HomeMy WebLinkAboutFile 3 of 3 - City of Huntington Beach Community Facilities L ICY
E C,E ",I EE
2005 DEC 20 Ali I I= 43
Council/Agency Meeting Held: ,3 O tai"i
f,:IT`r a s
Deferred/Continued to: rod E A.C irl
Approved ❑ Conditionally Approved ❑ Denied City rk' Ignatu
Council Meeting Date: 1/3/2006 Department ID Number: PW 05-073
. CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL/REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE MAYOR/CHAIRPERSON AND C TY COUNCIL/
REDEVELOPMENT AGENCY MEMBERS
SUBMITTED BY: PENELOPE CULBRETH-GRAFT, CITY
ADM IN ISTRATOR/EXECUTIVE D T
1V PREPARED BY: ROBERT F. BEARDSLEY, PE, DIRECTOR OF PUBLIC 2RKS
*STANLEY SMALEWITZ, DIRECTOR OF ECONOMIC
DEVELOPMENT/DEPUTY EXECUTIVE DIRECTOR
SUBJECT: Appropriate Funds and Approve Supplement to the Agreement
for Edinger Avenue Improvements near Bella Terra
Fstatement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: The Department of Public Works is requesting the developer of Bella
Terra, Huntington Center Associates, LLC, to construct additional,Edinger Avenue street
improvements in addition to those required to fulfill the project's conditions of approval.
Funding has been ,identified for the extra work items and the City will reimburse the
developer.
Funding Source:
1. Funds in the amount of$83,640 will be appropriated from the Redevelopment Agency.
2. A cash bond in the amount of$45,000 for the bus turnout will be appropriated.
3. Water well and street improvements totaling $35,313 will be completed with budgeted
Water Fund ($7,000) and Gas Tax ($28,313).
Redevelopment Agency Recommended Action: Motion to:
1. Approve the appropriation and expenditure of $83,640 from the Redevelopment
Agency fund balance to the General Fund, Public Works Development Services,
Street Improvements Business Unit 10085251.82300.
2. Authorize the Mayor and City Clerk to execute the First Supplement to Funding and
Construction Agreement Relating to City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center) Among the City of Huntington Beach, The
Redevelopment Agency of the City of Huntington Beach and Huntington Center
Associates, LLC.
REQUEST FOR ACTION
MEETING DATE: 1/3/2006 DEPARTMENT ID NUMBER:PW 05-073
City Council Recommended Action: Motion to:
1. Direct the City Treasurer to transfer funds in the amount of $45,000 from cash bond
receipt #9120 into the General Fund, Public Works Development Services, Street
Improvements, Account 10085251.82300;
2. Appropriate $45,000 from Account 10085251.82300 for the reimbursement payment.
Alternative Action(s): Deny appropriation of the funding and forego the additional street
improvements at this time.
Analysis: The Planning Commission approved Bella Terra on March 29, 2002 as Site
Plan Review 02-01. The project was conditioned to improve the north side of Edinger
Avenue along the project frontage per the City's Zoning and Subdivision Ordinance Chapter
255. The additional requested improvements are outlined as follows:
1. Reconstruction of the south side median along the project's frontage between the
westerly mall driveway and Beach Boulevard. This requested median work would
enhance the area and bring it into compliance with the Edinger Avenue Corridor
Specific Plan.
2. Construction of a bus turnout at the southeast corner of Edinger Avenue and Sher
Lane. Per Conditional Use Permit No. 92-2, the adjacent property owner was required
P to dedicate property for purposes of a bus turnout lane.along Edinger Avenue. A cash
bond was previously submitted to the City for this work.
,3. Adjustments to an abandoned water well and removal of the traffic island at the
intersection of Edinger Avenue and Parkside Lane.
As the developer will have contractors working in this section of Edinger Avenue constructing
the project's public improvements, the City has requested them to incorporate the extra work
into the construction schedule. This approach will keep traffic disruption impacts to a
minimum. The public improvement items being requested are beyond the scope of the
existing project conditions and not eligible for reimbursement by the CFD. Alternative
funding sources have been identified for the extra work items. In accordance with the First
Supplement, funds will be distributed to the developer upon completion of the improvements.
Public Works Commission Action: Not required.
Environmental Status: Not Applicable
Attachment(s):
NumberCity Clerk's
Page Description
1. First Supplement to Agreement (2 copies)
2. Fiscal Impact Statement (Redevelopment Agency)
G:\R C A\2006\05-073 Jan 18 Bogart(Approve Funds&Agreement for Bella Terra Edinger.doc -2-
12/15/2005 12:01 PM
FIRST SUPPLEMENT TO
FUNDING AND CONSTRUCTION AGREEMENT
Relating to
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
Among
THE CITY OF HUNTINGTON BEACH,
THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH
and
HUNTINGTON CENTER ASSOCIATES,L.L.C.
dated as of
November 15,2005
RVPUB\KAB\702794.1
FIRST AMENDMENT TO FUNDING AND CONSTRUCTION AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
This FIRST AMENDMENT TO FUNDING AND CONSTRUCTION AGREEMENT (the "First
Amendment") is entered into as of the 15th day of November, 2005 by and among the CITY OF
HUNTINGTON BEACH, a California charter city (the "City"), the REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH, a governmental entity existing under the laws of the State of
California (the Agency"), and HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited
liability company("Developer").
RECITALS
(A) Bella Terra Associates, LLC, a Delaware limited liability company ("Owner") has
acquired the Developer that certain real property located on Edinger Avenue and comprised of a shopping
center commonly known as "Huntington Center" and as "Bella Terra" (the "Property"). The Property
consists of a total of approximately 46.86 acres of land area. Pursuant to that certain Owner Participation
Agreement (the "OPA") entered into by and between Huntington Center Associates, LLC, a Delaware
limited liability company, and the Agency, and dated October 2, 2000, Owner, as successor in interest to
Huntington Center Associates, LLC, is contractually obligated under the OPA to improve the Huntington
Center and ancillary improvements on and adjacent to the Property(the"Development").
(B) The City has established a community facilities district pursuant to the provisions of
Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the Government Code,
commonly known as the "Mello-Roos Community Facilities Act of 1982" the ("Act"), and Chapter 3.56
of the City's Municipal Code (the "Municipal Code") known as '.'City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center) (the "District") over and including the Property for the
purpose of selling bonds, and has caused to be issued the aggregate principal amount of$25,000,000 (the
"Bonds") for the acquisition of land and improvements thereon for public use, the demolition and
clearance of said land and improvements and the design, planning, engineering, financing, installation,
RVPUB\KAB\702794.1 1
and construction of those certain public facilities (the "Public Facilities") described in that certain
Funding and Construction Agreement, dated as of March 1, 2004, (the "Funding Agreement") by and
between the City and the Developer, which at such time was owner of the Property. Capital terms used
herein shall have the meanings given them in the Funding Agreement.
(C) With the consent of the City, Developer's interest in the Property was conveyed to the
Owner and Developer's interest in the OPA was assigned to, and the Developer's obligations under the
OPA were assumed by Owner; however, Developer interest under the Funding Agreement was not
assigned to or assumed by Owner.
(D) The City and the Agency desire additional improvements to be constructed as additions
or betterments to certain of the Public Facilities, which improvements are listed in Exhibit A attached
hereto (the "Improvements"). The City and the Agency desire that the Developer construct such
Improvements in accordance with the provisions of the Funding Agreement except funds to pay for the
construction of the Improvements will be paid by the City or the Agency from lawfully available funds
therefore,other than Bond proceeds.
AGREEMENTS
NOW, THEREFORE, in consideration of the.preceding recitals and the mutual covenants
hereinafter contained,the parties agree as follows:
Section 1. Construction of the Improvements. Developer agrees to cause the Improvements
to be constructed on behalf of the City. The Developer will take such action as required for the proper
bidding and payment of the construction of the Improvements according to the provisions of Section 9(b)
of the Funding Agreement
Section 2. Payments to Developer. Payment for the Improvements (including the types of
costs described in Funding Agreement Section 5; provided, however, that plan check/permit/inspection
fees for the Improvements shall be waived by the City) shall be made by the Agency upon the submittal
RVPUB\KAB\702794.1 2
by Developer of a disbursement request as provided in Sections 5 and 6 of the Funding Agreement.
Subject to the provisions of Section 5 of the Funding Agreement,the Agency shall disburse or cause to be
disbursed to Developer, or its designee pursuant to Section 10 of the Funding Agreement, the amount
payable for costs approved by the City through such payment date for the Improvements. Disbursement
shall be made no more frequently than monthly. The City, on behalf of the Agency, shall use its
reasonable best efforts to review Developer disbursement requests as expeditiously as reasonably possible
and cause the disbursement of funds to Developer from funds of the Agency designated for the payment
of the Improvements.
Section 3. Other Provisions of the Funding Agreement to Apply. The remaining provisions
of the Funding Agreement with respect to construction of the Public Facilities apply to the construction
of the Improvements as is fully set forth herein. All provisions of the Funding Agreement relating to the
Public Improvements and payment therefor shall remain in full force and effect,without amendment.
Section 4 No Special Taxes. No Bond proceeds shall be used for payment of the cost of
the Improvements; accordingly, no Special Taxes shall be levied on the Property with respect to such
amounts.
Section 5 Notices. Any notice, payment or instrument required or permitted by this First
Amendment to be given or delivered to either party shall be deemed to have been received when
personally delivered, or transmitted by telecopy or facsimile transmission (which shall be immediately
confirmed by telephone and shall be followed by mailing an original of the same within twenty-four hours
after such transmission), or seventy-two hours following deposit of the same in any United States Post
Office,registered or certified mail,postage prepaid, addressed as follows:
City,Agency or City of Huntington Beach
District: 2000 Main Street
Huntington Beach,CA 92648
Attn: City Administrator,Director of Economic Development and
Director of Public Works
RVPUB\KAB\702794.1 3
Developer: Huntington Center Associates,LLC
5757 Wilshire Boulevard,Penthouse 30
Los Angeles,CA 90036
Attn.: Mike Wise
with a copy to: Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa Street,#700
Los Angeles, CA 90071 .
Attn.: Michael J.Kiely,Esq.
Construction Snyder Huntington Development,L.L.C.
Manager: 5757 Wilshire Blvd.,Penthouse 30
Los Angeles,CA 90036
Attn: Daniel J. Schneider
with a copy to: Allen Matkins Leck Gamble&Mallory LLP
515 South Figueroa Street,#700
Los Angeles,CA 90071
Attn.: Michael J.Kiely,Esq.
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.
Section 6. Severability. If any part of this First Amendment is held to be illegal or
unenforceable by a court of competent jurisdiction,the remainder of this First Amendment shall be given
effect
Section 7. Counterparts. This First Amendment may be executed in counterparts, each of
which shall be deemed an original.
RVPUB\KAB\702794.1 4
IN WITNESS WHEREOF, the parties have caused this agreement to be signed as of the date first
above written.
DEVELOPER
HUNTINGTON CENTER ASSOCIATES,LLC,
a Delaware limited liability company
By: Huntington Management Ent.,LLC,
a Delaware limited liability company,
Its Manager
By: BMLF/Huntington,LLC,
a Delaware ' 'ted liabili ompany,
Its Ma e
rya E aloes,Trustee of the
Bryan Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
r,
B}r!/GZ�-C�
Clerk Mayor
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH
By: �-�--
Chair
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrate Executive Dire or
Approved as to Form:
ity Att rney Age y Counsel
RVPUB\KAB\702794.1 5
EXHIBIT A
DESCRIPTION OF IMPROVEMENTS
Bella Terra
Reimbursable Costs for Edinger Avenue Improvements
(for Bus Turnout,South Median Improvements and Water Well Abandonment)
Ouantity Unit Unit Cost Total
Bus Turnout
Remove existing sidewalk 1,760 S.F. $5.00 $8,800.00
Construct sidewalk 1,760 S.F. $7.25 $12,760.00
Furnish&install 2"conduit,sched 40 PVC,
trenched 240 L.F. $10.00 $2,400.00
Furnish&install No.5 pull box 2 EACH $375.00 $750.00
Furnish&install 12 pair AWG#22 SIC 1,455 L.F. $2.00 $2,910.00
Bus turnout 1 EACH $12,500.00 $12,500.00
Sub-total $40,120.00
10%contingency $4,012.00
Soft Costs(Engr fee) $868.00
Bus Turnout Total $45,000.00
South Median Improvements in Edinger Ave.
Demolish&Remove Existing Curb 1,850 L.F. $5.50 $10,175.00
Sawcut&Remove Existing AC,AB 1,850 L.F. $5.45 $10,082.50
Construct 8"Curb 1,760 L.F. $18.00 $31,680.00
Construct 5"full depth AC over AB 2,500 S.F. $4.50 $11,250.00
Install Type E round loop 18 EACH $300.00 $5,400.00
Sub-total $68,587.50
10%contingency $6,858.75
Soft Costs(Engr fee) $7,194.00
Median
Improvements Total $82,640.25
Water Well Abandonment
Eliminate traffic island 1 L.S. $4,000.00 $4,000.00
Construct ADA access ramp 1 EACH $1,800.00 $1,800.00
Abandon water well 1 L.S. $6,000.00 $6,000.00
Furnish&install 3"conduit,sched 40 PVC,
jacked 175 L.F. $15.00 $2,625.00
Furnish&install 4"conduit,sched 40 PVC,
jacked 165 L.F. .$40.00 $6,600.00
Furnish&install No.5 pull box 3 EACH $375.00 $1,125.00
Furnish&install No.6(E)pull box 2 EACH $425.00 $850.00
Install Type E round loop 6 EACH $300.00 $1,800.00
Sub-total $24,800.00
10%contingency $2,480.00
Soft Costs(Engr fee) $8,033.00
Median
Improvements Total $35,313.00
TOTAL $162,953.25
RVPUB\KAB\702794.1 A-1
��VljTl
CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICATION
TO: PENELOPE CULBRETH-GRAFT,DPA, CITY ADMINISTRATOR
FROM: DAN T.VILLELLA, CPA,FINANCE OFFICER
SUBJECT: FIS 2005-06—02 APPROVE REIMBURSEMENT AGREEMENT WITH
BELLA TERRA AND ALLOCATE FUNDS FOR EDINGER AVENUE
IMPROVEMENTS
DATE: OCTOBER 24, 2005
As required by Resolution 4832, this Fiscal Impact Statement has been prepared for
"Approve Reimbursement Agreement with Bella Terra and Allocate Funds for Edinger
Avenue Improvements"
If the City Council approves this action (total appropriations not originally budgeted of
$83;640), the estimated unreserved fund balance of the Merged Redevelopment Capital
Projects Fund at September 30, 2006 will be reduced to $15,235,000.
Dan Villella,
Finance Officer
RCA ROUTING SHEET
INITIATING DEPARTMENT: Public Works/Economic Development
SUBJECT: Appropriate Funds and Approve Supplement for
Edinger Ave Improvements near Bella Terra
COUNCIL MEETING DATE: January 3, 2006
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Attached ❑
Not Applicable
Resolution (w/exhibits & legislative draft if applicable) Attached ❑
Not Applicable
Tract Map, Location Map and/or other Exhibits Attached ❑
Not A licable
Contract/Agreement (w/exhibits if applicable) Attached
Signed in full by the City Attorne ) Not Applicable ❑
Subleases, Third Party Agreements, etc. Attached El
Not Applicable
Approved as to form by CityAttorney
Certificates of Insurance (Approved b the CityAttome Attached
pp y y� Not Applicable ❑
hed
Fiscal Impact Statement (Unbudget, over $5,000) Not AppAttac licable ❑
❑
Bonds (If applicable) AttachedNot Applicable
❑
Staff Report (If applicable) AttachedNot Applicable
Commission, Board or Committee Report If applicable) Attached ❑
p ( pp ) Not Applicable
Findings/Conditions for Approval and/or Denial Attached ❑
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED RETURNED FORWARDED
Administrative Staff 104A& --
Assistant City Administrator Initial g
City Administrator Initial iy
City Clerk )
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For City Clerk's Use
RCA Author: Bogart
CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
OFFICE OF THE CITY CLERK
January 4, 2006
Huntington Center Associates, LLC
5757 Wilshire Boulevard, Penthouse 30
Los Angeles, CA 90036
Attention: Mike Wise
Dear Mr. Wise:
Enclosed for your records is an executed copy of the First Supplement to
Funding and Construction Agreement relating to Community Facilities District
No. 2003-1 (Huntington Center) for the Edinger Avenue improvements near Bella
Terra.
Sincerely,
Joan L. Flynn
City Clerk
JF:pe
Enclosure: Agreement
G:folloxvup:agrmtltr
(Telephone:714-536.5227)
BEST BEST & KRIEGER LLP
A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
INDIAN WELLS LAWYERS SAN DIEGO
(760) 568-261 I 3750 UNIVERSITY AVENUE (6I9) 525-1300
- POST OFFICE BOX.1028 -
ONTARIO RIVERSIDE, CALIFORNIA 92502-1 028 ORANGE COUNTY
(909)989-8584 (909)685-1450 (949) 263-2600
(909)686-3083 FAX
BBKLAW.COM SACRAMENTO
(916) 325-4000
June 11, 2004
TO THE PARTIES INDICATED ON THE
ATTACHED DISTRIBUTION LIST:
Re: $25,000,000
City of Huntington Beach
Community Facilities District No. 2003-1
(Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
We are pleased to enclose your transcript of closing documents in the above transaction.
