, Balboa Island, CA 92662; 3. Central Park #15, A California Limited Partnership, David D. Dahl, General Partner,505 Park Avenue, Balboa Island,CA 92662; 4. Southwest Diversified, A California General Partnership, William D. Foote, President-Managing Partner, 1849200 Von Karman, Suite 400,Irvine,CA 92715; 5. Emil Walter Plegel and Ruby Lucille Plegel,Trustees,7071 Thomas Street, Buena Park, CA 90621; 6. Audrey DeNubila Panabaker, Virginia May Denubila, 11728 Chaparal Street, Los Angeles, CA 90049; and 7. William Landis, 1901 Avenue of the Stars, Suite 1060, Los Angeles,CA. 90067,et al(collectively referred to herein as the"Property Owners"), of the land within the District. The property in the District is anticipated to be subdivided and developed primarily-for single family homes by a-sirtg�etwo developera,The Dahl Company and Southwest Diversified. Upon sale of the single family homes, the homeowners will become responsible for paying the Special Taxes on their homes. There is no assurance that the owners of property within the District will be financially able to pay the Special Taxes or will pay such tax even if financially able to do so. (See "BONDOWNERS'RISKS"-&r "THE DEVELOPMENT-Property-Ownership"THE DEVELOPMENT -The Developer"herein). The City has covenanted in the Fiscal Agent Agreement for the benefit of the owners of the Bonds that the City will cause foreclosure proceedings to be commenced within 150 days of receipt of notification from the County Treasurer-Tax Collector of a delinquency in the payment of any Special Taxes and will cause such foreclosure action to be diligently prosecuted to judgment and sale (see i "SOURCES OF PAYMENT FOR THE BONDS•Covenant for Superior Court Foreclosure"herein). i The Bonds are being sold to provide the District with funds to tanstrnttac uire certain public facilities, to establish a Reserve Fund, to provide for capitalized interest until October 1, 1991, and to pay the expenses of the District in connection with the issuance of the Bonds. The amount of Bond proceeds deposited into the Reserve Fund will equal 8% of the initial aggregate principal amount of the Bonds (the "Reserve Requirement"). Proceeds frorn the Bonds initially deposited in the improvement Fund, ReseLve Fund and B�nd Fund will be invested under investment Agreentet with _(the"Investment Agreements"). The District consists of three noncontiguous areas all within the same general area of the City. The three areas consist of seven separately owned parcels that are in the process of being subdivided and developed by$ etwo developers(see"DISTRICT BOUNDARY MAP"herein). The total land area within the District consists of approximately 36 acres. The City has approved tentative tract maps for the entire area within the District. The tentative tract maps provide for the development of 113 residential lots with single family detached homes. It is anticipated by the Developer that the sales price of homes constructed within the District will range from approximately $680,000 to $825,000 (see"THE DEVELOPMENTS"herein). 3 r x Property within the District has not been independently appraised in connection with the issuance of the Bonds. The 1989/90 Orange County Assessment Rolls lists the "full cash value" of the land in the District at$25,206,947 (see"BONDOWNERS'RISKS-Land Values"herein). This represents a ratio of fair market value as determined by the Orange County Assessor to initial aggregate principal amount of Bonds of 10.E+50 to 1. Proceeds from the Bonds will be used to acquire the-certain public facilities(the"Facilities"). The Facilities proposed to be acquired with the Bonds generally include construction of street improvements including the acquisition of certain right-of-way,certain storm drain, water and sewer improvements, fire station improvements and emergency vehicle traffic interruption devices (see THE DISTRICT-Facilities Description")herein. The brief descriptions and references contained herein to the City, the District, the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, the Acquisition Agreement, the Act, and the property owners within the District and ihe invesitnerri Agi eenteiri do not purport to be comprehensive or definitive and are qualified in their entirety by reference to such documents,and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Fiscal Agent Agreement. Copies of the Fiscal Agent Agreement are available for inspection during the initial offering of the Bonds at the offices of the Underwriter,Chilton& O'Connor,Inc., 1901 Avenue of the Stars,Suite 1400, Los Angeles, CA 90067, (213) 203-0966 and the Financing Consultant, Rod Gunn Associates, Inc.,3010 Old Ranch Parkway,Suite 330, Seal Beach, California 90740, (213)598-7677. Copies of the Fiscal Agent Agreement may be obtained after delivery of the Bonds at the corporate trust office of the Fiscal Agent. 4 DISPOSITION OF BOND PROCEEDS Proceeds from the sale of the Bonds are expected to be used to acquire the Facilities, to establish a Reserve Fund,to provide for approximately one years'capitalized interest on the Bonds and to pay the expenses of the District in connection with the issuance of the Bonds. Under the provisions of the Fiscal Agent Agreement, the Fiscal Agent will receive the proceeds from the sale of the Bonds and will apply them as follows (other than accrued interest which will be deposited in the Bond Fund): Source of Funds Principal Amount of Bonds $2,3%400,000& Application of Funds Improvement Fund $1,826,480726,480* Bond Fund(1) 201,9 i7214,240* Costs of Issuance Fund(2) 115,$99225,280* ' Reserve Fund(3) i99192,000* Initial Purchaser's Discount 4i;Se42,000* Total $2,37-5400,000* (1) This amount, together with accrued interest received on the date of delivery of the Bonds a-nd estimated interest earnings on such arnotint (at a i ate of 8%), are calculated to be sufficient to pay the interest due on the Bonds to and including October 1, 1991. (2) Includes fees of Bond Counsel and the Financing Consultant, initial fees of the Fiscal Agent, costs of printing the Bonds andOfficial Statement, administrative fees of the City reimbursement of certain costs of the property owners and other costs of issuance. (3) An amount equal to 8%of the initial aggregate principal amount of the Bonds. THE BONDS Authority For Issuance The District was established and bonded indebtedness was authorized pursuant to provisions of the Act. In accordance with such provisions,qualified electors within the District were entitled to cast one vote for each acre, or portion of an acre, of land they owned within the District. The property owners within the District at the time of the election cast 36 votes at the election held on June 25, 1990 in favor of the levy of the Special Taxes and the issuance of the Bonds. The Bonds will be issued pursuant to the Act and Resolution No. 6174. adopted on June 25, 1990 (the "Resolution of Issuance"). The Bonds are secured under an fiscal agent agreement dated as of dtrlyJune 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association,San Francisco,California,as the Fiscal Agent. Preliminary,subject to change. �i { 1 l 5 4 Description of the Bonds The Bonds will be issued only as fully registered Bonds without coupons, in the denomination of $5,000 each or any integral multiple thereof, will be dated,and will mature in the years,and will bear interest at the rates shown on the cover page hereof. Interest with respect to the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. The principal of and premium, if any, on the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in San Francisco, California, upon presentation and surrender of the Bonds. Payment of interest on the Bonds will be made to the owner thereof by check or draft of the Fiscal Agent, mailed on the Interest Payment Date to the owner at his address as it appears on the bond register to be kept by the Fiscal Agent at its principal corporate trust office in San Francisco,California,as of the close of business on the fifteenth day of the month preceding any Interest Payment Date(the"Record Date"),or at such other address as is furnished to the Fiscal Agent in writing by such owner at least fifteen (15) Business Days prior to such Interest Payment Date, or by wire transfer made on such Interest Payment Date upon instructions of any owner of$1,000,000 or more in aggregate principal amount of Bonds (see "Book- Entrv-Only Svstem"below). Book-Entry-Only System DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity in the amounts shown on the cover page hereof will be registered in the name of Cede& Co., as nominee for DTC. DTC is a limited purpose trust company organized under the laws of the State of New York, 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,as amended. DTC was created to hold securities of its participants (the "DTC Participants") and to facilitate the clearance and settlement of securities transactions among DTC Participants in such securities through electronic book entry charges in the accounts of the DTC Participants, thereby eliminating the need of physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant,either directly or indirectly(the"Indirect Participants"). The DTC Participants shall receive a credit balance in the records of DTC. The ownership interest of each actual purchaser of each Bond(the"Beneficial Owner") will be recorded through the records of the DTC Participant. Beneficial Owners are expected to receive a written confirmation of their purchase providing details of the Bond acquired. Transfers of ownership interests in the Bond will be accomplished by book entries made by DTC and, in turn,by the DTC Participants who act on behalf of the Beneficial Owners. The Beneficial Owners will not receive certificates representing their ownership interest in the Bonds,except as specifically provided in the Fiscal Agent Agreement. So long as Cede&Co. is the registered owner of the Bonds,as nominee of DTC,references herein to the Owners or registered owners of the Bonds shall mean Cede&Co. and shall not mean the Beneficial Owners of the Bonds. DTC may determine to discontinue providing its service with respect to the Bonds at any time by giving notice to the Citv and the Fiscal Agent and discharging its responsibilities with respect thereto under applicable law. Cinder such circumstances, Bond certificates are required to be delivered as described in the Agreement. The Beneficial Owners, upon registration of certificates held in the Beneficial Owner's name, will become the registered owner of the Bonds. 6 c, The Agency may determine that continuation of the system of book-entry transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners. In such event, Bond certificates will be delivered as described in the Fiscal Agent Agreement. The City and the Fiscal Agent will recognize DTC or its nominee as the sole owner for all purposes, including notices and voting: Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. Principal, sinking fund, interest pavments and premium, if any, with respect to the Bonds will be made to DTC or its nominee, Cede & Co., as registered owner of the Bonds. Upon receipt of moneys, DTC's current practice is to immediately credit the accounts of the DTC Participants in accordance with their respective holdings shown on the records of DTC. Pavments by DTC Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in"street name", and will be the responsibility of such DTC Participant or Indirect Participant and not of DTC, the Fiscal Agent, the District or the Citv, subiect to anv statutory and regulatory requirements as may be in effect from time to time. The Citv and the Fiscal Agent cannot and do not give anv assurance that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners G) payments of interest, principal or premium, with respect to the Bonds, GO certificates representing an ownership interest in or other confirmation of ownership interests in the Bonds, or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee,as the registered owner of the Bonds, or that they will do so on a timelv basis or that DTC, DTC Participants or Indirect Participants will service or act in the manner described in this Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. Neither the City nor the Fiscal Agent will have anv responsibility or obligations to the DTC Participants, the Indirect Participants or the Beneficial Owners with respect to G) the accuracy of anv records maintained by DTC or any DTC Participants or anv Indirect Participants; GO the payment by DTC or anv DTC Participants or anv Indirect Participants of any amount due to any Beneficial Owner in respect of the principal amount, redemption price or interest with respect to the Bonds; (iii) the delivery by DTC or any DTC Participants or anv Indirect Participants of anv notice to any Beneficial Owner which is required or permitted under the terms of the Fiscal Agent Agreement to be given to Bondowners (as defined in the Fiscal Agent Agreement); (iv) the selection of the Beneficial Owners to receive payment in the event of anv partial redemption of the Bonds;or(v)any consent given or other action taken by DTC as the Bondowner. Optional Redemption The Bonds maturing on or before October 1, 1997, are not subject to call and redemption prior to maturity. The Bonds maturing on or after October 1, 1998, may be called before maturity and redeemed at the option of the City, from any source of funds, on October 1, 1997, or on any interest payment date thereafter as a whole or in part, in inverse order of maturity and as the Fiscal Agent shall seleeiby lot within any one maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Price 7 October 1, 1997 or April 1,1998 102.5% October 1, 1998 or April 1,1999 102.0% October 1, 1999 or April 1,2000 101.5% October 1,2000 or April 1,2001 101.0% October 1,2001 or April 1,2002 100.5% October 1,2002 and thereafter 100.0% The City is required to give the Fiscal Agent written notice of its intention to optionally redeem Bonds not less than sixty(60)days prior to the applicable redemption date. Mandatory Redemption The Bonds maturing on October 1, 2020, are subject to mandatory sinking payment redemption in part on October 1, 2004, and on each October 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption without premium as follows: 8 Redemption Date iYfandaterySinking (October 1) PaymentK-- 2004 $ 5360,000 2005 69G6,000 2006 6570,000 2007 791,000 2008 W000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145,000 2017 }66155,000 2018 170,000 2019 +85180,000 2020 2001-35,000 (Maturity) The amounts in the foregoing table will be reduced pro rata as a result of any prior partial redemption of the Bonds as described under"Optional Redemption"above. All moneys deposited in the Bond Fund from sinking payments will be used and withdrawn by the Fiscal Agent upon receipt of a written request from the City for the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges) as the City may in its discretion determine,but not to exceed the principal amount of such Bonds, and accrued interest thereon. Notice of Redemption Notice of redemption will be mailed by first class mail by the Fiscal Agent to (i) the registered owners of the Bonds at their addresses appearing on the books kept for registration and transfer of the Bonds,(ii) the Securities Depositories,and(iii)one or more Information Services,in each case not less than thirty(30)nor more than sixty(60)days prior to the redemption date. Each notice of redemption shall state the date of such notice,the Bonds to be redeemed,the date of issue of such Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses of the Fiscal Agent), the CUSIP number(if any) of the maturity or maturities, and, if less than all of any such maturity, the distinctive numbers of the Bonds of such maturity 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 said redemption date there will become due and payable on each of said Bonds the redemption price thereof or of said specified portion of the principal amount thereof, in the case of a Bond to be redeemed in part only, and that interest thereon shall cease to accrue, and each such notice shall require that such Bonds be then surrendered at the address or addresses of the Fiscal Agent specified in the redemption notice. Failure by the Fiscal Agent to mail notice of redemption to any one or more of the respective owners of any Bonds designated for redemption or to any one or more of the Information Services or Securities Depositories shall not affect the sufficiency of the proceedings for redemption. Failure to receive any notice mailed or any defect in any notice shall not affect the sufficiency of the proceedings for redemption of the Bonds. i 1 9 i 10 i r I ! Transfer and Registration Registration of the Bonds may be transferred only upon the books kept for registration and transfer of the Bonds and may be exchanged upon surrender thereof to the Fiscal Agent together with an assignment duly executed by the registered owner or his other duly authorized attorney or legal representative in such form as set forth in the Bond and otherwise as is satisfactory to the Fiscal Agent. The Fiscal Agent may require payment from the owner of a sum sufficient to cover any tax, or other governmental fee or charge imposed with respect to such transfer or exchange. Neither the City nor the Fiscal Agent will be required to issue or register the transfer of any Bonds during a period beginning on the fifteenth day before any selection of Bonds for redemption and ending on the day Bonds are so selected or to register the transfer of any Bonds selected, called or being called for redemption in whole or in part. The City and the Fiscal Agent will treat the owner of a Bond, as shown on the registration books i kept by the Fiscal Agent, as the person exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that all interest payments will be made to the owner of record as of the fifteenth day of the month preceding any Interest Payment Date. Mutilated, Lost, Destroyed or Stolen Bonds If any Bond is mutilated, lost, stolen or destroyed, the City will execute and the Fiscal Agent will authenticate a new Bond or Bonds in replacement thereof in the same aggregate principal amount and of the same maturity, as the case may be. In the case of a lost, stolen, or destroyed Bond, the Fiscal Agent may require satisfactory indemnity prior to authenticating a new Bond. The City and the Fiscal Agent may charge the owners of the Bonds for their reasonable fees and expenses in connection with replacing mutilated,lost,stolen or destroyed Bonds. s Additional Bonds The Fiscal Agent Agreement does not authorize the issuance of anv Additional Bonds.T 19isti ict, at any time after the issuance and deli rery of the B nds under the Resol tition of , seCULed by a lien and charge upon-the Special Ta-ces eqttai to the lien and charge seettring the outstanding Bencis theretofbre isstied b� the District stibject only to the fiollowing specific conditions, which are conditions precedent to the issuance oF any such Additional Bonds. (a) The District shall be in Compliance with all covenants set f0fth in the Fiscal Agent Agreement and any supplemeLlb theLeto and a eeL.tificate of the District to that effect shall have beert filed with the Fiscal Agent; PLOVided, however, that Additionai Bonds may be issued notwithstanding that the District is not in cornpliance with all such covertants so long as immediately fbilening the issuance of such Additional Bonds the Distriet will be in eompliance with all Such eovenantt�-, (b) The issuance of the Additional Bonds sliall have been duly authorized Pursuant to the Act and all applicable laws and the issuance of such .�.dddditiom 9n ast I Bends shall have been pro v ided Sor by a supple mental resolution vv hich nieets bite L equit ernents set forth in the Fiscal A gent Agree ment, H The Bistrict shall have received the certificate of an independent Financial Gonstiltant (as defined in the Fiscal Agent Agreement) certifying that(i) the arnount of maximurn Special Taxes that My be levied by the District pttr3tiant to the Act and the applicable resolutions and ordinances of Elie least 1.15 ti ..es -Maxinitim Anntial Debt Service on all ot2tstanding Bonds and bite Additional Bends proposed to be isstied, and 60 the fair market valtze of the land and then existing Additional Bonds presently atitherized by the District, payabic from the Special Taxes anti i 1) 4 Scheduled Debt Service Debt Service Principal/ Interest Total Annual Date Redemptions* Payments Debt Service Apr7iI;-I990 October 1,1990 April 1, 1991 October 1, 1991 April 1, 1992 October 1, 1992 $RO25,000 April 1, 1993 October 1, 1993 25,000 April 1, 1994 October 1, 1994 2530,000 April 1, 1995 October 1, 1995 30,000 April 1, 1996 October 1, 1996 30,000 April 1, 1997 October 1, 1997 35,000 April 1, 1998 October 1,1998 3540,000 April 1, 1999 - October 1 1999 40,000 April 1,�000 October 1 2000 4845,000 April 1,�001 October 1 2001 45,000 April 1,�002 October 1 2002 50,000 April 1,�003 October 1 2003 55,000 April 1,�004 October 1 2004 5560,000 April 1,�005 - October 1 2005 6065,000 April 1,H06 October 1 2006 6-570,000 April 1,N07 October 1 2007 %75,000 April 1,�008 October 1 2008 80,000 April 1,N09 October 1 2009 85,000 April 1,M10 October 1 2010 90,000 April 1,N I I October 1 2011 100,000 April 1,�012 October 1 2012 105,000 April 1,�013 October 1 2013 115,000 April 1,�014 October 1 2014 125,000 April 1,N15 October 1 2015 135,000 April 1,�016 October 1 2016 145,000 April 1,N17 October 1 2017 +6el55,000 April 1,�018 October 1 2018 170,000 April 1,H19 October 1 2019 +85180,000 Apri1 1,H2O October 1,2020 2%195,000 13 i SOURCES OF PAYMENT FOR THE BONDS Special Taxes The principal of, premium, if any, and the interest on the Bonds, the administrative expenses of the City,many amounts required to replace moneys withdrawn from the Reserve Fund in order to maintain the Reserve Fund at the Reserve Requirement and certain expenses for City services are payable from the Special Taxes collected on property within the District and interest earned on funds held in nd available for that purpose pursuant to the Fiscal Agent Agreement. The Special Taxes are excepted from the tax rate limitation of California Constitution Article YIIIA pursuant to Section 4 thereof as a"special taxes"authorized by a two-thirds vote of the qualified electors as set forth in the Act. Consequently, the City Council of the City as the governing board of j the District has the power and is obligated by the Fiscal Agent Agreement to cause the levy and [ collection of the Special Taxes. i The City has covenanted in the Fiscal Agent Agreement to levy (subject to the limitation on the maximum amount of the Special Taxes)in each fiscal year the Special Taxes in an amount sufficient to pay the debt service on the Bonds, if any, for the next Bond Year, and administrative expenses of the City including Fiscal Agent fees, plus the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement and to pay certain expenses for City services. The Special Taxes collected are anticipated to be inare designed to collect the full amount of such Annual Debt Service plus administrative expenses of the City,and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement, and may be adjusted annually so as to maintain the eity,s ability to collect bite full al'n0t2lit 1-eCittil-ed tO V8y SUCh MOU?ItS. Subiect to the limitation on the maximum amount of the Special Taxes that may be levied on any parcel in the District,the annual levy of the Special Taxes may be increased to the extent necessary to replenish the Reserve Fund if amounts have been withdrawn from such fund to pay debt service on the Bonds due to delinquencies in payment of the Special Taxes. However, as of the date of delivery of the Bonds, there are only two property owners within the District. It is unlikely that if one of the initial property owners is delinquent in the payment of any installment of the Special Tax, the Property_ Owners would pay such additional Special Tax(see"BONDOWNERS'RISKS"herein). The Special Taxes are to be levied and collected according to the Rate and Method of Apportionment described in the section entitled"THE DISTRICT-Rate and Method of Apportionment of the Special Tax" herein. The maximunt tax levy ptirsuant to the Rate Mid Nlethod of Appettionm escalates each fiscal year 102%of the ntial Special Tax in the prior fiscal Revenues that may be raised from the levy of the maximum Special Taxes are expected to be a minimum of 4-29124%of the revenues actually needed for debt service on the Bonds. The Special Taxes with respect to any parcel within the District will not be affected by any changes in the zoning of such parcel or the failure to develop the parcel as contemplated by the Property Owners. Subject to the limitation on the maximum amount of the Special Taxes that may be levied on any parcel in the District, the annual levy of the Special Taxes may be increased to the extent necessary to replenish the Reserve Fund if amounts have been withdrawn from such fund to pay debt service on the Bonds due to delinquencies in payment of the Special Taxes. Although the Special Taxes will constitute a lien on parcels within the District, it does not ' constitute a personal indebtedness of the owners of property within the District. There is no assurance that the property owners will pay the annual Special Taxes (see "BONDOWNERS' RISKS" and "THE S DEVELOPMENT-Property Ownership"herein). i 14 4 The Special Taxes will be collected by the County in the same manner and at the same time as ad valorem property taxes are collected by the Tax Collector-Treasurer of the County. When received, such Special Taxes will be deposited in the Special Taxes Fund to be held by the City and transferred by the City to the Fiscal Agent(after deductions for the City's administrative expenses) for payment of debt service on the Bonds, if any, or for deposit, if required, in the Reserve Fund to be held by the Fiscal Agent in order to restore the balance therein to the Reserve Requirement. 15 i i Covenant for Superior Court Foreclosure Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Taxes, the City may order the institution of a superior court action to foreclose the lien therefor,provided such action is brought not later than four years after the final maturity date of the Bonds. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. If foreclosure is necessary, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale if the Reserve Fund is depleted. Although, as provided in the Rate and Method of Apportionment of the Special Tax, the City may adjust the Special Taxes on all property within the District to provide an amount required to pay principal of and interest on the Bonds, plus administrative expenses and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement, any such adjustment is limited by the maximum amount of Special Taxes and may not be sufficient to ensure timely payment of principal of and interest on the Bonds (see "BONDOWNERS' RISKS"herein). Furthermore,no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Taxes installment. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify the obligations of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the execution sale pursuant to the judgment in any such action if there is no other purchaser at such sale, nor does the Act specify the priority relationship, if any, between the Special Taxes and other taxes and assessment liens. A judgment debtor (property owner) has 140 days from the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to so redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within six(6) months of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made. The constitutionality of the aforementioned legislation, which repeals the former one-year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. As a result of the foregoing, in the event of a delinquency or nonpayment of one or more Special Taxes installments, there can be no assurance that there would be available to the Fiscal Agent sufficient funds to pay when due the principal of and the interest on the Bonds. Reserve Fund In order to secure further the timely payment of principal of and interest on the Bonds, the City is required, upon delivery of the Bonds, to deposit in the Reserve Fund an amount equal to the 8%of the initial aggregate principal amount of the Bonds (the "Reserve Requirement"). Thereafter, the City is required to deposit from the Special Taxes and maintain an amount of money equal to the Reserve Requirement in the Reserve Fund at all times while the Bonds are outstanding. Amounts in the Reserve Fund will be used to pay debt service on the Bonds to the extent other moneys are not available therefor. Earnings on amounts in the Reserve Fund may be deposited into the Bond Fund to the extent not required to be retained in the Reserve Fundto be deposited into the Ear nings Aecount to be used to make payments to the United States. Amounts in the Reserve Fund may be used to pay the final year's debt service on the Bonds(see"THE FISCAL AGENT AGREEMENT"herein). s 16 Capitalized Interest There will be an initial deposit to the Bond Fund out of Bond proceeds which, together with accrued interest on the Bonds and investment eftL11i.1gS on such amotints, has been calculated to be sufficient to make the interest payments on the Bonds to and including October 1, 1991. BONDOWNERS' RISKS Concentration of Ownership Most of the land within the District is currently owned by Limited Partnerships in which the General Partner is The Dahl Company or Southwest Diversified(the"Develoners"L For a summary of the current ownership of land in the District, see "THE DEVELOPMENT - Property Ownership" herein. The Developers intend to develop the land within the District for residential use. The Developers intend to construct 113 residential detached dwellings for sale to the public. There may be subsequent transfers of ownership of the property within the District prior to completion of development. The fact that most of the land within the District is currently controlled by two Developers, is substantially undeveloped and is subject to a number of contingencies which could slow or prevent future development presents significant risks to the Bondowners. No assurance can be given that the Development will be partially or fullv completed, and in assessing the investment quality of the Bonds. prospective purchasers should evaluate the risks of noncompletion discussed below. First, undeveloped land is less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of Special Taxes. Second,an inabilitv to develop the land within the District as planned will reduce the diversity of ownership of land within the District, making the Bondowners more dependent upon timely pavment of the Special Tax levied on the undeveloped property. Currently, the land within the District is owned by two Developers and,thus, until land is sold to others, the two Developers are responsible for r 100%of the annual Special Tax levy. Commencing in 1991/92, the District will need to levy an annual Special Tax of approximately $212,000 to pay debt service on the Bonds and the Expenses of the District. Because of the existing concentration of ownership of District land,the timely payment of the Bonds depends upon the willingness and ability of the Developers to pav the Special Taxes levied on the undeveloped land when due. A slowdown or stoppage in the continued development of the District might reduce the willingness of the Developer, or anv successor, to make Special Tax payments on undeveloped property. In addition to reducing the ability and willingness of the landowners to make Special Tax payments,a slowdown of the development process could adversely affect land values and the proceeds at a foreclosure sale in the event that Special Taxes are not paid when due. Land Development 3 As J[_______J tinder "•`•i. DEV •„n.,EN-T-12 here_ t1he Property Owners anticipate subdividing the land within the Dis rict, and ingle family detached homes within the District. The development and subsequent home sales may be adversely affected by changes in general economic conditions, fluctuations in the real estate market, and other similar factors, including development in surrounding areas which may compete with the developments within the District. `. 17 I } The Special Taxes are to be collected from the owners of property located within the District, and i levy of the Special Taxes are not dependent on the selling of homes and the completion of the development of the properties within the District. Nevertheless, the extent of completion of the development of the property within the District may affect the ability and willingness of landowners to pay the Special Taxes and may affect the market value of any property foreclosed upon for nonpayment of installments of the Special Taxes. Land Values Customarily, the issuers of Special Tax Bonds obtain an appraisal of the market value of the property subject to the Special Tax in order to have an estimate of the security value of the parcels relative to the amount of the outstanding indebtedness of the Special Tax Bonds. In this case, the City is providing the County Appraiser's estimate of "full cash value" (the "Assessed Value") of the property as opposed to an appraisal. The Assessed Value of the parcels in the District as carried on the assessment rolls of the County is $25,206,947. The Assessed Value is approximately 10.50 times the initial aggregate principal amount of the Bonds. While, in general, market value is in excess of Assessed Values, and in some cases well in excess of Assessed Value, no assurance can be given that should a parcel or lot with delinquent installments of the Special Tax be foreclosed, that any bid will i be received for such property or, if a bid is received, that such bid will be sufficient to pay delinquent i installments of unpaid taxes. However, since the Act requires that a property be sold only for the amount delinquent, it is anticipated that the value of the land as appraised by the County Assessor should be sufficient to secure any delinquent installments of unpaid reassessments. Collection of the Special Taxes In order to pay debt service on the Bonds, it is necessary that the Special Taxes levied against land within the District be paid in a timely manner. The interest payments on the Bonds through and including October 1, 1991, will be funded from Bond proceeds. The first levy of the Special Taxes will occur in the tax year 1991/92, with the first installment due and payable on December 10, 1991, and the second installment due and payable on April 10, 1992. Taxes collected from payments on the first levy of the Special Taxes will be available to pay interest coming due on April 1, 1992 and principal and interest coming due on October 1, 1992. Should the Special Taxes not be paid on time, the District has established a Reserve Fund to pay debt service on the Bonds to the extent other funds are not available therefor. Records of the Orange County Treasurer-Tax Collector reveal no current property tax delinquencies on the parcels comprising the District. The City has covenanted to institute foreclosure proceedings to sell any property delinquent in the Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were i ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Taxes to protect its security interest. (See "SOURCES OF PAYMENT FOR THE BONDS - Covenant for Superior Court Foreclosure" for provisions which apply in the event foreclosure is required and which the District is required to follow in the event of delinquency in the payment of the Special Taxes). If any property within the District becomes exempt from taxation through ownership by a non- taxable entity such as the State of California or a local government, for a public purpose (for example, through dedication or condemnation of property for use as a public street or highway), the Special Taxes will be reallocated to the taxable properties within the District. This would result in the owners of such properties paying a greater amount of the Special Taxes and could have an adverse impact upon the payment of the Special Taxes. Property Ownership TrrP 18 The real property in the District is owned by se%en property owners and is in the p.ocess of being artittired by a partnership in vyhich the general partner is the Developer. Failure oFthe awners to pay installinents of taxes when dt2e could iesult in the depletion oF the Reserve Fund prior to avv tiers which constitute seettrit� For the%nds iS thei.- Lespective prope.ty holdings located within the District "T EDx`VE Ana NT _I____", Bankruptcy The payment of the Special Taxes and the ability of the District to foreclose the lien of a delinquent unpaid tax, as discussed in the section herein entitled"SOURCES OF PAYMENT FOR THE BONDS", may be limited by bankruptcy, insolvency,or other laws generally affecting creditors'rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the taxes to become extinguished,bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. To the extent all of the property in the District continues to be owned by a single property owner, the payment of the Special Taxes and the ability of the District to foreclose the lien of a delinquent unpaid tax could be delayed by bankruptcy,insolvency,or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. Additional Taxation On June 3, 1986, California voters approved an amendment to Article XIIIA of the California Constitution to allow local governments and school districts to raise their property tax rates above the constitutionally mandated 1%ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast by the qualified electorate. If any such voter-approved debt is issued, it may be on a parity with the lien of the Special Taxes on the parcels within the District. Parity Taxes and Special Assessments The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annuallv imposed until thev are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all existing and future private liens imposed on the property. The District, however, has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the District. Any such special taxes or assessments will have a lien on such property on a parity with the Special Taxes(see"THE DISTRICT-Direct and Overlapping Debt"herein). Future Indebtedness At the present time, most of the property in the District is still only partially developed. In order to develop anv improvements on that land, the Developers will need to construct improvements over 19 t i i S ' and above those being financed with the proceeds of the Bonds. The cost of these additional improvements may well increase the public and private debt for which the land in the District or other land or collateral owned by the Developers is securitv over that contemplated by the Bonds, and such increased debt could reduce the abilitv or desire of the Developers or future property owners to pay the Special Taxes levied against the land in the District. No Acceleration Provision The Fiscal Agent Agreement does not contain a provision allowing for the acceleration of the principal of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, any owner of any of the Bonds is given the right for the equal benefit and protection of all owners similarly situated to pursue certain remedies described under"THE FISCAL AGENT AGREEMENT-Remedies of Bondow ners". THE FISCAL AGENT AGREEMENT The following is a summary of certain provisions of the Fiscal Agent Agreement and does not purport to be a complete restatement thereof. Reference is hereby made to the Fiscal Agent Agreement for further information in this regard. Copies of the Fiscal Agent Agreement are available from the City upon request. Creation of Funds and Accounts The Fiscal Agent Agreement establishes the following funds and accounts: I. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Bond Fund (the "Bond Fund") which will be held by the Fiscal Agent. The moneys transferred to the Bond Fund by the Fiscal Agent are to be used for paying principal of (including inandatory Ledemptierninsinkina payments) and all of the interest, and any premium, due and payable on all of the Bonds. 2. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Reserve Fund (the "Reserve Fund") which will be held by the Fiscal Agent. The moneys placed in the Reserve Fund upon sale and delivery of the Bonds and moneys, and any amounts, subsequently deposited to replenish the Reserve Fund will be used only for payment of the principal of and interest, and any premium, on the Bonds, including mandatary redemptierrinsinking payments, in the event that the moneys in the Bond Fund are insufficient therefor. 3. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Improvement Fund (the "Improvement Fund") will be held by the C—itpFiscal Agent. The moneys set aside and placed in the Improvement Fund will be used exclusively for the purpose of acquiring public improvements to be constructed as part of the Project and defraying other related costs of the Project. Upon completion of the Project, any surplus remaining in the Improvement Fund will be transferred to the Bond Fund. 4. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Cost of Issuance Fund (the "Cost of Issuance Fund") will be used to defray the necessary expenses in connection with the issuance and sale of the Bonds. The Cost of Issuance Fund will initially be held by the Fiscal Agent;any moneys remaining in the Cost of Issuance Fund after 180 days will be transferred to the Administrative Expense Fund. i ' 20 t 1 5. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Special Tax Fund (the "Special Tax Fund") which will be held by the Treasurer of the City. Special Taxes which have been collected by the Treasurer will be deposited in the Special Taxes Fund and a portion transferred to the Fiscal Agent for deposit into the funds-and accounts estabiished in the Fiscal Agent Agreement in the amounts set �o.tit Reserve Fund and Bonds in the amouts set forth in the Fiscal Agent Agreement. The balance then in the Special Tax Fund will be transferred for deposit in the Administrative Expense Fund and the Services Fund as provided in the Fiscal Agent Agreement. 6. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Administrative Expense Fund (the "Administrative Expense Fund") which will be held by the Treasurer of the GityFiscal Agent. The Administrative Expense Fund will be used to pay all administrative expenses as defined in the Fiscal Agent Agreement. 7. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Rebate Fund (the "Rebate Fund") to be held by the Fiscal Agent. The Fiscal Agent is required to direct and control a Rebate Fund separate and apart from the other funds established under the Fiscal Agent Agreement Account"), and is required to deposit certain amounts into the Rebate Fundinto the Eat nings Account all interest, derived from certain investments ea;ned by amotints in the Reserve Ft2nd and bite Bond Fund, as described in the Fiscal Agent Agreement. 8. City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Services Fund (the "Services Fund") which will be held by the Treasurer of the City and disbursed as required as,defined-in the Fiscal Agent Agreement. Application of Special Tax Revenues Pledge of the Special Taxes. The Bonds shall be secured by a first pledge(which shall be effected in the manner and to the extent provided in the Fiscal Agent Agreement) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed, the Improvement Fund. The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided with respect to moneys disbursed from the Improvement Fund) are dedicated in their entirety to the payment of the principal of, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Act until all the Bonds have been paid and retired or until moneys or noncallable Federal Securities have been set aside irrevocably for that purpose. All Special Tax Revenues transferred to the Fiscal Agent and will be used solely for the following purposes and in the following priority: Bond Fund (A) Disbursements. On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of and interest and any premium then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth herein. In the event that amounts in the Bond Fund are insufficient, the Fiscal Agent will withdraw from the Reserve Fund to the extent of any funds therein,and then will provide written notice to the Treasurer of the amounts so withdrawn from the Reserve Fund. (B) Investment. Moneys initially deposited in the Bond Fund will be invested in Permitted Investmentsunder the investment Agreement with Thereafter moneys in the Bond Fund will be immsted and depo in accordance with the 21 5 Fiscal Agent Agreement. Interest earnings and profits resulting from such investment will be retained in the Bond Fund. Reserve Fund (A) Use of Fund. Except as otherwise described below, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or for the purpose of redeeming Outstanding Bonds from the Bond Fund. i ' (B) Transfer Due to Deficiency in Bond Fund. Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent will provide written notice thereof to the Treasurer. (C) Transfer of Excess of Reserve Requirement. Whenever, on the day prior to any Interest Payment Date, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent will provide written notice to the Treasurer of the amount of the excess and will transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of the principal of and interest on the Bonds on the next succeeding Interest Payment Date. (D) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied,on.the next succeeding Interest Payment Date to the payment and redemption of all Outstanding Bonds, with any balance being transferred to the City to be used for any lawful purpose of the City. (E) Investment. Moneys in the Reserve Fund will be invested in Permitted Investmentsptitstiant to the investment Agreent Interest earnings and profits from investment of moneys in the Reserve Fund will be retained in the Reserve Fund. (F) Transfer for Rebate Purposes. Amounts in the Reserve Fund are required to be withdrawn for purposes of making payment to the Federal Government as specified in the Fiscal Agent Agreement. Description of Other Funds and Accounts Improvement Fund (A) Procedure for Disbursement. ' Disbursements from the Improvement Fund will be made by the£ityFiscal Agent upon receipt of an Officer's Certificate which will: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; ' and (ii) certify that the disbursement is in accordance with the Acquisition Agreement and that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting disbursement. 22 (B) Investment. !Moneys in the Improvement Fund will be invested in Permitted investmentspursuant to the investment AgIeement. Interest earnings and profits from such investment and deposit will be deposited by the Fiscal Agent in the Bond Fund. (C) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, the Gi-tyFiscal Agent will transfer the amount, if any, remaining in the Improvement Fund for deposit in the Bond Fund for application to the payment of principal of and interest on the Bonds and the Improvement Fund will be closed. Special Taxes Fund (A) Disbursements. As soon as practicable after the receipt by the City of any Special Tax Revenues, but no later than ten Business Days after such receipt, the City will withdraw from the Special Tax Fund and transfer to the Fiscal Agent for deposit in the Reserve Fund until the amount then on deposit therein is equal to the Reserve Requirement and an amount sufficient, together with the amounts then on deposit in the Bond Fund to pay principal, premium, if any, and interest on the Bonds as specified in the Fiscal Agent Agreement. All other amounts then in the Special Tax Fund will, concurrently with the foregoing transfer, be transferred to (i) the Fiscal Agent for deposit in the Administrative Expense Fund in an amount, together with the amounts then on deposit in the Administrative Expense Fund, to pay the estimated expenses to be incurred in the then current Fiscal Year and Kilthe balance trarrsfzrredretained by the City for deposit in to-the Services Fund for the purposes of such Fund. Notvvithstanding the fiDregoing, if the Bonds have been defeased as provided in the Fiscal Agent Agreement, bite TreztsLtr,. .'� .—i--dl to maintain the Special Tax Fund for transfers to the Adminisbtative Expense Fund and Services Fund for the purposes of such Funds. (B) Investment. Moneys in the Special Tax Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit will be retained in the Special Tax Fund to be used for the purposes thereof. Administrative Expense Fund (A) Disbursement. Amounts in the Administrative Expense Fund will be withdrawn by the TreastirerFiscal Agent and paid to the City or its order upon receipt by the Treasure.Fiscal Agent of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense (or a Cost of Issuance) and the nature thereof. Annually, on the last day of each Fiscal Year, the Treasure,Fiscal Agent will withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid and transfer such amounts to the Special Tax Fund. (B) Investment. Moneys in the Administrative Expense Fund will be invested in Permitted Investments in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Treasurer Fiscal Agent in the Administrative Expense Fund to be used for the purposes of such fund. 23 Cost of Issuance Fund (A) Disbursement. Amounts in the Cost of Issuance Fund will be disbursed from time to time to pay Cost of Issuance,as set forth in a requisition containing respective amounts to be paid to the designated payees,signed by an Authorized Officer and delivered to the Fiscal Agent. The Fiscal Agent will pay all Cost of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent will maintain the Cost of Issuance Fund for a period of 180 days from the date of delivery of the Bonds and then will transfer any moneys remaining therein, including any investment earnings thereon,to the Treasurer-for deposit in the Administrative Expense Fund for payment of any unpaid Cost of Issuance and every im.poice and requisition received thereafter by the Fiscal Agent will submitted to Elie Treasurer fbr FaYment. (B) Investment. Moneys in the Cost of Issuance Fund will be invested in Permitted Investments in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund. Services Fund (A) Disbursement. Amounts in the Services Fund shall be withdrawn by the Treasurer and paid to the City or its order upon receipt by the Treasurer of an Officer's Certificate stating the Amount to be withdrawn, that such amount is used to pay for a Service and the nature of such Service. Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amount then remaining in the Services Fund that have not been allocated to pay Services incurred but not yet paid, and which are otherwise encumbered, and transfer such amounts to the Special Tax Fund. (B) Investment. Moneys in the Services Fund shall be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Services Fund to be used for the purposes of such fund. Investment of Funds and Accounts; Disposition of Investment Proceeds -Moneys initially deposited in the Reserve Fund, Bend Fund and the improvement Fund will 1 invested under the investment Agreements. Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent, will be invested by the Fiscal Agent in Permitted Investments which by their terms mature prior to the date on which such moneys are needed under the Fiscal Agent Agreement or are otherwise available on such date. Subject in all respects to the provisions of rebate of excess investment earnings to the United States, moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Treasurer will be invested by the Treasurer in any lawful investments that the City may make, which by their terms mature prior to the date on which such moneys are required to be paid out thereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of 24 the Fiscal Agent Agreement for transfer of interest earnings and profits resulting from investment of amounts in the funds and accounts. The Fiscal Agent or the Treasurer may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer will incur any liability for losses arising from any investments made in accordance with the Fiscal Agent Agreement. For purposes of determining the amount on deposit in any fund or account held under the Fiscal Agent Agreement,all investments credited to such fund or account will be valued at the cost thereof (excluding accrued interest and brokerage commissions, if any). The Fiscal Agent or the Treasurer, as applicable, will sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it will be necessary to provide moneys to meet any required payment,transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer will be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance with the provisions of the Fiscal Agent Agreement. Rebate of Excess Investment Earnings to the United States The City covenants to comply with Section 148(f) of the Code and to that end to take or cause the Fiscal Agent to take or otherwise cause to be taken all actions required by the Fiscal Agent Agreement. Account,(B) Rebate Fund. The Fiseal Agent Agreement creates, as a separate accatint,distim From all other funds and accounts held by the Fiscal Agent tinder the Fiscal Agent Agreement, the Rebate Fund. Within twenty (20) days fbilowing the last day of each Bond Year, and nibitin fifty (60) da�s follevving the date of payment in full of the Bonds, tile Rebate Administrator, on behalf of the Gity, will calettlate Excess investment Eartling!� during the preceding Bond Year or such othei period as may be appropriate tinder applicable R"gulations and shall previde written notice to the Fiscai Agent and the (3ity Of the arnount thereof: Upon delivery 4 such notice,the Fiseai Agent shall withdraw From the Bend Fund an arnotint eqtial to Excess investment Harnings as so calettlated, shall depo such amettnt in the Rebate Ft2nd. in the event that bite aMOMIt OIL deposit in the Bond Funcl is less than the arnount of Exeess investment Hai nings,the Fiscal Agent shall withdraw tile differential From the Reserve Fttnd and shall deposit the sarne in Elie Rebate Fund, provided, honever, that in ne event shall the F sea! Agent withdMW an arneant front the Reserve Fund which %vill cause the amount remaining in the Reserve Fund together with anieunt� to be deposited in the Bond Fund Pf iOL to the next interest Payment Date to be less than tile arnaunt necessary te pay the prineipal ofi and interest and any p.erninrn on, the Bonds due on the next succeeding interest Payment Date, and previded, F;nrther, that if Such withdrawal would cattse the arnount . . in the Reseme Fund, together vvith arnounts to be deposited in the Bond Fund on the r;xt succeeding inte.est Payment Date, be less than the arnount necessm y to pay the principal of-, and inte,est and premitim on, tiTe Bends due on the next stteceeding interest Pay ment Date, then the Fiscal Agent shall vvithdiam Front the Reserve Fund only st2ch arnetnit as shall not cause the Reserve Fund to be so deficient andshall provide mitten netice directing the City to pay to tile Fiscai Agent fbr deposit in the Rebate Fttnd, an amount which, tegether with amotints in said Fund,will eqttal Excess investment Barnings as so calettlated. Within five (5) days f;0110vving receipt oF stich notice, the Gity shall pay to bite Fiscal Agent f6r deposit in the Rebate the amount set forth in such notice from any legally availablesomee of fundsof the Ehty. (C) Payme it to the United States. The Fiscal AgeLlb will pay frorn Elie Rebate Fund an First payment to be made not later than thirty (30) day s after the end ef the fifth Bend Year 25 and vvith subsequent payiilents to be made not later than Fi-ve (5) years after the preceding payment was citte. The Fiscal Agent shall assme that each such installment is in an arnotnit equal to at ieast 98 percent of the Exeess investment Em nings as of tile end of tile Band Yeat immediately preceding the date of such payment. Not later than sixty (60) daV after the L etirement of the Bonds, bite Fiscal Agent will pay from the Rebate Fund to the United States an arnount equal to !00 pereent of the thez etofore t1ripaid Excess investme Eatnings as certified in writing by th-! Rebate Administrato.. in bite event thett there etre preceding sentence, Elie F sea! Agent shall pay said arnotints to the Gity to be t2sed for any lawful Int.pose of the C-ity The Fiscal Agent shaH rernit petyrnents to the United States at. the addiess prescribed by the Regttlations as the same may be ft-om bitne to time in effect with st2ch reports and staternents as may be prescribed by such Regttlations. in the event that, for any reas0n, ftrn0t221t9 is! the Rebate Fund are insufficient to make the pay ments to the United States vvitich are eqttired by the Fiscal Agent AgLeernent, thK; Fiscal Age shall notify the Gity oftuch fact and the Gity shall assure that stich payments are Made b3r bite 12ity to the United Siates,on a timely basis,frorn any funds lztmfull� available therefor. (9) Further Obligation of . The City and the Fiscal Agent shall assure that Excess Investment Earnings are not paid or disbursed except as required by the Fiscal Agent Agreement. To that end the City and the Fiscal Agent shall assure that investment transactions are on an arm's length basis and that nonpurpose investments are acquired at their fair market value. In the event that nonpurpose investments consist of certificates of deposit or investment contracts, investments in such nonpurpose investments shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. (E) Maintenance of Records. Agent and the Rebate Administrator shall keep,ftnd L etain for a period of six(6)years follevv ing the retirement of the Bends,records-of the determinations made purstiant to this 8ection. Covenants of the City So long as any of the Bonds are outstanding and unpaid, the City is required (through its proper members, officers, agents or employees) to faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Fiscal Agent Agreement or in any Bond issued thereunder,including the following covenants for the benefit of the Bondowners: Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions,covenants and requirements of the Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds. Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the funds and accounts created under the Fiscal Agent Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, the City is not obligated to advance funds from the City treasury to cure any deficiency in the Bond Fund, the Reserve Fund, or the Administrative Expense Fund; provided, however, that nothing in the Fiscal Agent Agreement shall prevent the City, in its sole and absolute discretion and pursuant to such terms and conditions as it shall determine appropriate, from making such advances for the purpose of curing such deficiency. 26 Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in the case of default under the Fiscal Agent Agreement, to the benefits of the Fiscal Agent Agreement, except subject to the prior payment in full of the principal of all the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon the Special Taxes Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien created in the Fiscal Agent Agreement for the benefit of the Bonds,except as permitted by the Fiscal Agent Agreement. Books and Records. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City which may be the books and records of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund, the Special Tax Fund and the Administrative Expense Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent,and the owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent,in which complete and correct entries will be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund, the Reserve Fund, the Improvement Fund and the Costs of Issuance Fund. Such books of record and accounts will at all times during business hours be subject to the inspection of the City and the owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City. Compliance with Law, Completion of the Project; Payment for Services. The City will comply with all applicable provisions of the Act and law in completing the acquisition of the Project and in disbursing funds for the payment of the costs of services. Private Business Use Limitation. The City shall assure that: (a) not in excess of ten percent (10%) of the proceeds of the Bonds is used for Private I Business Use if, in addition, the payment of the principal of, or the interest on more than ten percent (10%) of the proceeds of the Bonds is (under the terms of the Bonds or any underlying arrangement) directly or indirectly, (i) secured by any interest in property, or payments in respect of property, used or to be used for a Private Business Use,or(ii) to be derived from payments(whether or not to the City or the District) in respect of property, or borrowed money, used or to be used for a Private Business Use;and (b)in the event that in excess of five percent(5%) of the proceeds of the Bonds are used for a Private Business Use, and, in addition, the payment of the principal of, or the interest on, more than five percent (5%) of the proceeds of the Bonds is, (under the terms of the Bonds or any underlying t 27 arrangement) directly or indirectly, secured by any interest in property, or payments in respect of property, used or to be used for said Private Business Use or is to be derived from payments (whether or not to the City) in respect of property,or borrowed money,used or to be used for a Private Business Use, then (A) said excess over said five percent (5%) of the proceeds of the Bonds which is used for a Private Business Use shall be used for a Private Business Use related to a government use of such proceeds and (B) each such Private Business Use over five percent (5%) of the proceeds of the Bonds which is related to a government use of such Proceeds shall not exceed the amount of such Proceeds which is used for the government use of Proceeds to which such Private Business Use is related. Private Loan Limitation. The City shall assure that not in excess of the lesser of five percent(5%)of the proceeds of the Bonds or $5,000,000 is to be used, directly or indirectly, to make or finance a loans (other than loans constituting Nonpurpose Investments and other than loans which enable the borrower to finance any governmental tax or assessment of general application for a specific essential governmental function)to persons other than state or local government units. Collection of Special Taxes. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1, the Fiscal Agent will provide the Treasurer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund, and informing the City that Special Taxes are to be levied as necessary to provide for annual debt service and administrative expenses and replenishment(if necessary)of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs. Upon receipt of such notice,the Treasurer will communicate with the County Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The Treasurer will effect the levy of the Special Taxes each Fiscal Year, in accordance with the ordinance of the City levying the tax by each August 1 that the Bonds are outstanding, such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Taxes amounts for the parcels within the District for inclusion on the next tax roll. Upon the completion of the computation, the Treasurer will prepare or cause to be prepared, and will transmit to the County Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next tax roll. The City shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any Outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable,and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions,instruments and assurances as may be reasonably necessary or proper to carry out .the intention or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in the Fiscal Agent Agreement. 28 i No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the Gross 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 date of delivery of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148(a)of the Code and the Regulations. 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 the Bonds to be "federally guaranteed"within the meaning of Section 149(b)of the Code and the Regulations. Compliance with the Code. The City covenants to take any and all action and to refrain from taking such action, which is necessary in order to comply with the Code or amendments thereto in order to maintain the exclusion from federal gross income, pursuant to Section 103 of the Code, of the interest on the Bonds paid by the City and received by the Owners. 1 Covenant to Foreclose. The City covenants in the Fiscal Agent Agreement with and for ' the benefit of the owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of notice to the City of a delinquency,and thereafter diligently prosecute,an action in the superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due. The Treasurer will notify the City Attorney of any such delinquency of which it is aware, and the ' Treasurer will instruct the City Attorney to commence,or cause to be commenced,such proceedings. Amendments The Fiscal Agent Agreement and the rights and obligations of the District, the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Fiscal Agent Agreement pursuant to the affirmative vote at a meeting of the Owners,or with the written consent without a meeting, of the owners of at least 60% in aggregate principal amount of the Bonds then Outstanding are filed with the City,exclusive of disqualified Bonds. No such modification or amendment may W extend the maturity of any Bond or reduce the interest rate thereon or otherwise alter or impair the obligation of the City on behalf of the District to 3 pay the interest on or principal or redemption premium, if any, on any Bond without the express written consent of the owner of such Bond, or 60 permit the creation of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent Agreement), or (iii) reduce the percentage of Bonds required for the amendment of the Fiscal Agent Agreement, or (iv) modify any rights or obligations of the Fiscal Agent without its prior written consent. The Fiscal Agent may obtain an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of the Fiscal Agent Agreement and the Fiscal Agent may conclusively rely on such opinion. The Fiscal Agent Agreement and the rights and obligations of the District, the City and of the owners of the Bonds may also be modified or amended at any time by a Supplemental Fiscal Agent ' Agreement without the consent of any owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) to add to the covenants and agreements of the City contained in the Fiscal Agent Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power reserved to or conferred upon the City in the Fiscal Agent Agreement;or i F 29 l (b) to make modifications not adversely affecting any outstanding series of Bonds of the District in any material respect; (c) to make provisions for the purpose of curing any ambiguity,or of curing,correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement,as the City and Fiscal Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; (d) to make such additions, deletions or modifications as may be necessary to assure compliance with section 148 of the Code relating to required rebate of Excess Investment Earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Remedies of Bondowners The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Resolution of Issuance. Liability of the City The City will not incur any responsibility in respect of the Bonds or the Fiscal Agent Agreement other than in connection with the duties or obligations explicitly in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The City will not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful default. The City will not be bound to ascertain or inquire as to the performance or observance of any of the terms,conditions,covenants or agreements of the Fiscal Agent in the Fiscal Agent Agreement or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder. In the absence of bad faith, the City, including the Treasurer, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of the Fiscal Agent Agreement. The City, including the Treasurer, will not be liable for any error of judgment made in good faith unless it is proved that it was negligent in ascertaining the pertinent facts. No provision of the Fiscal Agent Agreement will require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City may rely and will be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal question, and the opinion of such counsel will be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith. Whenever in the administration of its duties under the Fiscal Agent Agreement the City will deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action thereunder, such matter (unless other evidence in respect thereof be therein specifically 30 prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent,and such certificate will be full warrant to the City for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. In order to perform its duties and obligations under the Fiscal Agent Agreement, the City may employ such persons or entities as it deems necessary or advisable. The City will not be liable for any of the acts or omissions of such persons or entities employed by it in good faith under the Fiscal Agent Agreement, and will be entitled to rely, and will be fully protected in doing so, upon the opinions, calculations,determinations and directions of such persons or entities. The Fiscal Agent The Fiscal Agent will act as the agent and depository of the District for the purpose of receiving all ! moneys required to be paid to the Fiscal Agent, to allocate, use and apply the same, to hold, receive and disburse the Special Tax Revenues and other funds held under the Fiscal Agent Agreement, and otherwise to hold all the offices and perform all the functions and duties provided in the Fiscal Agent ! Agreement to be held and performed by the Fiscal Agent. The Fiscal Agent will signify its acceptance of the duties and obligations imposed upon it by executing and delivering to the District a written acceptance thereof,and by executing and delivering such acceptance, the Fiscal Agent will be deemed to have accepted such duties and obligations, but only upon the terms and conditions set forth in the Fiscal Agent Agreement. THE DISTRICT General The District consist of three noncontiguous areas with the City of Huntington Beach, California, generally located south of Ellis Avenue between Edwards Street and Goldenwest Street. The three areas consist of seven separately owned parcels that are in the process of being subdivided and developed by a-sirrg}ztwo developers(see"THE DEVELOPMENT-The Developer"herein). The Beveloper, whicir0ine of the Developers, The Bahl Companv, is a general partner in several of the partnerships t currently owning the land,is in the process of acquiring all the land in the 9ist The boundaries of the District approved and designated in the Resolution are legally described and shown on the Boundary Map prepared by Huntington Beach, Gahfbrnia included herein. Facilities Description A community facilities district may, pursuant to State law, provide for the purchase,construction, expansion or rehabilitation of any real or tangible property with an estimated useful life of five (5) years or longer. The public facilities proposed to be financed need not be physically located within the proposed community facilities district. Public facilities proposed to be financed from proceeds of the Bonds, and pursuant to the Resolution of Formation, public facilities that may be financed(the "Facilities")generally include the following: 31 1 1. Improvements to Ellis Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 2. Improvements to Goldenwest Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 3. Improvements to Quarterhorse. Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 4. Improvements to Saddleback Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 5. Improvements to Edwards Street in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 6. Water and sewer system improvements along Ellis Avenue,Quarterhorse Lane and Saddleback Lane in the vicinity of the District,including related improvements. 7. Undergrounding of utilities along one or more of the foregoing streets in the vicinity of the District,including any related work. 8. Fire station improvements,including construction and related costs. 9. Acquisition of emergency vehicle traffic interruption devices. f Proposed Services to be Financed by the District The Act provides that a Community Facilities District may finance certain specified services within the boundaries of the District. The Community Facilities District may only finance services that are in addition to services that were provided to the District prior to the District being created. Those additional services proposed to be financed in part by the District are as follows: 1. Police and Fire protection services, Paramedic services, in each case in addition to those currently provided in the District. Incidential Expenses to be Financed by the District 1. Costs of engineering,design,planning and coordination related to the above-listed facilities. 2. Bond related expenses, including underwriter's discount, reserve fund, capitalized interest, bond counsel and all other incidental expenses. 3. Administrative fees of the City and the Bond trustee or fiscal agent related to the District and the Bonds. in addition, the incidental costs as defined in the Act and the Reso4ation of Formation may, be financed. 32 BOUNDARY MAP COMMUNITY FACILITIES DISTRICT NO. 1990-1 33 Facilities Cost Estimate The Bonds are proposed to be issued based upon the estimates shown below. Prior to the delivery of the Bonds,the Property Owner will enter into a Acquisition Agreement with the City in which the Property Owner agrees to pay any costs overruns, inspection fees, and the costs of administrating the public works contract. The City's Engineer reviewed the reasonableness of the cost estimates. SUMMARY OF COSTS OF CONSTRUCTION OF PUBLIC IMPROVEMENTS TO BE FINANCED WITH BOND PROCEEDS Land Costs $ 110,118 Construction Related Costs Police& Fire $ 50,000 Offsites 1,523,422 Indirect Costs 15,933 General Administration 126,937 Total Construction $1,716,292 TOTAL $1,826,480 CONSTRUCTION COST DETAIL Land and Acquisition Costs Land Cost-Envy $ 99,000 Escrow 495 Title 693 Legal Costs 10,000 Total $ 110,188 Police&Fire Facilities and Equipment $ 50,000 I Offsite Construction-Land Development Demo&Grubbing $ 16,526 Survey 20,000 Grading-Cut/Fill 91,731 Grading-Import 46,688 Sewer Manholes 27,500 Sewer 8 Inch 19,099 Water 12 Inch 31,590 ' Water 8 Inch 151,000 Water 6 Inch 29,760 Fire Hydrants 48,000 Hot Taps 12 Inch 10,000 Hot Taps 8 Inch 12,000 Valves 8Inch 20,925 Valves 12 Inch 6,375 Blow Off Assembly 11,900 Bends 8 Inch 1,300 Drainage Facility 262,454 Curb&Gutter 38,430 Rolled Curb 27,520 Sidewalks 47,850 Concrete Aprons 38,021 Asphalt Paving 274,872 Street Base&Grading 68,718 34 Asphalt Paving Rep 15,120 Stripping 9,099 Street Signs 2,600 Barricades 4,800 Undergrounding 117,000 Contingencies 72,544 Total $1,523,422 35 Indirect Costs Temporary Toilets $ 2,400 Temporary Power 2,400 Construction Shack 1,800 Field Office Expense 1,200 Telephone 1,800 Water Truck 3,200 Contingencies 3,133 Total $ 15,933 General Administration Supervision $ 45,000 Office Overhead 6,000 General Contractor 60,937 General Labor 15,000 Total $ 126,937 Rate and Method of Apportionment of the Special Tax The Special Tax is to be levied by the Finance Director of the City on behalf of the District each Fiscal Year on all parcels within the District in an amount equal to the maximum Special Tax, less any Services Credit, as such terms are defined below. On March 1 of each year all taxable Parcels within the District shall be categorized by the Finance Director either as Developed Parcels or Undeveloped Parcels, and shall be subject to a Special Tax in accordance with the Rate and Method of Apportionment specified below. Undeveloped Parcels A Special Tax shall be levied on each Undeveloped Parcel as follows: (Taxable Sp.Ft.of Parcel X Maximum) Services = Special (Taxable Sq. Ft.of District Special Tax) Credit Tax Developed Parcels A Special Tax shall be levied on each Developed Parcel as follows: 1 1 (Maximum _ Total Special Tax Levied X Total Number of) _ Services = Special (Special Tax on Undeveloped Parcels Developed Parcels) Credit Tax s Definitions amended.Aet rneans the Mello Roos Gemirntinity-Facilities Act of 1982,as The Bond. (GoldenvvesUBIlis Areet) 1990 Special Tax Bonds, and any other bonds of the Dist!-iet payable from the Special—Tax: 36 The City means the Gity of Huntington Beach,ealifernia. Developed Parcel (1) is any Parcel that is within the boundaries of the District based on the latest available equalized rolls of the County of Orange as of March 1 of the applicable year which is not exempt from the Special Tax pursuant to Section 53311,et seq. of the California Government Code,(2) is not greater than 50,000 square feet in total square footage and (3) with respect to which a building permit for a single family dwelling has been issued as of March 1 of the current year. The Distriet FiscalAgent means the fiscal agent fbt-the Bonds appointed tinder the Fiscal Agent Ag.eement. Fiscal Agent Agreem mearts Elie agreement by that narne appro%ed by the Resolution e iissuance. I E Fiscal Year means the period starting on July land ending the following June 30. Maximum Special Tax is an amount for any Fiscal Year deteMinedb., reference to Attaehment4 lie.etaegual to$264,000. Resolution of 199ttance isstiance of Bonds. Services Credit is an amount equal to any proceeds of the Special Tax Levied within the District which has been allocated by the City to the payment of police and fire protection services and/or paramedic services authorized under the Act which have not been expended for such purpose by the last day of the prior Fiscal Year. i Special Ttxis any tax antherimd by Section 53340 of the 6alifbt nia Government E30de adopted by Ordinance of the City and levied within the District-. Taxable Square Footage of Parcels is all of the area within any Parcel within the District which 3 is not exempt from the Special Tax pursuant to Section 53311, et. seq. of the California Government Code. Total Taxable Square Footage of the District means the aggregate Taxable Square Footage for all Parcels within the District. s s Undeveloped Parcel is any Parcel within the boundaries of the District (based on the latest equalized rolls of the County of Orange as of March 1 of each year) which is not a Developed Parcel, and is not exempt from the Special Tax under the provisions of the Act. 1 37 MAKINI ,M SncniAi TAV DV TIC/ Ai VLFA.R. Fiscal im i99 1 i99n nrA nQA - _ - "VTL�l7 . 993 274,6 1994 irk f i995 __ _ _ noc nrn ) 19 9 6 nnn inn ) i 997 __ __ nnn nnn f Ao nno nc2 'Tz.� 999 i _ _ nnnf3+8 �rJJ 2 0 00 ni r 5,9 nnni - --- - -- - 321, 2002 n28 nri_ G2083 f 2806 _ _ _ -- _ _ neo 3Az ) 2006 966,309 `nnn --- - -- - - 362, ) 20 0 8 --- - 369, nn+i nnn nnn z-�✓v n 400,1 ono inn f 2014 ,nn inn inn ,�ii i1 f ) 7-82 n i6 4586 8 2028 pro ono 20 2 1 and Previous C t - - " T''t3LZTI-Itdr 38 THE DEVELOPMENT The information set forth below regarding ownership and development of properties in the District was provided by the Property Owners or the Developers and has not been independently verified. This information has been included because it is considered relevant to an informed evaluation of the District and the Project. As development of the properties has not commenced, no assurance can be given that it will occur, or that it will occur in a timely. manner. The information should not be construed to suggest that the Bonds or the Special Taxes that will be used to pay the Bonds are personal obligations of the Property Owners. The Property Owners do not intend to acquire any substantial assets or engage in any substantial business activities other than those related to the ownership of their respective Developments. However, the general partners may engage in the acquisition, development, ownership and management of similar types of projects. The Property Owners will not be personally liable for payments of the Special Taxes to be applied to pay the principal of and interest on the Bonds. Furthermore, except to the extent expressly set forth herein, no representation is made that the Property Owners will have substantial funds available for the Development. Accordingly, the Property Owners' financial statements are not included in this Official Statement. Property Ownership According to the preliminary title reports, there are seven Property Owners of the land in the District. The current ownership is shown below: 1. Central Park #8, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 2. Central Park #12,A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 3. Central Park #15, A California Limited Partnership, David D. Dahl, General Partner, 505 Park Avenue,Balboa Island,CA 92662. 4. Southwest Diversified, A California General Partnership, William D. Foote, PresidentManaging Partner, 1849200 Von Karman,Suite 400,Irvine,CA 92715. 