It was a pleasure working with you to bring this matter to a successful conclusion.
Very truly yours,
im A. Byrens
of Best Best &Krieger LLP
encls.
#23816.0000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
DISTRIBUTION LIST
(February 3,2004)
ISSUER BOND COUNSEL
-David C.Biggs, -Kim Byrens,Esq.
Director of Economic Development BEST,BEST&KRIEGER LLP
-Gustavo A.Duran, 400 Mission Square
Housing& Redevelopment Manager 3750 University Avenue
-Carol Runzel, Riverside,CA 92501
Assistant Project Manager (909) 826-8273
CITY OF HUNTINGTON BEACH (909)686-3083 [FAX]
2000 Main Street Email: kabyrens@bbklaw.com
Huntington Beach, CA 92648
(714)536-5582(Biggs) UNDERWRITER
(714)374-1529(Duran)
(714)536-5662(Runzel) -Daniel Gangwish,
(714)375-5087 [FAX] Managing Director
Email: dbiggs@surfcity-hb.org -Rose Wang,
gduran@surfcity-hb.org Vice President
crunzel@surfcity-hb.org -Yuka Tamura,
Senior Analyst
ISSUER'S COUNSEL UBS FINANCIAL SERVICES INC.
777 South Figueroa Street,50th Floor
-Scott F. Field,Esq. Los Angeles,CA 90017
Deputy City Attorney (213)253-5409(Gangwish)
CITY OF HUNTINGTON BEACH (213)253-5414(Wang)
2000 Main Street (213)972-2055 (Tamura)
Huntington Beach,CA 92648 (213)253-5401 [FAX]
(714)536-5555 Email: daniel.gangwish@ubs.com
(714)374-1590 [FAX] rose.wang@ubs.com
Email: fields@surfcity-hb.org yuka.tamura@ubs.com
AGENCY SPECIAL COUNSEL UNDERWRITER'S COUNSEL
-Murray 0. Kane,Esq. -John Murphy,Esq.
KANE,BALLMER&BERKMAN * STRADLING,YOCCA, CARLSON&RAUTH
515 South Figueroa Street, Suite 1850 660 Newport Center Drive, Suite 1600
Los Angeles, CA 90071 Newport Beach,CA 92660-6441
(213)617-0480 (949)725-4000
(213)625-0931 [FAX] (949)725-4100 [FAX]
Email: mkane@kbblaw.com Email: jmurphy@sycr.com
08003.08
RVPUB\KAB\669046.1
DISTRIBUTION LIST
Page 2
DEVELOPER -Dave Rodriguez,
Vice President
-Mike Wise 401 Wilshire Boulevard, Suite 850
-Dan Schneider Santa Monica,CA 90401
JH SNYDER DEVELOPMENT (310)656-4287
5757 Wilshire Boulevard,Penthouse 30 (310)899-9101 [FAX]
Los Angeles,CA 90036 Email: dodriguez@saybrook.net
(323)857-5546
(323)857-7042 [FAX] SPECIAL TAX CONSULTANT
Email: mwise@jhsnyder.net
dcchneider@jhsnyder.net -Mike Swan
PSOMAS
-Bryan Ezralow 3187 Red Hill Avenue, Suite 250
THE EZRALOW COMPANY Costa Mesa,CA 92626
23622 Calabasas Road,#100 (714)751-7373
Calabasas,CA 91302-1549 (714)545-8883 [FAX]
(818)223-3535 Email: mswan@psomas.com
(818)223-3536 [FAX]
Email: bezralow@ezralow.com APPRAISER
DEVELOPER'S COUNSEL -Larry Webb
-Bruce Weber,MAI
-Michael Kiely,Esq. INTEGRA REALTY RESOURCES
ALLEN MATKINS LECK GAMBLE& 29811 Santa Margarita Parkway, Suite 300
MALLORY,LLP Rancho Santa Margarita,CA 92688-3612
515 South Figueroa Street,7th Floor (949)709-7200 x225 (Webb)
Los Angeles,CA 90071-3398 (949)709-7200 x227(Weber)
(213)955-5594 (949)709-7201 [FAX]
(213)620-8816 [FAX] Email: lwebb@irr.com
Email: mkiely@allenmatkins.com
ABSORPTION/MARKET CONSULTANT
DEVELOPER'S LOAN COUNSEL
-Bob Gardner
-Brett Cohen,Esq. ROBERT CHARLES LESSER&COMPANY
CHRISTENSEN,MILLER,FINK,JACOBS, 1880 Century Park East, Suite 215
GLASER,WEIL&SHAPIRO,LLP Los Angeles,CA 9006771602
10250 Constellation Boulevard, 19th Floor (310)914-1800 x110
Los Angeles, CA 90067 (310)914-1810 [FAX]
(310)553-3000 Ext. 3518 Email: bgardner@rcico.com
(310)556-2920 [FAX]
Email: bcohen@chrismill.com FISCAL AGENT
DEVELOPER'S FINANCIAL ADVISOR -Martin Meza,
Account Manager
-Rebecca Casey Riedl, U.S.BANK NATIONAL ASSOCIATION
Managing Director 633 West Fifth Street,24th Floor LM-CA-T24T
SAYBROOK CAPITAL Los Angeles,CA 90071
508 Golden West Street (213)615-6062
Huntington Beach,CA 92648 (213)615-6199 [FAX]
(714)374-0213 Email: martin.meza@usbank.com
(714)374-0214 [FAX]
Email: rriedl@saybrook.net
RVPUB\KAB\669046.1
DISTRIBUTION LIST
Page 3
FISCAL AGENT'S COUNSEL
-Dennis Wong,Esq.
DORSEY&WHITNEY LLP
38 Technology Drive
Center Tower
Irvine,CA 92618-5310
(949)932-3600
(949)932-3601 [FAX]
Email: wong.dennis@dorsey.com
INVESTMENT ADVISOR
-Darlene Blaney
BOND LOGISTIX LLC
777 South Figueroa Street, Suite 3200
Los Angeles,CA 90017
(310)374-0156
(310)374-0956 [FAX]
Email: dblaney@bondlogistix.com
DISCLOSURE COUNSEL
-Paul Thimmig,Esq.
QUINT&THIMMIG LLP
One Embarcadero Center,Suite 2420
San Francisco, CA 94111-3737
(415)765-1550
(415)765-1555 [FAX]
Email: pthimmig@gtllp.com
RVPUB\KAB\669046.1
s
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
CLOSING INDEX
Closing and Delivery of Bonds
at 8:00 a.m. on April 15, 2004 '
at the offices of Best Best& Krieger LLP
3750 University Avenue
Riverside, California
Pre-closing Meeting to approve and sign Documents
at 2:00 p.m. on April 14, 2004
at the offices of Best Best& Krieger LLP
3750 University Avenue
Riverside, California
I. PARTICIPANTS:
City of Huntington Beach, for and on behalf of Community Facilities
District No. 2003-1 (Huntington Center) (the "City")
Best Best& Krieger LLP ("Bond Counsel")
UBS Financial Services Inc. ("Underwriter")
Stradling, Yocca, Carlson& Rauth ("Underwriter's Counsel")
Quint& Thimmig LLP ("Disclosure Counsel")
U.S. Bank National Association("Fiscal Agent")
Dorsey & Whitney, LLP ("Fiscal Agent's Counsel")
Psomas ("Special Tax Consultant")
Integra Realty Resources ("Appraiser")
Robert Charles Lesser & Co. LLC ("Absorption Consultant")
Huntington Center Associates ("Landowner")
Allen Matkins Leck Gamble & Mallory LLP ("Landowner's Counsel")
1
RVPUB\KAB\669042.1
II. BASIC DOCUMENTS:
1. Resolution No. 2003-10 Establishing Community Facilities District No. 2003-1
(Huntington Center)and Establishing the Boundaries thereof, adopted February 3,
2003.
2. Ordinance No. 3631 Levying Special Taxes within Community Facilities District
No. 2003-1, adopted January 5, 2004.
3. Notice of Special Tax Lien.,
4. Resolution No. 2004-1 adopted by the City Council on January 5, 2004,
Authorizing the Issuance of Special Tax Bonds for the City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) in an aggregate
principal amount not to exceed $25,000,000 and approving certain documents and
taking certain other actions in connection therewith.
5. Fiscal Agent Agreement by and between the City and the Fiscal Agent dated as of
March 1, 2004.
6. Funding and Construction Agreement, dated as of March 1, 2005.
7. Operating Agreement for Huntington Center Parking Structure dated as of
March 1, 2004.
8. Parking and Reciprocal Easement Agreement and Option to Purchase dated as of
March 1, 2004.
9. Preliminary Official Statement dated March 18, 2004.
10. Final Official Statement dated March 30, 2004.
11. City Continuing Disclosure Agreement, dated March 1, 2004.
12. Landowner Disclosure Certificate, dated March 1, 2004.
13. Bond Purchase Agreement dated March 30, 2004.
14. Specimen Bond.
RVPUB\KAB\669042. 1
2
III. ITEMS TO BE FURNISHED BY THE CITY:
15. Preliminary and Final Notices filed with the California Debt and Investment
Advisory Commission.
16. Incumbency and Signature Certificate of the City.
17. Certificate of the City.
18. Non-Arbitrage and Tax Compliance Certificate.
19. Instructions to Fiscal Agent re application of Bond proceeds.
20. Requisition pertaining to disbursements for Costs of Issuance.
21. Form 8038-G.
22. 15c2-12 Certificate of the City.
IV. ITEMS TO BE FURNISHED BY THE DEVELOPER:
23. Landowner 15c2-12 Certificate.
24. Certificate of Huntington Center Associates.
25. Certificate of Bank One, N.A.
V. ITEMS TO BE FURNISHED BY THE FISCAL AGENT
26. Certificate of Fiscal Agent.
27. Incumbency Certificate and Signature Resolution of Fiscal Agent.
28. Fiscal Agent's Receipt of purchase price of the Bonds.
VI. ITEMS TO BE FURNISHED BY THE UNDERWRITER, SPECIAL TAX
CONSULTANT AND APPRAISER
29. Underwriter's Receipt of Bonds.
30. Certificate of Underwriter.
31. Certificate of Special Tax Consultant.
32. Letter from Appraiser.
33. Letter from the Absorption Consultant.
3
RVPUB\KAB\669042.1
VII. OPINIONS AND RELATED DOCUMENTS:
34. Final Opinion of Bond Counsel.
35. Reliance letter of Bond Counsel.
36. Supplemental Opinion of Bond Counsel.
37. Opinion of the City Attorney.
38. Opinion of Disclosure Counsel.
39. Opinion of Underwriter's Counsel.
40. Opinion of Counsel to the Fiscal Agent.
41. Opinion of Landowner's Counsel.
VIII. MISCELLANEOUS:
42. Huntington Beach Community Facilities District Financing Law.
43. Depository Trust Company Blanket Issuer Letter of Representations.
4
RVPUB\KAB\669042.1
RESOLUTION NO. 2oo3—io
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
ESTABLISHING CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES
DISTRICT NO. 2003-1 (HUNTINGTON CENTER) AND ESTABLISHING THE
BOUNDARIES THEREOF
WHEREAS, the City Council (the "City Council") of the City of Huntington Beach
("City") has heretofore adopted on January 6, 2003, Resolution No. .200 stating that
a proposed community facilities district to be known as "City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State
of California" (the "Community Facilities District"), is proposed to be established under
the terms of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of
the City of Huntington Beach (the "Code") and Chapter 2.5 (commencing with § 53311)
of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as
the "Mello-Roos Community Facilities Act of 1982" (the "Act"), and fixing the time and
place for a public hearing on the establishment of the Community Facilities District; and
Notice was published and mailed to the owners of property in the Community
Facilities District as required by law relative to the intention of the City Council to
establish the Community Facilities District, the levy of the special taxes therein, the
financing and refinancing of public facilities therein, and the incurring of a bonded
indebtedness by the Community Facilities District, and of the time and place of said
public hearing; and - -
On February 3, 2003, at the time and place specified in said published and
mailed notices, the City Council opened and held a public hearing as required by law
relative to the formation of the Community Facilities District, the levy of the special taxes
therein and the financing of facilities by the Community Facilities District; and
On February 3, 2003, at the time and place specified in said published and
mailed notices, the City Council opened and held a public hearing as required by law
relative to the formation of the Community Facilities District, the levy of the special taxes
therein and the financing of facilities by the Community Facilities District; and
Prior to said hearing there was filed with the City Council a report (the "Report")
containing a description of the services being financed within and for the Community
Facilities District, and an estimate of the cost of such financing, as required by Section
53321.5 of the California Government Code; and
At the public hearing all persons desiring to be heard on all matters pertaining to
the establishment of the Community Facilities District, the levy of the special taxes and
the financing of the public facilities therein were heard, and a full and fair hearing was
held; and
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
The City Council may therefore proceed to establish the Community Facilities
District;
NOW, THEREFORE, the City Council of the City of Huntington Beach does
hereby resolve as follows:
Section 1. Findings. The City Council finds as follows:
(i) All of the preceding recitals are correct.
(ii) On February 3, 2003, pursuant to notice thereof duly given as provided
by law, the City Council conducted a public hearing with respect to the establishment of
the Community Facilities District and the annual levying of specified special taxes on the
taxable property within the Community Facilities District to pay for public facilities for the
Community Facilities District which are described in Section 3 hereof.
(iii) The boundary map of the Community Facilities District has been
recorded pursuant to Sections 3111 and 3113 of the Streets and Highways Code as
Instrument No. 2003000028911 in Book 85 of Book of Maps of Assessment and
Community Facilities Districts at page 45 of the Official Records of the County of
Orange.
(iv) All prior proceedings with respect to the establishment of the
Community Facilities District prior to and during the hearing with respect to the
establishment of the Community Facilities District conducted by the City Council on
February 3, 2003, were valid and in conformity with the requirements of Chapter 2.5
(commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code.
(v) No written protests were received at or prior to the time of said hearing
against the establishment of the Community Facilities District or the levying of said
special taxes by the Community Facilities District, and said special taxes have,
therefore, not been limited by majority protest pursuant to Section 53324 of the
California Government Code
(vi) The City Council is, therefore, authorized to adopt a resolution of
formation pursuant to Section 53325.1 of the California Government Code for the
establishment of City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center), County of Orange, State of California, and the Community
Facilities District should be established.
Section 2. Establishment of District. City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California,
is hereby established. The boundaries of the Community Facilities District are set forth
in Exhibit "A" attached hereto and are also shown on the map entitled "Boundaries of
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center),
2
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
County of Orange, State of California"which is on file with the Clerk and said
boundaries are hereby established.
Section 3. Types of Facilities; Incidental Expenses: Maintenance.
(1) The types of public facilities proposed to be provided within and
financed by the proposed Community Facilities District are:
(a) Street improvements including costs of condemnation, removal,
demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and
landscaping related thereto.
(b) Storm drains, drainage storage ponds and drainage channels including
landscaping, if applicable.
(c) Sewers, sewer treatment facilities and sewer capacity acquisition.
(d) Public parking facilities including a parking structure.
(e) Water distribution facilities, including fire hydrants and reclaimed water
and water storage facilities.
(f) Street signalization and signage, including traffic fees.
(g) Fire facilities including structures and capital equipment.
(h) Acquisition of land necessary for any other facilities specified in
paragraphs (a) through (g) above.
(i) The incidental expenses which will be incurred are: (i) the cost of
engineering, planning and designing such facilities and the cost of environmental
evaluations thereof, (ii) all costs associated with the creation of the proposed community
facilities district, issuance of the bonds thereof, the determination of the amount of and
collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry
out the authorized purposes of the community facilities district, and (iii) any other
expenses incidental to the construction,acquisition, completion, and inspection of such
facilities.
(2) The proposed community facilities district shall also pay for the
maintenance of, and the provisions of repair and replacement reserves for, any of the
publicly owned facilities listed in clause (1) of this Section 3.
Section 4. Special Taxes. Except where funds are otherwise available, special
taxes sufficient to pay for all such facilities and to pay the principal of and interest on the
bonds of the Community Facilities District and any territory to be annexed in the future,
and the annual administrative expenses of City and the Community Facilities District in
3
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
determining, apportioning, levying and collecting such special taxes, and in paying the
principal of and interest on such bonds, and the costs of registering, exchanging and
transferring such bonds, secured by the recordation of a continuing lien against all
taxable or nonexempt property in the Community Facilities District, and maintaining a
reserve fund for such bonds, and paying any amounts that must be paid to the United
States in order to preserve the tax-exempt status of such bonds shall be annually levied
within the Community Facilities District. Additionally, there shall be levied special taxes
sufficient to pay for the maintenance, repair and replacement of such public facilities.
The rate and method of apportionment of said special taxes shall be as set forth in
Exhibit "B" attached hereto and by this reference made a part hereof.
Section 5. Annexation of Territory. Other property within the boundaries of City
may be annexed into the Community Facilities District upon the condition that parcels
within that territory may be annexed only with the unanimous approval of the owner or
owners of each parcel or parcels at the time that parcel or those parcels are annexed.
Section 6. Exempt Property. Pursuant to Section 53340 of the California
Government Code, properties of entities of the state, federal and local governments or
used for public rights of way or other public uses, shall be exempt from the levy of
special taxes of the Community Facilities District.
Section 7. Report. The Report is hereby approved and is made a part of the
record of the public hearing regarding the formation of the Community Facilities District,
and is ordered to be kept on file with the Clerk of the City as part of the transcript of-
these proceedings.
Section 8. Repayment of Funds Advanced or Work-in-Kind. Pursuant to Section
53314.9 of the California Government Code, the City Council may accept advances of
funds or work-in-kind from private persons or private entities and may provide, by
resolution, for the use of those funds or that work-in-kind, for any authorized purpose,
including, but not limited to, paying any costs incurred by City in creating the Community
Facilities District and may enter into an agreement by resolution, with the person_or
entity advancing funds or work-in-kind to repay funds advanced, or to reimburse the
person or entity for the value or cost, whichever is less, of the work-in-kind, as
determined by the City Council.
Section 9. Tender of Bonds. This City Council hereby reserves the right, on
behalf of the Community Facilities District to accept tenders of bonds in full or partial
payment of special taxes to be levied within the Community Facilities District pursuant
to Section 3.56.320 of the Code.
Section 10. Description of Voting Procedures. The voting procedures to be
followed in conducting the consolidated special elections on (i) the proposition of the
Community Facilities District incurring a bonded indebtedness in an amount not to
exceed $30,000,000, (ii) the proposition with respect to the levy of special taxes on the
land within the Community Facilities District to pay the principal of and interest on the
4
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
bonds thereof and to pay the costs of maintenance, repair and replacement of public
facilities, and (iii) the proposition with respect to the establishment of an appropriations
limit for the Community Facilities District in the amount of$4,000,000, if the Community
Facilities District is established and such consolidated special elections (the
"consolidated special elections") are held, shall be as follows:
(a) If at least 12 persons have been registered to vote within the
territory of the Community Facilities District for each of the 90 days preceding the close
of the public or protest hearing (the "protest hearing"), the vote in the consolidated
special elections shall be by the registered voters of the Community Facilities District
with each voter having one vote. In that event, the consolidated special elections shall
be conducted by the Clerk, and shall be held on a date selected by the City Council in
conformance with the provisions of Section 53326 of the California Government Code
and pursuant to the provisions of the California Elections Code governing elections of
cities, insofar as they may be applicable, and pursuant to said Section 53326 the ballots
for the consolidated special elections shall be distributed to the qualified electors of the
Community Facilities District by mail with return postage prepaid or by personal service,
and the consolidated special elections shall be conducted as a mail ballot election.
(b) If 12 persons have not been registered to vote within the territory of
the community facilities district for each of the 90 days preceding the close of the
protest hearing, and pursuant to Section 53326 of the California Government Code, the
vote is therefore to be by the landowners (as defined in Section 3.56.070 of the
Municipal Code of the City of Huntington Beach) of the Community Facilities District,
with each landowner of record at the close of the protest hearing having one vote for
each acre or portion of an acre of land that he or she owns within the Community
Facilities District, the consolidated special elections shall be conducted by the City Clerk
pursuant to the Municipal Code of the City of Huntington Beach and Section 53326 of
the California Government Code as follows:
(1) The consolidated special elections shall be held on the
earliest date, following the adoption by the City Council of the resolution of formation
establishing the Community Facilities District pursuant to Section 53325.1 of the
California Government Code, and a resolution pursuant to Section 53326 of said Code
submitting the propositions with respect to (i)whether a bonded indebtedness shall be
incurred for constructing and financing through the sale of bonds public facilities
necessary for the formation of the Community Facilities District; (ii) the levy of special
taxes to pay the principal of and interest on the bonds of the Community Facilities
District and (iii) the establishing of an appropriations limit therefor to the qualified
electors of the Community Facilities District, upon which such elections can be held
pursuant to said Section 53326 which may be selected by the City Council, or such
earlier date as the owners of land within the Community Facilities District and the Clerk
agree and concur is acceptable.
(2) Pursuant to said Section 53326, the consolidated special
elections may be held earlier than 90 days following the close of the protest hearing if
5
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
the qualified electors of the Community Facilities District waive the time limits for
conducting the elections set forth in said Section 53326 by unanimous written consent
and the Clerk concurs in such earlier election date as shall be consented to by the
qualified electors.
(3) Pursuant to said Section 53326, ballots for the consolidated
special elections shall be distributed to the qualified electors by the Clerk by mail with
return postage prepaid, or by personal service.
(4) Pursuant to applicable sections of the California Elections
Code governing the conduct of mail ballot elections of cities, and specifically Division 4
(commencing with §4000 of the California Elections Code with respect to elections
conducted by mail), the Clerk shall mail (or deliver) to each qualified elector an official
ballot in a form specified by the City Council in the resolutions calling and consolidating
the consolidated special elections, and shall also mail to all such qualified electors a
ballot pamphlet and instructions to voter, including a sample ballot identical in form to
the official ballot but identified as a sample ballot, an impartial analysis by Counsel to
City pursuant to Section 9280, as amended, of said Code with respect to the ballot
propositions contained in the official ballot, arguments and rebuttals, if any, pursuant to
Sections 9281, as amended, to 9287, as amended, inclusive, and 9295, as amended, of
said Code, a return identification envelope with prepaid postage thereon addressed to
the Clerk for the return of voted official ballots, and a copy of the form of Resolution of
Formation establishing the Community Facilities District, adopted by the City Council
pursuant to Section 53325.1 of the California Government Code, and the exhibits
thereto; provided, however, that such analysis and arguments may be waived with the
unanimous consent of all the landowners, and in such event a finding regarding such
waivers shall be made in the resolution adopted by the City Council calling the
consolidated special elections.
(5) The official ballot to be mailed (or delivered) by the Clerk to
each landowner shall have printed or typed thereon the name of the landowner and the
number of votes to be voted by the landowner and shall have appended to it a
certification to be signed by the person voting the official ballot which shall certify that
the person signing the certification is the person who voted the official ballot, and if the
landowner is other than a natural person, that he or she is an officer of or other person
affiliated with the landowner entitled to vote such official ballot, that he or she has been
authorized to vote such official ballot on behalf of the landowner, that in voting such
official ballot it was his or her intent, as well as the intent of the landowner, to vote all
votes to which the landowner is entitled based on its land ownership on the propositions
set forth in the official ballot as marked thereon in the voting square opposite each such
proposition, and further certifying as to the acreage of the landowner's land ownership
within the Community Facilities District.
(6) The return identification envelope delivered by the Clerk to
each landowner shall have printed or typed thereon the following: (i) the name of the
landowner, (ii) the address of the landowner, (iii) a declaration under penalty of perjury
6
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
stating that the voter is the landowner or the authorized representative of the landowner
entitled to vote the enclosed ballot and is the person whose name appears on the
identification envelope, (iv) the printed name and signature of the voter, (v) the address
of the voter, (vi) the date of signing and place of execution of said declaration, and
(vii) a notice that the envelope contains an official ballot and is to be opened only by the
Clerk.
(7) The instruction to voter form to be mailed by the Clerk to the
landowners shall inform them that the official ballots shall be returned to the Clerk
properly voted as provided thereon and with the certification appended thereto properly
completed and signed in the sealed return identification envelope with the certification
thereon completed and signed and all other information to be inserted thereon properly
inserted not later than 7:00 p.m. on the date of the election, or immediately after the
Resolution Calling the Special Election is adopted
(8) Upon receipt of the return identification envelopes which are
returned prior to the voting deadline on the date of the elections, the Clerk shall canvass
the votes cast in the consolidated special elections, and shall file a statement with the
City Council as to the results of such canvass and the election on each proposition set
forth in the official ballot.
The procedures set forth in this section for conducting the consolidated special
elections, if they are held, may be modified as the City Council may determine to be
necessary or desirable by a resolution subsequently adopted ,by the City Council _ _-
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at
a regular meeting thereof held on the 3rd day of February , 2003.
&21��
Mayor
ATTEST: APPROVED AS TO FORM:
z
City Clerk Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED
City Ad nistrator Dir &tor of Economic Development
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
EXHIBIT A
LEGAL DESCRIPTION
CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2000-1
(HUNTINGTON CENTER), COUNTY OF ORANGE, STATE OF CALIFORNIA
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center),
County of Orange, State of California, includes the land situated in the State of
California, County of Orange, City of Huntington Beach, described as follows:
Parcels 2 through 9 as shown on Parcel Map 86-200
filed in Book 255, pages 40-45, of Parcel Maps in the
Office of the County Recorder of Orange County,
California
8
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-C669
CONFORMED COPY
•of OOfMr.d wf CM'11V laA5 S9 PO A5
PROPOSED BOUNDARIES OF ,�
CITY OF HUNTINGTON BEACH ATT,E
REQUEST OF THE
CITY
a NU11TT10'TOm BEACH
COMMUNITY FACILITIES DISTRICT DATE k,Ng 7063
No. 2003-1 E •2t��1+0002f9
.A6E 47 '
(HUNTINGTON CENTER) FILED TTSS�DAY
COUNTY OF ORANGE
STATE OF CALIFORNIA DISRSCTS,N THE OFFICE OF THE COUNTY
RECORIUM OF T12 COUNTY OF QIUeq
STATE OF CAUFORP"
TOn D.H.Y
UNTICIFAVREQo1®ER '
/ + �f3tknti
�o H 6•
M M' .NTHEOTECFTHECIY.
/ +r�A� i OF ThF� 3
CITY OF HIAIT?f-TON BEACH THIS
OAY CF 2 = .2WX
pE�— 0
�.u.G✓r1.
COFBBE SRO6NAY.THE CLERK OP
THE CITY OF HUNTINGTON REACH.
Sy 1-yY •��• I HERESY CERTIFY TWAT THE WITHIN MAP
i SHCWNG THE OCILIV 1RF,OFTHE CRY
. OF H WTNGTON BEA04 COAMMRY
/ M59Z7J�F FACLsnEsITQN CET MCC OIMT
�50 OPANG-TON CENTER)CA&FORNLY OF
' ORAHOESTATEOF CIWFOLNC WAS
APP�1 Y CITY
OVEN REACHAaOFTTE
% ` 500-3�\ 37 RFGCTAR MEET7G j�EAEOF HELD d1
, *�•• 50.0G' iTg�OAY OF a7035Y 1T6
I �� RE901.UT10N NO 1 i_Y
COME WAY,THE CRY QMW 6
THE CITYOF HL
OF IHA(T4'HOION BEACH
i 3
AMH
i _
NOT-
-mliln=l
S I
BASIS Of BEARBIG:
I I I I NamF TC I r Cl?fTERyNE OF ECiNDER AVE REM VaW%W37W
I Pei PAPICEIL MAP NO.esaro
II I FII ED INBOCK 2W PAGES.O-4.7,OF PAACM MAPS IN OFFICE
' (OF THE COUNTY RECORDER OF ORANGE COUNTY.CAUFORNK
III I � LocATTON MAP
Lp
PROJECT
LIB,__ I �a�Sr ai H:NTMOTON®cAaH-o0o tit I. SITE
1w 2w A
oRAPHIe sul.c
4
LEGALDEOCRE'TI9Nk did
PARCELS 3 THROUGH B AS SHOWN ON PARCEL MAP NO.a&ZQ
FUM IN BOOK=PAGES 4o4S OF PAACB NAPS N T}!OFFICE
OF THE COCWTY RECORDER OF ORAMG!COtMTY.CRPOIDAK
SHEET 1 OF 1
EXHIBIT B
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
9
PDA 2002 resolutions:CFD 2003-1 (Establishment)
RLS 2002-0669
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein
CFD No. 2003-1) shall be levied and collected according to the tax liability determined
by the Administrator through the application of the procedures described below. The real
property in CFD No. 2003-1, unless exempted by law or by the provisions hereof, shall
be taxed for the purposes,to the extent, and in the manner herein provided-
A. DEFINITIONS
The capitalized terms hereinafter set forth have the following meanings when used in this
Rate and Method of Apportionment:
Acre or Acreage means the land area of an Assessor's Parcel as shown on an Assessor's
Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area
shown on the applicable final map, parcel map, or the other parcel map recorded with the
County Recorder. If the Acreage of a particular Parcel is unclear after reference to
available maps,the Administrator shall determine the appropriate Acreage for a Parcel.
Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of
the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities
Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1,
Division 2, of Title 5 of the Government Code of the State of California.
Administrative Expenses means any or all of the following actual or reasonably
estimated costs directly related to the administration of CFD No. 2003-1: the fees and
expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel)
employed in connection with any Bonds; any costs associated with the marketing or
remarketing of the Bonds; the expenses of the Administrator and the City in carrying out
their duties under any Indenture or resolution with respect to the Bonds, including, but
not limited to, the levy and collection of the Special Tax, the fees and expenses of legal
counsel, charges levied by the County or any division or office thereof in connection with
the levy and collection of Special Taxes, audits, continuing disclosure or other amounts
needed to pay arbitrage rebate to the federal government with respect to Bonds; costs
associated with complying with continuing disclosure requirements; costs associated with
responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees
and other costs associated with commencement or pursuit of foreclosure for delinquent
Special Taxes; and all other costs and expenses of City, the Administrator, the County,
and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No.
2003-1.
Administrator means the Director of Economic Development or such other person or
entity designated by the City Administrative Officer or the City Council to administer the
Special Tax according to this Rate and Method of Apportionment of Special Tax.
Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an
Assessor's Parcel Map with an assigned Assessor's Parcel number.
Assessor's Parcel Map means an official map of the Assessor of the County designating
Parcels by Assessor's Parcel number.
Bonds mean any bonds or other debt(as defined in Section 53317(d) of the Act), whether
in one or more series, issued by the City for CFD No. 2003-1 under-the Act.
City means the City of Huntington Beach.
City Council means the City Council of the City of Huntington Beach, acting as the
legislative body of CFD No. 2003-1.
County means the County of Orange
Development Agreement means the Owner Participation Agreement(OPA) between the
Redevelopment Agency of the City of Huntington Beach and Huntington Center
Associates, LLC, dated October 2, 2000.
Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1
which generally serves the development subject to the Development Agreement and is
owned by a governmental agency for public right-of-way purposes including, but not
limited to parking structures, streets, public walkway corridors, and slopes as determined
in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the
Special Tax has been paid in full.
Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved.
Fiscal Year means the period commencing on July 1 and ending on the following June
30, in any year in which the Bonds are outstanding.
Indenture means the indenture, fiscal agent agreement, resolution or other instrument
approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued,
as modified, amended and/or supplemented from time to time, and any instrument
replacing or supplementing the same.
2
Maximum Special Tax means, with respect to any Parcel of Taxable Property, the
maximum Special Tax, determined in accordance with Section C, that can be levied in
any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts
payable under the Parking Structure Maintenance Special Tax.
Outstanding Bonds means all Bonds that are then outstanding under the Indenture.
Parking Structure Maintenance Special Tax means the portion of the Special Tax to
be levied in an amount equal to the amount required in any Fiscal Year for CFD No.
2003-1 necessary to pay all actual, documented maintenance costs,management fees and
other operating expenses of the parking structure being fmanced by a portion of the Bond
proceeds to the extent such costs, fees and operating expenses exceed revenues generated
by such parking structure. The calculation and inclusion or exclusion of particular items
of expense or income into such costs, fees, expenses and revenues shall be subject to and
limited by the provisions of the following documents,which documents shall be in the
form approved by the City Council in connection the issuance of the Bonds, and which
documents,upon such approval, shall be deemed to be incorporated herein by this
reference: (i) any covenants, conditions or restrictions encumbering such parking
structure and/or the real property upon which it is to be constructed as of the date of
issuance of the Bonds, (ii) the initial parking management agreement governing the
operation and maintenance of such parking structure (the provisions of such initial
parking management agreement to govern the determination of the Parking Structure
Maintenance Special Tax for so long as the Special Tax lien remains in effect,
notwithstanding any earlier expiration or termination of such agreement), and(iii) any
amendments to the foregoing covenants, conditions or restrictions or agreements. =
Reserve Fund means the fund of that name created under the Indenture.
Resolution of Issuance means the resolution adopted by the City Council of the City,
acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds
in accordance with the Act.
Special Tax means the special tax to be levied pursuant to the Act and this Rate and
Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within
CFD No. 2003-1.
Special Tax Requirement means the amount required in any Fiscal Year for CFD No.
2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds
due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts
required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay
Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and
expenses related to any letter of credit) for the Bonds, and less a credit for available funds
determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance
Special Tax.
3
Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No.
2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law,but
in no circumstance shall the total amount of Taxable Property be less than 40.63 acres.
Trustee means the trustee who is a party to the Indenture,if so approved.
B.. IDENTIFYING TAXABLE PROPERTY
Not less than fifteen business days prior to the beginning of each Fiscal Year, the
Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property.
The Taxable Property shall be subject to Special Taxes in accordance with the rate and
method of apportionment described in Sections C and D below.
C. MAXIMUM SPECIAL TAX
The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No.
2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined
pursuant to the following steps:
Step 1: Determine the maximum annual debt service on all Outstanding
Bonds;
Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add
the Administrative Expenses;
Step 3: Determine the Acreage of Taxable Property within the CFD No.
2003-1;
Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to
determine the Maximum Special Tax per Acre of Taxable
Property.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City
Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable
Property at up to 100% of the Maximum Special Tax, as determined by reference to
Section C, above, as needed to satisfy the Special Tax Requirement.
4
E. LIMITATIONS _
No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land.