5. Emil Walter Plegel and Ruby Lucille Plegel, Trustees, 7071 Thomas Street, Buena Park, CA 90621. 6. Audrey DeNubila Panabaker,Virginia May Denubila, 11728 Chaparal Street, Los Angeles, CA 90049. 7. William Landis, 1901 Avenue of the Stars,Suite 1060, Los Angeles,CA 90067. The Developers and the Development Southwest Diversified Coscan Partners, a California Limited Partnership ("Southwest Diversified")currently owns property within the District and is constructing 30 of the 113 homes to be constructed in the District. Southwest Diversified is a relativelv new partnership formed by Coscan 39 i Development Corporation ("Coscan"). Coscan is an international public real estate development company which operates in maior market areas in North America. The balance of the 88 homes are being developed by several limited partnerships in which David D. Dahl,dba The Dahl Company,is the General Partner. David D. Dahl received a BA in Business Administration in 1971 from California State University and a Juris Doctor in 1975 from Western State Universitv. While studying law,Mr. Dahl was actively engaged in real estate sales in Orange County, specializing in land acquisition for real property development for major Orange County builders. He closed his law practice in 1976 to devote full time to his duties at Lindborg/Dahl Investors,Inc. As President of Lindborg/Dahl Investors, Inc., Mr. Dahl was responsible for land acquisition, governmental approvals, equity syndication, and financing for thirty developments in the vears from 1975 to 1981. i In January of 1986, Mr. Dahl opened an office in Newport Beach, known as The Dahl Company, emphasizing construction of move-up market and luxury single family homes. Mr. Dahl acts as sponsor and General Partner for real estate limited partnerships in residential construction and hotel operation and development. Since 1975, equity capital raised totaled $11,188,500. To C-_m__ i The Appraised Value The table entitled "Assessment Roll Data" includes the Assessor's 1988/89"full cash value" (land and improvements), as of the date of lay conveyance and ownership of parcels as shown on the Assessment Roll. Beginning with the 1981/82 fiscal year, property in California is assessed at 100% of"full cash value". Article XIIIA of the California Constitution defines such "full cash value" as the appraised value of of March 1, 1975,plus adjustments not to exceed 2%per year to reflect inflation and requires reassessment of "full cash value" upon change of ownership or new construction. Accordingly, the 1 assessed values in the table reflect only 1975 values as increased by 2%per year unless the parcel has changed ownership or has had new construction thereon, in which case the assessment shown will more closely approximate current market value. Assessor's Parcel No. Full Cash Value Sales Price As of 110-186-15 $ $ 25,000 09/89 591-391-01 1,729,920 05/88 591-391-02 833,000 02/89 591-391-03 68,990 02/89 591-391-04 69,619 02/89 110-200-04 3,000,000 10/89 110-200-05 3,000,000 10/89 110-200-10 19,256 10/89 110-200-11 41,131 10/89 110-200-15 6,500,000 08/89 110-200-16 6,500,000 08189 40 110-200-23 3,000,000 10/89 110-210-01 92,491 02/77 110-210-02 300,000 10/88 110-210-04 27,540 01/88 TOTAL $25,206,947 The ratio of the Assessor's full cash value to the proposed principal amount of Bonds is 10-ra+50 to 1. 41 cl) CONCLUDING INFORMATION Underwriting The Bonds were purchased through negotiation by Chilton & O'Connor, Inc. (the "Underwriter"). The Underwriter agreed to purchase the Bonds at a discount from the initial public offering price equal to $ . The initial public offering prices set forth on the cover page may be changed by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers and others at lower than the public offering prices set forth on the cover page hereof. Legal Opinion The legal opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, approving the validity of the Bonds will be made available to purchasers at the time of original delivery. A copy of the legal opinion will be printed on the back of each definitive bond. Fees payable to Bond Counsel are contingent upon the sale and delivery of the Bonds. Tax ExemptiortMatters The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements which must be met subsequent to the issuance of the Bonds for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. These requirements include, but are not limited to, restrictions on the use of bond proceeds and provisions which prescribe yield and other limits within which the proceeds of the Bonds are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the United States of America. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Pursuant to the Indenture, the Authority has covenanted to comply with the requirements of the Code and to cause the payment to the United States Treasury of any and all amounts required to be rebated under the Code with respect to the outstanding bonds of the Agency being refunded with proceeds of the Bonds. In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject to the qualifications set forth below, under existing statutes, regulations, rulings and court decisions, assuming compliance by the Authority with the aforementioned covenants, interest on the Bonds is excluded from gross income for purposes of federal income taxation. Bond Counsel is further of the opinion that interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax provisions of the Code. However, interest on the Bonds received by corporations will be included in corporate adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. Although Bond Counsel has rendered an opinion that the interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient's particular tax status or other items of income or deduction and Bond Counsel expresses no opinion regarding any such consequences. Additionally,Bond Counsel has not undertaken to determine(or to inform any person) whether any actions taken (or not taken)or events occurring after the date of delivery of the Bonds may affect the tax status of the Bonds. 43 i Bond Counsel is further of the opinion that under existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt from personal income taxation imposed by the State of California. No Litigation At the time of delivery of and payment for the Bonds, the City Attorney will deliver its opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency against the City or the District affecting their existence or the titles of their respective officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the • Fiscal Agent Agreement, or the collection or application of the Special Taxes to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the 4 i Bonds,the Resolution of Issuance,the Fiscal Agent Agreement,or any other applicable agreements or any action of the City or the District contemplated by any of said documents,or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or the District or their authority with respect to the Bonds or any action of the City or the District contemplated by any of said documents. 1 The Financing Consultant The material contained in this Official Statement was prepared by Rod Gunn Associates,Inc.,Seal Beach,California,an independent financial consulting firm, which advised the City as to the financial structure and certain other financial matters relating to the Bonds. Fees paid to Rod Gunn Associates, Inc.are contingent upon the sale and delivery of the Bonds. The information set forth herein has been obtained by Rod Gunn Associates, Inc. from sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness,nor has it been independently verified. i No Rating jThe City has not made and does not contemplate making application to any rating agency for the assignment of a rating to the Bonds. i No General Obligation of the City The Bonds are not general obligations of the City but are limited obligations of the District payable solely from the proceeds of the Special Taxes and proceeds of the Bonds, including capitalized interest and amounts deposited in the Reserve Fund and investment income thereon, and the proceeds,if any,from the sale of property in the event of a foreclosure. See"SOURCE OF PAYMENT FOR THE BONDS- Covenant for Superior Court Foreclosure". Any tax for the payment of the Bonds will be limited to the Special Taxes to be collected within the jurisdiction of the District. i r i 4 44 i t References The preceding summaries of the Resolution of Issuance, the Fiscal Agent Agreement, other applicable legislation, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Execution The execution and delivery of this Official Statement by the City Administrator has been duly authorized by the City Council of the City on behalf of the District. CITY OF HUNTINGTON BEACH By: /s/ City Administrator 45 APPENDIX A DEFINITIONS OF CERTAIN TERMS "Acquisition Agreement" means the Acquisition Agreement, dated as of July 1, 1990, between the City and David D. Dahl. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq.of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent(including any fees or expenses of its counsel), the expenses of the City in carrying out its duties under the Fiscal Agent Agreement (including, but not limited to, the levying and collection of i the Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto,and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties under the Fiscal Agent Agreement and,in the case of the City,in any way related to the administration of the District. i f "Administrative Expense Fund" means the fund by that name established by the Fiscal Agent Agreement. "Annual Debt Service" means, for each Bond Year, the sum of(i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled,and(ii)the principal amount of the Outstanding Bonds due in such Bond Year. "Auditor" means the Auditor-Controller of the County of Orange. "Authorized Officer" means the City Administrator, the City Finance Director, the City Clerk, the Director of Public Works of the City or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in the Fiscal Agent Agreement as required to be undertaken by an Authorized Officer. "Bond Counsel" means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund" means the fund by that name established by the Fiscal Agent Agreement. A-1 "Bond Year" means the one-year period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "Bonds" means the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds at any time Outstanding under the Fiscal Agent Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "City" means the City of Huntington Beach,California,and any successor thereto. "Closing Date" means the date upon which there is a physical delivery of the Bonds in exchange for the amount representing he purchase price of the Bonds by the Original Purchaser. "Code" means the Internal Revenue Code of 1986,as amended. "Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization,sale and issuance of the Bonds,which items of expense shall include,but not be limited to,printing costs,costs of reproducing and binding documents,closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee,expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond counsel, and counsel to the financial consultant, financial consultant's fees, charges for execution, transportation and safekeeping of the Bonds and other costs,charges and fees in connection with the foregoing. "Cost of Issuance Fund" means the fund by that name established by the Fiscal Agent Agreement. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which is scheduled to be retired before the beginning of such period. "District" means Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) formed pursuant to the Resolution of Formation. A-2 "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: (i) Direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America,including, without limitation,such of the foregoing which are commonly referred to as"stripped"obligations and coupons;or (ii) Any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii) certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, (v)project notes issued by the United States Department of Housing and Urban Development, and NO public housing notes and bonds ' guaranteed by the United States of America. f r "Financial Consultant" means Rod Gunn Associates, Inc., or such other independent financial consulting firm appointed by the District to advise the District as to financial matters relating to the Bonds. :y "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement, its successors and assigns, and any other corporation or association which may at any time be substituted in its place as provided in the Fiscal Agent Agreement. "Fiscal Agent Agreement" means the Agreement by that name approved by the Resolution of Issuance. "Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year,both dates inclusive. t "Gross Proceeds" means the sum of the following amounts: i (i) original proceeds, namely, net amounts received by or for the City or the District as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds, namely, amounts received at any time by or for the City or the District, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause(i) above)or investment proceeds(as referenced in this clause(ii)) in Nonpurpose Investments, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds (determined in accordance with applicable Regulations)of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds (as referenced in clause (ii) above) of the Bonds, which are held in the Bond Fund and any A-3 other fund to the extent that the City reasonably expects to use such other fund to pay the Debt Service; GO amounts in the Reserve Fund and in any other fund established as a reasonably required reserve for the payment of Debt Service; (v) Investment Property pledged as security for payment of Debt service; (vi) Special Taxes and amounts, other than as specified in this definition, used to pay Debt Service;and (vii) amounts received as a result of investing amounts described in this definition. "Improvement Fund" means the fund by that name created by and held by the Fiscal Agent pursuant the Fiscal Agent Agreement. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, loth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services'"Called Bond Service,"55 Broad Street,28th Floor,New York, New York 10004; Moody's Investors Service "_Municipal and Government," 99 Church Street, New York, New York 10007,Attention: Municipal News Reports; Standard & Poor's Corporation"Called Bond Record," 25 Broadway,Third Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Interest Payment Dates" means April 1 and October 1 of each year, commencing April 1, 1991. "Investment Agreement" means one or more agreements with respect to the investment of the proceeds of the Bonds recommended by the Financial Consultant to be entered into between the District and/or the Fiscal Agent and an entity or entities whose long-term debt (or claims-paying ability) is rated in either of the two highest (excluding any modifier) categories by Standard& Poor's Corporation or Moody's Investors Service,Inc. "Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by the Fiscal Agent Agreement. "Investment Property" means any security(as said term is defined in Section 165(g)(2)(A)or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations (other than specified private activity bonds as defined in Section 57(e)(5)(6) of the Code) the interest on which is excluded from gross income under Section 103 of the Code for federal income tax purposes. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. A-4 "Nonpurpose Investment" means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired in order to carry out the governmental purpose of the Bonds. "Original Purchaser" means the first purchaser of the Bonds from the City. "Officer's Certificate" means a written certificate of the City signed by an Authorized Officer of the City. "Ordinance" means any ordinance of the City levying the Special Taxes. "Outstanding", when used as of any particular time with reference to Bonds, means(subject to the provisions of the Fiscal Agent Agreement)all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement;and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. "Permitted Investments" means (i) Federal Securities; (ii) obligations of states or of any political subdivision thereof, provided that the payment of principal thereof and interest thereon is fully secured by obligations described in G)above; (iii) any of the following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations or other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National _Mortgage Association and the Federal Home Loan Mortgage Corporation; and bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development, with a member bank or banks of the Federal Reserve System; (iv) interest-bearing demand or time deposits (including certificates of deposit) in federal or State chartered savings and loan associations or in a federal or State banks (including the Fiscal A-5 Agent), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in a Rating Category (as defined in the Fiscal Agent Agreement),and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in a Rating Category; (v) written repurchase agreements with any bank, savings institution or trust company (other than the Fiscal Agent) which is insured by the Federal Deposit Insurance Corporation,or with any broker-dealer with retail customers which falls under Securities Investors Protection Corporation protection, provided that such repurchase agreements are fully .secured by Federal Securities or obligations of any agency of instrumentality of the United States of America and provided further that (a)such collateral is held by the Fiscal Agent or any agent acting solely for the Fiscal Agent during the term of such repurchase agreement,(b)such collateral is not subject to liens or claims of third parties, (c) such collateral has a market value (determined at least once every 14 days) at least equal to the amount invested in the repurchase agreement, (d) the Fiscal Agent has a perfected first security interest in the collateral, (e) the agreement shall be fora term not longer than 270 days and (f) the failure to maintain such collateral at the level required in (c) above will require the Fiscal Agent to liquidate the collateral; (vi) taxable money market fund portfolios restricted to obligations with maturities on one year or less issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America and repurchase agreements collateralized by such obligations; (vii) commercial paper having original maturities of not more than 365 days and rated in a Rating Category; (viii) bankers acceptances rated in a Rating Category, endorsed and guaranteed by banks described in clause(v)of this definition;and (ix) obligations the interest on which is excluded from gross income for purposes of federal income taxation under Section 103 of the Code and which are rated in a Rating Category. "Principal Office" means the principal corporate trust office of the Fiscal Agent at San Francisco,California or such other or additional offices as may be designated by the Fiscal Agent. "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use by a nongovernmental unit as a member of the general public. "Proceeds", when used with reference to the Bonds, means the face amount of the Bonds, plus accrued interest and premium, if any,less original issue discount and less proceeds from the sale of the Bonds deposited in the Reserve Fund. "Project" means the facilities more particularly described as such in the"Report" attached as Exhibit A to the Resolution of Formation. A-6 "Purchase Price", for the purpose of computation of the Yield of the Bonds, has the same meaning as the term"issue price"in Sections 1273(b)and 1274 of the Code,and,in general, means the initial offering price of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or if the Bonds are privately placed,the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Purchase Price", for the purpose of computation of the Yield of Nonpurpose Investments, means the fair market value of the Nonpurpose Investments on the date of use of Gross Proceeds of the Bonds for acquisition thereof,or if later, on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. "Rating Category" means one of the two highest rating categories then in effect under the rating systems of Moody's Investors Service or Standard and Poor's Corporation, without regard to plus or minus sign or numerical or other qualifying designation. "Record Date" means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date. "Regulations" means temporary and permanent regulations promulgated under the Code. "Reserve Fund" means the fund by that name established pursuant to the Fiscal Agent Agreement. "Reserve Requirement" means an amount equal to 8% of the initial aggregate principal amount of the Bonds. "Resolution" means Resolution No. 6147, adopted by the City Council of the City on June +825, 1990. "Resolution of Formation" means Resolution No. 6161 adopted by the City Council of the City on June 4$25, 1990. "Reseltition of lattention" rneans Resolution No. , adopted by the City (3omieil on May , i 990. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax - (516) 227-4039 or 4190; :Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax - (312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex - (215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. A-7 "Services" means the services more particularly described as such in the"Report"attached as Exhibit A to the Resolution of Formation. "Services Fund" means the fund by that name established pursuant to the Fiscal Agent Agreement. "Special Taxes" means the special taxes levied within the District pursuant to the Act, the Ordinance and Fiscal Agent Agreement. "Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest and penalties thereon. "Special Tax Fund" means the fund by that name established by the Fiscal Agent Agreement. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to the Fiscal Agent Agreement,but only if and to the extent that such agreement is specifically authorized by the Fiscal Agent Agreement. "Treasurer" means the Finance Director of the Citv. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Investments which require payments in a form not characterized as principal and interest)on a Nonpurpose Investment or on the Bonds,produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds, all computed as prescribed in the applicable Regulations. A-8 APPENDIX B SUPPLEMENTAL INFORMATION ON THE CITY OF HUNTINGTON BEACH The following information concerning the City of Huntington Beach is presented as general background data. The Bonds are payable solely from Tax Revenues as described in the Official Statement. The Bonds are not an obligation of the City of Huntington Beach, and the taxing power of the City is not pledged to the payment of the Bonds. General The City of Huntington Beach encompasses 27 square miles and is located in western Orange County. It is approximately 19 miles south of Los Angeles Civic Center. Neighboring communities include Seal Beach,Newport Beach,Westminster and Fountain Valley. Transportation The San Diego Freeway (Interstate 405), a major north-south corridor, passes through the northern end of the City. Within minutes of the City are the Newport Freeway (State Highway 55) a east-west highway to the east, and the San Gabriel River Freeway (Interstate 605), a north-south freeway west of the City. Bus service is provided by Orange County Rapid Transit District. There are bus service connections to the Southern California Rapid Transit District, including Park-and-Ride service to downtown Los Angeles. Air cargo and passenger flight services are provided at Los Angeles International Airport, 25 miles west, which is served by all major airlines; Long Beach Airport, 5 miles west; and John Wayne Airport in Orange County,a twenty minute drive. All of these airports provide regional service. City Government The City of Huntington Beach was incorporated as a charter city in 1909 and operates under the Council/Administrator form of government. The City is governed by a six-member council elected at large for four-year alternating terms, with the Mayor being selected by the Council from amongst its members. All other offices, including those of City Administrator and City Attorney, are filled by appointments of the Council. Huntington Beach employs 400 full-time staff members and approximately 450 part-time workers. B-1 Community Facilities and Services The City of Huntington Beach provides its own police,fire,and paramedic protection services. The City itself handles sewer and park maintenance, and contracts out to private firms for water, trash collection,and street sweeping services. Educational services are provided by the Huntington Beach Unified School District. The district operates six elementary schools, two middle schools, three high schools,a continuation school, and an adult education center in the City. Total enrollment in the district is 5,5-0 students. Health care service within the City is provided by Within the City of Huntington Beach is a 300-acre park and children's fishing lake. City Community Services operate 518 other park facilities with year-round activities for all ages. In addition,there is a system of bicycle and horse trails,fully developed and lighted athletic fields,and 18 hole disc golf course, a 316,710-volume City Library, and a civic theatre which houses the symphony orchestra, community theatre, and civic light opera. Other attractions within the area include Disneyland, Knott's Berry Farm, the Los Angeles Music Center, the Hollywood Bowl, and the Los Angeles County Art Museum. Regional recreational areas include beach resorts and mountain resorts. Population The City's population increased more than 47 percent between the 1970 and the 1980 U.S. Census periods. Total population at January 1, 1990 was estimated at 188,700 by the State Department of Finance, an increase of 18,195persons, or nearly 6.7percent over the 1980 U.S. Census, and 960 persons, or 0.51 percent over the 1989 Department of Finance estimate. The following table summarizes population growth between 1970 and 1989. POPULATION DATA City of Huntington Beach OrangeCounty State of California Annual Annual Annual Percentage Percentage Percentage Year Population Increase Population Increase Population Increase 1970 0) 115,960 1,421,233 19,971,069 1980(1) 170,505 47.0% 1,962,200 38.1% 23,668,562 1.9% 1985(2) 180,068 5.6 2,088,347 6.4 25,857,464 1.8 1986(2) 184,280 2.3 2,145,706 2.7 26,636,961 3.0 1987(2) 186,913 1.4 2,195,652 2.3 27,292,300 2.5 1988(2) 187,740 0.4 2,238,721 1.9 28,018,710 2.7 1989(2) 188,700 0.5 2,280,400 1.9 28,662,000 2.3 Source: 1 US Census Bureau (2)Population Research Unit,State of California Department of Finance B-2 Personal Income Between 1985 and 1988 the City's growth in median household effective buying income grew 12 percent compared to 12 percent for the County, 13 percent for the State and 3 percent for the nation. The following table summarizes the total effective buying income and the median household effective buying income for the City,County,the State,and the nation for the years 1985 through 1988. CITY OF HUNTINGTON BEACH PERSONAL INCOME For the Years 1985 through 1988 Total Effective Median Household Buying Income Effective Year and Area (000's Omitted) Buying Income 1985 City of Huntington Beach $ 2,823,617 $ 35,247 Orange County 31,573,345 33,131 California 346,280,970 26,557 United States 2,800,258,833 23,680 1986 City of Huntington Beach $ 3,090,555 $ 37,468 Orange County 34,579,535 35,181 California 380,811,129 28,227 United States 2,981,720,801 24,602 1987 City of Huntington Beach $ 3,346,366 $ 39,942 Orange County 38,057,151 37,532 California 426,008,347 30,537 United States 3,202,847,131 25,888 1988 City of Huntington Beach $ 3,312,439 $ 39,512 Orange County 38,034,417 37,096 California 426,174,001 30,088 United States 3,064,005,977 24,488 Source: S&MM(Sales and Marketing Management)Survey of Buying Power. B-3 Employment The city is located in the western portion of the Orange County labor market area adjacent to the Los Angeles/Long Beach labor market area. The Orange County, Los Angeles/Long Beach and Riverside/San Bernardino/Ontario labor market areas combined contain the largest concentrations of major industrial firms in the western United States. Four major job categories constitute 83.8% of Orange County's work force. They are .Services (26%), wholesale and retail trade (26%), manufacturing(21.5%),and government(10.3%). Overall in the five years between 1986-1990, total employment in Orange County increased by 14.9%. The distribution of employment in Orange County area as follows: ORANGE COUNTY MSA WAGE AND SALARY WORKERS IN NONAGRICULTURAL ESTABLISHMENTS (In Thousands) January January January January January Industry 1986 1987 1988 1989 1990 Total nonagricultural 1,040.2 1,091.9 1,132.0 1,163.5 1,196.1 Mining 2.1 1.8 1.4 1.3 1.6 Construction 56.2 63.6 66.8 67.0 70.5 Manufacturing 247.7 248.6 257.1 259.1 256.8 Nondurable goods 62.1 65.2 67.9 68.2 69.7 Durable goods 179.6 183.4 189.2 189.7 187.1 Transportation& public utilities 33.8 34.2 34.0 34.0 35.1 Wholesale&retail trade 259.1 270.2 280.3 295.3 305.2 Finance,insurance& real estate 85.0 92.2 92.4 93.3 95.2 Services 250.4 266.5 282.2 295.1 308.2 Government 112.0 114.8 117.9 119.6 123.5 Federal 14.7 15.3 15.8 16.3 16.1 State& Local 97.3 99.4 102.1 103.3 107.4 * The January 1990 unemployment rate in Orange County was 2.9%. The State of California January 1990 unemployment rate was 5.5%. Source: State of California Employment Development Department, "Annual Planning Information" and"California Labor Market Bulletin,January 1990". B-4 v As of October, 1988, the largest employers in the City of Huntington Beach are as follows: MANUFACTURING EMPLOYMENT Name of Company Employment Products McDonnell Douglas Astronautics,Inc. 8,000 Aerospace Weiser Lock 1,081 Locks and Door Hardward Cambro Manufacturing 507 Institutional Food Equipment Opto 22 120 Decorative Ceramics Zwick Energy Research 105 Aircraft& Oilfield Equipment California Fineblanking Corp. 100 Fineblanking Source: City of Huntington Beach,Economic Development Department. NON-MANUFACTURING EMPLOYMENT Name of Company Employment Type of Business So.California Gas Company 492 Utility Company James Lumber Company 325 Lumber Materials Western Assembly,Inc. 105 Electronic Assemblies Shipley's 104 Retail Clothing Sotre Dean Worldwide 100 International Freight Forwarding Source: City of Huntington Beach,Economic Development Department. B-5 Commercial Activity The volume of retail sales and total taxable transactions for Huntington Beach during the five years that ended December 31, 1989 and taxable transactions by type of business are shown below. CITY OF HUNTINGTON BEACH Total Taxable Transactions and Number of Sales Permits, 1984-1988 Total Retail %of Retail Taxable %of Issued Sales Increase/ Sales Transactions Increase/ Sales Year ( 000) (Decrease) Permits ( 000 (Decrease) Permits 1984 1,013,532 1,328 1,202,802 5,537 1985 1,137,845 12.3% 1,335 1,348,247 12.09% 5,656 1986 1,212,666 6.57% 1,411 1,455,290 7.94% 6,041 1987 1,277,401 5.33% 1,517 1,544,775 6.15% 6,263 1988 1,229,134 (3.93%) 1,593 1,521,594 (1.52%) 6,314 Source: State of California,State Board of Equalization,Taxable Sales in California. CITY OF HUNTINGTON BEACH Taxable Transactions by Type of Business, 1984-1988 (In Thousands of Dollars) Increase/ Type 1984 1985 1986 1987 1988 (Decrease) Retail Stores Apparel 30,496 37,978 41,452 45,412 46,385 52.1% General Merchandise 141,377 149,896 153,399 165,496 160,673 13.7% Drug Stores 21,748 22,299 22,448 22,087 22,510 3.5% Food Stores 93,086 97,239 99,277 85,060 81,459 (12.5%) Packaged Liquor Stores 15,084 13,947 15,145- 19,323 17,772 17.8% Eating/Drinking Places113,622 121,687 130,540 136,593 140,423 23.6% Home Furnishings and Appliances 70,698 74,661 80,084 88,584 102,604 45.1% Building Materials and Farm Implements 115,825 144,852 185,983 190,306 168,441 45.4% Auto Dealers/ Suppliers 211,872 250,023 271,924 271,355 298,636 40.9% Service Stations 94,632 97,099 96,245 133,407 # N/A Other Retail Stores 105,092 126,165 116,169 119,778 #190,231 81.0% Total Retail Stores 1,013,532 1,137,845 1,212,666 1,277,401 1,229,134 21.3% All Other Outlets 119,270 210,402 242,624 267,374 292,460 145.0% Total All Outlets 1,212,802 1,348,247 1,455,290 1,544,775 1,521,594 25.5% Source: State of California,State Board of Equalization,Taxable Sales in California. # Sales omitted because their publication would result in disclosure of confidential information. This total is included in"Other Retail Stores"category. B-6 The following are the ten largest sales tax payers and their percentage of total sales tax collected in the City of Huntington Beach for calendar year 1988. CITY OF HUNTINGTON BEACH Schedule of Principal Sales Tax Payers For Calendar Year 1988 Rank Taxpayer %of Total 1 James Lumber Company 3.29% 2 Friendly Fort Sales 2.76 3 Mervyn's 2.57 4 Reliable Wholesale Lumber 2.39 5 Broadway Department Stores 1.81 6 JC Penney Company,Inc. 1.73 7 B.W.Randall Lumber Co.,Inc. 1.66 8 Dellillo Chevrolet 1.64 9 Huntington Jeep Eagle,Inc. 1.58 10 Roger Miller Honda 1.56 Source: City of Huntington Beach,Finance Department. Building Activity The following chart summarizes the building permit valuations for Huntington Beach for the five-year period from 1985 to 1989. CITY OF HUNTINGTON BEACH BUILDING ACTIVITY AND VALUATION 1985- 1989 (Valuation in Thousands of Dollars) 1985(1) 1986 0) 1987(2) 1988(2) 1989(2) Residential New Single-Family $ 25,641 $ 43,816 $ 51,053 $141,741 $ 37,369 New Multi-Family 26,155 32,759 32,431 40,965 22,852 Additions,alterations 6,067 8,710 10,143 10,762 12,926 Total Residential $ 57,863 $ 85,285 $ 93,627 $193,468 $ 73,146 Non-Residential$ New Commercial $ 46,201 $ 32,501 $ 7,263 $ 27,489 $ 31,674 New Industrial 18,125 11,553 12,407 5,350 3,841 Other 4,132 30,78 3,071 4,643 3,681 Addition,alterations 14,644 15,730 19,087 12,453 16,275 Total Non-Residential $ 83,102 $ 62,863 $ 41,828 $ 49,936 $ 55,471 Total $140,965 $148,148 $135,455 $243,403 $128,618 Percentage Increase/ (Decrease) 5% (9%) 79.7% (89.2%) No.of New Dwelling Units Single-dwelling 231 383 402 865 225 Multi-dwelling 647 595 564 544 267 Total New Units 878 978 966 1,409 492 Source: Q)Security Pacific National Bank, "California Construction Trends" (2)Ecomonic Sciences Corporation, "California Building Permit Activity" B-7 rR ROD GUNN ASSOCIATES, INC Connie Brockway � 3010 Ow RA.\cH PK�1'Y SUITE 330,$[AL BEACH,C.�90740-2750 f fib - vu s JONES BALL DILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS FOUR EMBARCADERO CENTER HA$oLD w.BANK' SUITE 1950 STEPHEN R.CASALEOOIO SAN FRANCISCO,CA 94111 BRUCE R.COLEMAN THOMAS A.DOWNEY (415)391-5780 ANDREW C.HALL,in. KENNETH I.JONES FACSIMILE WILLIAM H.MADISON DAVID J.OSTHR (415)391-5784 BRIAN D.QUINT (415)391-5785 PAVL J.THIMMIO (415)956-6308 SHARON STANTON WHITE TO NEW August 6 1990 DAT TSSNEWTORE AND � VMRICT OF COLL-MMA BARS ONLT ROBERT J.HILL(1922.1988) A VIA COURIER r,C'.A e, To: Distribution RE: City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Enclosed are revised, final drafts of the Fiscal Agent Agreement, Acquisition Agreement and Homeowner Disclosure form for the above-referenced financing. The Fiscal Agent Agreement and the Acquisition Agreement have been marked to show the changes made to them since they were last distributed to the working group. Comments and/or questions with respect to the enclosed documents must be directed to the undersigned no later than. 1:00 p.m. on August 8th. Very truly yours, ail J"- ' v Paul J. Th unmlg Enclosures PJTmdJ8163 i ti CITY OF HUNTINGTON. BEACH PROPOSED COMMUNITY FACILITY DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) DISTRIBUTION LIST (August 6, 1990) CITY: UNDERWRITER: CITY OF HUNTINGTON BEACH CHILTON & O'CONNOR -Mr. Robert J. Franz -Mr. Tony Wetherbee Deputy City Administrator/ 1901 Avenue of the Stars,Suite 1400 Administrative Services Los Angeles,California 90067 -Mr. Louis F. Sandoval, (213) 203-0966 Director of Public Works (213) 201-5091 [FAX] -Mr. Robert E. Eichblatt, City Engineer -Mr. Dan T. Villella, FINANCIAL CONSULTANT: Director of Finance -Ms. Connie Brockway, GRC MUNICIPAL FINANCE, INC. City Clerk -Mr. Rod Gunn -Mr. Arthur J. Folger, Principal Deputy City Attorney 3010 Old Ranch Parkway,Suite 330 2000 Main.Street Seal Beach,California 90740 Huntington Beach,CA 92648 (213) 598-7677 (714)536-5236[Franz] (213) 431-5446[FAX] (714)536-5432[Sandoval] (714)536-5431 [Eichblatt] (714)536-5228[Villella] BOND COUNSEL: (714) 536-5404[Brockway] (714)536-5555[Folger] JONES HALL HILL & WHITE -Paul J. Thimmig, Esq. (714)536-4182[Franz FAX] -Glenda F. Bell, Project Coordinator (714) 536-6473[Sandoval FAX] Four Embaicadero Center, 19th Floor (714)536-6473[Eichblatt FAX] San Francisco,CA 94111 (714)536-4182[Villella FAX] (415) 391-5780 (714)536-4693 [Brockway FAX] (415) 391-5785 (FAX) (714)536-4693[Folger FAX] FISCAL AGENT DEVELOPER: BANK OF AMERICA THE DAHL COMPANY -Marion Reyes, Trust Officer -Mr. David Dahl Corporate Trust Administration -Mr. Ron McDevitt 555 S. Flower Street, 5th Floor 505 Park Avenue Los Angeles, CA 90071 Balboa Island,CA 92662 (213) 228-4146 (714) 673-0127 (213) 689-4772[FAX] (714) 723-0269[FAX] Prepared by: Rod Gunn Associates,Inc. As of 07/18/90 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) PROJECT FINANCING TEAM City of Huntington Beach Bond Counsel Robert J. Franz,Deputy City Administrator Paul J.Thimmig,Esq. s Louis F. Sandoval, Director of Public Works Glenda F. Bell,Project Coordinator a y+ Robert E. Eichblatt,City Engineer Jones Hall Hill&White r , cn Dan T. Villella,Director of Finance Four Embarcadero Center,Suite 1950 �,L Connie Brockway,City Clerk San Francisco,CA 94111 Arthur J. Folger,Deputy City Attorney (415) 391-5780 2000 Main Street (415) 391-5784(FAX) s Huntington Beach,CA 92648 (714) 536-5236(Franz) (714) 536-4182(Franz-FAX) (714) 536-5432(Sandoval) Developer (714) 536-6473(Sandoval-FAX) David Dahl (714) 536-5431 (Eichblatt) Ron McDevitt (714) 536-6473(Eichblatt-FAX) The Dahl Company (714) 536-5225(Villella) 505 Park Avenue (714) 536-4182(Villella-FAX) Balboa Island,CA 92662 (714) 536-5404(Brockway) (714) 673-0127 (714) 536-4693(Brockway-FAX) (714) 723-0269(FAX) (714) 536-5555(Folger) (714) 536-4693(Folger-FAX) Financing Consultant Property Owners Rod Gunn,Principal Central Park#8,A California Limited Partnership Rod Gunn Associates,Inc. David D. Dahl,General Partner 3010 Old Ranch Parkway,Suite 330 505 Park Avenue Seal Beach,CA 90740 Balboa Island,CA 92662 (213)598-7677 Central Park#12,A California Limited Partnership (213)431-5446(FAX) David D. Dahl,General Partner 505 Park Avenue Balboa Island,CA 92662 Fiscal Agent Central Park#15,A California Limited Partnership Peter C. Gerrer David D. Dahl,General Partner Bank of America NT&SA 505 Park Avenue 555 S. Flower Street,5th Floor Balboa Island,CA 92662 Los Angeles,CA 90071 Southwest Diversified,A California General Partnership (213) 228-4146 William D. Foote,Managing Partner (213) (FAX) 19200 Von Karman,Suite 400 Irvine,CA 92715 Emil Walter Plegel and Ruby Lucille Plegel,Trustees Underwriter 7071 Thomas Street Tony Wetherbee Buena Park,CA 90621 Ken Caresio Audrey DeNubila Panabaker,Virginia May Denubila Chilton&O'Connor,Inc. 11728 Chaparal Street 1901 Avenue of the Stars,Suite 300 Los Angeles,CA 90049 Los Angeles,CA 90067 William Landis (213) 203-0966 1901 Avenue of the Stars,Suite 1060 (213) 201-5091 (FAX) Los Angeles,CA 90067. t I , $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) 1990 SPECIAL TAX BONDS PURCHASE CONTRACT i 1 July 24, 1990 City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 Dear Sirs: Chilton & O'Connor, Inc. (the"Underwriter"), acting not as a fiduciary or agent for you, but on our own behalf, offers to enter into this Purchase Contract with the City of Huntington Beach, Huntington Beach, California (the "City"), subject to your acceptance within 24 hours on the date hereof. s 1. Introductory. The City is authorized to issue the above indicated principal amount of its 1990 Special Tax Bonds (the"Bonds"), pursuant to the Mello- Roos Community Facilities Act of 1982, as amended, constituting Sections 53311 et seq. of the California Government Code (the "Act"). The Bonds will be issued and secured under a fiscal agent agreement dated as of June 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association, San Francisco, California, as fiscal agent (the "Fiscal Agent"). The Bonds will mature on the dates and in the amounts and will bear interest at the rates shown on Schedule I hereto. 