The Special Tax may be levied and collected on Taxable Property. commencing with
Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which
principal and interest on all Outstanding Bonds have been paid in full (or provision for
their payment has been made). Notwithstanding the foregoing, the Parking Structure
Maintenance Special Tax may be levied and collected until such time as the City and the
CFD No. 2003-01 have divested all remaining ownership interests in the parking
structure. Upon determination by the Administrator that such requirements have been
met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1.
F. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary
ad valorem property taxes,provided,however,that the City on behalf of CFD No. 2003-1
may directly bill the special tax or any portion thereof, may collect special taxes or any
portion thereof at a different time or in a manner if necessary to meet its financial
obligations, and may covenant to foreclose and may actually foreclose on delinquent
Assessor's Parcels as permitted by the Act. Notwithstanding the foregoing, the Parking
Structure Maintenance Special Tax shall be directly billed in each instance and not billed
with ad valorem property taxes.
G. APPEALS
The City Council shall establish as part of the proceedings and administration of CFD
No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal
Committee shall interpret this Rate and Method of Apportionment and make
determinations relative to the annual administration of the Special Tax and any appeals,
as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming
that the amount or application of the Special Tax is not correct may file a written notice
of appeal with the. Review/Appeal Committee not later than one calendar year after
having paid the Special.Tax that is disputed. The Review/Appeal Committee shall
promptly review the appeal, and if necessary, meet with the owner, consider written.and
oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the
Review/Appeal Committee's decision requires the Special Tax to be modified or changed
in favor of the owner, a cash refund shall not be made (except for the last year of the
levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall
be exclusive and its exhaustion by any owner shall be a condition precedent to any legal
action by such owner.
5
H. PREPAYMENT OF SPECUL,TAX
The following definitions apply solely to this Section H:
Amount of Current Special Taxes Paid means the amount of the Special Tax levied
against the subject Assessor's Parcel that was paid to the County or the City by the owner
of the subject Assessor's Parcel and would be applied to debt service payments on the
Redemption Date and the Interest Payment Date immediately following the Redemption
Date.
Outstanding Bonds means all Bonds that are deemed to be outstanding under the
Indenture the day immediately preceding the next Interest Payment Date.
Redemption Date means the Interest Payment Date on which Bonds are proposed to be
redeemed from the prepayments of the Special Tax.
1. Prepayment in Full
The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and
the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as
described herein. The owner intending to prepay the Special.Tax obligation on one or
more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to
prepay. It shall be a condition precedent to prepayment that the owner intendingato
prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's
Parcel to be prepaid and provide proof of payment to the Administrator. Promptly
following receipt of such notice, the Administrator shall notify the owner of such
Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The
Administrator may charge a reasonable fee for providing this figure. Prepayment must be
made not less than 90 days prior to the next occurring date that Bonds may be redeemed
from the proceeds of such prepayment pursuant to the Indenture.
The Prepayment Amount (defined below) shall be calculated as summarized below
(capitalized terms as defined above or below):
Bond Redemption Amount
Plus Redemption Premium
Plus Defeasance Amount
Plus Administrative Fees and Expenses
Less Reserve Fund Credit
Less Amount of Current Special Taxes Paid
Total: Equals Prepayment Amount
6
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be
e
calculated as follows:
Paragraph No.
1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the
Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year.
2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total
Maximum Special Tax of all Assessor's Parcels of Taxable Property for the
current Fiscal Year.
3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding
Bonds as defined in this Section G to compute the amount of Outstanding Bonds
to be retired and prepaid, and round the result up to the nearest multiple of$5,000
(the Bond Redemption Amount).
4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled
to mature on the Redemption Date by the applicable redemption premium (the
Redemption Premium).
5. Compute the amount needed to pay interest on the Bond Redemption Amount
from the Interest Payment Date immediately preceding the Redemption Date to
the Redemption Date.
6. Compute the amount the Administrator reasonably expects to derive .from the
reinvestment of the Prepayment Amount from the date of prepayment until fhe
redemption date for the Outstanding Bonds to be redeemed with the prepayment.
7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount
computed pursuant to Paragraph 6 (the Defeasance Amount).
8. Determine the administrative fees and expenses associated with the costs of
computation of the prepayment, the costs to invest the prepayment proceeds, the
costs of redeeming Bonds, and the costs of recording any notices to evidence the
prepayment and the redemption(the Administrative Fees and Expenses).
9. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal
the lesser of. (a) the expected reduction in the Reserve Requirement (as defined
in the Indenture), if any, associated with the redemption of Outstanding Bonds as
a result of the prepayment, or (b) the amount derived by subtracting the new
Reserve Requirement (as defined in the Indenture) in effect after the redemption
of Outstanding Bonds as a result of the prepayment from the balance in the
reserve fund on the prepayment date, but in no event shall such amount be less
than zero.
10. The Special Tax prepayment is equal to the sum of the amounts computed
pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to
Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment
Amount).
7
11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3,
4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as
established under the Indenture and be used to redeem Outstanding Bonds or
make debt service payments (as appropriate). The amount computed pursuant to
Paragraph 8 shall be retained by the Administrator.
With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a
suitable notice to be recorded in compliance with the Act, to indicate the prepayment of
the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii)
notify the County that the Special Tax, if any, remaining on the secured tax roll for the
Assessor's Parcel has been satisfied and that the County should remove such amounts
from the secured tax roll, and (iii) refund the owner for any Special Tax payments made
on the Assessor's Parcel after the date of prepayment. From and after the prepayment,
the obligation of such Assessor's Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the
amount of the Maximum Special Tax that may be levied on Taxable Property-within CFD
No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt
service on all Outstanding Bonds.
2. Prepayment in Part
The Maximum Special Tax on an Assessor's Parcel of Taxable Property may be partially_
prepaid. The amount of the prepayment shall be calculated as in Section H.1, except that
a partial prepayment shall be calculated according to the following formula:
PP=(PH xF)+ G
Where these terms are defined as follows:
PP = the partial prepayment
PH= the Prepayment Amount calculated according to Section H.1, minus the amounts
determined in Paragraph No. 8 of Section H.1.
F the percent by which the owner of an Assessor's Parcel(s) is partially prepaying
the Maximum Special Tax.
G = the amounts determined in Paragraph No_8 of Section H.1.
The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special
Tax shall notify the Administrator of (i) such owner's intent to partially prepay the
Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall
be prepaid. The Administrator shall promptly provide the owner with a statement of the
amount required for the partial prepayment of the Maximum Special Tax for an
Assessor's Parcel following receipt of the request.
8
With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i)
distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii)
indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the
Maximum Special Tax and that a portion of the Maximum Special Tax equal to the
outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall
continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D..
9
Res. No. 2003-10
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whole number of members of the City
Council of the City of Huntington Beach is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at an regular meeting thereof held on the
3`d day of February 2003 by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio C erk of the
City Council of the City of
Huntington Beach, California
The foregoing instruinwi z e cww
Copy of the originel on file in this office.
0
Attest 2q
CONNIE BROCKWAY
Cky Clark and -oft Cie
Coundl of the City of HunthVton Beoj*
i
By Deputy
ORDINANCE NO. 3631
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH LEVYING SPECIAL TAXES
WITHIN THE CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
WHEREAS, on January 6, 2003, this City Council adopted a Resolution entitled
"Resolution of Intention of the City Council of the City of Huntington Beach with Respect to
Establishment of Proposed City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center)" (the "Resolution of Intention") stating its intention to establish City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (the "District")
pursuant to Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City
of Huntington Beach (the "Municipal Code") and Chapter 2.5 of Part 1 of Division 2 of Title 5,
commencing with Section 53311, of the California Government Code (the "Act"), to finance
certain facilities described in the Resolution of Intention(the "Facilities"); and
Notice was published as required by the Municipal Code and the Act relative to the
intention of this City Council to form the District and to provide for the Facilities; and
This City Council has held a noticed public hearing as required by the Municipal Code
and the Act relative to the determination to proceed with the formation of the District and the- _
rate and method of apportionment of the special tax to be levied within the District to finance a
portion of the costs of the Facilities;and
At said hearing all persons desiring to be heard on all matters pertaining to the formation
of the District and the levy of said special taxes were heard, substantial evidence was presented
and considered by this City Council and a full and fair hearing was held; and
Subsequent to said hearing, this City Council adopted Resolutions entitled "Resolution of
the City Council of the City of Huntington Beach Establishing City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of
California, and Establishing the Boundaries Thereof " (the "Resolution of Formation") and
"Resolution of the City Council of the City of Huntington Beach Calling a Special Election and
Submitting to the Voters of City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) a Proposition with Respect to the Annual Levy of Special Taxes Within the
Community Facilities District to Pay Principal of and Interest on Bonds Thereof, and a Proposi-
tion with Respect to the Establishment of an Appropriations Limit for the Community Facilities
District" which Resolutions established the District, authorized the levy of a special tax within
the District, and called an election within the District on the proposition of incurring
indebtedness, levying a special tax, and establishing an appropriations limit within the District,
respectively; and
G:TIELD'.CFD No.2003-1(Huntington Center)\Ordinance.rtfl 1/[7/2003
Ord. No.3631
An election was held within the District in which eligible landowner electors approved
said propositions by more than the two-thirds vote required by the Act;
NOW, THEREFORE, The City Council of The City of Huntington Beach ordains as
follows:
Section 1. By the passage of this Ordinance, this City Council hereby authorizes and
levies special taxes within the District pursuant to the Municipal Code and California
Government Code Sections 53328 and 53340, at the rates and in accordance with the method of
apportionment set forth in Exhibit A to the Resolution of Formation (being Resolution No. 2003-
10 of the City of Huntington Beach) (the "Rate and Method of Apportionment"). The special
taxes are hereby levied commencing in fiscal year 2004-05 and, in each fiscal year thereafter,
until payment in full of any bonds of the City issued for the District (the 'Bonds"), payment of
all costs of the Facilities to be paid with such funds, and payment of all costs administering the
District.
Section 2. The City Treasurer or his/her written designee is hereby authorized and
directed each fiscal year to determine the specific special tax rate and amount to be levied for the
next ensuing fiscal year for each parcel of real property, within the District, in the manner and as
provided in the Rate and Method of Apportionment.
Section 3. Properties or entities of the State, federal or local governments shall be
exempt from any levy of the special taxes, except those properties subject to a leasehold interest,
to the extent set forth in the Rate and Method of Apportionment. In no event. shall the special
taxes be levied on any parcel within the District in excess of the maximum tax specified in the
Rate and Method of Apportionment.
Section 4. All of the collections of the special tax shall be used as provided for in the
Act, the Municipal Code, the Rate and Method of Apportionment, and in the Resolution of
Formation including, but not limited to, the payment of principal and interest on the Bonds, the
replenishment of the reserve fund for the Bonds, the payment of the costs of the Facilities, the
payment of the costs of the City in administering the District, the operation and maintenance of
the public parking garage and the costs of collecting and administering the special tax.
Section 5. The special taxes shall be collected from time to time as necessary to meet the
financial obligations of the District on the secured real property tax Iroll in the same manner as
ordinary ad valorem taxes are collected. The City Treasurer or his/her designee, pursuant to the
Rate & Method of Apportionment, is hereby authorized and directed to provide all necessary
information to the auditor/tax collector of the County of Orange and to otherwise take all actions
necessary in order to effect proper billing and collection of the special tax, so that the special tax
shall be levied and collected in sufficient amounts and at the times necessary to satisfy the
financial obligations of the District in each fiscal year until the Bonds are paid in full and
provision has been made for payment of all of the administrative costs of the District.
&TIELD CFD No.2003-1(Huntington CenterpOrdinance.tttl 1/17,2003
Ord. No. 3631
Notwithstanding the foregoing and notwithstanding the Rate & Method of
Apportionment, the City Treasurer or his/her written designee may collect one or more
installments of the special taxes by means of direct billing by the City of the property owners,
within the District, if, in the judgment of the City Treasurer or his/her written designee, such
means of collection will reduce the administrative burden on the City or is otherwise appropriate
under the circumstances. In such event, the special taxes shall become delinquent if not paid
when due as set forth in any such respective billing to the property owners. Notwithstanding the
foregoing, the portion of the Special Tax relating to maintenance and operation of the public
parking structure may be levied on the taxable real property within the District by direct billing
on a monthly, bi-monthly or semi-annual basis as the Treasurer may determine in his/her
discretion.
The special taxes shall have the same lien priority, and be subject to the same penalties
and the same procedure and sale in cases of delinquency as provided for ad valorem taxes. In
addition, the provisions of Section 53356.1 of the Act shall apply to delinquent special tax
payments.
Section 6. If for any reason any portion of this ordinance is found to be invalid, or if the
special tax is found inapplicable to any particular parcel within the District, by a Court of
competent jurisdiction, the balance of this ordinance and the application of the special tax to the
remaining parcels within the District shall not be affected.
Section 7. This Ordinance shall become effective thirty(30) days after its adoption
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Huntington Beach, State of California, on this 20th day of January , 200+-.
Mayor of the Nr5rof Huntington Beach
ATTEST: APPROVED AS TO FORM:
fa
City Clerk C ty Attorney
REVIEWED AND APPROVED INITIATED AND APPROVED
Q�'_'P_. -r A, ��J_ C 19 Le'4'
City AdmfKistrator Director of Economic Development
G:'FIELD\CFD No.2003-1(Huntington Center)\Ordinance.rtfl 1/17/2003
Ord. No. 3631
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY,the duly elected,qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing ordinance was read to said City Council at
a regular meeting thereof held on the 5th day of January, 2004, and was again read to
said City Council at a regular meeting thereof held on the 20th day of January,2004,
and was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council.
AYES.: Sullivan, Coerper,Hardy, Green,Boardman, Cook
NOES: None
ABSENT: Houchen
ABSTAIN: None The bregolm instrument is a correct
COPY of the orI&V on file in offic,�s,
Attest
r 1E BR --�.-
I,Connie Brockway,CITY CLERK of the City of _ x�� clerk of
•
Coundl of the City of Huntington Beads,
Huntington Beach and ex-officio-Clerk of the City C40MO/
Council,do hereby certify that a synopsis of this BY Dlputy
ordinance has been published in the Huntington Beach
Fountain Valley Independent on January 29,2004.
In accordance with the City Charter of said City
Awl/-Vakv—
Connie Brockway,City Clerk City Clerk and ex-officio C erk
Deputy City Clerk of the City Council of the City
of Huntington Beach, California
i
CONFORMED COPY
EXEMPT FROM FILING FEEL
Not COrnpared with origi ial PURSUANT TO GOVERNMEW
SECTION 610'
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO Recorded in Official_Records, County of Orange
Tom Daly,Clerk-Recorder
--„ IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIINO FEE
City of Huntington Beach 2000 Main Street 200300018647812:39pm 02120103
Huntington Beach, CA 92648 0.0 27 N20 16
0.00 0.00 0.00 0:00 0.00 0.00 0.00 0.00
SPACE ABOVE TEAS LINE RESERVED FOR RECORDER'S US]
NOTICE OF SPECIAL TAX LIEN
Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code and
Section 53328.3 of the Government Code, the undersigned City Clerk of the City of Huntington Beach,
County of Orange, State of California, hereby gives notice that a lien to secure payment of special taxes
is hereby imposed by the City Council of the City of Huntington Beach, County of Orange, State of
California. The special taxes secured by this lien are authorized to be levied for the purpose of paying
principal of and interest on bonds, the proceeds of which are being used to finance the public.facilities
described in Exhibit "A" attached hereto.
The special taxes are authorized to be levied within City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the
"Community Facilities District"), the boundaries of which are described in Exhibit "B" attached hereto,
which has now been officially formed and the lien of the special taxes is a continuing lien which shall
secure each annual levy of the special taxes and shall continue in force and effect until the special tax
obligation is prepaid,permanently satisfied,and canceled in accordance with law or until the special taxes
cease to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5
of the Government Code.
RVPUB\BIS\647242
The rates,-method of apportionment, and manner of collection of the authorized special
taxes are as set forth in Exhibit "C" attached hereto. The conditions under which the obligation to pay
the special taxes may be prepaid and permanently satisfied and the lien.of the special taxes canceled are
a130 set forth in Exhibit "C" hereto.
Notice is further given that upon the recording of this notice in the office of the County
Recorder, the obligation to pay the special tax levy shall become a lien upon all nonexempt real property
within the Community Facilities District in accordance with Section 3115.5 of the Streets and Highways
Code.
The name(s) of the owner(s) and the assessor's tax parcel number(s) of the real property
included within the Community Facilities District and not exempt from the special taxes are set forth in
Exhibit "D" attached hereto.
Reference is made to the boundary map(or the amended boundary map)of the Community
Facilities District recorded on January 19, 2003, in Book 85 of Maps of Assessment and Community
,' Facilities Districts, at Page 45, and as Instrument No. 2003-000028911, in the office of the County
Recorder for the County of Orange, State of California, which map is now the final boundary map of the
Community Facilities District.
For further information concerning the current and estimated future tax liability of owners
or purchasers of real property subject to this special tax lien, interested persons should contact the Office
of the Director ofEconomic Development of the City of Huntington Beach,2000 Main Street,Huntington
Beach, California, telephone number (714) 536-5582.
Dated: February /.� , 2003.
City Clerk of the City of Huntioton Beach
i
R V PUBk8JSt647242 -2-
EXHIBIT "A"
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
DESCRIPTION OF PUBLIC FACILITIES
The types of public facilities to be provided within and financed by the Community
Facilities District are:
(a) Street improvements including costs of condemnation, removal, demolition, grading,
paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related
thereto.
(b) Storm drains, drainage storage ponds and drainage channels including landscaping, if
applicable.
(c) Sewers, sewer treatment facilities and sewer capacity acquisition.
(d) Public parking facilities including parking structure.
(e) Water distribution facilities,including fire hydrants and reclaimed water and water storage
facilities.
(f) Street signalization and signage, including traffic fees.
(g) Fire facilities including structures and capital equipment.
(h) Acquisition of land, rights-of-way and easements necessary' for any of the facilities
specified in paragraphs (a) through (g) above.
(1) The incidental expenses which will be incurred are: (i) the cost of engineering, planning
and designing such facilities and the cost of environmental evaluations thereof,(ii)all costs
associated with the creation of the proposed community facilities district, issuance of the
bonds thereof,the determination of the amount of and collection of taxes,the payment of
taxes, and costs otherwise incurred in order to carry out the authorized purposes of the
community facilities district, and (iii) any other expenses incidental to the construction,
acquisition, completion, and inspection of such facilities.
0) Maintenance of, and the provisions or repair and replacement reserves for, any of the .
publicly owned facilities listed above in(a) through(h).
d'
RVPUB\B1S\647242 A-I
M-1IBIT ''B''
LEGAL DESCRIPTION FOR
COMMUNITY FACILITIES DISTRICT NO. 2003-1 PURPOSES
FOR THE HUNTINGTON CENTER
THE LAND REFERRED TO HEREIN LIES WITHIN PARCELS 2 THROUGH 9 INCLUSIVE
OF PARCEL MAP NO. 86-200, IN THE CITY OF HUN'TINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP RECORDED IN BOOK 255,
PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL MAPS IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY OF ORANGE WHOSE PERHAETER JS
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF EDINGER AVENUE AND BEACH
BOULEVARD AS SHOWN ON SAID PARCEL MAP NO. 86-200, SAID INTERSECTION
BEING.SOUTH 000 19' 42" WEST 0.17 FEET FROM ORANGE COUNTY GPS # 5110,
THENCE ALONG SAID CENTERLINE OF EDINGER AVENUE THE FOLLOWING:
1. NORTH 890 29' 30" WEST 111.00 FEET; THENCE PERPENDICULAR TO SAID
CENTERLINE, MEASURED AT RIGHT ANGLES
2. NORTH 000 30' 30" EAST 50.00 FEET TO THE SOUTHEASTERLY CORNER OF
PARCEL 8 OF SAID PARCEL MAP NO. 86-200 AND THE TRUE POINT OF
BEGINNING; THENCE ALONG THE SOUTHERLY LINES OF PARCELS 8; 4, 3
AND 2
3. NORTH 890 29' 30" WEST 2053.69 FEET TO THE MOST SOUTHWESTERLY
CORNER OF SAID PARCEL 2, SAID POINT BEING IN THE NORTHERLY LINE
OF SAID EDINGER AVENUE; THENCE NORTHERLY ALONG THE WESTERLY
LINES OF SAID PARCEL 2 THE FOLLOWING COURSES:
4. NORTH.000 30' 30"EAST 403.20 FEET,
5. SOUTH 890 29' 40"EAST 172.56 FEET,
6. NORTH 000 30' 30' EAST 210.00 FEET,
7. NORTH 890 29' 30" WEST 19.50 FEET,
8. NORTH 000 30' 30"EAST 169.00 FEET, .
9. NORTH 890 29' 30"WEST 153.06 FEET,
10.NORTH 000 30' 30" EAST 338.61 FEET, TO THE SOUTHERLY LINE OF THE
NORTHERLY 150.00 FEET OF THE SOUTH HALF OF THE SOUTHEAST
QUARTER OF -SECTION 14, SAID LINE ALSO BEING THE NORTH LINE OF
SAID PARCELS; 3 AND 4; THENCE ALONG SAID NORTH LINE
11. SOUTH 890 29' 30" EAST 1333.15 FEET TO THE MOST NORTHEASTERLY
CORNER OF SAID PARCEL 4, SAID POINT BEING ON THE SOUTHWESTERLY
RIGHT OF WAY LINE OF CENTER DRIVE AND THE BEGINNING OF A NON
TANGENT CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS ' OF
504.00 FEET TO WHICH POINT A RADIAL LINE BEARS SOUTH 430 16' 29"
WEST; THENCE ALONG SAID SOUTHWESTERLY LINE AND SAID CURVE
THROUGH A CENTRAL ANGLE OF 120 04' 12" AN ARC LENGTH OF 106.17
FEET AND A CHORD DISTANCE OF 105.98 FEET; THENCE TANGENT TO SAID
r
CURVE
1
12. SOUTH 34° 39' 19"EAST 208.54 FEET; THENCE
13. SOUTH 310 44' 20". EAST 249.92 FEET TO THE BEGINNING OF A NON-
TANGENT CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 300.00
FEET TO WHICH POINT A RADIAL LINE BEARS NORTH 750 14' 40" EAST;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 500 58' 58"
AN ARC LENGTH OF 266.95 FEET AND A CHORD DISTANCE OF 258.23 FEET;
THENCE TANGENT TO SAID CURVE
14. SOUTH 650 44' 18"EAST 233.07 FEET;THENCE
15. SOUTH 350 15' 38" EAST 70.56 FEET TO A POINT ON THE WEST LINE OF
BEACH BOULEVARD AS DESCRIBED PER DEED TO THE CITY OF
HUNTINGTON BEACH RECORDED AS INSTRUMENT NO. 91-209426 OF
OFFICIAL RECORDS OF SAID COUNTY OF ORANGE; THENCE ALONG SAID
.WEST LINE
16. SOUTH 000 19' 42" WEST 273.61 FEET; THENCE
17. SOUTH 420 18' 58" WEST 41.42 FEET TO THE NORTH LINE OF EDINGER
AVENUE -AS SHOWN ON DEED TO THE CITY OF HUNTINGTON BEACH
RECORDED IN BOOK 10418, PAGE 968 OF OFFICIAL RECORDS OF SAID
COUNTY OF ORANGE;THENCE
18. SOUTH 890 29' 30"EAST 8.05 FEET; THENCE
19. SOUTH 420 18' 58" WEST 10.73 FEET TO THE TRUE POINT OF BEGINNING.
CONTAINING AN AREA OF 44.00 ACRES MORE OR LESS
COORDINATES SHOWN ARE BASED UPON THE CALIFORNIA STATE PLANE
COORDINATE SYSTEM, 1983 DATUM.
GPS#5110
N 2213732:692
E 6032865.319
FOUND REBAR DOWN 0.1'. STATION IS. LOCATED AT APPARENT CENTERLINE
INTERSECTION OF BEACH BOULEVARD AND EDINGER AVENUE.
0 N
CHRISTOPHER
W DMIELS
* EXP." 3'02
NO. 6328
y,�}J
y P:/PROJECTS/02100/SURVEYIADNUNICFD LEGAL BELLA TERRA 112602-DOC
2
HB-PCLS2-9.txt
\, Y
p ---------------------------------------------------------------------------
Parcel name: PCLS-2-91
North: 2213791.4410 East 6032761. 9937
Line Course:. S 42-18-58 W Length: 10.73
North: 2213783.5068 East : 6032754 .7701
Line Course: N 89-29-30 W Length: 2053.69
North: 2213801.7271 East : 6030701.1609
Line Course: N 00-30-30 E Length: 403.20
North: 2214204.9112 East : 6030704.7381
Line Course: S 89-29-30 E Length: 172.56.
North: 2214203.3803 East : 6030877.2913
Line Course: N 00-30-30 E Length: 210.00
North: 2214413.3720 East : 6030879.1544
Line Course: N 89-29-30 W Length: 19:50
North: 2214413.5450 East : 6030859.6552
Line Course: N 00-30-30 E Length: 169.00'
North: 2214582.5384 East 6030861.1546
Line Course: N 89-29-30 W Length: 153.06
North: 2214583.8963 East 6030708.1006
Line Course: N 00-30-30 E Length: 338.61
North: 2214922.4930 East 6030711. 1047
Line Course: S 89-29-30 E Length: 1333. 15
North: 2214910.6653 East : 6032044 .2022
Curve Length: 106-17 Radius: 504 .00
Delta: 12-04-12 Tangent: 53.28
Chord: 105.98 Course: S 40-41-25 E
Course In: S 43-16-29 W Course Out: N 55-20-41 .E
RP North: 2214543.7154 East 6031698.7117
End North: 2214830.3087 East 6032113.2961
Line Course: S 34-39-19 E Length: 208.54
North: 2214658.7662 East : 6032231.8798
Line Course: S 31-44-20 E • Length: 249.92
North: 2214446.9207 East : 6032363.3499
Curve Length: 266. 95 Radius: 300.00
Delta: 50-58-58 Tangent: 143.04
Chord: .258.23 Course: S 40-14-49 E
Course In: N 75-14-40 E Course Out: S 24-15-42 W
RP ,North: 2214522.6294 East : 6032653.4563
End North: 2214249.1259 East : 6032530.1850
Line Course: S 65-44-18 E Length: 233.07
North: 2214153.3564 East : 6032742.6698
Line Course: .S 35-15-38 E Length: 70.56
North: 2214095.7416 East : 6032783.4038
Line Course: S 00-19-42 W Length: 273.61
North: 2213822.1361 East : 6032781.8359
Line Course: S 42-18-58 W Length: 41.42
North: 2213791.5084 East : 6032753.9511
Line Course: S 89-29-30 E Length: 8.05 .
North: 2213791.4370 East : 6032762.0008
Perimeter: 6321.78 Area: 1, 916, 606.9244 sq. ft. 43.9992 acres
Mapcheck Closure - (Uses listed courses, radii, and deltas)
Error Closure: 0.0081 Course: S 60-33-45 E
Error North: -0.00398 East : 0.00706
Page 1
EXHIBIT !V?
,cam.
CITY OF HUNTINGTON BEACH
COiIMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein
CFD No. 2003-1) shall be levied and collected according to the tax liability determined
by the Administrator through the application of the procedures described below. The real
property in CFD No. 2003-1, unless exempted by law or by the provisions hereof, shall
be taxed for the purposes, to the extent, and in the manner herein provided.
A. DEFINITIONS
The capitalized terms hereinafter set forth have the following meanings when used in this
Rate and Method of Apportionment:
Acre or Acreage means the land area of an Assessor's Parcel as shown on an Assessor's
Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area
shown on the applicable final map, parcel map, or the other parcel map recorded%Vith the
County Recorder. If the Acreage of a particular Parcel is unclear after reference to
available maps, the Administrator shall determine the appropriate Acreage for a Parcel.
Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of
the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities
.Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1,
Division 2, of Title 5 of the Government Code of the State of California.
Administrative Expenses means any or all of the following actual or reasonably
estimated costs directly related to the administration of CFD No. 2003-1: the fees-and
expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel)
employed in connection with any Bonds; any costs associated with the marketing or
remarketing of the Bonds; the expenses of the Administrator and the City in carrying out
their duties under any Indenture or resolution with respect to the Bonds, including, but
not limited to, the levy and.collection of the Special Tax, the fees and expenses of legal .
counsel, charges levied by the County or any division or office thereof in connection with
the levy and collection of Special Taxes, audits, continuing disclosure or other amounts
needed to pay arbitrage rebate to the federal government with respect to Bonds; costs
associated with complying with continuing disclosure requirements; costs associated with
responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees
and other costs associated with commencement or pursuit of foreclosure for delinquent
' Special Taxes; and all other costs and expenses of City, the Administrator, the County,
and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No.
'2003-1.
Administrator means the Director of Economic Development or such other person or
entity designated by the City Administrative Officer or the City Council to administer.the
Special Tax according to this Rate and Method of Apportionment of Special Tax.
Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown _on an
Assessor's Parcel Map with an assigned Assessor's Parcel number.
- Assessor's Parcel Map means an official map of the Assessor of the County designating
Parcels by Assessor's Parcel number.
Bonds mean any bonds or other debt(as defined in Section 53317(d) of the Act), whether
in one or more series,issued by the City for CFD No. 2003-1 under the Act.
City means the City of Huntington Beach.
.City Council means the City Council of the City of Huntington Beach, acting as the
legislative body of CFD No. 2003-1.
County means the County of Orange.
Development Agreement means the Owner Participation Agreement (OPA) between the
Redevelopment Agency of the City of Huntington Beach and Huntington Center
Associates, LLC,dated October 2,2000.
m
Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1
which generally serves the development subject to the Development Agreement and is
owned by a governmental agency for public right-of-way purposes including, but not
limited to parking structures, streets, public walkway corridors, and slopes as determined
in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the
Special Tax has been paid in full.
Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved.
Fiscal Year means the period commencing on July 1 and ending on the following June
30, in any year in which the Bonds are outstanding.
Indenture means the indenture, fiscal agent agreement, resolution or other instrument
approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued,
as modified, amended and/or supplemented from time to time; and any instrument
replacing or supplementing the same.
E
J
2
Maximum Special Tax means, with respect to any Parcel of Taxable Property, the
maximum Special Tax, determined in accordance with Section C, that can be levied in
any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts
payable under the Parking Structure Maintenance Special Tax.
Outstanding Bonds means all Bonds that are then outstanding under the Indenture.
Parking Structure Maintenance Special Tax means the portion of the Special Tax to
be levied in an amount equal to the amount required in any Fiscal Year for CFD No.
2003-1 necessary to pay all actual,documented maintenance costs, management fees and
other operating expenses of the parking structure being financed by a portion of the Bond
proceeds to the extent such costs,fees and operating expenses exceed revenues generated
by such parking structure. The calculation and inclusion or exclusion of particular items
of expense or income into such costs, fees, expenses and revenues shall be subject to and
limited by the provisions of the following documents, which documents shall be in the
form approved by the City Council in connection the issuance of the Bonds, and which
documents, upon such approval, shall be deemed to be incorporated herein by this
reference: (i) any covenants, conditions or restrictions encumbering such parking
structure and/or the real property upon which it is to be constructed as of the date of
issuance of the Bonds, (ii) the initial parking management agreement governing the
operation and maintenance of such parking structure(the provisions of such initial
parking management agreement to govern the determination of the Parking Structure
Maintenance Special Tax for so long as the Special Tax lien remains in effect;
notwithstanding'any earlier expiration or termination of such agreement), and(iii)any
amendments to the foregoing covenants, conditions or restrictions or agreements.
Reserve Fund means the fund of that name created under the Indenture.
_Resolution of Issurance means the resolution adopted by the City Council of the City,
acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds
in accordance with the Act.
Special Tax means the special tax to be levied. pursuant to the Act and this Rate and
Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within
CFD No. 2003-1.
Special Tax Requirement means the amount required in any Fiscal Year for CFD No.
2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds
due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts
required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay
Administrative Expenses, (iv) to pay costs of any credit enhancement(including fees and
expenses related to any letter of credit) for the Bonds, and less a credit for available funds
determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance
Special Tax.
'f
3
f '
Taxable Property means all of the Assessor's Parcels.within the boundaries of CFD No.
2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law, but
in no circumstance shall the total amount of Taxable Property be less than 40.63 acres.
Trustee means the trustee who is a party to the Indenture, if so approved.
B. IDENTIFYING TAXABLE PROPERTY
Not less than fifteen business days prior to the beginning of each Fiscal Year, the
Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property.
The Taxable Property shall be subject to Special Taxes in accordance with the rate and
method of apportionment described in Sections C and D below.
C. MAXIMUM SPECIAL TAX
The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No.
2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined
pursuant to the following steps: ,
Step 1: Determine the maximum annual debt service on all Outstanding
Bonds;
Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add
the Administrative Expenses;
Step 3: Determine the Acreage of Taxable Property within the CFD No.
° 2003-1;
Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to
determine the Maximum' Special Tax per Acre of Taxable
Property.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City
Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable
j Property at up to 100% of the Maximum Special Tax, as determined by reference to
Section C, above, as needed to satisfy the Special Tax Requirement.
4
E. LIiyIITATIONS
No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land.
The Special Tax may be levied and collected on Taxable Property commencing with
Fiscal Year 2004-2005,.and for each Fiscal Year thereafter, and until the date on which
principal and interest on all Outstanding Bonds have been paid in full (or provision for
their payment has been made)._Notwithstanding the foregoing, the Parking Structure
Maintenance Special Tax may be levied and collected until such time as the City and the
CFD No. 2003-01 have divested all remaining ownership interests in the parking
structure. Upon determination by the Administrator that such requirements have been
met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1.
F. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary
ad valorem property taxes,provided, however,that the City on behalf of CFD No. 2003-1
may directly bill the special tax or any portion thereof, may collect special taxes or any
portion thereof at a different time or in a manner if necessary to meet its financial
obligations, and may covenant to foreclose and may actually foreclose on delinquent
Assessor's Parcels as permitted by the Act. Notwithstanding the foregoing, the Parking
Structure Maintenance Special Tax shall be directly billed in each instance and not billed
with ad valorem property taxes.