2. Purchase, Sale and Delivery of Bonds. On the basis of the representations, warranties and agreements contained herein, but subject to the terms and conditions herein set forth, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell to the Underwriter, the Bonds at a purchase price of 98.25% of the aggregate principal amount thereof plus accrued interest thereon(calculated on the basis of a 360-day year) to the Closing Date, less an original issue discount of$9,750. The City will deliver the Bonds to the Underwriter for the account of the Underwriter in definitive form against payment of the purchase price therefor by check or checks payable in federal funds at the office of Jones Hall Hill & White, A } Y � 1 i c Professional Law Corporation, San Francisco, California, at 10:00 a.m., California time, on August 9, 1990, or at such other time not later than seven business days thereafter as the Underwriter and the City shall mutually agree upon (such time being hereinafter referred to as the "Closing Date"). The Bonds to be delivered will be delivered in definitive fully registered form, with CUSIP numbers. imprinted thereon, in such denominations and registered in such names as the Underwriter requests by written notice to the City and the Fiscal Agent not less than five business days prior to the Closing Date and will be made available for checking and packaging at least 24 hours prior to the Closing Date. 3. Delivery of Official Statement. At the time of the acceptance of this Bond Purchase Agreement by the City (or such later date as the Underwriter may consent to), the City shall deliver to the Underwriter for review copies of the Official Statement relating to the Bonds, substantially in the form attached hereto (which, including all appendices thereto, and with such changes therein and supplements thereto as are consented to by the Underwriter, is referred to as the "Preliminary Official Statement"). The City hereby ratifies the use of the Preliminary Official Statement by the Underwriter in the marketing of the Bonds. The Preliminary Official Statement shall be final as of the date of such review, except for final information as to the offering prices, interest rates, selling compensation, amount of proceeds, delivery dates, other terms depending on such factors, and other information permitted to be omitted under Rule 15c2-12(b)(2) under the Securities Exchange Act of 1934, as amended. The City shall provide to the Underwriter, within seven business days following the date hereof, a quantity of final Official Statements, including such final information listed in the previous sentence (the "final Official Statement") adequate to enable the Underwriter to meet the continuing obligations imposed on it by Rule 15c2-12 under the Securities Exchange Act of 1934; provided that the Underwriter shall have advised the City of such quantity within two business days following the date hereof. 4. Offering of Bonds. The Underwriter agrees to make an initial offering of the Bonds at the initial offering prices (or yields) set forth on the Schedule I. Following the initial offering, the offering prices (or yields) may be changed from time to time by the Underwriter. The Bonds may be offered and sold to certain underwriters (including the Underwriter and other broker/dealers depositing such Bonds into investment trusts) at prices lower than such initial offering prices. 5. Financing Consultant. In connection with the issuance of the Bonds, the City under separate contract has engaged Rod Gunn Associates,Inc., Seal Beach, .California, to serve as its financing consultant(the "Financing Consultant") to assist the City in preparing the City's Preliminary Official Statement and its Official Statement relating to the issuance and offering of the Bonds (the "Preliminary Official Statement" and the "Official Statement") and in developing the financial feasibility of the City's program and the financial structure of the Bonds. The Financing Consultant has not been engaged by the City in connection with the selling of the Bonds. 2 6. Authorization. The City authorizes the Underwriter to use the Fiscal Agent Agreement, the Preliminary Official Statement heretofore made available to the Underwriter and the Official Statement, including any supplements or amendments thereto, in connection with the offer and sale of the Bonds. The City authorizes all changes and modifications to the Preliminary Official Statement in preparation of the Official Statement as are approved by the Financing Consultant and Bond Counsel. 7. Representations and Warranties. The City represents and warrants to the Underwriter and the Financing Consultant that: (a) The City is a municipal corporation and a public body corporate and politic of the State of California (the"State") and has full legal right, power and authority (i) to enter into this Purchase Contract, (ii) to issue, sell and deliver the Bonds as provided herein, and (iii) to carry out the transactions contemplated by this Purchase Contract, the Fiscal Agent Agreement and the Official Statement, as they may be amended or supplemented from time to time by the City; (b) To the best of its knowledge, the Official Statement (including the statistical and other financial data included therein) does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; (c) By official action of the City prior to or concurrently with the acceptance hereof, the City has authorized and approved the Preliminary Official Statement and the Official Statement, has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in, the Fiscal Agent Agreement, the Bonds and this Purchase Contract; (d) The City is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which breach or default would have a material adverse effect on the transactions contemplated by this Purchase Contract; and the execution and delivery of the Bonds, the Fiscal Agent Agreement and this Purchase Contract, and compliance by the City with the provisions of each thereof, will not conflict with or constitute a breach of default under any law, administrative regulation,judgment, decree, loan agreement, not, resolution, agreement or other instrument to which the City is a party or is otherwise subject; 3 (e) All approvals, consents and orders of any governmental authority, board, city or commission having jurisdiction which would constitute a condition precedent to the performance by the City of its obligations hereunder and under the Fiscal Agent Agreement and the Bonds have been obtained; (f) There is no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, public board or body pending or, to the knowledge of the City,threatened against the City affecting the existence of the City or the titles of its officials to their respective offices, or the pledge of. revenues or assets of the City pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent Agreement or this Purchase Contract, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City or its authority for the issuance of the Bonds,or the execution and delivery of this Purchase Contract or the Fiscal Agent Agreement nor, to the knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the validity or enforceability 4 ' of the Bonds,the Fiscal Agent Agreement or this Purchase Contract; (g) The Bonds and the Fiscal Agent Agreement conform to the descriptions thereof contained in the Official Statement, and the Bonds, when issued, authenticated and delivered in accordance with the Fiscal Agent Agreement and sold to the Underwriter as provided herein, will be validly issued and outstanding limited obligations of the City entitled to the benefits of the Fiscal Agent Agreement; and (h) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon. Any certificate signed by an authorized official of the City and delivered to the Underwriter and the Financing Consultant shall be deemed a representation and warranty by the City to the Underwriter and the Financing Consultant as to the statements made therein. 8. Covenants. The City covenants with the Underwriter and for the benefit of the Financing Consultant that: (a) If between the date of this Purchase Contract and the date 60 days following the Closing Date an event occurs affecting the City or the Program which would cause the Official Statement to contain an untrue statement of a material fact or to omit to state a material fact necessary in order to make the . statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter and the Financing Consultant and, if in the opinion of the City, the Financing Consultant, or the 4 Underwriter such event requires an amendment or supplement of the Official Statement, the City will amend or supplement the Official Statement in a form and in a manner collectively approved by the City, the Financing Consultant, and the Underwriter. (b) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, that the City shall not be required to register as a dealer or broker in any such state or jurisdiction or consent to service of process therein. 9. Conditions to Obligations of Underwriter. The obligation of the Underwriter to purchase and pay for the Bonds will be subject to the accuracy of the representations and warranties of the City herein, to the accuracy of statements to be made on behalf of the City hereunder, to the performance by the City of its obligations hereunder and to the following additional conditions precedent: (a) At the Closing Date, the Fiscal Agent Agreement and all official action of the City relating thereto shall be in full force and effect and shall not have been amended,modified or supplemented, and the Official Statement shall have been executed and shall not have been amended or supplemented, except as may have been agreed to by the Underwriter and Financing Consultant; (b) At the Closing Date the City shall have received (i) an approving opinion of Jones Hall Hill & White, A Professional Law Corporation, Bond Counsel to the City to the effect that the Bonds are valid and binding limited obligations of the City enforceable in accordance with their terms, subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and to the exercise of judicial discretion in accordance with general principles of equity and that under existing law, interest on the Bonds is excluded from gross income for purposes of income taxation by the United States of America and is not an item of tax preference for purposes of the alternative minimum tax imposed by the United States on individuals and corporations subject to the qualifications described under "Tax Exemption" in the Official Statement and is exempt from State of California personal income taxes and (ii) a supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter, in substantially for from attached hereto as Exhibit A. (c) The Underwriter and the Financing Consultant shall have received opinions, dated the Closing Date and addressed to the Underwriter and the Financing Consultant, of counsel to the City in substantially the form attached hereto as Exhibit B. 5 (d) The Underwriter and the Financing Consultant shall have received a certificate, dated the Closing Date and signed by an authorized officer of the Fiscal Agent, to the effect that: (i) he is an authorized officer of the Fiscal Agent; (ii) the duties and obligations of the Fiscal Agent under the Fiscal Agent Agreement have been duly accepted by the Fiscal Agent; (iii) the Fiscal Agent has all necessary corporate and trust powers required to carry out the Fiscal Agent Agreement; and (iv) to the best of his knowledge, the acceptance by the Fiscal Agent of the duties and obligations of the Fiscal Agent under the Fiscal Agent Agreement and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, consent decree or any agreement or other instrument to which the Fiscal Agent is subject. (e) The Underwriter and the Financing Consultant shall have received a certificate, dated the Closing Date and signed by an appropriate official of the City, to the effect that the City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Fiscal Agent Agreement and this Purchase Contract at or prior to the Closing Date and the representations and warranties of the City contained herein are true and correct as of the Closing Date. (f) The Underwriter and the Financing Consultant shall have received evidence that the City has property filed Form 8038 with the Internal Revenue Service pursuant to Section 149 of the Internal Revenue Code of 1986. (g) The Underwriter and the Financing Consultant shall have received a certificate dated the Closing Date and signed by an appropriate officer of The Dahl Company (the "Developer") to the effect that the information in the Official Statement with respect to the project proposed to be constructed by such Developer in the District does not contain an untrue statement of a material fact or omit to state a fact necessary in order to make the statements made therein in light of the circumstances under which they were made, not misleading. All of the opinions,letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and the Financing Consultant. 10. Conditions to.the Oblizations of the City. The obligations of the City to sell the Bonds shall be subject to, at the option of the City,the following conditions: (a) No order, decree, injunction, ruling or regulation of any court shall have been issued, nor shall any legislation have been enacted, with the purpose or effect or prohibiting the issuance, offering or sale of the Bonds as contemplated hereby or by the Official Statement. 6 (b) The documents contemplated by Section 9 (b), (c), (d), (e), (g) and (h) of this Purchase Contract shall have been delivered,except as may be waived by the Financing Consultant. (c) The Developer shall have executed and delivered an acquisition agreement substantially in the form heretofore prepared by Jones Hall Hill & White, A Professional Law Corporation, with such changes therein as shall be reasonably acceptable to the City. 11. Termination. The Underwriter may terminate its obligations hereunder by written notice to the City if, at any time subsequent to the date hereof and on or prior to the Closing Date: (a) (i) Legislation shall have been enacted by the Congress, or recommended to the Congress for passage by the President of the United States or the U.S. Department of the Treasury or the Internal Revenue Service or any member of the United States Congress, or favorably reported for passage to either House of the Congress by any Committee of such House to which such legislation has been referred for consideration,or (ii) a decision shall have been rendered by a court established under Article III of the Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling, regulation or communication (including a press release) shall have been issued by the Treasury Department of the United States or the Internal Revenue Service, in each case referred to in clauses (i), (ii) and (iii), with the purpose or effect, directly or indirectly, of including in gross income for federal income tax purposes the interest to be received by any owners of the Bonds. (b) Legislation shall have been enacted or any action taken by the Securities and Exchange Commission which has the effect or requiring the offer or sale of the Bonds to be registered under the Securities Act of 1933 or the Fiscal Agent Agreement to be qualified as an indenture under the Trust Indenture Act of 1939. (c) (i) In the Underwriter's reasonable judgment, the market price of the Bonds is adversely affected because: (a) additional material restrictions not in force as of the effective date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (b) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or similar obligations, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, underwriters; (c) a general banking moratorium shall have been established by Federal, New York or California authorities; or (d) a war involving the United States of America shall have been declared or any conflict involving the armed forces of the United 7 States of America shall have escalated to such a magnitude as to materially affect the Underwriter's ability to market the Bonds; (ii) there shall have occurred any change or any development in, or affecting particularly, the economy of the City generally which, in the Underwriter's reasonable judgment with the concurrence of the Financing Consultant, materially impairs the investment quality of the Bonds; or (iii) any litigation shall be instituted, pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting or affecting any authority for or the validity of the Bonds, or the existence or powers of the City. 12. Expenses. (a) Whether or not a closing shall take place hereunder, the Underwriter shall be under no obligation to pay, and the City shall pay or cause to be paid but only out of Bond proceeds or from moneys deposited with the City by the Developer, any expenses incident to the performance of the City's obligations hereunder, including, but not limited to, the cost of printing and/or duplicating the Bonds, the Preliminary Official Statement, the Official Statement, the fees and expenses of Bond Counsel and the Financing Consultant, the fees and expenses, if any, of the Fiscal Agent, and the fees and expenses, if any, of any other counsel, consultants, accountants or other experts retained by the City in connection with the issuance and sale of the Bonds, subject to the terms of any agreement among such parties. (b) The Underwriter shall pay its own expenses, including all advertising expenses incurred in connection with the public offering of the Bonds and the fees and expenses of its counsel. 13. Notices. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the City at its address set forth above, Attention: Robert Franz, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Chilton & O'Connor, Inc., 1901 Avenue of the Stars, Suite 1400, Los Angeles, California 90067, Attention: James K. Chilton, Jr., and any notice or other written communication to be given to the Financing Consultant under this Purchase Contract may be given by delivering notice to Rod Gunn Associates, Inc., 3010 Old Ranch Parkway, Suite 330, Seal Beach, California 90740,Attention: Rod Gunn. 14. Successors. This Purchase Contract is made solely for the benefit of the City and the Underwriter(including its successors or assigns) and no other person shall acquire or have any right hereunder or by virtue hereof except as expressly provided herein with respect to the Financing Consultant. The representations, warranties, and agreements contained herein shall remain operative and in full force and effect and shall survive deliver of and payment for the Bonds hereunder, regardless of any investigation made by or on behalf of the Underwriter. 8 15. Governing Law. This Purchase Contract shall be governed by the laws of the State of California. 16. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof by the City. Very truly yours, CHILTO & O'CONNOR, INC. By: Accepted: CITY OF HUNTINGTON BEACH B " 9 SCHEDULE I MATURITIES, PRINCIPAL AMOUNTS AND INTEREST RATES Maturity Principal Interest Dates Amounts Rates Price 1992 $ 25,000 6.35% 100% 1993 25,000 6.50 100% 1994 30,000 6.60 100% 1995 30,000 6.70 100% 1996 30,000 6.85 100% 1997 35,000 6.95 100% 1998 40,000 7.10 100% 1999 40,000 7.15 100% 2000 45,000 7.25 100% 2001 45,000 7.30 100% 2002 50,000 7.35 100% 2003 55,000 7.40 100% 2020 $1,950,000 7.60% 99.50% EXHIBITA- . Letterhead of BOND COUNSEL (Closing Date) Chilton & O'Connor,Inc. Los Angeles, California $2,400,000 CITY OF HUNTINGTON BEACH, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) 1990 SPECIAL TAX BONDS Dear Sirs: On the date hereof we rendered to the City of Huntington Beach (the"City"), an opinion approving the validity of$2,875,000 aggregate principal amount of the above mentioned Bonds (the "Bonds"), issued pursuant to Sections 53311 et seq. of the California Government Code (the "Act"), and a Fiscal Agent Agreement dated as of June 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association, San Francisco, California, as Fiscal Agent. You are authorized to rely upon said opinion as if it was addressed to you. In that connection, we have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the City taken in connection with the formation of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"), the authorization of the issuance of the Bonds, the levy of a special tax to provide for the payment of the Bonds and the fixing of an appropriations limit for the District and the authorization and issuance of the Bonds, and such other information and documents as we consider necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on the foregoing, in our opinion: A-1 (i) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. (ii) The statements contained in the Official Statement for the Bonds under the captions"THE BONDS"(other than the subheading"Scheduled Debt Service" thereunder), "THE FISCAL AGENT AGREEMENT", and "CONCLUDING INFORMATION - Tax Matters", insofar as such statements purport to summarize certain provisions of the Fiscal Agent Agreement and the Bonds and the status of interest on the Bonds for purposes of California and Federal income taxes, present a fair and accurate summary of such provisions. Based on our participation in the preparation of the Official Statement as Bond Counsel and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, we have no reason to believe that the Official Statement, as of its date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading in any material respect (except for the statistical and other financial data included therein, and any information under the heading "THE DEVELOPMENT" or in Appendix B thereto, as to which we express no view). Very truly yours, A-2 EXHIBIT B Letterhead of COUNSEL TO THE CITY (Closing Date) Rod Gunn Associates,Inc. Seal Beach, California Chilton & O'Connor,Inc. Los Angeles, California $2,400,000 CITY OF HUNTINGTON BEACH, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) SPECIAL TAX BONDS 1990 SERIES A Dear Sirs: We have acted as counsel to the City of Huntington Beach, Huntington Beach, California (the "City"), in connection with its sale to you of the above-mentioned Bonds (the "Bonds"). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of June 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association, San Francisco, California,as Fiscal Agent. In that connection, we have examined originals or copies certified or otherwise identified to my satisfaction of. (to be completed) Based on the foregoing,in our opinion: (i) The City is a duly created and lawfully existing general law City. (ii) The Purchase Contract has been duly authorized, executed and delivered by the City and constitutes a valid, legal and binding agreement of the City enforceable in accordance with its terms. B-1 Gii) Except as disclosed in the Official Statement, to the best of my knowledge there is no action, suit,proceeding, inquiry or investigation at law or in equity before or by any court or regulatory City against the City or the District affecting their existence or the titles of their respective officers to office or seeking to restrain or to enjoin the issuance,sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way questioning or affecting the validity or enforceability of the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, or any other applicable agreements or any action of the City or the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Official Statement or any amendment or supplement thereto, or contesting the powers of the City or the District or other authority with respect to the Bonds or any action of the City or the District contemplated by any of said documents. Based on our review as Counsel to the City of the Official Statement,we have no reason to believe that the Official Statement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading (except that no opinion is expressed with respect to the statistical and other financial data included therein). Very truly yours, B-2 18019.30 JMM:P]T:xr M5190 17647 08/05.'90 ski e�� FISCAL AGENT AGREEMENT by and between CITY OF HUNTINGTON BEACH and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent Dated as of June 1, 1990 Relating to City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1"0 Special Tax Bonds t TABLE OF CONTENTS EM ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement.. ....................................................3 Section 1.02. Agreement for Benefit of Bondowners..............................................3 Section1.03. Definitions..... .........................................................................3 ARTICLE II THE BONDS Section 2.01. Principal Amount; Designation.......................................................9 Section 2.02. Terms of Bonds.........................................................................9 Section2.03. Redemption............................................................................. 10 Section 2.04. Form of Bonds......................................................................... 12 Section 2.05. Execution of Bonds.................................................................... 12 Section 2.06. Transfer of Bonds......................................................................13 Section 2.07. Exchange of Bonds.................................................................... 13 Section2.08. Bond Register..... ..................................................................... 13 Section 2.09. Temporary Bonds................:..................................................... 13 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen........................................ 14 Section 2.11. Limited Obligation..... ................................................................ 14 Section 2.12 Book-Entry Only Sysytem............................................................ 14 Section 2.13 No Additional Bonds...............................:.................................. 15 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of Bonds...................................................... 16 Section 3.02. Application of Proceeds of Sale of Bonds..... ..................................... 16 Section3.03. Improvement Fund.....................................................................16 Section3.04. Special Tax Fund....................................................................... 17 Section 3.05. Administrative Expense Fund..... ..................................................... 17 Section3.06. Costs of Issuance Fund..... .......................................................... 18 Section 3.07. Validity of Bonds..... ................................................................. 18 -i- i ARTICLE IV SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND Section 4.01. Pledge of Special Tax Revenues..... ................................................20 Section 4.02. Bond Fund..............................................................................20 Section 4.03. Reserve Fund...........................................................................21 ARTICLE V OTHER COVENANTS OF THE CITY Section5.01. Punctual Payment......................................................................22 Section 5.02. Limited Obligation..... ................................................................22 Section 5.03. Extension of Time for Payment..... ..................................................22 Section 5.04. Against Encumbrances..... ...........................................................22 Section 5.05. Books and Records....................................................................22 Section 5.06. Protection of Security and Rights of Owners.......................................22 Section 5.07. Compliance with Law, Completion of Project......................................23 Section 5.08. Private Business Use Limitation..... ................................................23 Section 5.09. Private Loan Limitation................................................................23 Section 5.10. Collection of Special Tax Revenues..... ............................................23 Section 5.11. 'Further Assurances..... ...............................................................24 Section 5.12. No Arbitrage.............:..............................................................24 Section 5.13. Federal Guarantee Prohibition........................................................24 Section 5.14. Compliance with the Code............................................................24 Section 5.15. Covenant to Foreclose.................................................................24 ARTICLE VI RWESTMEIM DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds.......................................25 Section 6.02. Rebate of Excess Investment Earnings to the United States..... .................25 Section 6.03. Limited Obligation..... ................................................................26 Section 6.04. Liability of City.........................................................................26 Section 6.05. Employment of Agents by City.......................................................26 -ii- i ARTICLE VII . THE FISCAL AGENT Section 7.01. Appointment of Fiscal Agent..... .........................:..........................28 Section 7.02. Liability of Fiscal Agent...............................................................28 Section 7.03. Information..... .........................................................................29 Section 7.04. Notice to Fiscal Agent.................................................................29 Section 7.05. Compensation, Indemnification......................................................30 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 8.01. Amendments Permitted................................................................31 Section 8.02. Owners' Meetings......................................................................31 Section 8.03. Procedure for Amendment with Written Consent of Owners.....................31 Section 8.04. Disqualified Bonds.....................................................................32 Section 8.05. Effect of Supplemental Agreement..............................:....................32 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments..............32 Section 8.07. Amendatory Endorsement of Bonds.................................................33 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties. ... ....... ........................34 Section 9.02. Successor is Deemed Included in All References to Predecessor..... ...........34 Section 9.03. Discharge of Agreement................................................................34 Section 9.04. Execution of Documents and Proof of Ownership by Owners...................35 Section 9.05. Waiver of Personal Liability.................... ...... ......................................................35 Section 9.06. Notices to and Demands on City and Fiscal Agent..................................35 Section 9.07. Partial Invalidity........................................................................35 Section 9.08. Unclaimed Moneys..... ...............................................................36 Section9.09. Applicable Law.........................................................................36 'Section 9.10. Conflict with.Act.......................................................................36 Section 9.11. Conclusive Evidence of Regularity..... .............................................36 Section 9.12. Payment_on Business Day..... ........................................................36 Section9.13. Counterparts............................................................................36 E G19BTf A-FORM OF BOND -iii- f FISCAL AGENT AGREEMENT THIS FISCAL AGENT AGREEMENT (the "Agreement") is made and entered into as of June 1, 1990, by and between the City of Huntington Beach, California, a municipal corporation,organized and existing under and by virtue of the Constitution and laws of the State of California (the "City") for and on behalf of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the 'District'),and Bank of America National Trust and Savings Association, a national banking association, duly organized and existing under the laws of the United States of America with its principal corporate trust office located in Los Angeles,as fiscal agent (the "Fiscal Agent"), WITNESSETH: WHEREAS, the City Council of the City has formed the District under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the California Government Code) (the "Act")and Resolution No. 6161 of the City Council adopted on June 18, 1990; WHEREAS, the City Council, as the legislative body with respect to the District, is authorized under the Act to levy special taxes to pay for the costs of facilities and services within the District and to authorize the issuance of bonds secured by said special taxes under the Act; WHEREAS, under the provisions of the.Act, on�July 2, 1990, the City Council of the City adopted its Resolution No. 6174 (the 'Resolution"), which resolution, among other matters, authorized the issuance of the City of Huntington Beach,Community Facilities District No. 1990-1 (GoldenwesvEllis Area) 1990 Special Tax Bonds(the 'Bonds")in the aggregate principal amount of not to exceed $2,500,000 upon the security of the unpaid special taxes and provided that said issuance would be in accordance with the Act and this Agreement, and authorized the execution hereof; WHEREAS, it is in the public interest and for the benefit of the City, the District, the persons responsible for the payment of special taxes and the owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds,the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds and the administration and payment of the Bonds; and WHEREAS, all things necessary to cause the Bonds, when authenticated by the City for the District and issued as in the Act,the Resolution and this Agreement provided,to be legal,valid and binding and special obligations of the City for the District in accordance with their terms,and all things necessary to cause the creation, authorization,execution and delivery of this Agreement and the creation,authorization,execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: -1- i ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreemen This Agreement is entered into pursuant to the provisions of the Act and the Resolution. Section 1.02. Agreement for Benefit of Bondowners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity,shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the owner of any of the Bonds in its own or any other. capacity with the same rights it would have if it were not Fiscal Agent. Section 1.03. DefDef Unless the context otherwise requires, the terms defined in this Section 1.03 shall,for all purposes of this Agreement, of any Supplemental Agreement,and of any certificate,opinion or other document herein mentioned, have the meanings herein specified. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein," "hereof," "hereunder"and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. "Acquisition Agreement" means the Acquisition Agreement, dated as of July 1, 1990, between the City and David D. Dahl. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its dudes hereunder (including, but not limited to, the levying and collection of the Special Taxes)including the fees and expenses of its counsel,an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto,and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the.discharge of their respective duties hereunder and,in the case of the City,in any way related to the administration of the District. . "Administrative Expense Fund" means the fund by that name established by Section 3.05(A) hereof. "Agreement''means this Fiscal Agent Agreement,as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. "Annual Debt Service" means, for each Bond Year, the sum of(i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled,and(ii)the principal amount of the Outstanding Bonds due in such Bond Year. "Auditor"means the auditor-controller of the County of Orange. -2- "Authorized Officer" means the City Administrator, the City Finance Director, the City Clerk, the City Treasurer, the Director of Public Works of the City or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer. "Bond CounseP' means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund"means the fund by that name established by Section 4.02(A)hereof. "Bond Year" means the one-year period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "Bonds"means the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds at any time Outstanding under this Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "City"means the City of Huntington Beach, California,and any successor thereto. "Closing Date"means the date upon which there is a physical delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds by the Original Purchaser. "Code"means the Internal Revenue Code of 1986,as amended. "Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent . including its fast annual administration fee,expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges,including bond counsel,and counsel to the financial consultant,financial consultants' fees, charges for execution, transportation and safekeeping of the Bonds and other costs,charges and fees in connection with the foregoing. "Cost of Issuance Fund" means the fund by that name established by Section 3.06(A) hereof. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation,excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Depository" means(a)initially,DTC,and (b)any other Securities Depository acting as Depository pursuant to Section 2.12. "District" means City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)formed pursuant to the Resolution of Formation. -3- s "DTC" means the Depository Trust Company,New York, New York, and its successors and assigns. "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: (i) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations,the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America,including,without limitation, such of the foregoing which are commonly referred to as "stripped"obligations and coupons; or (ii) any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii)certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or pass- through obligations issued and guaranteed by the Government National Mortgage Association, (v) project notes issued by the United States Department of Housing and Urban Development, and (vi) public housing notes and bonds guaranteed by the United States of America. "Finance Director" means the Director of Finance of the City. "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01. "Fiscal Year"means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year,both dates inclusive. "Gross Proceeds"means the sum of the following amounts: (i) original proceeds, namely, net amounts received by or for the City or the District as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations)of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds,namely,amounts received at any time by or for the City or the District, such as interest and dividends,resulting from the investment of any original proceeds (as referenced in clause (i) above) or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Investments, increased by any profits and decreased (if necessary,below zero) by any losses on such investments,excluding investment proceeds which become transferred proceeds(determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds(as referenced in clauses(i)above)of the Bonds,which are held in the Bond Fund and any other fund to the extent that the City reasonably expects to use such other fund to pay Debt Service; (iv) amounts in the Reserve Fund and in any other fund established as a reasonably required reserve for payment of Debt Service; -4- (v) Investment Property pledged as security for payment of Debt Service; (vi) Special Taxes and amounts, other than as specified in this definition,used to pay Debt Service;and (vii) amounts received as a result of investing amounts described in this definition. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service", 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government", 99 Church Street, New York, New York 10007,Attention: Municipal News Reports;Standard&Poors Corporation "Called Bond Record", 25 Broadway, 3rd Floor, New-York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Improvement Fund" means the fund by that name created by and held by the Fiscal Agent pursuant to Section 3.03(A)hereof. "Interest Payment Dates" means April 1 and October I of each year, commencing April 1, 1991. "Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement. "Investment Property" means any security (as said .term is defined in Section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations (other than specified private activity bonds as defined in section 57(e)(5)(6)of the Code)the interest on which is excluded from gross income under Section 103 of the Code for federal income tax purposes. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Nonpurpose Investment" means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired in order to carry out the governmental purpose of the Bonds. "Original Purchaser"means the fast purchaser of the Bonds from the City. "Officer's Cera cate" means a written certificate of the City signed by an Authorized Officer of the City. "Ordinance"means any ordinance of the City levying the Special Taxes. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04)all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; -5- (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Agreement or any Supplemental Agreement "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. "Permitted Investments" means (a) Federal Securities; (b) any of the following obligations or indebtedness issued or guaranteed by any of the following federal agencies and. entities: (i) senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates of the Federal Home Loan Mortgage Corporation; (iii) mortgage-backed securities or senior debt obligations of the Federal National Mortgage Association; or(iv)senior debt obligations of the Student Loan Marketing Association; (c) interest-bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in national or state banks (including the Fiscal Agent), provided that either: (i) such deposits shall be fully insured by the Federal Deposit Insurance Corporation, or (ii) the unsecured obligations of such association or bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in a Rating Category; (d) obligations issued by any corporation organized and operating within the United States of America having assets in excess of$500,000,000, which obligations are rated in a Rating Category; (e) commercial paper which is backed by a letter of credit or line of credit which is rated in a Raring Category; (f) money market funds the policy of which is to invest in Federal Securities; (g) bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances, which are eligible for purchase by the Federal Reserve System and the obligations of which commercial bank or the obligations of the holding company of which are rated in a Rating Category (h) obligations the interest on which is excluded from gross income for purposes of federal income taxation under Section 103 of the Code and which are rated in a Rating Category;and (i) investment agreements which are the obligations of, or which are secured or guaranteed by the obligations of, a financial institution whose long-term unsecured obligations are rated in a Rating Category. Notwithstanding the foregoing, banks, and savings and loan associations shall be required to secure deposits by pledging government securities with a value of 110 percent of the deposit,or by pledging first trust deed mortgage notes having a value of 150% of the total deposit. The -6- Treasurer, at his discretion, may waive the collateral requirement specified in the preceding sentence for deposits which are fully-insured by the Federal Deposit Insurance Corporation.. "Principal Office" means the principal corporate trust office of the Fiscal Agent at 555 South Flower Street, 5th Floor, Los Angeles, California 90071 Attention: Corporate Trust Administration or such other or additional offices as may be designated by the Fiscal Agent; provided that, for purposes of the payment of debt service on the Bonds, 'Principal Office"means the principal corporate trust office of the Fiscal Agent at 55 Hawthorne Street, loth Floor, San Francisco,CA 94104 Attention:Corporate Trust Department. "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however,use by a governmental unit and use by a nongovernmental unit as a member of the general public. "Proceeds" when used with reference to the Bonds, means the face amount of the Bonds, plus accrued interest and premium, if any, less original issue discount and less proceeds. from the sale of the Bonds deposited in the Reserve Fund. "Project" means the facilities more particularly described as such in Exhibit A to the .Resolution of Formation. "Purchase Price," for the purpose of computation of the Yield of the Bonds, has the same meaning as the term "issue price"in sections 1273(b) and.1274 of the Code, and, in general, means the initial offering price of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers)at which price a substantial amount of the Bonds are sold or if the Bonds are privately placed,the price paid by the first buyer of the Bonds or the -acquisition cost of the first buyer. The term "Purchase Price," for the purpose of computation of the Yield of Nonpurpose Investments, means the fair market value of the Nonpurpose Investments on the date of use of Gross Proceeds of the Bonds for acquisition thereof,or if later,on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. "Rating Category" means one of the two highest rating categories then in effect under the rating systems of Moody's Investors Service or Standard and Poor's Corporation, without regard to plus or minus sign or numerical or other qualifying designation. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date. "Regulations"means temporary and permanent regulations promulgated under the Code. "Reserve Fund"means the fund by that name established pursuant to Section 4.03(A) hereof. "Reserve Requirement" means an amount equal to $192,000. "Resolution" means Resolution No. 6174, adopted by the City Council of the City on July 2, 1990. "Resolution of Formation" means Resolution No. 6161, adopted by the City Council on June 18, 1990. -7- "Resolution of Intention" means Resolution No. 6142, adopted by the City Council on May 7, 1990. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company,Capital Structures-Call Notification, 440 South LaSalle Street,Chicago,Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496- 5058; and, in accordance with the current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Services" means the services more particularly described as such in Exhibit A to the Resolution of Formation. "Services Fund"means the fund by that name established by Section 3.07(A) hereof. "Special Taxes" means the special taxes levied within the District pursuant to the Act, the Ordinance and this Agreement. "Special Tax Revenues"means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof,interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special'Taxes to the amount of said lien and interest and penalties thereon. "Special Tax Fund" means the fund by that name established by Section 3.04(A) hereof. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to this Agreement,but only if and to the extent that such agreement is specifically authorized hereunder. "Treasurer"means thebty Treasurer. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Investments which require payments in a form not characterized as principal and interest) on a Nonpurpose Investment or on the Bonds,produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds,all computed as prescribed in applicable Regulations. -8- ARTICLE H THE BONDS Section 2.01. Principal Amount: Designation. Bonds in the aggregate principal amount of Two Million Four Hundred Thousand Dollars ($2,400,000) are hereby authorized to be issued by the City for the District under and subject to the terms of the Resolution and this .Agreement, the Act and other applicable laws of the State of California. The Bonds shall be designated the "City of Huntington Beach, Community Facilities. District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds"and shall be secured by the Special Taxes. Section 2.02. Terms of Bonds. (A) Form: Denominations. The Bonds shall be issued as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent. (B)Date of Bonds. The Bonds shall be dated August 1, 1990. (C) CUSIP Identification Numbers. "CUSIP" identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the City's contract with such Owners and shall not impair the effectiveness of any such notice. (D) Maturities. Interest Rates.The Bonds shall mature and become payable on October 1 of each year,and shall bear interest at the rates, as follows: Maturity Date Principal Interest (October 1) Amount $fig 1992 $25,000 6.35% 1993 25,000 6.50 1994 30,000 6.60 1995 30,000 6.70 1996 30,000 6.85 1997 35,000 6.95 1998 40,000 7.10 1999 40,000 7.15 2000 45,000 7.25 2001 45,000 7.30 2002 50,000 7.35 2003 55,000 7.40 2020 1,950,000 7.60 -9- (E)jnteEest. The Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360- day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or(ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or(iii)it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from August 1, 1990; provided, however,that if at the time of authentication of a Bond,interest is in default thereon,such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. (F) Method of Payment,. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check or draft of the Fiscal Agent mailed on the Interest Payment Dates by first class mail to the registered Owner thereof at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon instructions of any Owner of$1,000,000 or more in aggregate principal amount of Bonds. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City. Section 2.03.Redemiltion. (A) Redemption Dates. (i) The Bonds maturing on and after October 1, 1998, are subject to redemption prior to their stated maturities on any Interest Payment Date on or after October 1, 1997, as a whole or in part, upon payment from any source of funds available for that purpose,including,but not limited to,prepayments of Special Taxes,at a redemption price (expressed as a percentage of the principal amount of Bonds to be redeemed) as set forth below, together with accrued interest thereon to the date fixed for redemption: RedemDtio^ n Dates motion Prices October 1, 1997 or April 1, 1998 102.5% October 1, 1998 or April 1, 1999 102.0 October 1, 1999 or April 1,2000 101.5 October 1,2000 or April 1, 2001 101.0 October 1, 2001 or April 1,2002 100.5 October 1,2002 and thereafter 100.0 (ii)The outstanding Bonds maturing on October 1,2020 are subject to mandatory sinking payment redemption in part on October 1.,2004,and on each October 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium,from sinking payments as follows: -10- Redemption Date (October 1) Sinking Payment 2004 $60,000 2005 65,000 2006 70,000 ;007 75,000 2008 80,000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145,000 2017 155,000 2018 170,000 2019 180,000 2020 195,000 fMaturity) The amounts in the foregoing table shall be reduced pro rata, in order to maintain substantially level debt service, as a result of any prior partial redemption of the Bonds pursuant to Section 2.03(A)(i) above. In lieu of redemption under this Section 2.03(A)(ii),moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and when,and at such prices (including brokerage and other charges) as such Officer's Certificate may provide,but in no event may Bonds be purchased at a price in excess of the principal amount thereof,plus interest accrued to the date of purchase. (B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem Bonds pursuant to subsection (A)(i)not less than sixty (60)days prior to the applicable redemption date. (C) Redemption Procedtre by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption,at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. The Fiscal Agent, in addition to mailed notice, shall publish notice in a newspaper of general circulation circulated in the area of the District. The first such publication of the redemption notice shall not be less than 30 nor more than 60 days prior to the date fixed for redemption. -11- Such notice shall state the redemption date and the redemption price and,if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed,and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed,each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, of the Bonds being redeemed with the proceeds of such check or other transfer. Whenever provision is made in this Agreement for the redemption of less than all of the Bonds or any given portion thereof, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption, in inverse order of maturity and by lot within a maturity in any manner which the Fiscal Agent in its sole discretion shall deem appropriate and fair. Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds,of the same series and maturity,of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. (D) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price,and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City. Section 2.04. Form of Bonds. The Bonds, the form of Fiscal Agent's certificate of authentication and the form of assignment, to appear thereon,shall be substantially in the forms, respectively,set forth in Exhibit A attached hereto and by this reference incorporated herein,with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement,the Resolution and the Act. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the facsimile signatures of its Mayor and City Clerk who are in office on the date of adoption of this Agreement or at any time thereafter,and the seal of the City shall be impressed,imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. -12- Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A,executed and dated by the Fiscal Agent,shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated,registered and delivered hereunder and are entitled to the benefits of this Agreement. Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 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 duly written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal-Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. No transfers of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or(ii) with respect to a Bond after such Bond has been selected for redemption. Section 2.01. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date established,by the Fiscal Agent for selection of Bonds for redemption or(ii) with respect to a Bond after such Bond has been selected for redemption Section 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds (the 'Bond Re ister" which books shall show the series number, date, amount, rate of interest and last own owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and,upon presentation for such purpose,the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred,on said books,the ownership of the Bonds as hereinbefore provided. Section 2.09. Temuorary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate,and the Fiscal Agent 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 -13- be entitled to the same benefits under to this Agreement as definitive Bonds authenticated and delivered hereunder. Section 2.10. Bonds Mutilated, Lost. Destroyed or Stolen. If any Bond shall become mutilated,the City,at the expense of the Owner of said Bond,shall execute,and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be cancelled by it and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given,the City, at the expense of the Owner, shall execute,and the Fiscal Agent shall authenticate and deliver,a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost,destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation,execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost,destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement. Section 2.11. Limited Obligation. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Section 2.12._Book-Entry Only System. DTC shall act as the initial Depository for the Bonds. One Bond for each maturity of the Bonds shall be initially executed,authenticated,and delivered as set forth herein with a separate fully registered certificate (in print or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the Bonds shall be registered in the Bond Register(as defined in Section 2.08)kept by the Fiscal Agent for the Bonds in the name of Cede&Co.,as nominee of DTC or such nominee as DTC shall appoint in writing. The Authorized Officers and the Fiscal Agentlare hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Bonds for the Depository's book-entry system, including the execution of the Depository's required representation letter. With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC,the Fiscal Agent shall not have any responsibility or obligation to any broker- dealer,bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the '!DTC Participants") or to any person for which a DTC Participant acquires as interest in the Bonds (the "Beneficial Owners"). Without limiting the immediately preceding sentence,the Fiscal Agent shall not have any responsibility or obligation with respect to(i)the accuracy of the records of DTC,Cede &Co.,or any DTC Participant with respect to any ownership interest in the Bonds, (h) the delivery to any DTC Participant,any Beneficial Owner,or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption or mandatory tender,(iii)the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or(v)any consent given or other action taken by the Depository as Owner of the Bonds; except that so long as any Bond is registered in the -14- name of Cede & Co., as nominee of DTC, any Beneficial Owner of $1,000,000 or more in • aggregate principal amount of any series of Bonds who has filed a written request to receive notices, containing such Beneficial Owner's name and address, with the Fiscal Agent shall be provided with all notices relating to such Bonds by the Fiscal Agent. Except as set forth above,the Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds,for the purpose of giving notices of prepayment and other matters with respect to such Bonds, for the purpose of registering transfers with respect to such Bonds,and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to or upon the order of the Owners as shown on the Bond Register, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the sums or sums so paid. No person other than an Owner, as shown on the Bond Register, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subj t to the transfer provisions in Section 2.06 hereof,references to "Cede & Co." in this Section�l2 shall refer to such new nominee of DTC. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book- entry transfers through DTC is not in the best interest of the Beneficial Owners,and the City shall mail notice of such termination to the Fiscal Agent. Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest if the Beneficial Owners of the Bonds that they be able to obtain certificated Bonds,the Bonds shall no longer be restricted to being registered in the Bond Register of the Trustee in the name of Cede & Co.,as nominee of DTC, but may be registered in whatever name or name the Owners shall designate at that time,in accordance with Section 2.06. To the extent that the Beneficial Owners are designated as the transferee by the Owners,in accordance with Section 2.06,the Bonds will be delivered to such Beneficial Owners. Section 2.13. No Additional Bonds. No Bonds, other than as described in Section 2.01 and 3.01,are authorized to be issued hereunder. -15- ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of_Bonds. At any time after the execution of this Agreement,the City may issue the Bonds for the District in the aggregate principal amount set forth in Section 2.01 and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of the Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser. Section .3.02. Agplication of Proceeds of Sale of Bonds. The proceeds of the purchase of.the Bonds by the Original Purchaser shall be paid to the Fiscal Agent, who shall forthwith set aside,pay over and deposit such proceeds on the Closing Date as follows: (A) deposit in the Bond Fund $209,862.92, (being an amount equal to $3,997.39 A with respect to the accrued interest paid on the Closing Date by the Original Purchaser and $205,865.53 with respect to capitalized interest on the Bonds); (B) deposit in the Reserve Fund $192,000.00 (an amount equal the Reserve Requirement); A (C)deposit in the Costs of Issuance Fund an amount equal to$223,904.47; and (D)deposit in the Improvement Fund $1,726,480;�,being the remaining proceeds of the Bonds paid on the Closing Date by the Original Purchaser. Section 3.03.Improvement Fund. (A) Establishment of Improvement Fund. There is hereby established as a separate account to be held by the Fiscal Agent, the Community Facilities District No. 1990-1 (GoldenwestMhs Area) 1990 Special Tax Bonds,Improvement Fund,to the credit of which a deposit shall be made as required by clause (D) of Section 3.02, and deposits shall be made as provided in Sections 4.02(C). Moneys in the Improvement Fund shall be held in trust by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, shall be disbursed,except as otherwise provided in subsection (D) of this Section,for the payment or reimbursement of costs of the Project and,pending such disbursement,shall be subject to a lien in favor of the Owners of the Bonds. (B)Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed,the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (ii)certify that the disbursement is in accordance with the provisions of the Acquisition Agreement or is otherwise for a facility, and that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting disbursement. -16- ♦6 (C) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from such investment and deposit shall be transferred by the Fiscal Agent on each Interest Payment Date to the Bond Fund,to be used for the purposes of such fund. (D) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund,the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund for application to the payment of debt service on the Bonds in accordance with Section 4.02, and the Improvement Fund shall be closed. Section 3.04. Special Tax Fund. (A) stabli5hment oL Special Tax Fund. There is hereby established as a separate account to be held by th Finance Director,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Special Tax Fund to the credit of which the City shall deposit,immediately upon receipt,all Special Tax Revenue received by the City and any amounts required by Section 3.05 (B) or 3.07 (B) to be deposited therein. Moneys in the Special Tax Fund shall be held in trust by iii6inance Director for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending and disbursement,shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursements. As soon as practicable after the receipt by the City of any Special Tax Revenues, but no later than ten Business Days after such receipt,the EW ce Director shall withdraw from the Special Tax Fund and transfer(i)to the Fiscal Agent for eposit in the Reserve Fund an amount,taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund equals the Reserve Requirement, and (ii) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds on the next two Interest Payment Dates with respect to Special Tax Revenues received during the period from October 1 through the last day of March in any Fiscal Year,and on the next Interest Payment Date with respect to Special Tax Revenues received during the period from April 1 through September 30 in any Fiscal Year. All other amounts then in the Special Tax Fund shall,concurrently with the fore-going transfers, (i) be transferred by theTinance Director to the Fiscal Agent for deposit in the Administrative Expense Fund, in an amount taking into account any amounts then on deposit in the Administrative Expense Fund, such that the amount therein equals the estimated Administrative Expenses to be incurred in the then Fiscal Year and (ii)all remaining amounts deposited by the-Finance Director in the Services Fund. (C)Inv`estment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. Section 3.05. Administrative Expense Fund. (A) Establishment of Administrative Eggense Fund. There is hereby established as a separate account to be held by the Fiscal Agent,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Administrative Expense Fund to the credit of which deposits shall be made as required by Sections -17- 3.04(B) and 3.06(B). Moneys in the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the City,and shall be disbursed as provided below. (B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer's Certificate stating the amount to be withdraw,that such amount is to be used to pay an Administrative Expense (or a Costs of Issuance),and the nature of such Administrative Expense (or Costs of Issuance). Annually,on the last day of each Fiscal Year,the Fiscal Agent shall withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Finance Director for deposit in the Special Tax Fund. (C)Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes of such fund. Section 3.06. Costs of Issuance Fund. (A) Establishment of Costs of Issuance Fund. There is hereby established as a separate account to be held by the Fiscal Agent,the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Costs of Issuance Fund, to the credit of which a deposit shall be made as required by clause(C) of Section 3.02. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance. (B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees,signed by the'Yinance Director and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on or after the Closing Date. The Fiscal Agent shall maintain the Cost of Issuance Fund for a p nod of 180 days from the date of delivery of the Bonds and then shall transfer any moneys remaining therein,including any investment earnings thereon,to the Administrative Expense Fund for payment of any unpaid Costs of Issuance. (C) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Cost of Issuance Fund to.be used for the purposes of such fund. Section 3.07. Services Fund (A) stabUshm nt nt Carveces Fund. There is hereby established as a separate account to be held by th Finance Director, the Community Facilities District No. 1990-1 (Goldenwest/Ellis ArearServices Fund, to the credit of which deposits shall be made as required by Section 3.04(B). Moneys in the Services Fund shall be held in trust -18- i by the4Finance Director for the benefit of the City, and shall be disbursed as provided below. (B) Disbursement. Amounts in the Services Fund shall be withdrawn by the Finance Director and paid to the City or its order upon receipt by the Finance Director of an Officer's Certificate stating the amount to be withdraw,that such amount is used to pay for a Service and the nature of such Service. Annually, on the last day of each Fiscal Year,the Finance Director shall withdraw any amounts then remaining in the Services Fund that have not been allocated to pay Services incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund. (C)Investment. Moneys in the Services Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Services Fund to be used for the purposes of such fund. Section 3.08. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the acquisition of the Project or upon the performance by any person of his obligation with respect to the Project. I -19- ARTICLE IV SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND Section 4.01. Pledge of Sgeciai Tax Revenues. The Bonds shall be secured by a fast pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund,the Reserve Fund and, until disbursed as provided herein,in the Improvement Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein)are hereby dedicated to the payment of the principal of,and interest and any premium on,the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03, and to the other purposes set forth herein. Section 4.02. Bond Fund. (A) Establishment of Bond Fund. There is hereby established as a separate account to be held by the Fiscal Agent the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Bond Fund to the credit of which deposits shall be made as required by clause (A) of Section 3.02, Section 3.03(D),Section 3.04(B), Section 4.03 and any other amounts required to be deposited therein by this Agreement or the Act. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent- for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of,and interest and any premium on,the Bonds as provided below, and,pending such disbursement,shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(ii) and any other redemption of Bonds pursuant to Section 2.03(A). Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to Section 3.03(D) shall be used to pay the principal of and interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose. In the event that amounts in the Bond Fund are insufficient for the purpose set forth in the preceding sentence,the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Reserve Fund insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first paragraph of this Section 4.02(B),the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments,and then to payment of principal due on the bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. (C) Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment -20- and deposit of amounts in the Bond Fund shall be retained in the Bond Fund to be used for the purposes of the Bond Fund. Section 4.03. Reserve Fund. (A) Establishment of Fund. There is hereby established as a separate account to be held by the Fiscal Agent the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds, Reserve Fund to the credit of which a deposit shall be made as required by clause (B) of Section 3.02, which deposit is equal to the initial Reserve Requirement, and deposits shall be made as provided in Section 3.04(B). Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment.of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section,for the purpose of redeeming Bonds from the Bond Fund. (C) Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due t9 a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the inane Director. (D) Transfer of Excess of Reserve Reouirement. Whenever, on the day prior to any Interest Payment Date, the amount in the Reserve F nd exceeds the Reserve Requirement,the Fiscal Agent shall provide written notice to the"Finance Director of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of.the Bonds in accordance with Section 4.02. (E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds,including interest accrued to the date of payment or redemption and premium, if any,due upon redemption,the Fiscal Agent shall transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 4.02 or 2.03, as .applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds,the balance in the Reserve Fund shall be transferred to Finanm Director to be used for lawful purpose of the City. (F) Transfer for Rebate Purposes. Investment earnings on amounts in the Reserve Fund"May be withdrawn for purposes of making payment to the federal government to comply with Section 6.02. (G)Inver Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained in the Reserve Fund to be used for the purposes of such fund. -21- ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01.Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds. Section 5.02.Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund,the Reserve Fund,the Improvement Fund and the Special Tax Fund created hereunder. Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity,the City shall not, directly or indirectly,extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.04..Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement. - Section 5.05.Books and Records. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Services Fund and the Special Tax Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent(10%) of the principal amount of the Bonds then Outstanding,or their representatives duly authorized in writing. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund,the Administrative Expense Fund,the Bond Fund,the Reserve Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent(10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Section 5.06. Protection of Security and of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners,and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City,the Bonds shall be incontestable by the City. -22- I Section 5.07. Compliance with Law: Completion of Project: Payment for Services. The City will comply with all applicable provisions of the Act and law in completing the acquisition of the Project and in disbursing funds for the payment of the costs of Services. Section 5.08.Private Business Use L•iM& ion. The City shall assure that: (a) not in excess of ten percent (10%) of the Proceeds of the Bonds is used for Private Business Use if,in addition,the payment of the principal of, or the interest on more than 10 percent of.the Proceeds of the Bonds is (under the terms of the Bonds or any underlying arrangement) directly or indirectly, (i) secured by any interest in property, or payments in respect of property,used or to be used for a Private Business Use,or(H)to be derived from payments (whether or not to the City) in respect of property, or borrowed money,used or to be used for a Private Business Use; and (b) in the event that in excess of 5 percent of the Proceeds of the Bonds is used for a Private Business Use,and,in addition,the payment of the principal of, or the interest on, more than 5 percent of the Proceeds of the Bonds is, (under the terms of the Bonds or any underlying arrangement) directly or indirectly, secured by any interest in property, or payments in respect of property, used or to be used for said Private Business Use or is to be derived from payments (whether or not to the City)in respect of property, or borrowed money, used or to be used for a Private Business Use, then, (A) said excess over said 5 percent of the Proceeds of the Bonds which is used for a Private Business Use shall be used for a Private Business Use related to a government use of such Proceeds and (B)each - such Private Business use over five percent of the Proceeds of the Bonds which is related to a government use of such Proceeds shall not exceed the amount of such Proceeds which is used for the government use of Proceeds to which such Private Business Use is related. Section 5.09.Private Loan Limitation. The City shall assure that not in excess of the lesser of five percent(5%) of the Proceeds of the Bonds or$5,000,000 is to be used, directly or indirectly, to make or finance loans (other than loans constituting Nonpurpose Investments and other than loans which enable the borrower to finance any governmental tax or assessment of general application for a specific essential governmental.function) to persons other than state or local government units. Section 5.10. Collection of Special Tax Revenues. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation,the enforcement of delinquent Special Taxes. - On or within fivg(5) Business Days of each June 1,commencing June 1, 1991,the Fiscal Agent shall provide the"Finance Director with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund, and informing the City that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for Annual Debt Service,Administrative Expenses,replenishment(if necessary)of the Reserve Fund so that the balance therein equals the Reserve Requirement,and for the payment of Services. The receipt of such notice by the`Finance shall in no way affect the obligations of the"Finance Director under the following two paragraphs. Upon receipt of such notice,therEinance Director shall communicate with the Auditor to ascertain the relevant panels on which the Special Taxes are to be levied,taking into account any parcel splits during the preceding and then current year. The Finance Director shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 (commencing August 1, 1991)that the Bonds are outstanding, such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next tax roll. Upon the completion of the computation of the amounts of the -23- levy,the4Finance Director shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next tax roll. The'Vinance Director shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses and Services during such year. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority,become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property- Section 5.11.Further Assurances. The City will adopt, make,execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement. Section 5.12. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the Gross 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(a) of the Code and Regulations. Section 5.13.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 the Bonds to be 'Federally guaranteed"within the meaning of Section 149(b)of the Code and Regulations. Section 5.14. Comgliance with the Code. The City covenants to take any and all action and to refrain from taking such action,which is necessary in order to comply with the Code or amendments thereto in order to maintain the exclusion from federal gross income,pursuant to Section 103 of the Code,of the interest bn the Bonds paid by the City and received by the Owners. Section 5.15. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act, the City hereby covenants with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of notice to the City of a delinquency, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due. TheTinance Director shall notify the City Attorney of any such delinquency of which it is aware,and the City Attorney shall commence,or cause to be commenced,such proceedings. -24- ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02,moneys in any fund or account created or established by . this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments,as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (vi) of the definition thereof or in Federal Securities which by their terms mature prior to the date on.which such moneys are required to be paid out hereunder. Subject in all respects to the provisions of Section 6.02,moneys in any fund or account created or established by this Agreement.and held by y Authorized Officer of the Cityshall be invested by the Treasurer in any lawful investments that the City may make or in any Permitted Investment,which in any event by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account,subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts.in funds and accounts. Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent,such transfer may be accomplished by transferring a like amount of Permitted Investments. The Fiscal Agent or the Treasurer may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any investments made pursuant to this Section. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions,if any). Subject in all respects-to the provisions of Section 6.02, investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making,holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or any Authorized Officer of the City hereunder, provided that the Fiscal Agent or the Treasurer, as applicable,shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement. The Fiscal Agent or the Treasurer,as applicable, shall sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment,transfer,withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. Section 6.02. Rebate of Excess Investment Earnings to the United States. The City covenants*to calculate and rebate to the federal government, in accordance with the Regulations,excess investment earnings to the extent required by section 148(f)of that Code. Any fees or expenses incurred by the Fiscal Agent or the City under or pursuant to this Section 6.02 shall be Administrative Expenses. -25- a Section 6.03. Limited Obligation. The City's obligations hereunder are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Improvement Fund, the Bond Funeand the Reserve Fund created hereunder. Section 6.04. Liability of City, The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or-in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder,except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms,conditions covenants or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder. In the absence of bad faith,the City,including the Treasurer and the Finance Director,may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City,including the Treasurer and the Finance Director,shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel,who may be the City Attorney,with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established,if disputed. Whenever in the administration of its duties under this Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder,such matter(unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent,and such certificate shall be full warrant to the City for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the City may,in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.05. Employment of Agents by City. In order to perform its duties and obligations hereunder, the City the Finance Director and/or the Treasurer may employ such persons or entities as it deems necessary or advisable. e City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder,and shall be -26- entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. -27- ARTICLE VII THE FISCAL AGENT Section 7.01. Anoointment of Fiscal Agent. Bank of America National Trust and Savings Association, at its principal corporate trust office in Los Angeles, California is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent. Any company into which the Fiscal Agent 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 parry or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business,provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act,anything herein to the contrary notwithstanding. The City may remove the Fiscal Agent initially appointed, and any successor thereto,and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually,pursuant to law or to the requirements of any supervising or examining authority above referred to,then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent. If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45)days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon,after such notice, if any,as such court may deem proper,appoint a successor Fiscal Agent. If, by reason of the judgment of any court,the Fiscal Agent is rendered unable to perform its duties hereunder,all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the"Finance Director of the City in ayst for the benefit of the Owners. The City covenants for the direct benefit of the Owners that irnance Director in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder,in trust for the benefit of the Owners of the Bonds. Section 7.02. Lia_ of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds,or shall.incur any responsibility in respect thereof,other than in connection with the duties -28- or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder,except for its own negligence or willful default. The Fiscal Agent as no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph,Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith,reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate,statement,affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial.liability in the performance of any of its duties hereunder,or in the exercise of any of its rights or powers,if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs,expenses and liabilities which might be incurred by it in compliance with such request or direction. The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent. Section 7.03.Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request,including but not limited to quarterly statements reporting funds held and transactions by the Fiscal Agent. Section 7.04. Notice to Fiscal Agent. .The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice,resolution,request, consent, order, certificate,report, warrant,Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. -29- I The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established,if disputed. Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)may,in the absence of willful misconduct on the part of the Fiscal Agent,be deemed to be conclusively proved and established by a certificate of the City,and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the Fiscal Agent may, in lieu thereof,accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 7.05. Co nuensation. Indemnification. The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys,agents and employees,incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement, but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund. -30- ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of the City and of the Owners of the Bonds may,be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on,any Bond, without the express consent of the Owner of such Bond, or(ii)permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with.the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act,the laws of the State of California or this Agreement),or (iii) reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (A)to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (B)to make modifications not adversely affecting affecting any outstanding series of Bonds of the City in any material respect; (C)to make such provisions for the purpose of curing any ambiguity,or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement,and which shall not adversely affect the rights of the Owners of the Bonds; (D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with section 148 of the Code relating to required rebate of Excess Investment Earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Section 8.02. Owners' Meetings. The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof,and to fix and adopt rules and regulations for the conduct of said meeting. Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the.Bonds or of this Agreement or any Supplemental Agreement,to the extent that such amendment is permitted by Section 8.01,to take effect when and as provided in this Section. A copy of such.Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds -31- Outstanding,but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided. Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04 and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement,stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent.A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 8.04. Disqualified Bonds. Bonds owned or held for.the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article . VIII, and shall not be entitled to vote upon,consent to,or take any other action provided for in this Article VIII. Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VUL this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined,exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the teams and conditions of this Agreement for any and all purposes. Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation,by endorsement or otherwise, in form approved by the City, as to such action. In that case,upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners' action, shall be prepared,executed and delivered. In that case,upon demand of the Owner of any Bonds -32- then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner,for Bonds then Outstanding,upon surrender of such Bonds. Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VID shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him,provided that due notation thereof is made on such Bonds. -33- ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties.. Nothing in this Agreement,expressed or implied, is intended to give to any person other than the City,the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations,promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent. Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent 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 Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03. Discharge of Agreement. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (A)by well and truly paying or causing to be paid the principal of,and interest and any premium on, such Bonds Outstanding,as and when the same become due and payable; I (B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which,together with,in the case of all Outstanding Bonds,the amounts then on deposit in the funds and accounts provided for in Sections 4.02 and 4.03 is fully sufficient to pay such Bonds Outstanding, including all principal,interest and redemption premiums; or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the Treasurer shall determine as confirmed by an independent certified public accountant will,together with the interest to accrue thereon and,in the case of all Outstanding Bonds,moneys then on deposit in the fund and accounts provided for in Sections 4.02 and 4.03, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice,then, at the election of the City,and notwithstanding that any Bonds shall not have been surrendered for payment,the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate.Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to Section 7.05 shall continue in any event. Upon compliance by the City with the foregoing with respect to all Outstanding Bonds,any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City for deposit in the Special Tax Fund and any Special Taxes thereafter received by the City shall not be -34- remitted to the Fiscal Agent but shall be deposited by the City to be used for the purposes specified in the last sentence of the first paragraph of Section 3.04(B) hereof. The Special Tax Fund, Services Fund and Administrative Expense Fund shall survive payment and discharge of the Bonds. Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor,and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request,declaration or other instrument or writing 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. Except as otherwise herein expressly provided,the ownership of registered Bonds and the amount,maturity,number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith Section 9.05. Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of,or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer,agent or employee from the performance of any official duty provided by law. Section 9.06. Na4ices to and Demands on City and Fiscal Agent. Any notice or. demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows: City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: Finance Dh ector Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City)as follows: Bank of America National Tnist and Savings Association 555 South Flower Street,5th Floor Los Angeles,California 90071 Attention:Corporate Trust Administration Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it -35- u • would have adopted this Agreement and each and every other Section,paragraph, sentence,clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal,invalid or unenforceable. Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of,and the interest and any premium on,the Bonds which remains unclaimed for'two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust,and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bondowners shall look only to the City for the payment of the principal of,and interest and any premium on,such Bonds. Section 9.09. Agglicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date,the provision of the Act shall prevail over the conflicting provision of this Agreement. Section 9.11. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes. Section 9.12. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day,the payment of interest or principal (and premium,if any)or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period after such date. Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. -36- IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and the Fiscal Agent has caused this Agreement to be executed in its name,all as of June 1, 1990. CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) By: City Administrator Approved as to form: By: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By: Authorized Officer -37- EXHIBIT A FORM OF BOND No. $ UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOL)ENWEST/ELLIS AREA) 1990 SPECIAL TAX BOND INTEREST RATE MATURITY DATE BOND DATE CUSIP August 1, 1990 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Huntington Beach (the "City") for and on behalf of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"),for value received,hereby promises to pay solely from the Special Tax (as hereinafter defined)to be collected in the District or amounts in certain funds and accounts held under the Agreement(as hereinafter defined),to the registered owner named above,or registered assigns, on the maturity date set forth above,unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from August 1, 1990, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on April 1 and October 1, commencinp,'hRril 1 191 at the interest rate set forth above,until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of Bank of America National Trust and Savings Association in Los Angeles,California(the "Fiscal Agent'). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each interest payment date to the registered owner hereof as of the close of business on the 15th day.of the month preceding the month in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent. This Bond'is one of a duly authorized issue of bonds in the aggregate 4ncipal amount of $2,400,000 approved by the qualified electors of the District on July 2, 1990 pursuant to the A-1 i a Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the "Mello-Roos Act")for the purpose of financing the acquisition of certain facilities in the vicinity of the District (the "Project") and the provision of additional police, fire protection and paramedic services in the District, and is one of the series of Bonds designated "City of Huntington Beach, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds" (the "Bonds"). The creation of the Bonds and the terms and conditions there f are provided for by a resolution adopted by the City Council of the City of Huntington Beach on 1 2 1990 (the "Resolution"), and the Fiscal Agent Agreement, dated as of June 1, 1990, between the City and the Fiscal Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Resolution is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the annual special tax authorized under the Mello- Roos Act to be collected within the Distinct (the "Special Tax")and certain funds held under the Agreement. Interest on this Bond shall be payable from the interest payment date next preceding the date of authentication hereof,unless(i)it is authorized on an interest payment date,in which event it shall bear interest from such interest payment date, or(ii) such date of authentication is after a Record Date but on or prior to an interest payment date, in which event interest will be payable from such interest payment date,or(iii) such date of authentication is prior to the first Record Date, in which event interest will be payable from August 1, 1990; provided however,that if at the time of authentication of this Bond,interest is in default hereon,this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment hereon. Any tax for the payment hereof shall be limited to the Special Tax,except to the extent that provision for payment has been made by the City of Huntington Beach, as may be permitted by law. The Bonds do not constitute obligations of the City of Huntington Beach for which said City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The City has covenanted for the benefit of the owners of the Bonds that it will commence within 150 days of notification of a delinquency and diligently pursue to completion appropriate foreclosure actions in the event of delinquencies of any Special Tax installments levied for payment of principal and interest. The Bonds maturing on or after October 1, 1998 may be redeemed prior to maturity, in whole or in part, at the option of the City_on October 1, 1997 or an any interest payment date thereafter, upon at least 30 days, but not more than 60 days, prior written notice mailed to the registered owners at the addresses appearing on the bond registry books, at the following redemption prices,expressed as a percentage of par value,together with accrued interest to the date of redemption: Redemption Dates RddemFtion Prices October 1, 1997 or April 1, 1998 102.5% October 1, 1998 or April 1, 1999 102.0 October 1, 1999 or April 1,2000 101.5 October 1,2000 or April 1,2001 101.0 October 1,2001 or April 1,2002 100.5 October 1,2002 and thereafter 100.0 A-2 The outstanding Bonds:maturing on October 1, 2020 are subject to mandatory sinking payment redemption in part on October 1, 2004, and on each October 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows: Redemption Date (October 1) Sinking Pavment 2004 $60,000 2005 65,000 2006 70,000 2007 75,000 2008 80,000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145,000 2017 155,000 2018 170,000 2019 180,000 2020 195,000 Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof,interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made(i)fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption. A-3 1 The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed,happened and been performed in due time,form and manner as required by law,and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF,City of Huntington Beach has caused this Bond to be dated August 1, 1990, to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signature of the City Clerk. [S E A L] CITY OF HUNTINGTON BEACH Mayor ATTEST: City Clerk _ A-4 r FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the Resolution and the Agreement which has been authenticated on BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By: Authorized Officer ASSIGNMENT FOR VALUE RECEIVED,the undersigned do(es)hereby sell, assign and transfer unto (Name,address and Tax identification Number of Assignee) the within-mentioned registered Bond and hereby irrevocably constitute(s)and appoint(s) attorney, to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises. Dated: NOTE: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: NOTE: Signature(s)must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. A-5 30012-06 JHHW:PJT:dc os/Os'90 J7731 07/25/90 08ro5:90 ir10!'ted +o ,:,5 shoes cht�.ngeS ACQUISITION AGREEMENT By and Between CITY OF HUNTINGTON BEACH and DAVID D. DAHL, dba THE DAHL COMPANY Dated as of July 1, 1990 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) s ACQUISITION AGREEMENT CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) THIS AGREEMENT, dated as of July 1, 1990, is by and between the City of Huntington Beach,a municipal corporation and a political subdivision of the State of California (the "City"), for the benefit of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the 'District"),and David D.Dahl (the"Developer"). WHEREAS, the City Council at the City has established the District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, (commencing with Section 53311)of Part I of Division 2 of Title 5 of the California Government Code (the "Act")to provide financing for, among other things, the public facilities described on Exhibit A attached hereto and by this reference incorporated herein (the"Facilities");and WHEREAS, the Developer is an owner of land within the District and is developing single-family homes thereon;and WHEREAS, the Facilities are adjacent to said homes and the City will benefit from a common plan of construction of the Facilities and the homes; and WHEREAS,the Developer has expertise in the construction of homes and public facilities of the character of the Facilities;and WHEREAS,the City has determined that it will obtain no advantage from undertaking the construction of the Facilities pursuant to public bid and will realize economic benefit if the Developer constructs the Facilities as provided herein;and WHEREAS,the City is proceeding with the authorization and issuance of bonds for the District(the 'Bonds")to finance the Facilities pursuant to the Act. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the sufficiency and receipt of which are hereby acknowledged,the parties hereto agree as follows: 1. Recites. Each of the parties hereto represent and warrant,each to the other, that the above recitals are true and correct. 2. Sale of Bonds. The City shall continue to completion all necessary proceedings pursuant to the Act for the sale and delivery of the Bonds; provided that each step in the proceedings and the principal amount and timing of sale of the Bonds shall be in all respects subject to the approval of the City Council or its designee,and nothing contained herein shall be construed as requiring the City to issue the Bonds for the District. The estimated principal amount of the Bonds is$2,4(10,000. 3. Reimbursement of District Formation Costs by the Developer. By execution of this Agreement,the Developer agrees to indemnify the City against any cost it may pay or incur in good faith in the formation of the District and the issuance of the Bonds. -1- The Developer has submitted to the City a deposit in the amount of$100,000 to pay the costs of the City in connection with the District. If additional funds are needed for reasonable costs relating to the processing of the proceedings with respect to the District and the sale of the Bonds therefor,the Finance Director of the City shall make written demand upon the Developer therefore, and the Developer shall remit to the City the amount specified in each demand within 10 business days thereafter. 4. Reimbursements to the Develop r. Upon completion of the sale and delivery of the Bonds, the City shall reimburse, without interest, the Developer, solely from Bond proceeds and then only to the extent available for such purpose and permitted under the Act,the amount of any costs paid from such Developer deposit or any Developer advances hereunder. If for any reason the Bonds are not issued,neither the District nor the City shall have any obligation to reimburse the Developer for any costs and expenses advanced or paid from the Developer's advances,except that the City in any event agrees to return to the Developer any moneys advanced by the Developer in excess of the amount needed for payment(or provision therefor)of the costs and expenses relating to the formation of the District and the authorization and efforts to issue and sell the Bonds. The City agrees to keep records with respect to any disbursement of funds advanced to the City by the Developer. Such records shall be available for inspection by the Developer in the offices of the Finance Director of the City upon reasonable notice and during normal business hours. 5. Use of Bond Proceeds. The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the fiscal agent agreement(the 'Fiscal Agent Agreement") pursuant to which the Bonds are issued. A portion of the proceeds of the Bonds shall be set aside under a fiscal agent agreement in a separate improvement fund (the 'Improvement Fund") to pay the cost of the acquisition of the Facilities as provided below. The Developer reasonably expects to complete the Facilities and request payment therefor hereunder within 8 months of the date of this Agreement. 6. Construction of and Payment for Facilities. a. Plans and Specifications: Prevailing Wages. The Developer represents that it has obtained or will obtain approval by all appropriate City departments of the plans and specifications for the Facilities that are to be acquired by the City and that all of such Facilities have been or will be-constructed by the Developer in full compliance with the current City standards applicable to the construction of public improvements and in compliance with any applicable law or regulation with respect to the payment of prevailing wages. The City and the Developer agree that the Facilities are of local, not statewide concern, and that the provisions of the Public Contracts Code shall not apply to the construction of the Facilities. The City and the Developer agree that this Agreement is necessary to assure timely and satisfactory completion of the Facilities and that compliance with the Public Contracts Code with respect to the Facilities would work an incongruity and would not produce an advantage to the City or the District. The Developer agrees to comply with all City or other applicable bonding requirements applicable to construction of the Facilities,and to provide the City Director of Public Works (all references herein to the City Director of Public Works include any official of the City acting in such capacity or any designee of the City Director of Public Works)with copies of any change orders relative to the construction of any Facilities to be acquired by the City and the plans and specifications therefor. The City hereby acknowledges that funds on deposit in the Improvement Fund will be considered the -2- equivalent of a construction bond for a commensurate portion of the Purchase Price (as defined below) of the Facilities to be acquired with such funds. b. Purchase Price. The amount to be paid by the City for the Facilities (hereafter the 'Purchase Price" as to each such Facility), shall be determined by the City Director of Public Works and shall not exceed and shall be substantially the cost thereof,including the reasonable cost of appurtenant facilities and of preparing plans and specifications as well as the construction contracts and all costs of construction reasonably determined by the City Director of Public Works to be eligible under the Act to be part of the Purchase Price (said determination to be made consistent with the terms of this Agreement), such as fees and costs incurred in obtaining permits, licenses, rights of way or easements, the costs of change orders,engineering,legal,fiscal and inspection fees constituting a part of the public improvements. The Purchase Price may include a reasonable charge for contract administration by the Developer,not to exceed 4%of the related construction cost. The Developer shall provide any documentation substantiating the cost of the Facilities reasonably requested by the City Director of Public Works or the City Finance Director. There shall be a presumption of reasonableness as to costs incurred under a construction contract entered into as a result of a call for bids by the Developer, provided that no extraordinary limitations or requirements (such as short time frame) are imposed by the Developer on the performance of such contract. c. Inspection and Acceptance. The Facilities to be acquired by the City,when fully completed, shall be accepted in accordance with adopted City policy, and the Purchase Price for each such Facility promptly paid from Bond proceeds if completed substantially in accordance with the approved plans and specifications for such Facilities and pursuant to the requirements of Section 53313.5 of the Act. The City shall accept no liability or responsibility for any such Facility or the maintenance thereof until all work with respect thereto has been completed to the satisfaction of the City Director of Public Works. Any Facilities to be acquired by other public agencies,shall be accepted subject to the relevant public agencies'policies and procedures. The Facilities shall be subject at all reasonable times prior to their acquisition to inspection by the City Director of Public Works,which inspection shall be accomplished in a timely manner. Prior to acceptance of any Facility by the City, the Developer shall. provide as-built drawings or other similar plans and specifications of such Facility in the form required under City standards applicable to the construction of public improvements and otherwise by applicable law or regulation,along with evidence satisfactory to the City Director of Public Works that all costs of the Facility have been fully paid by the Developer to the party or parties entitled to be paid for such costs. The Developer shall obtain from any public agency(other than the City)acquiring a Facility a written statement to the effect that such Facility has been accepted by such public agency and all costs with respect thereto have been paid. All warranties, guarantees or other evidence of contingent obligations of third persons with respect to Facilities to be acquired by the City shall be delivered to the City Director of Public Works prior.to acceptance thereof. If applicable,all documentation evidencing dedication and/or transfer of ownership of the Facilities shall be delivered to the City prior to the acceptance thereof and payment therefor,as further provided in Section 6e below. d. PPAyments to Developer. The Developer may request in writing a payment on the Purchase Price of any Facility or portion thereof described in Exhibit A hereto. Such payments shall be made only in the amount determined reasonable by the City Director of Public Works with respect to the Facility to be acquired,as specified in a cost certificate for each Facility or group of related Facilities completed by the City Director of Public Works. -3- A ten percent retainage shall be held by the City in the Improvement Fund with respect to the cost of any Facility acquired by the City (no such retainage being required with respect to any Facility to be acquired by a public agency other than the City) pending final completion and acceptance of the related Facility and a one-year maintenance period for each such Facility except landscaping,which shall have a three-year maintenance period. In lieu of such retainage,the Developer shall be permitted to provide to the City a letter of credit in form and substance satisfactory to the City Director of Public Works and the City Finance Director. Any such Facility or portion thereof to be acquired by the City must be completed in accordance with the approved plans and specifications. Any Facility to be accepted by the City must be in such condition that it is ready for use by the City or the public as determined by the City Director of Public Works(said determination to be based on current City standards applicable to the construction of public improvements,wherever relevant), or is otherwise a discrete portion of a Facility that is determined by the City Director of Public Works to be complete. For purposes of this Agreement, attached hereto as Exhibit B is a description of discrete portions of the Facilities upon completion of which payment may be requested by the Developer. It is hereby acknowledged by the Developer that the discrete portions of the Facilities listed in Exhibit B are provided for purposes of payment only, and City acceptance of a Facility for purposes of liability and/or maintenance shall only be with respect to completion of the entire Facility and not,for example,completion of the grading incident to that Facility, and shall only be in accordance with adopted City policy. Any claim for a payment to the Developer from amounts in the Improvement Fund shall be in a form acceptable to the City and include supporting documentation(including, with respect to any Facility to be acquired by a public agency other than the City,evidence that such agency has so accepted the Facility). The Director of Public Works shall review each claim for payment and inform the Developer,in writing, within 15 business days of receipt by the Director of Public Works of the claim and all supporting documentation, of the denial of any claim for payment in whole or in part, setting forth the reasons for such denial. The Developer shall be entitled to resubmit any claim or portion thereof so denied, if it is able to address the objections to such claim. The City shall make payment within forty-five (45) days of receipt of any claim or portion thereof which is not so denied, subject to the provisions of the last sentence of the next paragraph. If requested by the City Director of Public Works,the Developer shall prepare and execute a Notice of Completion in form acceptable to the City Director of Public Works as to any Facility to be acquired by the City and record such notice with the office of the Recorder of the County of Orange, State of California and cause its contractor to provide general lien releases in form acceptable to the City Director of Public Works for such Facility. The City shall be entitled to delay payment to the Developer for any Facility to be acquired by the City until 35 days after a Notice of Completion with respect thereto has been so filed by the Developer. If any of the Facilities to be acquired hereunder were or are financed,in whole or in part,from the proceeds of any loan secured by a mortgage or deed of trust upon any lands within the District,and in the absence of contrary written instructions by any mortgagee or beneficiary of such mortgage or deed of trust, the Purchase Price shall be paid to the Developer and to such mortgagee or beneficiary, as their interests may appear. The Developer shall provide evidence to the City Director of Public Works as to the source of funds,if any,to pay the costs of construction of the Facilities. e. Ownership and Transfer of Facilities. The conveyance of any Facilities to be owned by a public agency other than the City, shall be in accordance with such agency's -4- a policies and procedures. The provision or conveyance to the City of any Facilities to be acquired by the City shall take place as follows: (i) Land (Fee or Easement). The Developer shall cause the owners of the real property within the District to transfer to the City the appropriate rights, title and interest in and to said land to be acquired. The Developer agrees to cause the owners of the real property within the District to execute and deliver to the City those documents required to complete the transfer of Acceptable Title (as defined herein)to the land. Acceptable Title means tide to the land delivered free and clear of all liens, encumbrances, assessments, easements or leases, whether any such item is recorded or unrecorded, and taxes, except those matters which are determined by the City Director of Public Works in his reasonable discretion not to interfere with the intended use of the land and therefore are not required to be cleared from the title. Completion of transfer shall be evidenced by the recordation of an acceptance of the interest(s)in the land by the City Council or their designee. (ii) Improvements Constructed on Land Owned by ProRM Owners. If Facilities to be acquired by the City are located on land which is owned by the owners of the real property within the District, then such property owners shall retain the tide to said land and the improvements constructed thereon until the land and improvements are acquired by the City pursuant to the provision of this Agreement. Until tide to the land and the Facilities are acquired by the City, the Developer shall maintain the land and improvements in good and safe condition. Transfer of tide to the land and the Facilities thereon shall be in accordance with clause (i)above. (iii) Improvements Constructed on Land Owned by City in Fee or Easement. If Facilities to be acquired by the City are on land on which the City holds fee title or easement rights,the Developer is hereby granted a license to enter said land for purposes related to the construction and maintenance (prior to acquisition by the City hereunder)of the said improvements. Upon completion of construction of any such Facility,the City Director of Public Works shall inspect the improvements in accordance with City standards applicable to the construction of public improvements,and if approved by the City Director of Public Works,the City shall give written notice of its acceptance of the Facility. (iv) Personal Property. If the Developer provides any personal property' identified on Exhibit A hereto, transfer by the Developer to the City shall be accomplished by a bill of sale. (v) Funds. If the Developer provides funds for Facilities,the provision of such funds to the City shall be acknowledged with a written receipt from the Finance Director. f. Payment of Excess Costs. The Developer hereby agrees to pay all costs of the Facilities in excess of the proceeds of the Bonds available therefore in the Improvement Fund established under the Fiscal Agent Agreement. 7. Indemnification and Hold Harmless. The Developer shall assume the defense of, indemnify and save harmless the City,its officers,directors,employees and agents,and each and every one of them,from and against all actions,damages,claims,losses or expense of every type and description to which they may be subjected or put, by reason of, or resulting from, this -5- Agreement, the Developer's negligent design, the Developer's negligent engineering and construction of the Facilities, or any claims of persons employed to construct the Facilities; provided that this indemnification as it relates to the construction of the Facilities shall terminate and be of no further force and effect for claims arising after acceptance by the City of the Facilities. No provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer or its contractors. 8. Agdft. The City Director of Public Works and Finance Director shall have the right, during normal business hours and upon the giving of ten days written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing any of the Facilities. 9. Relationship to Public Works. The parties hereto agree that this Agreement is for the acquisition of certain public facilities by the City from the proceeds of the sale of the Bonds deposited in the Improvement Fund and is not,nor is it intended to be,a public works contract. In performing this Agreement, the Developer is an independent contractor and not the agent of the City or the District. Neither the City nor the District shall have responsibility for payment to any contractor or supplier of the Developer. All contracts related to the construction of the Facilities, and all change orders related thereto, shall be submitted to the City Director of Public Works for review and approval as to cost, and quantity and quality of work. Unless the City Director of Public Works submits a written denial of approval of any contract or change order to the Developer (stating the reasons therefor) within 15 business days of receipt by the City Director of Public Works of the contract or change order,the City Director of Public Works shall be deemed to have approved the contract or change order with respect to cost. 10. Attorney s Fees. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit,including reasonable attorneys'fees. 11. Notices. Any notice,payment or instrument required or permitted by this Agreement to be given or delivered to either parity shall-be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California,registered or certified mail,postage prepaid,addressed as follows: Developer. David D.Dahl SOS Park'Avenue Balboa Island,California 92662 City or District: City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: Finance Director with a copy to: City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: Director of Public Works -6- Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. 12. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction,the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by the Developer without the prior written consent of the City. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. 14. Limited Liability. Any and all obligations of the City arising out of or related to this Agreement are the special and limited obligations of the City, in any event payable only from amounts, if any, in the Improvement Fund available therefor. In no event shall the City be obligated to advance any of its own funds hereunder,except pursuant to the provisions of Section 10 hereof. No Councilmember, staff member or agent of the City shall incur any liability hereunder to the Developer or any other party in their individual capacities.by reason of their actions hereunder or execution hereunder. 15. Waiver. Failure by a parry to insist upon the strict performance of any of the provisions of this Agreement by the other party,or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter. 16. CounteZparts. This Agreement may be executed in counterparts,each of which shall be deemed an original. 17. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto. -7- IN WITNESS WHEREOF,the parties have executed this Agreement as of the day and year first-above written. CITY OF HUNTINGTON BEACH,for itself and on behalf of COMMUNITY FACHIIIES DISTRICT NO. 1990-1 (Goldenwest/EIlis Area) By: City Administrator DAVID D.DAHL,dba The Dahl Company By: David D.Dahl •1- T O EXHIBIT A LIST OF FACILITIES TO BE ACQUIRED 1. Improvements to Ellis Avenue in the vicinity of the District,including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related .improvements. 2. Improvements to Goldenwest Avenue in the vicinity of the district, including road improvements,curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 3. Improvements to Quarterhouse Lane in the vicinity of the district, including road improvements, curb,gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 4. Improvements to Saddleback Lane in the vicinity of the district, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 5. Improvements to Edwards Street in the vicinity of the district, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. 