G. APPEALS
The City Council shall establish as part of the proceedings and administration of CFD
No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal
Committee shall interpret this Rate and Method of Apportionment and make
determinations relative to the annual administration of the Special Tax and any appeals,
as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming
that the amount or application of the Special Tax is not correct may file a written notice
of appeal with the Review/Appeal Committee not later than one calendar year after
having paid the Special Tax that is disputed. The Review/Appeal Committee shall
promptly review the appeal, and if necessary, meet with the owner, consider written and
oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the
Review/Appeal Committee's decision requires the Special Tax to be modified or changed.
in favor of the owner, a cash refund shall not be made (except for the last year of the
levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall ,
be exclusive and its exhaustion by any owner shall be a condition precedent to any legal
action by such owner.
5
H. PREPAYMENT OF SPECL-VL, TAX
The following definitions apply solely to this Section H:
Amount of Current Special Taxes Paid means the amount of the Special Tax levied
against the subject Assessor's Parcel that was paid to the County or the City by the owner.
of the subject Assessor's Parcel and would be applied to debt service payments on the.
.Redemption Date and the Interest Payment Date immediately following the Redemption
Date.
Outstanding Bonds means all Bonds that are deemed to be outstanding under the
Indenture the day immediately preceding the next Interest Payment Date.
Redemption Date means the Interest Payment Date on which Bonds are proposed to be
redeemed from the prepayments of the Special Tax.
1. Prepayment in-Full
i
The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and
the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as
described herein. The owner intending to prepay the Special Tax obligation on one or
more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to
prepay. It shall be a condition precedent to prepayment that the owner intending to
prepay_the Special Tax must pay to the County all past due Special Tax on the Assessor's
Parcel to be prepaid and provide proof of payment to the Administrator. Promptly
following receipt of such notice, the Administrator shall notify the owner of such
Assessor's Parcels) of the prepayment amount of such Assessor's Parcel(s). The
Administrator may charge a reasonable fee for providing this figure. Prepayment must be
made not less than 90 days prior to"the next occurring date that Bonds may be redeemed
from the proceeds of such prepayment pursuant to the Indenture.
The Prepayment Amount (defined below) shall be calculated as summarized_ below
(capitalized terms as defined above or below):
Bond Redemption Amount
Plus Redemption Premium
Plus Defeasance Amount
Plus Administrative Fees and Expenses
Less Reserve Fund Credit
Less Amount of Current Special Taxes Paid
Total: Equals Prepayment Amount
6
q As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be
calculated as follows:
Paragraph No.
1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the
Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year.
2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total
Maximum Special Tax of all Assessor's Parcels of Taxable Property for the
current Fiscal Year.
3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding
Bonds as defined in this Section G to compute the amount of Outstanding Bonds
to be retired and prepaid, and round the result up to the nearest multiple of$5,000
(the Bond Redemption Amount).
4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled
to mature on the Redemption Date by the applicable redemption premium (the .
Redemption Premium).
5. Compute the amount needed to pay interest on the Bond Redemption Amount
from the Interest Payment Date immediately preceding the Redemption Date to
the Redemption Date.
6. Compute the amount the Administrator reasonably expects to derive from the
' reinvestment of the Prepayment Amount from the date of prepayment until the
redemption date for the Outstanding Bonds to be redeemed with the prepayment.
7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount
computed pursuant to Paragraph 6 (the Defeasance Amount).
8. Determine the administrative fees and expenses associated with the costs of
computation of the prepayment, the costs to invest the prepayment proceeds, the
costs of redeeming Bonds, and the costs of recording any notices to evidence the
prepayment and the redemption(the Administrative Fees and Expenses).
9. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal
the lesser of: (a) the expected reduction in the Reserve Requirement (as defined
in the Indenture), if any, associated Nvith the redemption of Outstanding Bonds as
a result of the prepayment, or (b) the amount derived by subtracting the new
Reserve Requirement (as defined in the Indenture) in effect after the redemption
of Outstanding Bonds as a result of the prepayment from the balance in the
reserve fund on the prepayment date, but in no event shall such amount be less
than zero.
10. The Special Tax prepayment is equal to the sum of the amounts computed
pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to
Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment
Amount).
7
1 ,
11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3,
4, 7 (if greater than zero), and 9 shall be deposited into the appropri ate,fund as
established under the Indenture and be used to redeem Outstanding Bonds or
make debt service payments (as appropriate). The amount computed pursuant to
Paragraph 8 shall be retained by the Administrator.
With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a
suitable notice to be recorded in compliance with the Act, to indicate the prepayment of
the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii)
notify the County that the Special Tax, if any, remaining on the secured tax roll for the
Assessor's Parcel has been satisfied and that the County should remove such amounts
from the secured tax roll, and (iii) refund the owner for any Special Tax payments made
on the Assessor's Parcel after the date of prepayment. From and after the prepayment,
the obligation of such Assessor's Parcel to pay the Special Tax,shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the
amount of the Maximum Special Tax that may be levied on Taxable Property Nrithin CFD
No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt
service on all Outstanding Bonds.
2. Prepayment in Part
The Maximum Special Tax on an Assessor's Parcel of Taxable Property may be partially
prepaid. The amount of the prepayment shall be calculated as in Section H.1, except that
a partial prepayment shall be calculated according to the following formula:
PP =(PH xF) + G
a
Where these terms are defined as follows:
PP = the partial prepayment
PH = the Prepayment Amount calculated according to Section H.1, minus the amounts
determined in Paragraph No. 8 of Section H.1.
F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying
the Maximum Special Tax.
G = the amounts determined in Paragraph No. 8 of Section H.1.
The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special
Tax shall notify the Administrator of (i) such owner's intent to partially prepay the
Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall
be prepaid. The Administrator shall promptly provide the owner with a statement of the
amount required for the partial prepayment of the Maximum Special Tax for an
Assessor's Parcel following receipt of the request.
t
8
With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i)
distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii)
indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the
Maximum Special Tax and that a portion of the Maximum Special Tax equal to the
outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall
continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D.
i
I.
i
1
9
EXHIBIT "D"
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(MOUNTAIN COVE)
OWNERSHIP LIST
ASSESSOR'S PARCEL NOS. OWNER'S NAME
142-071-53 Huntington Center Associates, LLC
142-071-61
142-071-80
142-071-85
142-071-93
142-071-97
142-071-98
147-071-99
l
R
RVPUBrBJS1647242 D-1
' w
RESOLUTION NO. 2004-1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH AUTHORIZING THE ISSUANCE
OF SPECIAL TAX BONDS FOR CITY OF HUNTINGTON
BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $25,000,000 AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER
ACTIONS IN CON`i\TECTION THEREWITH
WHEREAS, the City Council of the City of Huntington Beach (the "City") has
heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of the
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County
of Orange, State of California (the "Community Facilities District") pursuant to the terms and
conditions of Chapter 3.56 of the Municipal Code of the City and the ("Municipal Code") and
the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5 of the Government Code of the State of California(the"Act"); and
Pursuant to Resolution No. 2003-12 adopted by the City Council on February 3,
2003, the questions of whether bonds should be issued to finance the costs of construction and
acquisition of certain public facilities and a special tax levy in order to pay the principal of and
interest on such bonds were submitted to the qualified electors within the Community Facilities
District and were approved by a two-thirds majority of the qualified electors at an election held
on February 3, 2003; and
The City Council by its Resolution No. 2003-13 adopted on February 3, 2003,
declared that the propositions authorizing the issuance of bonds and the levy of special taxes,
presented to the qualified electors of the Community Facilities District on February 3, 2003,
received a two-thirds majority vote of the qualified electors voting at said election and each
carried, and, accordingly, the Community Facilities District is hereby authorized to issue from
time to time, as determined by the City Council, bonds for the benefit of the Community
Facilities District and to take the necessary steps to levy the special tax; and
The City Council is now considering the issuance of Bonds in the aggregate
principal amount of not to exceed $25,000,000 designated as the "City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) Special Tax Bonds, (the
"Bonds") as permitted by the Municipal Code, the Act and Resolution No. 2003-10 establishing
the Community Facilities District; and
The City Council has determined in accordance with Section 53360.4 of the
California Government Code that a negotiated sale of the Bonds with UBS Financial Services,
Inc. (the "Underwriter") in accordance with the terms and conditions of the Bond Purchase
Agreement (the"Purchase Contract") approved as to the form by the City Council will result in a
lower overall cost to the Community Facilities District than a public sale; and
G:\FIELD'CFD No.2003-1(Huntington Center)\Resolution.rtf
Resolution No. 2004-1
The City on behalf of the Community Facilities District, has caused to be
prepared a Preliminary Official Statement (the "Preliminary Official Statement") containing
certain information with respect to the Community Facilities District.
NOW, THEREFORE, The City Council of The City of Huntington Beach
resolves as follows:
Section 1. Findings. The City Council finds as follows: (1) each of the above
recitals is true and correct; (2) that the sale of the Bonds at a private sale will result in a lower
overall cost to the Community Facilities District; and (3) based upon the appraisal report for the
land within the Community Facilities District prepared by Integra Realty Resources hereby finds
and determines that:
(a) the Bonds do not present any unusual credit risk due to the provisions of
the Fiscal Agent Agreement defined herein;
(b) The value of the real property subject to the Special Tax and the
improvements thereon is more than three times the aggregate principal amount of Bonds;
and
(c) the Bond issue should proceed for the following public policy reasons: (i)
orderly development of the land within the Community Facilities District; (ii) there are
significant public benefits as a result of development within the Community Facilities
District; (iii) the District's obligations under the developer funding agreements with
respect to land in the Community Facilities District are satisfied by issuing the Bonds. -
Section 2. Approval of Issuance of Bonds. The issuance of the Bonds in a
principal amount of not to exceed $25,000,000 is hereby authorized pursuant to the Act. The
Bonds shall mature on the dates, pay interest at the rates and shall be substantially in the form set
forth in the Fiscal Agent Agreement as executed.
Section 3. Execution of Bonds. The Bonds shall be executed on behalf of the
Community Facilities District by the manual or facsimile signature of the Mayor or the City
Administrator and attested with the manual or facsimile signature of the City Clerk.
Section 4. Appointing of Fiscal Agent. U.S. Bank National Association is hereby
appointed to act as Fiscal Agent for the Bonds and to assume the duties and obligations of Fiscal
Agent under the Fiscal Agent Agreement. Payment of principal of and interest on the Bonds
shall be made at the principal offices of the Fiscal Agent.
Section 5. Approval of Financing Documents. The forms of financing documents
listed below in this Section 5 (the "Financing Documents") presented at this meeting are hereby
approved and the Mayor, City Administrator, Assistant City Administrator, Director of
Administrative Services or Director of Economic Development is authorized to execute and
deliver the Financing Documents in the name of and on behalf of the Community Facilities
District and the City in said form with such changes therein as the officer executing the same
may approve, such approval to be conclusively evidenced by the execution and delivery thereof:
G:\FIELD\CFD No.2003-1(Huntington Center)\Resolution.rtf
2
• Resolution No. 2004-1
(a) Funding and Construction Agreement, between the City and Huntington
Center Associates, LLC;
(b) Fiscal Agent Agreement, between the City and U.S. Bank National
Association,as fiscal agent;
(c) Purchase Contract, by and between the City and UBS Financial Services,
Inc.;
(d) Reciprocal Easement Agreement, by and between the City and Huntington
Center Associates, LLC; and
(e) Operating Agreement, by and between the City and Huntington Center
Associates, LLC.
Section 6. City Administrator Authorized to Establish Final Terms of the Sale of
the Bonds. The City Administrator, Assistant City Administrator, Director of Administrative
Services or Director of Economic Development, upon such advice of staff as they may deem
necessary, is hereby authorized and directed to act on behalf of the City to establish and
determine (i) the final principal amount of the Bonds, which amount shall not exceed
$25,000,000, including Bonds which may be issued at an original issue discount, (ii)the final
amounts of the various maturities and sinking fund payments of the Bonds the final maturity of
such Bonds to be no later than September 1, 2033, (iii)the final interest rate on the Bonds, which
rate shall not exceed seven percent (7%) per annum for any maturity of the Bonds, and (iv) the
Underwriter's discount for the purchase of the Bonds, which shall not exceed $13.75 per $1,000
principal amount of the Bonds.
Section 7. Approval of Preliminary Official Statement: Preparation of Final
Official Statement. The Preliminary Official Statement is approved, and the City Administrator,
Assistant City Administrator, Director of Administrative Services or Director of Economic
Development, is authorized to consent to and assist in the preparation of such modifications
thereto as may be specified by Disclosure Counsel. The City Administrator, Assistant City
Administrator, Director of Administrative Services or Director of Economic Development, is
authorized to determine, with the assistance of Bond Counsel, when the Preliminary Official
Statement is to be deemed final within the meaning of Rule 15c2-12 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and to deliver a certificate to
that effect to the Underwriter. The Underwriter may distribute the Preliminary Official
Statement as approved hereby, or as modified with the consent of the City Administrator,
Assistant City Administrator, Director of Administrative Services or Director of Economic
Development, to prospective purchasers of the Bonds. The City Administrator, Assistant City
Administrator, Director of Administrative Services or Director of Economic Development, is
authorized to participate in the preparation of the Final Official Statement, based on the
Preliminary Official Statement, and such modifications thereto as may be agreed to by
Disclosure Counsel and the Underwriter. The City Administrator, Assistant City Administrator,
Director of Administrative Services or Director of Economic Development, is authorized to sign
the Final Official Statement on behalf of the City and the Community Facilities District.
G:\FIELD\CFD No.2003-1(Huntington Center)\Resolution.rtf
3
Resolution No. 2004-1
Section 8. Findings Reizarding the Levy and Rates of Special Taxes. The City
Council finds that the Community Facilities District will covenant in the Fiscal Agent
Agreement, for the benefit of the owners of the Bonds, that to the extent it is legally permitted to
do so (a) it will levy the Special Taxes for the payment of the Administrative Expenses (as
defined therein) which are expected to be incurred in each fiscal year, and (b) it will not initiate
proceedings under the Mello-Roos Community Facilities Act of 1982 to reduce the maximum
Special Tax Rates (the "Maximum Rates") on property below the amounts which are necessary
to pay such Administrative Expenses and to provide Special Tax Revenues (as defined therein)
in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service (as
defined therein) on the outstanding Bonds. The City further finds and determines that any
reduction or limitation of the Special Tax rates below the Maximum Rates would interfere with
the timely retirement of the Bonds.
Section 9. Approval of Continuing Disclosure Certificate. The Continuing
Disclosure Certificate-Issuer is approved in the form submitted to the City Council at the
meeting at which this Resolution is adopted, and the City Administrator, Assistant City
Administrator, Director of Administrative Services or Director of Economic Development, is
authorized to execute and deliver said certificate on behalf of the Community Facilities District.
Section 10. Other Acts. All actions heretofore taken by officers and agents of the
City and the Community Facilities District with respect to the sale and issuance of Bonds are
hereby approved, confirmed and ratified, and the City Administrator, Assistant City
Administrator, Director of Administrative Services, Treasurer and Director of Economic
Development, and the City Clerk, and other appropriate officials of the City and the Community
Facilities District are hereby authorized and directed to take any actions and execute and deliver
any and all documents as are necessary to accomplish the issuance, sale and delivery of the
Bonds in accordance with the provisions of this Resolution.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach
at a regular meeting thereof held on this 5th day of January , 20C4.
or
ATTEST: APPROVED AS TO FORM
C
City Clerk Jityy Atto ey
REVIEWED AND APPROVED INITIATED AND APPROVED
zc &tct //
City Adm istrator Director of Economic Development
G:\FIELD`CFD No.2003-1(Huntington Center)Resolution.rtf
4
Res. No. 2004-1'
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whole number of members of the City
Council of the City of Huntington Beach is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at an regular meeting thereof held on the 5th
day of January, 2004 by the following vote:
AYES: Sullivan, Coerper, Hardy, Green, Boardman, Cook, Houchen
NOES: None
ABSENT: None
ABSTAIN: None
L-----------------
1 ��
City Clerk and ex-officio elerk of the
City Council of the City of
Huntington Beach, California
Ple foregoing ins nantlat is a co"W
ovy oX7=
inrm.
Attest 20
CONNIE BROCKW
Z`��-off 'o Clark o t e
Coun 1 of the City of Huntington Beach,
By Deputy
FISCAL AGENT AGREEMENT
by and between the
CITY OF HUNTINGTON BEACH
r
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of March 1, 2004
Relating to
City of Huntington Beach
Community Facilities District No. 2003-1
(Huntington Center)
County of Orange
State of California
$25,000,000
2004 Special Tax Bonds
RVPUBWAB\666669.1
TABLE OF CONTENTS
Page(s)
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement ...................................................................................I
Section 1.02. Agreement for Benefit of Bondowners .....................................................................I
Section 1.03. Definitions............................
ARTICLE 11
THE BONDS
Section 2.01. Principal Amount; Designation.............................................................................11
Section2.02. Terms of Bonds ................................................................................... .................11
Section2.03. Redemption.............................................................................................................13
Section2.04. Form of Bonds.......................................................................................................16
Section 2.05. Execution of Bonds ...............................................................................................16
Section2.06. Transfer of Bonds...................................................................................................16
Section2.07. Exchange of Bonds.................................................................................................17
Section2.08. Bond Register........................................................................................................17
Section2.09. Temporary Bonds ..................................................................................................17
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen..........................................................17
Section 2.11. Special Obligation...................................................................................................18
Section 2.12. Issuance of Additional Bonds.................................................................................18
Section2.13. Book-Entry ............................................................................................................21
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT FUND;
SPECIAL TAX FUND; ADMINISTRATIVE EXPENSE FUND;
COSTS OF ISSUANCE FUND
Section 3.01. issuance and Delivery of Bonds. 22
.Section 3.02. Application of Proceeds of Sale of Bonds................................................................22
Section3.03. Improvement Fund ................................................................................................23
Section3.04. Special Tax Fund...................................................................................................24
Section 3.05. Administrative Expense Fund ...............................................................................24
Section 3.06. Costs of Issuance Fund..........................................................................................25
ARTICLE IV
SPECIAL TAX-REVENUES; BOND FUND; RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues ...........................................................................25
Section4.02. Bond Fund .....................................................................................r........................26
Section4.03. Reserve Fund.........................................................................................................28
RVPUB\KAB\666669. 1
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment..................................................................................................30
Section 5.02. Special Obligation...............................................................................:..................30
Section 5.03. Extension of Time for Payment...........:.................................................................30
Section 5.04. Against Encumbrances...........................................................................................30
Section 5.05. Books and Accounts..............................................................................................30
Section 5.06. Protection of Security and Rights of Owners........................................................30
Section 5.07. Collection of Special Tax Revenues......................................................................30
Section 5.08. Levy of Special Taxes for Administrative Expenses.............................................32
Section 5.09. Further Assurances ................................................................................................32 .
Section5.10. Tax Covenants.......................................................................................................32
Section 5.11. Covenant to Foreclose...........................................................................................32
Section 5.12. Prepayment of Special Taxes ................................................................................33
Section 5.14. Continuing Disclosure and Filing of Reports........................................................33
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds........................................................34
Section 6.02. Rebate Fund; Rebate to the United States.:...........................................................35
Section 6.03. Liability of City....................................................................................................:35
Section 6.04. Employment of Agents by City..............................................................................36
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent ................................................................................36
Section 7.02. Liability of Fiscal Agent.........................................::.............................................37
Section7.03. Information............................................................................................................38
Section 7.04. Notice to Fiscal Agent...........................................................................................38
Section 7.05. Compensation, Indemnification.....................:.......................................................38
Section 7.06. Books and Accounts..............................................................................................39
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted.........................................................................................39
Section 8.02. Owners' Meetings..................................................................................................40
Section 8.03. Procedure for Amendment with Written Consent of Owners ...............................40
Section 8.04. Disqualified Bonds................................................ ............................................41
Section 8.05. Effect of Supplemental Agreement.......................................................................41
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments .....................41
Section 8.07. Amendatory Endorsement of Bonds......................................................................42
RVPUB\KAB\666669. 1
11
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties.............................................................42
Section 9.02. Successor is Deemed Included in All References to Predecessor.........................42
Section 9.03. Discharge of Agreement........................................................................................42
Section 9.04. Execution of Documents and Proof of Ownership by Owners .............................43
Section 9.05. Waiver of Personal Liability..................................................................................43
Section 9.06. Notices to and Demands on City and Fiscal Agent...............................................43
Section 9.07. Partial Invalidity....................................................................................................44
Section 9.08. Unclaimed Moneys................................................................................................44
Section9.09. Applicable Law......................................................................................................44
Section 9.10.. Conflict with Act or Municipal Code....................................................................44
Section 9.11. Conclusive Evidence of Regularity.......................................................................45
Section 9.12. Payment on Business Day .....................................................................................45
Section9.13. Counterparts...........................................................................................................45
EXHIBIT A- FORM OF BOND................................................................................................A-1
EXHIBIT B - FORM OF IMPROVEMENT FUND REQUISITIONS......................................B-1
RVPUB\KAB\666669. I
111 '
FISCAL AGENT AGREEMENT
THIS FISCAL.AGENT AGREEMENT (the "Agreement") is dated as of March 1, 2004,
by and between the City of Huntington Beach, a charter city (the "City"), for and on behalf of the
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center),
County of Orange, State of California (the "District"), and U.S. Bank National Association, a
national banking association duly organized and existing under the laws of the United States of
America, as fiscal agent(the "Fiscal Agent").
WITNESSETH:
WHEREAS, the City Council of the City (the "City Council") has established the District .
pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal
Code'of the City (the "Municipal Code") and the provisions of the Mello-Roos Community
Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of
Division 2 of Title 5 of the California Government Code (the "Act"); and
WHEREAS, the District is authorized to incur bonded indebtedness and issue bonds in
the aggregate principal amount of$30,000,000 for the purpose of financing the construction and
acquisition of certain public facilities and the City Council has determined that it is necessary
that bonds of the District be issued and sold in the aggregate principal amount of$25,000,000 for
the purpose of financing the construction and acquisition of the public facilities which are
hereinafter identified as the Project(the "Bonds"); and
WHEREAS, all,things necessary to cause the Bonds, when executed by the City and
authenticated by the Fiscal Agent for the District and issued as in the Municipal Code, the Act,
the Resolution (as hereinafter defined) and this Agreement provided, to be legal, valid and
binding special obligations of the District in accordance with their terms, and all things necessary
to cause the authorization, execution and delivery of this Agreement and the authorization,
execution, authentication and delivery 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:
ARTICLE I ,
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to
the provisions of.the Municipal Code,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 and/or the District 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,
RVPUB\KAB\666669.1
1
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
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.
"Act"means-the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5
(commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code.
"Additional Bonds"means bonds issued pursuant to Section 2.12 hereof.
"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, any amounts paid by the City from its general funds pursuant to
Section 6.02 hereof, the fees and expenses of the Financial Advisor, 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 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 scheduled to be paid.
"Auditor" means the Auditor-Controller of the County of Orange.
"Authorized Officer" means any officer or employee of the City authorized by the City
Council or by an Authorized Officer to undertake the action referenced in this Agreement as
required to be undertaken by an Authorized Officer.
"Bond Counsel" means Best Best & Krieger LLP, or 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.
RVPUB\KAB\666669. 1
2
"Bond Fund"means the fund by that name established by Section 4.02(A) hereof.
"Bond Year" means the period beginning on the Closing Date and ending on
September 1, 2004 and thereafter the period beginning on each September 2 and ending on the
following September 1.
"Bonds" means, unless otherwise expressly provided, the City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds,
authorized by and at any time Outstanding pursuant to the Municipal Code, the Act.and this
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 of California or in any state in which the Fiscal Agent has
its Principal Office are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Sub-account" means the sub-account by that name established in the
Interest Account in the Bond Fund by Section 4.02(A) hereof.
"City"means the City of Huntington Beach.
"Closing Date" means the date upon which there is an exchange of the Bonds for.the
proceeds representing payment of the purchase price of the Bonds by the Original Purchaser.
"Code"means the Internal Revenue Code of 1986, as amended.
"Continuing Disclosure Agreement" means the Continuing Disclosure Certificate - Issuer
between the City and the Fiscal Agent, as Dissemination Agent thereunder, dated as of the
Closing Date, as originally executed and as it may be amended from time to time in accordance
with the terms thereof.
"Costs of Issuance" means items of expense payable or reimbursable directly or
indirectly by the City and related to the formation of the District, 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, including but not limited to the preliminary official
statement and official statement regarding the Bonds, closing costs, filing and recording fees,
initial fees and charges of the Fiscal Agent including its first annual administration fee and the
fees of its counsel, expenses incurred by the City in connection with the issuance of the Bonds
and the establishment of the District, appraisal and other consultant fees, Bond (underwriter's)
discount, legal fees and charges, including the fees of Bond Counsel, Disclosure- Counsel,
Developer's Counsel and counsel to the Underwriter, Financial Advisor's fees, charges for
authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in
connection with the foregoing.
"Costs of Issuance Fund" means the fund by that name established by Section 3.06(A)
hereof.
"Debt Service" means the amount of interest and principal payable on the Bonds
scheduled to be paid during the period of computation, excluding amounts payable during such
RVPUB\KAB\666669. 1
3
period which relate to principal of the Bonds which are scheduled to be.retired and paid before
the beginning of such period.
"Defeasance Securities"means, for purposes of Section 9.03(C)hereof, the following:
(i) United States Treasury Certificates, Notes and Bonds (including State and Local
Government Series - "SLGs"); and
(ii) Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard
& Poor's; provided, however, that if the issue is only rated by Standard & Poor's (i.e., there is no
Moody's rating), then the pre-refunded bonds must have been pre-refunded with cash, direct
United States or United States guaranteed,obligations, or "AAA" rated pre-refunded municipal
bonds.
"District" means the City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center), County of Orange, State of California.
"Federal Securities" means any of the following which at the time of investment are legal
investments under the laws of the State of California for the moneys proposed to be invested
therein:
(i) Cash; and
(ii) Direct general obligations of(including obligations issued or held in book entry
form on the books of the Department of the Treasury of the United States of America and CATS
and TIGRS), or obligations, the payment of principal of and interest on which is unconditionally
guaranteed by, the United States of America.
"Fiscal Agent" means U.S. Bank National Association, the Fiscal Agent appointed by the
City, 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 hereof.
"Fiscal Year" means the twelve-month period extending from October 1 in a calendar
year to September 30 of the succeeding year, both dates inclusive.
"Improvement Fund"means the fund by that name established by Section 3.03(A) hereof.
"Independent Financial Consultant" means a firm of certified public accountants, a
financial consulting firm, which is not an employee of, or otherwise controlled by,the.City.
"Information Services" means Financial Information, Inc.Is"Daily Called Bond Service,"
30 Montgomery Street, loth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York
10006; Moody's Investors Service, Inc.'s "Municipal and Government," 99 Church Street, 8th
Floor, New York, New York 10007, Attention: Municipal News Reports; Standard& Poor's
Corporation's "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,
RVPUB\KAB\666669. 1
4
such other 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 March 1 and September 1 of each year, commencing
September 1, 2004, until the maturity or redemption of all Outstanding Bonds.
"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 excluding interest
earned and gains and losses on the investment of moneys in the Rebate Fund.
"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.
"Moody's" shall mean Moody's Investors Service, Inc., a national rating service with
offices in New York,New York.
"Municipal Code" means Chapter 3.56 (commencing with Section 3.56.010) of the
Municipal Code of 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 or resolution of the City Council levying
the Special Taxes.
"Original Purchaser"means the first purchaser of the Bonds from the City.
"Outstanding," when used as of any particular time with reference to the Bonds, means
(subject to the provisions of Section 8.04 hereof) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal
Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in Section 2.03 (G)
hereof, are no longer entitled to any benefit under this Agreement other than the right to receive
payment of the redemption price therefor;
(iii) Bonds paid or deemed to have been paid within the meaning of Section 9.03
hereof, and
(iv) Bonds in 'lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent
pursuant to this Agreement or any Supplemental Agreement.
"Owner"means any person who shall be the registered owner of any Outstanding Bond.
"Permitted Investments" means:
(i) Federal Securities;
RVPUB\KAB\666669. 1
. 5
(ii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following federal agencies and provided such obligations are backed by the full
faith and credit of the United States of America (stripped securities are only permitted if they
have been stripped by the agency itself):
(a) Federal Intermediate Credit Bank
(b) Federal Land Bank
(c) Tennessee Valley Authority
(d) Government National Mortgage Association
(iii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following non-full faith and credit United States government agencies:
(a) Federal Home Loan Bank
(b) Federal Home Loan Mortgage Corporation
(c) Federal National Mortgage Association
(d) Student Loan Marketing Association
(e) Small Business Administration
(iv) Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating
by Standard & Poor's of AAAm-G, AAA-m or AA-m and, if rated by Moody's, rated Aaa, Aal
or Aa2 by Moody's with a minimum of $500 million in assets under management including
funds for which the Trustee or its affiliates provide investment or other advisory services;
(v) Certificates of deposit secured at all times by collateral described in clauses (i)
and/or (ii) above. Such certificates must be issued by commercial banks, savings and loan
associations or mutual savings banks of which the short-term obligations are rated A-1 or better.
and P l or better by Moody's or Standard & Poor's. The collateral must be held by a third party
and the Fiscal Agent on behalf of the Owners of the Bonds must have a perfected first security
'interest in the collateral;
(vi) Time deposits - certificates of deposit, which are fully insured by FDIC, including
BIF and SAIF, with banks with the rating of at least AI or P1 by Moody's or Standard & Poor's;
(vii) Investment agreements with domestic or foreign banks, insurance companies
other than a life or property casualty insurance company, or corporations the long-term debt or
claims paying ability of which or, in the case of a guaranteed corporation, the long-term debt of
the guarantor, or, in the case of a monoline financial guaranty insurance company, claims paying
ability or financial strength, of the guarantor is rated in at least the AA category by Standard &
Poor's and Moody's; provided that, by the terms of the investment agreement:
RVPUB\KAB\666669. 1
6
(a) interest payments are to be made to the Fiscal Agent at times and in
amounts as necessary to pay Debt Service on the Bonds (if the funds invested pursuant to
the investment agreement are from the Reserve Fund);
(b) the invested funds are available for withdrawal without penalty. or
premium, upon not more than seven(7) days' prior notice;
(c) the investment agreement shall provide that it is the unconditional and
general obligation of, and is not subordinated to any other obligation of, the provider
thereof;
(d) the City and the Fiscal Agent receive the opinion of domestic counsel
(which opinion shall be addressed to the City) that such investment agreement is legal,
valid, binding and enforceable upon the provider in accordance with its terms and of
foreign counsel (if applicable) in form and substance acceptable, and addressed to, the
City;
(e) the investment agreement shall provide that if during its term
(1) the provider's rating by either Standard & Poor's or Moody's falls
below "AA-" or "AAY, respectively, the provider shall, at its option, within ten
(10) Business Days after the provider's receipt of a written request from the fiscal
Agent to satisfy the foregoing, either (i) collateralize the investment agreement by
delivering or transferring in accordance with the applicable state and federal laws
(other than by means of entries on the provider's books) to the City, the Fiscal
Agent or a third party acting solely as agent therefor (the "Holder of the
Collateral") collateral free and clear of any third-party liens or claims, the market
value of which collateral is maintained at one hundred four percent (104%) of
securities identified in clauses (i) and (ii) of this definition; or (ii) assign the
investment agreement and all of its.obligations thereunder to, or enter into a
repurchase agreement . or such other agreement with, a financial institution
mutually acceptable to the Provider and the City which is rated either in the first
or second highest category by.Standard & Poor's and Moody's; and
(2) the provider's rating by either Standard & Poor's or Moody's is
withdrawn or suspended or falls below "A-" or "AY, respectively,.the provider
must, at the direction of the City or the Fiscal Agent, within ten (10) days of
receipt of such direction, repay the principal of and accrued but unpaid interest on
the invested funds, in either case with no penalty or premium to the City or the
Fiscal Agent; and
(f) the investment agreement shall provide and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider under the terms
of the investment agreement at the time such collateral is delivered, that the Holder of the .
Collateral has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof (in the. case of bearer securities, this shall mean the
Holder of the Collateral is in possession of such collateral); and
RVPUB\KAB\666669. 1
7
(g) the investment agreement shall provide that if during its term
(1) the provider shall default in its payment obligations, the provider's
obligations under the investment agreement shall, at the direction of the City or the Fiscal
Agent, be accelerated and amounts invested and accrued but unpaid interest thereon shall
be paid to the City or the Fiscal Agent, as appropriate; and
(2) the provider shall become. insolvent, not pay its debts as they become due,
be declared or petition to be declared bankrupt, etc., the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid interest
thereon shall be paid to the City or the Fiscal Agent, as appropriate;
(viii) Commercial paper rated, at the time of purchase, "Prime - I" by Moody's and "A-
1" or better by Standard & Poor's having original maturity of not more than 270 days issued by a
domestic corporation having assets in excess of$500 million;
(ix) Bonds or notes issued by any state or municipality which are rated,by Moody's
and Standard& Poor's in one of the two highest rating categories assigned by them;
(x) Federal funds or bankers acceptances with a maximum term of 180 days of any
bank which has an unsecured, uninsured and unguaranteed obligation rating of"Prime - 1" or
"A3" or better by Moody's and "A-1" or better by Standard& Poor's;
(xi) Repurchase agreements which satisfy the following criteria:
(a) Repurchase agreements must be between the City or the Fiscal Agent and
a dealer bank or securities firm which is:
(1) A primary dealer on the Federal Reserve reporting dealer list
which is rated "A" or better by two of the following Standard & Poor's, Moody's,
or Fitch; or
(2) A domestic bank or a domestic branch of a foreign bank rated "A"
or above by two of the following: Standard & Poor's, Moody's or Fitch; or
(3) Corporations the long-term debt or claims paying ability of which,
or in the case of a guaranteed corporation, the long-term debt of the guarantor, or,
in the case of a monoline financial guaranty insurance company, claims paying
ability or financial strength, is rated in at least the double A category by Standard
& Poor's and Moody's; and.