6. Water and sewer system improvements along Ellis Avenue, Quarterhouse Lane and Saddleback Lane in the vicinity of the District,including related improvements. 7. Undergrounding of utilities along one or more of the foregoing streets in the vicinity of the District,including any related work. A-1 EXHIBIT B DISCRETE PORTIONS OF FACII.T= TRACT TRACT IMPROVEMENT AMOUNT 88 ASPHALT 63,173 13269 ASPHALT 75,709 13270 ASPHALT 33,933 13439 ASPHALT 48,241 13714 ASPHALT 53,984 14035 ASPHALT 41,875 14209 ASPHALT 75,480 88 CONCRETE WORK . 21,479 13269 .CONCRETE WORK 30,914 13270 CONCRETE WORK 17,652 13439 CONCRETE WORK 11,806 13714 CONCRETE WORK 25,974 14035 CONCRETE WORK 20,917 14109 CONCRETE WORK 37,337 88 CONTINGENCY 22,411 13269 CONTINGENCY 7,984 13270 CONTINGENCY 7,868 13439 CONTINGENCY 17,323 23714 CONTINGENCY 18,220 14035 CONTINGENCY 12,517 14109 CONTINGENCY 24,376 88 DRAINAGE FACILITIES 45,470 13270 DRAINAGE FACILITIES 16,901 13439 DRAINAGE FACILITIES 70,335 13714 DRAINAGE FACILITIES 28,830 14035 DRAINAGE FACILITIES 68,738 14109 DRAINAGE FACILITIES 35,29,0 88 ELECTRICAL DISTRIBUTION 127,987 88 GRADING i SURVEY 82,044 13269 GRADING i SURVEY 13,718 13270 GRADING i SURVEY 10,407 13439 GRADING i SURVEY 45,582 23114 GRADING i SURVEY 19,027 14035 GRADING i SURVEY 4,662 14109 GRADING i SURVEY 15,934- 88 SEWER SYSTEMS 2,735 13270 SEWER SYSTEMS 5,470 13439 SEWER SYSTEMS 9,024 13714 SEWER SYSTEMS 14,099 . 14035 SEWER SYSTEMS 19,648 88 STRIPPING,SIGNS,BARRICADES 5,556 13269 STRIPPING,SIGNS,BARRICADES 3,790 13270 STRIPPING,SIGNS,BARRICADES 1,193 13439 STRIPPING,SIGNS,BARRICADES 1,094 13714 S?RlPPING,SIGNS,8ARRICADES 1,750 14035 STRIPPING,SIGNS,BARRICADES • 975 14109 STRIPPING,SIGNS,BARRICADES 3,766 13270 WATER SYSTEMS 36,783 13439 WATER SYSTEMS 63,263 13714 WATER SYSTEMS 139,621 14035 WATER SYSTEMS 37,794 14109 WATER SYSTEMS 55,707 TOTAL 1,666,363 B-I Mello-Roos Financing Info mation Fining and Facilities and Services Mello-Roos Special Taxes The following information is being provided CFD No. 1990-1 has issued bonds with a As mentioned above, CFD No. 1990-1 has to prospective homebuyers to inform you that 30-year term. These bonds are secured by all issued tax exempt bonds to be repaid, and the property you intend to purchase is located real property within CFD No. 1990-1 and will provide services to be paid, by the levy in a Mello-Roos Community Facilities will be repaid by the levy of a Special Tax on of a Special Tax on each residential unit District. This means that a Mello-Roos the property located within CFD No. 1990-1. within CFD No. 1990-1. The maximum Special Tax lien has been placed on the This Special Tax will be levied to pay the annual Mello-Roos Special Tax that can be property you are purchasing, and that as a bonds and to provide funding for additional levied in any year against the property you buyer of this home, you will be responsible police, fire and paramedic services within intend to purchase is estimated to be for paying Special Taxes which are in CFD No. 1990-1 beginning in the 1991-1992 approximately$2,337, assuming that at least addition to the ordinary property taxes paid tax year. The Special Tax will be collected 113 homes are built within CFD No. 1990-1. by homeowners in other parts of the City of semiannually at the same time and in the same This is in addition to the regular level of Huntington Beach. Information summarizing manner as ordinary real property taxes. The property taxes paid by property owners in the specific tax liabilities associated with this facilities and services that will be financed by the-City of Huntington Beach. If less than Community Facilities District, plus the the levy of this Special Tax may include but 113 homes are built within CFD No. 1990-1, facilities to be financed, is presented in this are not limited to those listed below: the annual additional Special Tax levy may be brochure. proportionately in excess of $2,337. The Special Taxes are to be levied each year so Background • Widening of Ellis Avenue from 20 to 50 long as any bonds of the City for CFD No. feet. 1990-1 are outstanding. A Community Facilities District (CFD No. • Acquisition of land for widening of Ellis 1990-1) has been established by the City of Avenue. It is expected that the Special Taxes will be Huntington Beach pursuant to the Mello- • Raising of Ellis Avenue elevation by 10 levied each year for 30 years. The Special Roos Community Facilities Act of 1982. feet. Taxes will be collected on the general This Act was passed by the California • Provision of drainage control on Ellis property tax roll,and will be due at the same Legislature in response to public funding Avenue. time as the general property taxes, currently limitations imposed by Proposition 13, in • Improvements to Goldenwest Avenue, December 10 and April 10 of each year. The order to provide an alternative method to Quarterhorse Lane, Saddleback Lane and Special Taxes are not subject to prepayment. finance the construction of public facilities in Edwards Street in the vicinity of CFD Failure to pay Special Taxes when levied and a timely fashion and to provide funds to pay No. 1990-1. due may result in a foreclosure sale of the for additional municipal services arising from • Undergrounding of utilities along Ellis property on which the Special Taxes are growth in the community. Avenue. levied, in order to pay the delinquent Special • Water and sewer system improvements Taxes. A CFD may issue and sell bonds to provide along Ellis Avenue, Quarterhorse Lane funds to acquire or construct public capital and Saddleback Lane in the vicinity of facilities and may levy a special tax to pay CFD No. 1990-1. such bonds and the cost of providing • Acquisition of emergency vehicle traffic additional municipal services within the CFD. interruption devices for the City of These bonds qualify for tax exempt status, Huntington Beach. thereby providing a lower interest rate than • Provision of additional police and fire conventional,taxable financing methods. protection services in the area of CFD No. 1990-1. Acknowledgement I, the undersigned, acknowledge that I have read this disclosure and understand that a Special Tax will be collected along with regular property taxes to finance the public facilities and pay for the services as listed above. I recognize that the property I am considering for purchase is within CFD No. 1990-1, and I understand that I will be responsible for payment of the Mello-Roos Special Tax. I understand that if I fail to pay the Special Tax when levied and due, my home may be subject to foreclosure sale to MELLO-ROOS pay the delinquent Special Tax. I also understand that a copy of this brochure with SPECIAL TAX my signature may be kept on file with the City of Huntington Beach. DISCLOSURE Signed Date TO THE Signed HOMEOWNER Date THIS SUMMARY BROCHURE DOES NOT WAIVE OR ALTER ANY OF THE CONDITIONS OR PROVISIONS OF THE "NOTICE OF SPECIAL TAX LIEN" FROM THE TITLE REPORT FOR YOUR PROPERTY. FOR MORE DETAILED INFORMATION REGARDING THE SPECIAL TAX, A, PROSPECTIVE HOMEOWNER SHOULD REVIEW THE ENTIRE "NOTICE OF SPECIAL TAX LIEN," A COPY OF WHICH CAN BE OBTAINED BY CALLING THE CITY OF HUNTINGTION BEACH FINANCE DEPARTMENT AT (714) 536-5228. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE No. R-1 $ 25,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) . 1990 SPECIAL TAX BOND INTEREST RATE MATURITY DATE BOND DATE CUSIP 6.35% October 1, 1992 August 1, 1990 446188 AA2 REGISTERED OWNER: Cede & Co. 55 Water Street New York, NY 10041 Tax Identification No. 13-2555119 PRINCIPAL AMOUNT: TWENTY-FIVE THOUSAND DOLLARS The City of Huntington Beach (the "City") for and on behalf of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"), for value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) to be collected in the District or amounts in certain funds and accounts held under the Agreement (as hereinafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from August 1, 1990, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on April 1 and October 1, commencing April 1, 1991,at the interest rate set forth above,until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of Bank of America National Trust and Savings Association in Los Angeles,California(the "Fiscal Agent"). .Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each interest payment date to the registered owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent. This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $2,400,000 approved by the qualified electors of the District on July 2, 1990 pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the i California Government Code (the "Mello-Roos Act") for the purpose of financing the acquisition of certain facilities in the vicinity of the District (the 'Project") and the provision of additional police, fire protection and paramedic services in the District, and is one of the series of Bonds designated "City of Huntington Beach, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds" (the 'Bonds"). The creation of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City of Huntington Beach on July 2, 1990 (the 'Resolution"), and the Fiscal Agent Agreement, dated as of June 1, 1990, between the City and the Fiscal Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Resolution is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the annual special tax authorized under the Mello- Roos Act to be collected within the District (the "Special Tax") and certain funds held under the Agreement. Interest on this Bond shall be payable from the interest payment date next preceding the date of authentication hereof,unless (i) it is authorized on an interest payment date, in which event it shall bear interest from such interest payment date, or (ii) such date of authentication is after a Record Date but on or prior to an interest payment date, in which event interest will be payable from such interest payment date,or(iii) such date of authentication is prior to the fast Record Date, in which event interest will be payable from August 1, 1990; provided however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment hereon. Any tax for the payment hereof shall be limited to the Special Tax,except to the extent that provision for payment has been made by the City of Huntington Beach, as may be permitted by law. The Bonds do not constitute obligations of the City of Huntington Beach for which said City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The City has covenanted for the benefit of the owners of the Bonds that it will commence within 150 days of notification of a delinquency and diligently pursue to completion appropriate foreclosure actions in the event of delinquencies of any Special Tax installments levied for payment of principal and interest. The Bonds maturing on or after October 1, 1998 may be redeemed prior to maturity, in whole or in part, at the option of the City, on October 1, 1997 or an any interest payment date thereafter, upon at least 30 days, but not more than 60 days, prior written notice mailed to the registered owners at the addresses appearing on the bond registry books, at the following redemption prices,expressed as a percentage of par value,together with accrued interest to the date of redemption: Redemption Dates Redemption Prices October 1, 1997 or April 1, 1998 102.5% October 1, 1998 or April 1, 1999 102.0 October 1, 1999 or April 1,2000 101.5 October 1, 2000 or April 1,2001 101.0 October 1, 2001 or April 1,2002 100.5 October 1,2002 and thereafter 100.0 -2- The outstanding Bonds maturing on October 1, 2020 are subject to mandatory sinking payment redemption in part on October 1, 2004, and on each October 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows: Redemption Date (October 1) Sinking Pant 2004 $60,000 2005 65,000 2006 70,000 2007 75,000 2008 80,000 2009 85,000 2010 90,000 2011 100,000 2012 105,000 2013 115,000 2014 125,000 2015 135,000 2016 145,000 2017 155,000 2018 170,000 2019 180,000 2020 195,000 Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of. assignment endorsed hereon, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption. The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. -3- A This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed,happened and been performed in due time,form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. -4- IN WITNESS WHEREOF, City of Huntington Beach has caused this Bond to be dated August 1, 1990, to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signature of the City Clerk. CITY OF HUNTINGTON BEACH Mayor (SEAL] ATTEST: City Clerk FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the Resolution and the Agreement which has been authenticated on August 9, 1990. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By: Authorized Officer -5- 1 ASSIGNMENT FOR VALUE RECEIVED,the undersigned do(es) hereby sell, assign and transfer unto (Name,address and Tax identification Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises. 'Dated: NOTE: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: NOTE: Signature(s)must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. -6- _f eJONES HALL HILL SC WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS FOUR EMBARCADERO CENTER HAROLD W.BANK* - SUITE 1980 STEPHEN R.CASALEGGIO BRUCE R.COLEMAN SAN FRANCISCO, CA 04111 THOMAS A.DOWNEY (418) 391-5780 ANDREW C.HALL,JR. KENNETH I.JONES FACSIMILE WILLIAM H.MADISON DAVID J.OSTER (418)391-5784 BRIAN D.QUINT (415)391-5788 PAUL J.THIMMI6 (416)966-6308 SHARON STANTON WHITE ADMITTED TO NEW YORE AND DISTRICT OF COLUMBIA BARS ONLY ROBERT J.HILL(1922-1988) August 3, 1990 CLOSING MEMORANDUM To: All Parties on the Attached Distribution List Re: $2,400,000 City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area). 1990 Special Tax Bonds The Pre-Closing and Closing of the captioned financing are scheduled to be held in the offices of Jones Hall Hill & White, A Professional Law Corporation, Four Embarcadero Center, Suite 1950 in San Francisco on Wednesday, August 8, and Thursday, August 9, respectively. The Pre-Closing will begin at 2:30 p.m. and the Closing will begin at 8:00 a.m. Enclosed is a Schedule of Transcript Documents which sets forth the documents to be presented and/or executed prior to Closing or at Closing. This Memorandum makes reference to items listed on the Schedule of Transcript Documents by the letter/number designation beside which they are listed. The draft documents enclosed are numbered in the upper right- hand corner with their corresponding letter/number designation on the Schedule of Transcript Documents. Set forth below is a description of procedures and responsibilities as they affect each Closing participant. PLEASE NOTE that all documents executed and received by this office prior to the Closing, as requested herein, will be held in escrow by this office for delivery at the Closing upon consent and agreement of the parties thereto. In addition, enclosed are the revised draft of the Fiscal Agent Agreement and the final draft of the Disclosure Statement to Homeowners. Comments regarding these documents should be transmitted to Paul J. Thimmig., via telephone, telecopy or overnight mail Comments regarding the procedures set forth herein and the enclosed Schedule of Transcript Documents and draft documents should be transmitted to the undersigned or Paul J. Thimmig, via telephone, telecopy or overnight mail. In addition, enclosed is a copy of the definitive Bond No. R-1 for your review and comment. All parties are requested to advise the undersigned no later than 3:00 p.m. on Monday, August 6, with any comments on said definitive Bond. CITY and CITY ATTORNEY 1. Arthur J. Folger, Esq., City Attorney, is requested to prepare and deliver to Ms. Sally-Danekas, of this office, at the signing session on Tuesday, August 7, five (5) originally executed copies of the opinion required pursuant to Section 9(c) of the Purchase Contract, the form of which is enclosed as Item B11. Please note that said opinion is to be dated the date of Closing, August 9, 1990. 2. Ms. Connie-Brockway has heretofore been requested to prepare five (5) certified copies of each of the documents listed below and deliver same to Ms. Danekas at the signing session to be held on Tuesday, August 7: (a) Resolution No. 6141 entitled "A Resolution of the City Council of the City of Huntington Beach Acknowledging Receipt of Petition for Establishment of Community Facilities District, Directing Initiation of Proceedings Under the Mello-Roos Community Facilities Act of 1982, and Approving an Agreement Regarding Advances and Employing Consultants in Connection Therewith, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted April 3, 1990; (b) Petition (Including Waiver) Regarding Proceedings Under the Mello-Roos Community Facilities Act of 1982; (c) Agreement Regarding Advances Between the City of Huntington Beach and David D. Dahl and Southwest Diversified, Inc. (collectively, the "Company") for the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) of the City of Huntington Beach; (d) Resolution No. 6142 entitled "A Resolution of the City Council of the City of Huntington Beach of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990; (e) Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilot to be held June 18, 1990, as required by Section 11 of the City's Resolution No. 6142; (f) Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Report, dated June 7, 1990; (g) Resolution No. 6143 entitled "A Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (GoldenwesUEllis Area)", adopted May 7, 1990; (h) Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilot to be held June 18, 1990, as required by Section 5 of the City's Resolution No. 6143; (i) Resolution No. 6161 entitled "A Resolution of Formation of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District and Submitting Levy of the Special Tax and the Establishment of the Appropriations Limit to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990; Q) Resolution No. 6162 entitled "A Resolution Determining the Necessity to Incur Bonded Indebtedness Within Community Facilities District No. 1990- 1 (Goldenwest/Ellis Area) and Submitting Proposition to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990; (k) Resolution No. 6163 entitled "A Resolution Calling Special Election, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990; (1) Proof of Publication of Resolution No. 6163 in the Orange Coast Daily Pilot, pursuant to Section 9 thereof; (m) Official Ballot/Special Tax Election held on July 2, 1990; (n) Return Envelope(s) for the Official Ballot/Special Tax Election held on July 2, 1990; (o) Canvass and Statement of Result of Election held on July 2, 1990; (p) Resolution No. 6173 entitled "A Resolution Declaring Results of Special Election and Directing Recording of Notice of Special Tax Authorization, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990; (q) Notice of Special Tax Lien (recorded in the Orange County Recorder's Office on July 12, 1990, as instrument number 90-368665), pursuant to Section 5 of the City's Resolution No. 6173; (r) Resolution No. 6174 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing The Issuance of Special Tax Bonds of the City of Huntington Beach for Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Approving and Directing the Execution of a Fiscal Agent Agreement, and Approving Other Related Documents and Actions, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990; (s) Ordinance No. 3050 entitled "An Ordinance of the City Council of the City of Huntington Beach Levying Special Taxes Within Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", enacted July 16, 1990; and (t) Proof of Publication of Ordinance No. 3050 in the Orange Coast Daily Pilot as required pursuant to Section 7 thereof. 3. A signing session has been arranged for Tuesday, August 7, beginning at 11:30 a.m., in the offices of the City, to facilitate execution of the documents listed below (which Ms. Danekas will deliver to said signing session). The officers of the City required to be in attendance at said signing session are the Mayor, City Administrator, Director of Finance, City Attorney (or Deputy) and City Clerk of the City (please note that the seal of the City will be required at this signing session): (a) Certificate Regarding Effectiveness of Report, a draft of which is enclosed as Item A7; (b) Fiscal Agent Agreement; (c) Acquisition Agreement; (d) Final Official Statement; (e) Incumbency and Signature Certificate, a draft of which is enclosed as Item 131; (f) Certificate of City Clerk regarding effectiveness of City resolutions and ordinance, a draft of which is enclosed as Item 134; (g) Written Request to authenticate the Bonds, a draft of which is enclosed as Item B6. 4. At the Pre-Closing, Mr. Dan T. Villella will be requested to execute the following: (a) Representation Letter to The Depository Trust Company, a draft of which will be available for review at or prior to the Pre-Closing; (b) Certificate as to Arbitrage, a draft of which is enclosed as Item 132; (c) Officer's Certificate, a draft of which is enclosed as Item 133; (d) Certificate Regarding Use of Proceeds, a draft of which is enclosed as Item 135; and (e) Information Return Form 8038-G, a draft of which will be available for review at or prior to the Pre-Closing; (f) Certificate Regarding Preliminary Official statement, a draft of which is enclosed as Item 138; (g) Officer's Certificate Requesting Disbursement from Costs of Issuance Fund, a draft of which is enclosed as Item 1310. 5. Pursuant to Section 6.01 of the Fiscal Agent Agreement, the City is to provide the Fiscal Agent with instructions as to the investments to be made with that portion of the proceeds of the Bonds to be held by the Fiscal Agent. Following the determination of such investments, the Certificate Regarding Investments, a draft of which is enclosed as Item B12, will be completed and available for execution by Mr. Villella on the morning of Closing. 'DEVELOPER Enclosed to Mr. Ron McDevitt are execution copies of the Acquisition Agreement and the Certificate of Developer required pursuant to the Purchase Contract. Mr. McDevitt is requested to have all copies signed by David D. Dahl and ensure delivery of same to the undersigned for receipt by 10:30 a.m. on Wednesday, August 8. FISCAL AGENT 1. It is anticipated that the definitive typewritten Bonds will be delivered to the Fiscal Agent's operations center on Tuesday, August 7, for authentication. The authenticated Bonds are to be delivered to the attention of Mr. Willie Rodriguez, The Depository Trust Company, 55 Water Street, 2nd Sublevel, New York, New York 10041, for his receipt by Wednesday, August 8. 2. Please advise the undersigned as soon as possible of the payees, "not to exceed" amounts and a description of the obligation for any Costs of Issuance of which you are aware are to be paid from the Costs of Issuance Fund, whether or not the same are to be paid at Closing. For any Costs of Issuance to be paid upon Closing, please prepare (or have prepared) invoices for such amounts and deliver same to the Pre-Closing. 3. Please prepare (or have prepared) and deliver to the Pre-Closing, five (5) originally executed copies of the Fiscal Agent's Incumbency Certificate, together with five (5) copies of the Fiscal Agent's general signing resolution. 4. At the Pre-Closing, an authorized officer of the Fiscal Agent will be required to execute the following: (a) - Fiscal Agent Agreement; (b) Representation Letter to The Depository Trust Company; and (c) Certificate of the Fiscal Agent, a draft of which is enclosed as Item C2. 5. Please make the necessary arrangements with Ms. Irma Haro of Chilton & O'Connor, Inc. (address per attached) for delivery to the Fiscal Agent on the morning of Closing of the proceeds of the Bonds. Following receipt by the Fiscal Agent of said proceeds, an authorized officer of the Fiscal Agent will be required to execute the Fiscal Agent's Receipt of Proceeds, a draft of which is enclosed as Item C3. 6. In addition, the Fiscal Agent will be required to invest the amounts held by it in the various funds and accounts established under the Fiscal Agent Agreement pursuant to instructions to be received from the City, whereupon an authorized officer of the Fiscal Agent will be required to execute the "compliance" signature block on the Certificate Regarding Investments, a draft of which is enclosed as Item B12. UNDERWRITER I. Please prepare (or have prepared) and deliver to the Pre-Closing five (5) originally executed copies of the Representation Letter of the Underwriter, the form of which is enclosed as Item E1. 2. On the morning of Closing, the Underwriter will be required to deliver to the Fiscal Agent the purchase price of the captioned Bonds in the amount of $2,352,247.39, which purchase price has been calculated as outlined in the Fiscal Agent's Receipt of Proceeds, a draft of which is enclosed as Item C3. 3. On the morning of Closing, following receipt by the Fiscal Agent of the proceeds of the captioned Bonds, subject, however, to certain additional conditions precedent, the definitive Bonds will be released to a representative of the Underwriter in.New York, New York, whereupon, an authorized representative of the Underwriter in attendance at the Closing in San Francisco, California, will be required to execute the Receipt for Bonds, a draft of which is enclosed as Item E2. FINANCIAL ADVISOR 1. Please prepare (or have prepared) and deliver to the undersigned at or prior to the Pre-Closing, the following: (a) Acknowledgment of Receipt of Report of Proposed Debt Issuance by the California Debt Advisory Commission ("CDAC"), together with a copy of the Report of Proposed Debt Issuance; (b) all originally executed copies of the Purchase Contract, between the City and the Underwriter; (c) Certificate of Mailing (or other evidence of such mailing) Report of Final Sale to CDAC, together with a copy of the Report of Final Sale; (d) a complete "laundry list" of all costs of issuance, whether or not the same are to be paid at Closing; and (e) a breakdown of the deposits to be made with the proceeds of the captioned Bonds into the various funds and accounts established pursuant to the Fiscal Agent Agreement. 2. At the Pre-Closing, Mr. Rod Gunn will be required to execute the Certificate of Financial Advisor, a draft of which is enclosed as Item E4. BOND COUNSEL 1. On the day of Pre-Closing, forward to The Depository Trust Company execution copies of the Representation Letter of the City and the Fiscal Agent for execution by The Depository Trust Company and subsequent return to Bond Counsel. 2. Deliver to the Closing, the following: (a) List of Financing Participants; (b) copies of the Preliminary Official Statement which have been received from the Financial Advisor; (c) copies of the Final Official Statement which have been received from the Financial Advisor; (d) Certificate of Mailing Information Return Form 8038-G; (e) Form of Officer's Certificate Requesting Disbursement from Improvement Fund, a draft of which is enclosed as Item B9; (f) Specimen Bonds; and (g) opinions and reliance letters, drafts of which are enclosed as Items F1 through F3. 3. Prepare original Transcripts, ultimately to be comprised of all items listed on the enclosed Schedule of Transcript Documents, to be distributed upon Closing as follows: City of Huntington Beach (City Clerk) Chilton & O'Connor, Inc. Bank of America National Trust and Savings Association Rod Gunn Associates, Inc. Jones Hall Hill & White, A Professional Law Corporation 4. Prepare photocopies of an original Transcript, to be distributed following duplication as outlined below: City of Huntington Beach (City Administrator) City of Huntington Beach (Director of Finance) Office of the City Attorney Jones Hall Hill & White, A Professional Law Corporation ALL PARTIES 1. Please review the responsibilities of the participants as outlined herein, the enclosed Schedule of Transcript Documents and draft closing documents and advise the undersigned or Paul Thimmig as soon as possible of any questions or comments. 2. Please advise the undersigned as soon as possible of the payees, "not to exceed" amounts and descriptions of obligations for any Costs of Issuance of which you are aware are to be paid from the Costs of Issuance Fund, whether or not the same are to be paid at Closing. For any Costs of Issuance to be paid upon Closing, please prepare (or have prepared) invoices for such amounts and deliver same to the Pre-Closing. Very truly yours, Ienda F. Bell Project Coordinator Enclosure 30012-06 JHHW:PJT:GFB 8/3/90 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS SCHEDULE OF TRANSCRIPT DOCUMENTS A. LIEN AND ISSUANCE DOCUMENTS 1. List of Financing Participants. 2. City of Huntington Beach (the "City") Resolution No. 6141 entitled "A Resolution of the City Council of the City of Huntington Beach Acknowledging Receipt of Petition for Establishment of Community Facilities District, Directing Initiation of Proceedings Under the Mello-Roos Community Facilities Act of 1982, and Approving an Agreement Regarding Advances and Employing Consultants in Connection Therewith, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) adopted April 3, 1996. 3. Petition (Including Waiver) Regarding Proceedings Under the Mello-Roos Community Facilities Act of 1982. 4. Agreement Regarding Advances Between the City of Huntington Beach and David D. Dahl and Southwest Diversified, Inc. (collectively, the "Company") for the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) of the City of Huntington Beach. 5. City Resolution No. 6142 entitled "A Resolution of the City Council of the City of Huntington Beach of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990. 6. Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilot to be held June 18, 1990, as required by Section 11 of the City's Resolution No. 6142. 7. Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Report, dated . June 7, 1990, together with Certificate Regarding Effectiveness of Report, as required by Section 9 of the City's Resolution No. 6142. 8. City Resolution No. 6143 entitled "A Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990. t 9. Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilot to be held June 18, 1990, as.required by Section 5 of the City's Resolution No. 6143. 10. City Resolution No. 6161 entitled "A Resolution of Formation of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District and Submitting Levy of the Special Tax and the Establishment of the Appropriations Limit to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990. 11. City Resolution No. 6162 entitled "A Resolution Determining the Necessity to Incur Bonded Indebtedness Within Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) and Submitting Proposition to the Qualified Electors of the District, Community Facilities District No. 199071 (Goldenwest/Ellis Area)", adopted June 18, 1990. 12. City Resolution No. 6163 entitled "A Resolution Calling Special Election, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990. 13. Proof of Publication of Resolution No. 6163 in the Orange Coast Daily Pilot, pursuant to Section 9 thereof. 14. Official Ballot/Special Tax Election held on July 2, 1990, including copy of return envelope. 15. Canvass and Statement of Result of Election held on July 2, 1990, as certified by the City Clerk of the City. 16. City Resolution No. 6173 entitled "A Resolution Declaring Results of Special Election and Directing Recording of Notice of Special Tax Authorization, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990. 17. Notice of Special Tax Lien (recorded in the Orange County Recorder's Office on July 12, 1990, as instrument number 90-368665), pursuant to Section 5 of the City's Resolution No. 6173. 18. City Resolution No. 6174 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing The Issuance of Special Tax Bonds of the City of Huntington Beach for Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Approving and Directing the Execution of a Fiscal Agent Agreement, and Approving Other Related Documents and Actions, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990. 19. City Ordinance No. 3050 entitled "An Ordinance of the City Council of the City of Huntington Beach Levying Special Taxes Within Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", enacted July 16, 1990. 20. Proof of Publication of Ordinance No. 3050 in the Orange Coast Daily Pilot as required pursuant to Section 7 thereof. -2- Y s� 21. Acknowledgment of Receipt of Report of Proposed Debt Issuance by the California Debt Advisory Commission ("CDAC")', together with Report. CDAC No. 90-0415. 22. Preliminary Official Statement, dated July 19, 1990. 23. Purchase Contract, dated July 23, 1990, between Chilton & O'Connor, Inc., as the underwriter (the "Underwriter") and the City. 24. Fiscal Agent Agreement, dated as of June 1, 1990, by and between the City and Bank of America National Trust and Savings Association (the "Fiscal Agent"). 25. Acquisition Agreement, dated as of July 1, 1990, by and between the City and David D. Dahl, dba.The Dahl Company (the "Developer"). 26. Final Official Statement, dated July 24, 1990. 27. Certificate of Mailing Report of Final Sale to CDAC, together with Report. 28. Representation Letter of the City and the Fiscal Agent to The Depository Trust Company ("DTC"), as accepted by DTC. B. CITY DOCUMENTS 1. Incumbency and Signature Certificate. 2. Certificate as to Arbitrage. 3. Officer's Certificate pertaining to representations and warranties, no-litigation, disclosure and other matters pursuant to Section 9(e) of the.Purchase Contract. 4. Certificate of City Clerk regarding effectiveness of City ordinance and resolutions. 5. Certificate Regarding Use of Proceeds. _ 6. Written Request to authenticate Bonds, pursuant to Section 7 of the- City's Resolution No. 6174. 7. Certificate of Mailing Information Return for Tax-Exempt Governmental Obligations Form 8038-G to the Internal Revenue Service, together with Form 8038-G, pursuant to Section 9(f) of the Purchase Contract. 8. Certificate Regarding Preliminary Official Statement, pursuant to Section 4 of the City's Resolution No. 6174. 9. Form of Officer's Certificate Requesting Disbursement from Improvement Fund, pursuant to Section 3.03(B) of the Fiscal Agent Agreement. 10. Officer's Certificate Requesting Disbursement from Costs of Issuance Fund, pursuant to Section 3.06(B) of the Fiscal Agent Agreement. 11. Opinion of City Attorney, pursuant to Section 9(c) of the Purchase Contract and attached as Exhibit B thereto. . i ' 12. Certificate Regarding Investments, as acknowledged by the Fiscal Agent, pursuant to Section 6.01 of the Fiscal Agent Agreement. C. FISCAL AGENT DOCUMENTS 1. Authentication and Incumbency Certificate, together with general signing resolution. 2. Certificate of Fiscal Agent, pursuant to Section 9(d) of the Purchase Contract. 3. Fiscal Agent's Receipt of Proceeds. D. DEVELOPER DOCUMENTS 1. Certificate of the Developer, pursuant to Section 9(g) of the Purchase Contract. E. UNDERWRITER and FINANCIAL ADVISOR DOCUMENTS 1. Representation Letter of Underwriter pertaining to the reoffering price of the Bonds to the public and the establishment of reserve fund. 2. Receipt for Bonds. 3. Specimen Bond. 4. Certificate of the Financial Advisor. F. BOND COUNSEL DOCUMENTS 1. Final Approving Legal Opinion of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 9(b)(i) of the Purchase Contract. 2. Supplemental Opinion of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 9(b)(ii) of the Purchase Contract and attached as Exhibit A thereto. 3. Reliance Letter to Underwriter Regarding Final Approving Legal Opinion of Jones Hall Hill & White, A Professional Law Corporation. 30012-06 JHHW:PJT:GFB 8/3/90 A7 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 ' SPECIAL TAX BONDS CERTIFICATE REGARDING REPORT The undersigned hereby states and certifies: (i) that she is the duly elected or appointed, qualified and acting City Clerk of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that attached hereto is a true and correct copy of the Community Facilities District Report, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), dated June 7, 1990 (the "Report"), which Report has not been modified, amended, supplemented, rescinded or repealed and remains in full force and effect as of the date hereof, said date being the delivery date of bonds designated "City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds", in the aggregate principal amount of $2,400,000, dated August 1, 1990. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By City Clerk 300.12-06 JHH W:PJT:G FB 8/3/90 B1 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS INCUMBENCY AND SIGNATURE CERTIFICATE The undersigned hereby state and certify: (i) that they are the duly elected or appointed, qualified and acting City Administrator and City Clerk, respectively, of the City of Huntington Beach, a chartered city and municipal corporation duly organized and existing under the laws of the State of California (the "City"), and as such, are familiar with the facts herein certified and are authorized and qualified to certify the same; (ii) that the following are now, and have continuously been since the dates of beginning of their respective current terms of office shown below, the duly elected, qualified and acting members of the City Council of the City, and the dates of the beginning and ending of their respective current terms of office are hereunder correctly designated opposite their names: Date of Date of Beginning of Ending of Members Current Term Current Term Tom Mays - November, 1986 November, 1990 Peter Green November, 1988 November, 1992 Jim Silva November, 1988 November, 1992 'Wes Bannister November, 1986 November, 1990 Grace Winchill November, 1986 November, 1990 Don MacAllister November, 1988 November, 1992 John Erskine November, 1986 November, 1990 (iii) that the signatures set forth opposite the names of the following persons are the true and correct specimens of, or are, the genuine signatures of such persons, each of whom holds the office designated: Name/Title Signature Tom Mays, Mayor Michael T. Uberuaga, City Administrator Dan T. Villella, Director of Finance Connie Brockway, City Clerk (iv) that the bonds issued by the City designated "City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds", in the aggregate principal amount of $2,400,000, dated August 1, 1990 (the "Bonds"), have been executed by the facsimile signature of the Mayor named herein, whose signature has been attested to by the facsimile signature of the City Clerk named herein; (v) that the seal of the City has been impressed hereon and reproduced in facsimile on the Bonds; (vi) that the City Administrator named herein has executed that certain Fiscal Agent Agreement, dated as of June 1, 1990, by and between the City and Bank of America National Trust and Savings Association, as fiscal agent; and (vii) that the Director of Finance named herein is hereby appointed by the undersigned City Administrator to execute any and all documents required to effectuate the issuance of the Bonds. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By City Administrator [SEAL] By City Clerk -2- 4 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE AS TO ARBITRAGE I, the undersigned Director of Finance of the City of Huntington Beach, California (the "City"), being one of the officers of the-City duly charged (by resolution of the City Council of the City), with others, with the responsibility of issuing the City's $2,400,000 Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds (the "Bonds"), dated August 1, 1990, and being issued this date, hereby certify as follows: (1) The Bonds are being issued for the purpose of providing funds for the acquisition and construction of certain public improvements consisting of certain street improvements, including the acquisition of certain rights-of-way, certain storm drain, water and sewer improvements, certain fir station improvements and certain emergency vehicle traffic interruption devices (the "Project"). (2) On the basis of the facts, estimates and circumstances in existence on the date hereof,I reasonably expect the following with respect to the proceeds of-the Bonds: (a) The Bonds were sold to Chilton & O'Connor, Inc. (the "Underwriter") at their face amount ($2,400,000), less original issue discount of less Underwriter's discount of $___________________________, plus accrued interest of $------------_--------------, for total net proceeds of $ . Of said amount, $ will be deposited in the Bond Fund, $225,280 will be deposited in the Costs of Issuance Fund, $192,000 will be deposited in the Reserve Fund and the remaining $1,726,480 will be deposited in the Improvement Fund. The net proceeds of the Bonds, together with interest earnings thereon, except to the extent that such interest earnings are subject to requirements for rebate to the federal government,will not exceed the amount necessary for the governmental purposes of the Bonds, namely, the purposes set forth in paragraph (1). (b) The proceeds of the Bonds deposited in the Costs of Issuance Fund will be used for the payment of legal fees,printing costs and other costs of issuance of the Bonds and will be fully expended within 180 days of.of the date hereof. Amounts deposited in the Costs of Issuance Fund, if invested, will be invested without yield restrictions. Interest earnings and profits resulting from said investment will be retained in the Costs of Issuance Fund and used for the purposes thereof. Amounts, if any, remaining in the Costs of Issuance Fund on the earlier of payment of costs of issuance in full or 180 days following the date hereof will be deposited in the Administrative Expense Fund and used for the purposes thereto. (c) The proceeds of the Bonds deposited in the Improvement Fund will be used for the payment of costs and expenses of acquisition and construction of the Project or for the reimbursement of costs and expenses of acquisition and construction of the Project undertaken in contemplation of issuance of the Bonds, as evidenced by the official records of the City,-and proceeds of the Bonds deposited in the Bond Fund will be used for the payment of interest on the Bonds from the date thereof through , which date is within three (3) years of the date hereof. The City has entered into a contract for of the Project, which contract exceeds $100,000 and constitutes a substantial binding commitment of the City to commence and complete the Project. The City will proceed with due diligence to completion of the Project. Completion is expected by , which date is within three (3) years of the date hereof. Proceeds of the Bonds deposited in the Improvement Fund and the Bond Fund will be invested without yield restrictions for the period necessary to complete the Project,not to exceed three (3) years from the date hereof. Interest earnings and profits resulting from said investment will be deposited in, or retained in, the Improvement Fund. Amounts, if any, remaining in the Improvement Fund upon completion of the Project will be deposited in the Bond Fund and used for the purposes thereof. (d) The proceeds of the Bonds ($192,000) deposited in the Reserve Fund equal the "Reserve Requirement", being eight percent (8%) of the face amount of the Bonds. The Reserve Requirement is less than ten percent (10%) of the reoffering proceeds of the Bonds (see subparagraph (i) below), less than one hundred and twenty-five percent (125%)of average annual debt service on the Bonds, and less than ten percent (10%) of the face amount of of the Bonds (the net proceeds of the Bonds, as referenced in subparagraph (a) above, being more than ninety-eight percent (98%) of the face amount of the Bonds). The Underwriter has represented that the establishment of the Reserve Fund in the amount of the Reserve Requirement was vital to the marketing of the Bonds and reasonably required to assure the payment of debt service on the Bonds. Amounts deposited in the Reserve Fund will be invested without yield restrictions. Interest earnings and profits resulting from said investment will be retained in the Reserve Fund in the event that the amount on deposit in such Fund and, in the event that the amount on deposit in said Fund is in excess of the Reserve Requirement, such excess will be transferred to the Bond Fund to be used for the purposes thereof. (e) The City has pledged certain special tax revenues (the 'Tax Revenues")to the payment of debt service on the Bonds. Upon receipt, the Tax Revenues will be deposited in the Special Tax Fund and within ten (10) business days following receipt of Tax Revenues,the amounts needed to pay administrative costs of carrying the Bonds during the fiscal year will be deposited in the Administrative Expense Fund, the amount, if any, • necessary to increase the amount in the Reserve Fund to the Reserve Requirement will be deposited in the Reserve Fund, the amount necessary to pay debt service on the Bonds during the fiscal-year will be deposited in the Bond Fund and the amount necessary to pay services will be deposited in the Services Fund. The Special Tax Fund and Bond Fund have been established primarily to achieve a proper matching of revenues (consisting primarily of Tax Revenues and certain interest earnings) and debt service due on the Bonds during each year that the Bonds are outstanding. Except for proceeds of the Bonds deposited in the Bond Fund, amounts deposited in the Special Tax Fund and in the Bond Fund will be expended within a thirteen (13)month period beginning on the date of deposit, and the Special Tax Fund and the Bond Fund (other than proceeds of the Bonds deposited in such Fund) will be depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on said Funds or one-twelfth (1/12) of annual debt service on the Bonds. Amounts in the Administrative Expense Fund and in the Services Fund will not be available for payment of debt service on the Bonds. Amounts in the Special Tax Fund, the Bond Fund, the Administrative Expense Fund and the Services Fund will be invested without yield restrictions. Interest earnings and profits resulting from investment of said Funds will be retained in the Fund in which investment was made and used for the purposes thereof. (f) Transfers from the Special Tax Fund of Tax Revenues to the Bond Fund will be made from current Tax Revenues and surplus Tax Revenues are not expected to be available for payment of debt service on the Bonds in the event of financial difficulties of the City. (g) The City has covenanted in the fiscal agent agreement establishing the terms of the Bonds to comply with requirements for rebate of excess investment earnings to the federal government and acknowledges that the first payment of excess investment earnings, if any, is required to be rebated to the federal government no later than sixty (60) days after April 1, 1995. (h) No portion of the Bonds will constitute a private activity bond within the meaning of section 141(a) of the Internal Revenue Code of 1986 (the "Code"),the average maturity of the Bonds is greater than five (5) years and none of the interest rates on the Bonds vary during the term of the Bonds. As a consequence of the foregoing, investment earnings on the Special Tax Fund and the Bond Fund will be excluded for the purposes of computation of the amount required to rebated to the federal government as referenced in subparagraph (g) above without regard to the total-amount of said earnings. (i) The yield of the Bonds is %,determined on the basis of regularly scheduled principal and interest payments on the Bonds and a purchase price of the Bonds of$ , representing the face amount of the Bonds of $2,400,000, less original issue discount of $............................ plus accrued interest of $ . The Underwriter has represented that (i) based upon reasonable expectations and actual facts which existed on July 23, 1990, being the date upon which the City sold the Bonds to the Underwriter, the initial offering price of each 3 y maturity of the Bonds to the public (excluding bondhouses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which a substantial amount of each maturity of the Bonds was to be sold to the public on the date hereof was par in the case of all maturities other than the Bonds maturing October 1, 2020, and 99.50% of par in the case of the Bonds maturing October 1, 2020, plus accrued interest ;(ii) no Bonds of a single maturity were offered at one price to the general public and at a discount from that price to institutional or other investors; and (iii) the Bonds of each maturity were actually offered to the general public in a bona fide public offering for the prices set forth above. (j) Except as described herein, no funds have been pledged to, or are or will be available for,payment of debt service on the Bonds which have or will be invested, directly or indirectly, in securities,obligations, annuity contracts or other investment-type property producing a yield in excess of the yield on the Bonds and no transaction has been, or will be, entered into directly or indirectly in connection with the Bonds involving the swap of fixed rate obligations for variable rate obligations or vice versa. (k) No portion of the proceeds of the Bonds will be used as a substitute for other funds (replacement funds) which are otherwise expected to be available to be used as a source of financing for any part of the cost of the Project or for payment of debt service on the Bonds and which have been or will be used to acquire, directly or indirectly, securities, obligations, annuity contracts or other investment-type property producing a yield in excess of the yield of the Bonds. (1) The transaction contemplated herein does not represent an exploitation of the difference between tax-exempt and taxable interest rates to gain a material financial advantage and will not increase the burden on the market for tax-exempt obligations in that the Bonds are not being issued in an amount greater than otherwise necessary nor are they being issued sooner,or to be outstanding longer, than otherwise necessary. (m) The Bonds do not constitute "hedge bonds"in that at least eighty-five percent (85%) of the proceeds of the Bonds deposited in the Improvement Fund will be used to carry out the governmental purposes of the Bonds within the three' (3) year period beginning on the date hereof, and not more than fifty percent (50%) of the proceeds of the Bonds, if any, are invested in investments having a substantially guaranteed yield for four (4) or more years. (3) The City has not received notice that its Certificate as to Arbitrage may not be relied upon with respect to its own issues nor has it been advised that any adverse action by the Commissioner of Internal Revenue is contemplated. 4 On the basis of the foregoing, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of section 148 of the Code'and applicable regulations. To the best of my knowledge, information and belief, the expectations herein, expressed are reasonable and there are no facts, estimates or circumstances, other than those expressed herein, that would materially affect the expectations herein expressed. IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of August, 1990. Dan T. Villella, Director of Finance 5 30012-06 JHHW:PJT:GFB 8/3/90 a B3 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS OFFICER'S CERTIFICATE OF THE CITY The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered city and municipal corporation 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; . (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that the City Council of the City duly adopted the following resolutions (the "Resolutions") and ordinance (the "Ordinance"), which Resolutions and Ordinance have not been amended, modified, supplemented, rescinded or repealed and remain in full force and effect as of the-date hereof, said date being the delivery date of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds, in the aggregate principal amount of $2,400,000, dated August 1, 1990 (the "Bonds"): (a) Resolution No. 6141 entitled "A Resolution of the City Council of the City of Huntington Beach Acknowledging Receipt of Petition for Establishment of Community Facilities District, Directing Initiation of Proceedings Under the Mello-Roos Community Facilities Act of 1982, and Approving an Agreement Regarding Advances and Employing Consultants in Connection Therewith, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted April 3, 1990, (b) Resolution No. 6142 entitled "A Resolution of the City Council of the City of Huntington Beach of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990, (c) Resolution No. 6143 entitled "A Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, .1990, (d) Resolution No. 6161 entitled "A Resolution of Formation of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District and Submitting Levy of the Special Tax and the Establishment of the Appropriations Limit to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990, (e) Resolution No. 6162 entitled "A Resolution Determining the Necessity to Incur Bonded Indebtedness Within Community Facilities District No. 1990- 1 (Golden'west/Ellis Area) and Submitting Proposition to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990, (f) Resolution No. 6163 entitled "A Resolution Calling Special Election, Community Facilities District No. 1990-1 (Goidenwest/Ellis Area)", adopted June 18, 1990, (g) . Resolution No. 6173 entitled "A Resolution Declaring Results of Special Election and Directing Recording of Notice of Special Tax Authorization, Community Facilities District No. 1.990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990, (h) Resolution No. 6174 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing The Issuance of Special Tax Bonds of the City of Huntington Beach for Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Approving and Directing the Execution of a Fiscal Agent Agreement, and Approving Other Related Documents and Actions, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990, and (i) Ordinance No. 3050 entitled "An Ordinance of the City Council of the City of Huntington Beach Levying Special Taxes Within Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", enacted July 16, 1990; (iv) that the representations and warranties of the City and the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District") contained in that certain Purchase Contract, dated July 23, 1990 (the "Purchase Contract"), between Chilton & O'Connor, Inc. and the City, are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof; (v) that, to the best of his knowledge, no event has occurred since the date of the Official Statement, dated July 24, 1990 (the "Official Statement"), relating to the Bonds, affecting the City or the District which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement with respect to the City and the District not misleading in.any material respect; (vi) that .the City has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Tax (as such term is defined in the Purchase Contract), the issuance of the Bonds or -2- the performance by the City and the District of their obligations thereunder or under the Fiscal Agent Agreement; (vii) that the City has complied with all agreements and has satisfied all conditions on its part.to be performed or satisfied under the Purchase Contract, the Fiscal Agent Agreement, the Resolutions and the Ordinance, at or prior to the date hereof; (viii) that the City's employer identification number for federal tax purposes is 95- 6000723; and (ix) that for calendar year 1990, and including the Information Return for Tax-Exempt Governmental Bond Issues Form 8038-G filed with the Internal Revenue Service for the Bonds, the City has filed one (1) Information.Return Form 8038-G with the Internal Revenue Service, Philadelphia, Pennsylvania 19255. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLD ENWEST/ELLIS AREA) By Director of Finance 30012-06 JHHW:PJT:GFB 8/3/90 B4 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE OF CITY CLERK The undersigned hereby states and certifies: (i) that she is the duly elected or appointed, qualified and acting City Clerk of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that the City Council of the City duly adopted the following resolutions (the "Resolutions") and ordinance (the "Ordinance"), which Resolutions and Ordinance have not been amended, modified, supplemented, rescinded or repealed and remain in full force and effect as of the date hereof, said date being the delivery date of the City of Huntington Beach' Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds, in the aggregate principal amount of $2,400,000, dated August.1, 1990 (the "Bonds"): (a) Resolution No. 6141 entitled "A Resolution of the City Council of the City of Huntington Beach Acknowledging Receipt of Petition for Establishment of Community Facilities District, Directing Initiation of Proceedings Under the Mello-Roos Community Facilities- Act of 1982, and Approving an Agreement Regarding Advances and Employing Consultants in Connection Therewith, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted April 3, 1990, (b) Resolution No. 6142 entitled "A Resolution of the City Council of the City of Huntington Beach of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990, (c) Resolution No. 6143 entitled "A Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) Pursuant to the Mello-Roos Community Facilities Act of 1982, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted May 7, 1990, (d) Resolution No. 6161 entitled "A Resolution of Formation of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District and Submitting Levy of the Special Tax and the Establishment of the Appropriations Limit to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990, (e) Resolution No. 6162 entitled "A Resolution Determining the Necessity to Incur Bonded Indebtedness Within Community Facilities District No. 1990- 1 (Goldenwest/Ellis Area) and Submitting Proposition to the Qualified Electors of the District, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990, (f) Resolution No. 6163 entitled "A Resolution Calling Special Election, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted June 18, 1990, (g) Resolution No. 6173 entitled "A Resolution Declaring Results of Special Election and Directing Recording of Notice of Special Tax Authorization, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990, (h) Resolution No. 6174 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing The Issuance of Special Tax Bonds of the City of Huntington Beach for Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), Approving and Directing the Execution of a Fiscal Agent Agreement, and Approving Other Related Documents and Actions, Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", adopted July 2, 1990, and (i) Ordinance No. 3050 entitled "An Ordinance of the City Council of the City of Huntington Beach Levying Special Taxes Within Community Facilities District No. 1990-1 (Goldenwest/Ellis Area)", enacted July 16, 1990. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By City Clerk -2- • 30012-06 JHHW:PJT:GFB '8/3/90 B5 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE REGARDING USE OF PROCEEDS The undersigned hereby states and certifies: (i) that he is tho duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that the City is, on the date hereof, issuing bonds for and on behalf of the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) of the City (the "District") designated "Community Facilities District No. 1990-1 (Goidenwest/Ellis Area) 1990 Special Tax Bonds" in the aggregate principal amount of$2,400,000 (the "Bonds"); (iv) that of the proceeds of the Bonds, the amount of $ will be .deposited in the Improvement Fund to be used for the purpose of financing certain facilities (the"Facilities"); (v) that set forth in Part 1 of Exhibit A attached hereto and by this reference incorporated herein is a detailed description of the Facilities and set forth in Part 2 of Exhibit A is a description of all private uses of the Facilities other than use by members of the public generally and use by governmental units; (vi) that no portion of the proceeds of the Bonds will be used for the purposes of making a loan to any person or governmental unit except as set forth in Part 2 of Exhibit A; and (vii) that it is intended that the interest on the Bonds be excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes, that the firm of Jones Hall Hill & White, A Professional Law Corporation, is rendering an opinion on the date hereof to said effect, and that, in rendering said opinion, said firm is relying, among other things, upon the statements made herein and in Exhibit A. IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of August, 1990. Dan T. Villella Director of Finance EXHIBIT A DESCRIPTION OF IMPROVEMENTS 1. Describe Improvements, including all components,in detail: Improvements to Ellis Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, stripping and related improvements. Improvements to, Goldenwest Avenue in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. Improvements to Quarterhorse Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. Improvements to Saddleback Lane in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. Improvements to Edwards Street in the vicinity of the District, including road improvements, curb, gutter, sidewalk, storm drain and signal improvements, striping and related improvements. Water and sewer system improvements along Ellis Avenue, Quarterhorse Lane and Saddleback Lane in the vicinity of the District, including related improvements. Undergrounding of utilities along one or more of the foregoing streets in the vicinity of the District, included any related work. Fire station improvements, including construction and related'costs. Acquisition of emergency vehicle traffic interruption devices. 2. Describe any expected private business use of the Improvements other than use of the improvements by members of the public generally or by governmental units. Examples of private business use include: use through service contracts, such as contracts for janitorial services, food services, maintenance, management and operation; use through location of privately-owned equipment, such as photocopying equipment, vending machines, computer equipment, printing equipment, public telephones and teller machines; use through sales of personal products and services, such as newsstands, candy and smoke shops and shoeshine stands; use through the provision of utilities through privately-owned conduits or wires; use through advertising displays; use through storage arrangements; use through rights to possess and control identified space; and use through leases and subleases. 30012-06 JHHW:PJT:GFB 8/3/90 B6 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS WRITTEN REQUEST OF THE CITY The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting City Administrator of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that the Fiscal Agent is hereby requested to authenticate bonds designated "City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds", in the aggregate principal amount of $2,400,000, dated August 1, 1990 (the "Bonds"), and to deliver the authenticated Bonds to Chilton & O'Connor, Inc. upon receipt by the Fiscal Agent of the purchase price therefor. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By City Administrator 30012-06 JHHW:PJT:GFB 8/3/90 B7 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE OF MAILING FORM 8038-G I, Glenda F. Bell, hereby state and certify as follows: That for and on behalf of the City of Huntington Beach, on the date hereof, I caused to be mailed an Information Return for Tax-Exempt Governmental Obligations Form•8038-G relating to the captioned Bonds, postage prepaid, via certified mail, return-receipt requested, to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255, a true copy of which Information Return is hereto attached. Dated: August 9, 1990 Glenda F. Bell, Project Coordinator Jones Hall Hill & White, A Professional Law Corporation 30012-05 JHHW:PJT:GFB 8/3/90 0 B8 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE REGARDING PRELIMINARY OFFICIAL STATEMENT The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered.city and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that there has been delivered to Chilton & O'Connor, Inc., as underwriter (the "Underwriter"), and Rod Gunn Associates, Inc., as financial advisor (the "Financial Advisor"), of the captioned Bonds, a preliminary official statement, dated July 19, 1990 (including the cover page and all appendices thereto, the "Preliminary Official Statement"), which the City 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 (iv) that the City hereby approves of the use and distribution by the Underwriter of the Preliminary Official Statement. Dated: July 19, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By Director of Finance .30012-05 JHHW:PJT:GFB 8/3/90 B9 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS OFFICER'S CERTIFICATE REQUESTING DISBURSEMENT .FROM THE IMPROVEMENT FUND The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered city.and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"),.by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) _ that pursuant to Section 3.03(B) of the Fiscal Agent Agreement, the undersigned hereby requests the Fiscal Agent to disburse from the Improvement Fund established under the Fiscal Agent Agreement to each payee designated on Exhibit A attached hereto and by this reference incorporated herein, the amount set forth opposite such payee; (iv) that each payment to be made pursuant to this Officer's Certificate is in accordance with the provisions of the.Acquisition Agreement or is otherwise for a facility; (v) that no portion of the amounts to be paid pursuant to this Officer's Certificate have been included in any Officer's Certificate previously filed with the Fiscal Agent requesting disbursement from the Improvement Fund; and (vi) that capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Fiscal Agent Agreement. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By Director of Finance EXHIBIT A Payee Name and Address Purpose of Obligation Amount 30012-06 JHHW:PJT:GFB 8/3/90 B10 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS REQUISITION FOR DISBURSEMENT FROM COSTS OF ISSUANCE FUND The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term is defined in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that pursuant to Section 3.06(B) of the Fiscal Agent Agreement, the undersigned hereby requests the Fiscal Agent to disburse from the Costs of Issuance Fund established under the Fiscal Agent Agreement to each payee designated on Exhibit A attached hereto and by this reference incorporated herein, an amount not to exceed the amount set forth opposite such payee, for payment or reimbursement of previous payment of Costs of Issuance as described on attached Exhibit A, upon receipt by the Fiscal Agent of an invoice from such payee which requests payment in an amount which is less than or equal to the amounts set forth on said Exhibit A; (iv) that the disbursements described on the attached Exhibit A constitute Costs of Issuance and are properly chargeable to the Costs of Issuance Fund; and (v) that capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Fiscal Agent Agreement. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) By Director of Finance EXHIBIT A Payee Name and Address Purpose of Obligation Amount Bank of America National Trust and Fiscal Agent Administration Fees $ Savings Association 333 South Beaudry Avenue Los Angeles, CA 90017 David D. Dahl, dba Reimbursement of Advance $100,000.00 505 Park Avenue Balboa Island, CA 92662 Jones Hall Hill & White Bond Counsel Fee and $ 41,500.00 Four Embarcadero Center, Suite 1950 Reimbursable Expenses San Francisco, CA 94111 Rod Gunn Associates, Inc. Financial Advisor Fee $ 26,500.00 3010 Old Ranch Parkway, Suite 330 and Reimbursable Expenses Seal Beach, CA 90740 A-1 ' ell EXHIBIT B Letterhead of COUNSEL TO THE CITY (Closing Date) Rod Gunn Associates,Inc. Seal Beach, California Chilton & O'Connor,Inc. Los Angeles, California $2,400,000 CITY OF HUNTINGTON BEACH, CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) SPECIAL TAX BONDS 1990 SERIES A Dear Sirs: We have acted as counsel to the City of Huntington Beach, Huntington Beach, California (the "City"), in connection with its sale to you of the above-mentioned Bonds (the "Bonds"). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of June 1, 1990 (the "Fiscal Agent Agreement"), between the City and Bank of America National Trust and Savings Association, San Francisco, California, as Fiscal Agent. In that connection, we have examined originals or copies certified or otherwise identified to my satisfaction of. (to be completed) Based on the foregoing, in our opinion: (i) The City is a duly created and lawfully existing general law City. (ii) The Purchase Contract has been duly authorized, executed and delivered by the City and constitutes a valid, legal and binding agreement of the City enforceable in accordance with its terms. B-1 (iii) Except as disclosed_in the Official Statement, to the best of my knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory City against the City or .the District affecting their existence or the titles of their respective officers to office or seeking to restrain or to enjoin the. issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the. Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way questioning or affecting the validity or enforceability of the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, or any other applicable agreements or any action of the City or the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Official Statement or any amendment or supplement thereto, or contesting the powers of the.City or the District or other authority with respect to the Bonds or any action of the City or the District contemplated by any of said documents. Based on our review as Counsel to the City of the Official Statement, we have no reason to believe that the Official Statement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading (except that no opinion is expressed with respect to the statistical and other financial data included therein). Very truly yours, B-2 30012-06 JHHW:PJT:GFB 8/3/90 B12 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE REGARDING INVESTMENTS The undersigned hereby states and certifies: (i) that he is the duly appointed, qualified and acting Director of Finance of the City of Huntington Beach, a chartered city and municipal corporation 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; (ii) that he is an "Authorized Officer" of the City, as such term- is defined' in that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent"); (iii) that, of that portion of the net proceeds of the City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds, in the aggregate principal amount of $2,400,000, dated August 1, 1990 (the "Bonds"), received by the Fiscal Agent on the date hereof, the City hereby authorizes and directs the Fiscal Agent to invest the amounts deposited into the funds and accounts established pursuant to the Fiscal Agent Agreement, as shown on Exhibit A attached hereto and by this reference incorporated herein, in the Permitted Investments set forth on said Exhibit A; (iv) . that the investments set forth on said Exhibit A are traded on established markets and are to be purchased by the Fiscal Agent in arms' length transactions for their fair market value without regard to the relationship of the yield of such investments to the yield of the Bonds; and (v) that capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Fiscal Agent Agreement. Dated: August 9, 1990 CITY OF HUNTINGTON BEACH, for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLD ENWEST/ELLIS AREA) By Director of Finance EXHIBIT A Amount Description Principal Interest Purchase Account ofof Deposit byName Amount Maturity Rate Price Bond Fund $ Reserve Fund $ Costs of Issuance' Fund $ Improvement Fund $ "These amounts are equal to the initial deposit into said fund ($ ), less disbursements made on the date hereof in the amount of$ The undersigned hereby acknowledges that the foregoing investment instructions have been complied with. Dated: August 9, 1990 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By Authorized Officer A-1 30012-06 JHHW:PJT:GFB 8/3/90 V2 $2,40.0,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE OF FISCAL AGENT The undersigned hereby states and certifies: (i) that she is an authorized officer of Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent") under that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City of Huntington Beach (the "City") and the Fiscal Agent, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that the Fiscal Agent is duly organized and existing as a national banking association under the laws of the United States of America having full power and authority to perform its duties under the Fiscal Agent Agreement; (iii). that the duties and obligations of the Fiscal Agent under the Fiscal Agent Agreement have been duly accepted by the Fiscal Agent; (iv) that the Fiscal Agent has all necessary corporate and trust powers required to carry out the Fiscal Agent Agreement; and (v) that, to the best of her knowledge, the acceptance by the Fiscal Agent of the duties and obligations of the Fiscal Agent under the Fiscal Agent Agreement and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, consent decree or any agreement or other instrument to which the Fiscal Agent is subject. Dated: August 9, 1990 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By Authorized Officer .30012-06 JHHW:PJT:GFB 8/3/90 C3 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS FISCAL AGENT'S RECEIPT OF PROCEEDS The undersigned hereby states and certifies: (i) that she is an authorized officer of Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent") under that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City of Huntington Beach (the "City") and the Fiscal Agent, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that, on the date hereof, the Fiscal Agent received from Chilton & O'Connor, Inc., as the underwriter (the "Underwriter"), the amount of $2,352,247.39, representing the purchase price of the bonds designated "City of Huntington. Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area), 1990 Special Tax Bonds", in the aggregate principal amount of $2,400,000, dated August 1, 1990 (the "Bonds"), and has deposited same on this date, pursuant to Section 3.02 of the Fiscal Agent Agreement, as follows: $ Deposited into the Bond Fund (representing accrued interest from August 1 1990 to August 9, 1990 in the amount of $3,997.39 and capitalized interest from August 9, 1990 to 1, 19 in the amount of$ ) 192,000.00 Deposited into the Reserve Fund (representing the Reserve Requirement) 225,280.00 Deposited into the Costs of Issuance Fund Deposited into the Improvement Fund $2,352,247.39 TOTAL Amount Received This Date (iii) and, that said purchase price has been represented by the Underwriter to have been calculated. pursuant to the Purchase Contract, dated July 23, 1990, between the Underwriter and the City, as follows: $2,400,000.00 Principal Amount of Bonds ( 9.750.00) Less Original Issue Discount $2,390,250.00 Issue Price 3,997.39 Plus accrued 'interest from August 1, 1990 to August .9, 1990 (8 days) $2,394'247.39 Reoffering Price j 42,000.00) Less Underwriter's Discount (1.75%) $2,352,247.39 TOTAL Purchase Price Dated: August 9, 1990 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Fiscal Agent By Authorized Officer -2- 30012-06 JHHW:PJT:GFB 8/3/90 D1 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE OF THE DEVELOPER The undersigned hereby states and certifies: (i) that he is David D. Dahl, dba The Dahl Company (the "Developer"), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that the information in the Official Statement, dated July 24, 1990 (the 'Official Statement"), relating to the captioned bonds,. with respect to the project proposed to be constructed by the Developer in the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) located in the City of Huntington Beach, does not contain an untrue statement of a material fact or omit to state a fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Dated: August 9, 1990 DAVID D. DAHL, dba THE DAHL COMPANY By David D. Dahl E1 [LETTERHEAD OF UNDERWRITER] August 9, 1990 City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Re: $2,400,000 City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area). 1990 Special Tax Bonds Ladies and Gentlemen: Chilton & O'Connor, Inc., as underwriter (the "Underwriter") of the captioned bonds (the "Bonds")' hereby represents and certifies to you that: (i) based upon reasonable expectations and actual facts which existed on July 23, 1990, being the date upon which the City of Huntington Beach sold the Bonds to the Underwriter, the initial offering price of each maturity of the Bonds to the public (excluding bondhouses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which a substantial amount of each maturity of the Bonds was to be sold to the public on the date hereof is set forth on Exhibit A attached hereto and by this reference incorporated herein; (ii) no Bonds of a single maturity were offered at one price to the general public and at a discount from that price to institutional or other investors; and (iii) the Bonds of each maturity were actually offered to the general public in a bona fide public offering for the.price of par. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in that certain Fiscal Agent Agreement, dated as of June 1, 1990, by and between the City of Huntington Beach and Bank of America National Trust and Savings Association, as fiscal agent. Very truly yours, Anthony Wetherbee Vice President Exhibit A MATURITY SCHEDULE Maturity Date Principle Interest Reoffering (Oct. 1) Amount Rate Price* 1992 $ 25,000 6.35% 100.0% 1993 25,000 6.50 100.0 1994 30,000 6.60 100.0 1995 30,000 6.70 100.0 1996 30,000 6.85 100.0 1997 35,000 6.95 100.0 1998 40,000 7.10 100.0 1999 40,000 7.15 100.0 2000 45,000 7.25 100.0 2001 45,000 7.30 100.0 2002 50,000 7.35 100.0 2003 55,000 7.40 100.0 2020 1,950,000 7.60 99.5 " Stated as a percentage of par. 30012-06 JHHW:PJT:GFB 813/90 E2 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS RECEIPT FOR BONDS The undersigned, on behalf of Chilton& O'Connor, Inc., hereby acknowledges receipt this date of the following described bonds issued by the City of Huntington Beach: "City of Huntington Beach Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) 1990 Special Tax Bonds", in the aggregate principal amount of $2,400,000,.dated August 1, 1990, issued as fully registered bonds, without coupons, in the denomination of $5,000 each or any integral multiple thereof. Dated: August 9, 1990 CHILTON & O'CONNOR, INC. By Title 30012-06 JHHW:PJT:GFB 8/3/90 " E4 $2,400,000 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) 1990 SPECIAL TAX BONDS CERTIFICATE OF FINANCIAL ADVISOR The undersigned hereby states and certifies: (i) that he is the Principal of Rod Gunn Associates, Inc. (herein, the "Financial Advisor"), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) , that the Financial Advisor has acted as such to the City of Huntington Beach (the "City") and the Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District") in connection with the issuance by the City for and on behalf of the District of the captioned bonds (the"Bonds"); (iii) that the Financial Advisor has participated in the preparation of the Official Statement, dated July 24, 1990, relating to the Bonds (the "Official Statement") and, based upon information made available to us in the course of our participation in the financing to be accomplished with the proceeds of the Bonds as Financial Advisor 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, except as noted above, nothing has come to our attention which would lead us to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not.misleading in any material respect; and (iv) that the establishment of the Reserve Fund (as such term is defined in the that certain Fiscal Agent Agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement"), by and between the City and Bank of America National Trust and Savings Association, as fiscal agent (the "Fiscal Agent")), in the amount so established was vital to the marketing of the Bonds and reasonably required to assure payment of debt service on the Bonds. Dated: August 9, , 1990' ROD GUNN ASSOCIATES, INC., as Financial Advisor By Principal 30012-M JHH W:PJT:GFB 8/3/90 F3 [LETTERHEAD OF JONES HALL HILL &WHITE] August 9, 1990 Chilton & O'Connor, Inc. 1901 Avenue of the Stars, Suite 1400 Los Angeles, California 90067 RELIANCE LETTER Regarding Final Approving Legal Opinion: $2,400,000 City of Huntington- Beach Community Facilities District No. 1990-1 ((Goldenwest/Ellis Area), 1990 Special Tax Bonds Ladies and Gentlemen: We have this day released to the City of Huntington Beach our final approving legal opinion with respect to the captioned financing. The foregoing opinion may be relied upon by Chilton & O'Connor, Inc., as underwriter, to the same extent as if such opinion were addressed to it. Respectfully submitted, A Professional Law Corporation