(b) The written agreement must include the following:
(1) Securities which are acceptable for transfer are,
(A) direct obligations of the United States government, or
RVPUB\KAB\666669. 1
8
(B) obligations of federal agencies backed by the full faith and
credit of the United States of America (or the Federal National Mortgage
Association (FNMA) or the Federal Home Loan Mortgage Corporation
(FHLMC)),
(2) The collateral must be delivered to the Fiscal Agent (if the Fiscal
Agent is not supplying the collateral) or a third party acting as agent for the Fiscal
Agent (if the Fiscal Agent is supplying the collateral) before or simultaneous with
payment(perfection by possession of certificated securities),
(3) (A) The securities must be valued weekly, marked-to-market at
current market price plus accrued interest, and
(B) The value of the collateral must be at least equal to one
hundred four percent (104%) of the amount of money transferred by the
Fiscal Agent to the dealer, bank or security firm under the agreement plus
accrued interest. If the value of the securities held as collateral is reduced
below one hundred four percent (104%) of the value of the amount of
money transferred by the Fiscal Agent, then additional acceptable
securities and/or cash must be provided as collateral to bring the value of
the collateral to one hundred four percent (104%); provided, however, that '
if the securities used as collateral are those of FNMA or FHLMC, then
the value of the collateral must be at least equal to one hundred five
percent (105%) of the amount of money transferred by the Fiscal Agent;
and
(c) A legal opinion must be delivered to the City and the Fiscal Agent that the
repurchase agreement meets the requirements of California law with respect to the
investment of public funds; and
(d) Should the provider's rating by either Standard & Poor's or Moody's be
withdrawn or suspended or fall below "A-" or "AY, respectively, the provider must, at
the direction of the City or the Fiscal Agent, within ten (10) days of receipt of such
direction, repay the principal of and accrued but unpaid interest on the invested funds, in
either case with no penalty or premium to the City or the Fiscal Agent; and
(xii) the Local Agency Investment Fund in the State Treasury of the State of California
as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government
Code.
"Principal Office" means the principal corporate trust office of the Fiscal Agent in Los
Angeles, California or such other addresses may be specified in writing by the Fiscal Agent;
provided, however, that for purposes of the transfer, registration, exchange, payment and
surrender of Bonds "Principal Office" means the corporate trust office of the Fiscal Agent in St.
Paul, Minnesota or such other address as may be specified in writing by the Fiscal Agent.
RVPUBTAB\666669. I
9
"Proceeds," when used with reference to the Bonds, means the aggregate principal
amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if
any.
"Project" means the public facilities which are to be financed with the proceeds of the
sale of the Bonds as described in Resolution No. 2003-10 adopted by the City Council on
February 3, 2003.
"Rebate Certificate means the certificate delivered by the City upon the delivery of the
Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate.
"Rebate Fund"means the fund by that name established by Section 6.02 hereof.
"Record Date" means the fifteenth (15th) day of the month next preceding the applicable
Interest Payment Date whether or not such day is a Business Day.
"Regulations" means the temporary and permanent regulations of the United States .
Department of the Treasury promulgated under the Code.
"Representation Letter" means the representation letter which the City has delivered to
The Depository Trust Company ("DTC") with respect to the utilization of the book-entry system
maintained by DTC for the issuance and registration of bonds.
"Reserve Fund"means the fund by that name established by Section 4.03(A)hereof.
"Reserve Requirement" means, as of any date of calculation, the lesser of(i) ten percent
(10%) of the principal amount of the Bonds on the Closing Date, (ii) Maximum Annual Debt
Service on the Outstanding Bonds or (iii) 125 percent of average Annual Debt Service on the
Outstanding Bonds, as determined by the City.
"Resolution" means Resolution No. 2004-1 adopted by the City Council on January 5,
2004.
"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, Tel- (215)
496-5058; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other securities depositories as the City may designate in an Officer's
Certificate delivered to the Fiscal Agent.
"Special Taxes" or "Special Tax" means the special taxes levied by the City Council on
parcels of taxable property within the District pursuant to the Municipal Code, the Act, the
Ordinance and this Agreement, but excluding the Parking Structure Maintenance Tax, as defined
in the Rate and Method of Apportionment of the Special Tax, as Exhibit A to Resolution No.
2003-10 of the City.
RVPUB\KAB\666669. I
10
"Special Tax Fund" means the fund by that name established by Section 3.04(A)hereof.
"Special Tax Prepayments" means amounts received by the City as prepayments of all or
a portion of the Special Tax obligation of a parcel of property in the District. .
"Special Tax Prepayments Account" means the account by that name established by the
Fiscal Agent in the Bond Fund pursuant to Section 4.02(A)hereof.
"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 in the amount of said lien and interest and penalties thereon.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., a national rating service with offices in New York,New York.
"Supplemental Agreement" means any supplemental or amendment to this Agreement
permitted pursuant to Section 8.01 hereof.
ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation. The Bonds in the aggregate principal
amount of$25,000,000 are hereby authorized to be issued by the City for the District under and
subject to the terms of the Resolution, this Agreement, the Act,'the Municipal Code and other
applicable laws of the State of California. The Bonds shall be designated the "City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special.
Tax Bonds."The Bonds shall be issued in the form attached hereto as Exhibit A.
Section 2.02. Terms of Bonds.
(A) - The Bonds. The Bonds shall be issued as fully registered bonds, without coupons,
in the denominations of$5,000 or any integral multiple thereof. The Bonds shall be lettered and
numbered in a customary manner as determined by the Fiscal Agent. The Bonds shall be dated
the Closing Date.
(B) Maturities. The Bonds shall mature and become payable on September 1 of each
year, as follows:
1
RVPUB\KAB\666669..I
11
Maturity Dates Principal Interest
(September 1) Amounts Rates
2006 $ 440,000 2.65%
2007 450,000 3.10
2008 465,000 3.55
2009 485,000 . 3.85
2010 500,000 4.15
2011 520,000 4.35
2012 545,000 4.60
2013 570,000 4.80
2014 595,000 4.90
2015 625,000 5.00
2017 1,355,000 5.30
2023 5,060,000 5.80
2033 13,390,000 . 5.85
(C) Interest. The Bonds shall bear interest at the rates set forth in subsection (B)
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 Interest
Payment Date,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 on or before the Record Date
preceding the first Interest Payment Date, in which event it shall bear interest from the Closing
Date; 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 or from the Closing Date, if no
interest has previously been paid or made available for payment thereon.
(D) Method of Payment. Interest on the Bonds ,is payable by check of the Fiscal
Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, 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. The principal of the Bonds and any premium on the Bonds are payable in
lawful money of the United States of America by check of the Fiscal Agent upon surrender of
such Bonds at the Principal Office of the Fiscal Agent; provided, however, that at the written
.request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds
filed with the Fiscal Agent prior to any Record Date, interest on such Bonds shall be paid to such
Owner on each succeeding Interest Payment Date by wire transfer of immediately available
funds to an account in the United States of America designated in such written request. All
Bonds paid by the Fiscal Agent pursuant to this subsection shall be canceled by*the Fiscal Agent.
(E) 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. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP
RVPUB\KAB\666669. 1
12
numbers in any notice to the Owners shall not constitute an event of default or any violation of
the City's contract with the Owners and shall not impair,the effectiveness of any such notice.
Section 2.03. Redemption.
(A) Optional Redemption. The Bonds are subject to redemption prior to their stated
maturity dates on September 1, 2004 or any Interest Payment Date thereafter, on.a pro rata basis
among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the
option of the City from moneys derived by the City from any source (including Special Tax
Prepayments), at redemption prices (expressed as percentages of the principal amounts of the
Bonds to be redeemed),together with accrued interest to the date of redemption as follows:
Redemption Dates Redemption Price
September 1, 2004 through March 1, 2012 103%
September 1, 2012 and March 1, 2013 102%
September 1, 2013 and March 1, 2014 101%
September 1, 2014 and thereafter 100%
(B) [intentionally omitted]
(C) Mandatory Sinking Fund Redemption.
The Outstanding Bonds maturing on September 1, 2017, September 1, 2023 and
September 1, 2033, respectively, are subject to mandatory sinking fund redemption, in part, on
September 1, 2016, with respect to the Bonds maturing-September 1, 2017, September 1, 2018,
with respect to the Bonds maturing September 1, 2023, and September 1, 2024, with respect to
the Bonds maturing September 1, 2033, and on each respective September 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 of redemption, without premium, and from sinking
payments as follows: .
RVPUB\KAB\666669. 1
13
Bonds Maturing September 1, 2017
Redemption Date
(September 1) \ Sinking Payment
2016 $660,000
2017 (maturity) 695,000
Bonds Maturing September 1, 2023
Redemption Date
(September 1) Sinking Payment
2018 $730,000
2019 770,000
2020 815,000
2021 865,000
2022 915,000
2023 (maturity) 965,000
Bonds Maturing September 1, 2033
Redemption Date
(September 1) Sinking Payment
2024 $1,025,000
2025 1,080,000
20216 1,145,000
2027 1,215,000
2028 1,285,000
2029 1,360,000
2030 1,440,000
2031 1,525,000
2032 1,610,000
2033 (final maturity) 1,705,000
The amounts in the foregoing schedules shall be reduced by the City pro rata among
redemption dates, in order to maintain substantially level Debt Service, as a result of any prior or
partial redemption of the Bonds pursuant to subsection(A) above.
(D) Purchase of Bonds. In lieu of payment at maturity or redemption under this
Section 2.03, 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.
RVPUB\KAB\666669. 1
14
(E) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written
notice of the City's intention to redeem Bonds not less than forty-five (45) days prior to the
applicable redemption date specifying the principal amounts and maturities of the Bonds to be
redeemed.
(F) 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 selected by an Authorized Officer, and to the respective
registered Owners of any Bonds designated for redemption, at their addresses appearing on the
Bond registration books maintained by the-Fiscal Agent at its Principal Office; 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.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place or
places of redemption, the redemption date, 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 for redemption in part the
portion of the principal of the Bond to be redeemed, 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. The cost of the mailing and publication of any such redemption notice shall be
paid by the District.
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, the Bonds being redeemed with the proceeds of such check or
other transfer.
In the event of an optional redemption pursuant to Section 2.03(A) the City shall transfer
or cause to be transferred to the Fiscal Agent for deposit in the Bond Fund moneys in an amount `
equal to the redemption price of the Bonds being redeemed on or before the Interest Payment
Date upon which such Bonds are to be redeemed..
If less than all the Bonds Outstanding are to be redeemed, the portion of any Bond of a
denomination of more than$5,000 to be redeemed shall be in the principal amount of$5,000 or a
multiple thereof, and, in selecting portions of such Bonds for redemption, the Fiscal Agent shall
treat each such Bond as representing the number of Bonds of $5,000 denomination which is
obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000.
Whenever provision is made in this Agreement for the redemption of less than all of the`
Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the Bonds of such
maturity to be redeemed, from all Bonds of such maturity or such given portion thereof not
RVPUB\KAB\666669. 1
15
previously called for redemption, by lot within a maturity in any manner which.the Fiscal Agent
in its sole discretion shall deem appropriate.
Upon surrender of Bonds redeemed in part only, the .City shall execute and the Fiscal
Agent shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or
Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to
the unredeemed portion of the Bond or Bonds.
(G) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the redemption prices of the Bonds called for redemption shall have.
been deposited in the Bond Fund, such Bonds shall cease to be entitled to any benefit under this
Agreement other than the right to receive payment of the redemption price, and interest shall
cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of
redemption.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section 2.03
shall be canceled by the Fiscal Agent.
Section 2.04. Form of Bonds. The Bonds, including the Fiscal Agent's certificate of
authentication and the assignment to appear thereon, shall be substantially in the form 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.
Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the District
by the facsimile signatures of the Mayor and City Clerk of the City, who are in office on the date
of this Agreement or at any time thereafter. If any officer whose signature appears on any Bond
ceases to be such officer before delivery of the Bond to the Owner, such signature shall
nevertheless be as effective as if the officer had remained in office until the delivery of the Bond .
to the Owner. Any Bond may be signed and attested on behalf of the District 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.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the
form set forth in Exhibit A hereto manually 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 such Bonds
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 hereof,
by the person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Bond for cancellation at the Principal Office of the Fiscal Agent, accompanied
by delivery of a duly executed written instrument of transfer in a form acceptable to 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 District. The Fiscal Agent shall collect
RVPUB\KAB\666669. I
16
from the Owner requesting transfer of a Bond 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 of like aggregate principal
amount.
No transfers of Bonds shall be required to be made (i) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or
(ii)with respect to Bonds which have been selected for redemption.
Section 2.07. Exchange of Bonds., Bonds may be exchanged at the Principal Office of
the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized
denominations and of the same maturity and interest rate. The cost for any services rendered or
any expense incurred by the Fiscal Agent in connection with any such.exchange shall be paid by .
the District. The Fiscal Agent shall collect from the Owner requesting exchange of a Bond 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) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or
(ii) with respect to Bonds which have been selected for redemption.
Section 2.08. Bond Register. The Fiscal Agent shall 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, CUSIP identification number, date of issuance, amount, rate of interest
and 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. Temporary 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 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 be entitled to the same benefits under 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 replacement Bond of like tenor and principal amount in
RVPUB\KAB\666669. 1
17
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
canceled and destroyed by the Fiscal Agent. 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 for the City and the Fiscal Agent satisfactory to the
Fiscal Agent shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal
Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in
lieu of and in substitution for the Bond so lost, destroyed or stolen. The City or Fiscal Agent
may require payment of a sum not exceeding the actual cost of preparing each replacement Bond
delivered under this Section 2.10 and of the expenses which may be incurred by the City and the
Fiscal Agent for the preparation, execution, authentication and delivery thereof. Any Bond
delivered under the provisions of this Section 2.10 in replacement of any Bond alleged to be lost,
destroyed or stolen shall .constitute an original additional contractual obligation of the District
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. Special Obligation. All obligations of the City and the District under this .
Agreement and the Bonds shall be special obligations of the City and the District, payable solely
from the Special Tax Revenues and the funds pledged therefor pursuant hereto. Neither the
faith and credit nor the taxing power of the City, the District (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. Issuance of Additional Bonds..The City may on behalf of the District at
any time after the issuance and delivery of the Bonds hereunder issue Additional Bonds 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 hereunder, but only subject to the
following specific conditions, which are hereby made conditions precedent to the issuance of any
such Additional Bonds.
(A) The City and the District shall be in.compliance with all covenants set
forth in the Resolution and this Agreement, and a certificate of an Authorized Officer to
that effect shall have been filed with the Fiscal Agent.
(B) The issuance of such 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 Agreement which shall specify the
following:
(1) The purpose for which such Additional Bonds ate to be issued and
the fund or funds into which the proceed thereof are to be deposited, including a
provision requiring the proceeds of such Additional Bonds to be applied solely for
(i) the purpose of aiding in financing the Project, including payment of all costs
incidental to or connected with such financing, and/or (ii) the purpose of
refunding any Bonds, including payment of all costs incidental to or connected
with such refunding to the extent permitted by law;
RVPUB\KAB\666669. 1
18
(2) The authorized principal amount of such Additional Bonds;
(3) The date and maturity date or dates of such Additional Bonds;
provided that (i) each maturity date shall be September 1 of each year such
Additional Bonds are due, (ii) all such Additional Bonds of like maturity shall be
identical in all respects, except as to number, and (iii) fixed serial maturities or
mandatory sinking payments, or any combination thereof, shall be established to
provide for the retirement of all such Additional Bonds on or before their
respective maturity dates;
(4) The interest payment dates for such Additional Bonds; provided
that interest payment dates shall be on the same. semiannual dates as the Interest
Payment Dates for the Bonds unless the City determines that interest payment
dates other than those for the Bonds will not adversely affect the interests of the
owners of the Outstanding Bonds;
(5) The denomination and method of numbering of such Additional
Bonds;
(6) The redemption premiums, if any, and the redemption terms, if
any, for such Additional Bonds;
(7) The amount and. due date of each mandatory sinking payment, if
any, for such Additional Bonds;
(8) The amount, if any, to be deposited from the proceeds of such
Additional Bonds in any interest account;
(9) The amount, if any, to be deposited from the proceeds of such
Additional Bonds in a reserve fund;
(10) The form of such Additional Bonds; and
(1-1) Such other provisions as are necessary or appropriate and not
inconsistent with this Agreement.
(c) The Fiscal Agent shall have received the following documents, all of such
documents dated or certified, as the case may be, as of the date of delivery of such
Additional Bonds by the Fiscal Agent (unless the City shall accept any of such
documents bearing a prior date):
(1) A certified copy of the resolution authorizing the issuance of such
Additional Bonds and the Supplemental Agreement pursuant to which such
Additional Bonds are to be issued;
(2) An Officer's Certificate of the City on behalf of the District as to
the delivery of such Additional Bonds;
RVPUB\KAB\666669. 1
19
(3) An opinion of Bond Counsel to the effect that (a) the District has
the right and power under the Act to execute and deliver this Agreement.and all
Supplemental Agreements thereto, and this Agreement and all such Supplemental
Agreements have been duly and lawfully approved, executed and delivered by the
District, are in full force and effect and are valid and binding upon the District and
enforceable in accordance with their terms (except as enforcement may be limited
by bankruptcy, insolvency, reorganization and other similar laws relating to the
enforcement of creditors' rights), and no other authorization for.this Agreement or
such Supplemental Agreement is required; (b) this Agreement and such
Supplemental Agreement create the valid pledge which they purport to create of
the of the Special Taxes as provided in this Agreement and such Supplemental
Agreement, subject to the application thereof to the purposes and on the
conditions permitted by this Agreement and such Supplemental Agreement; (c)
such Additional Bonds are valid and binding special obligations.of the District,
enforceable in accordance with their terms (except as enforcement may be limited
by bankruptcy, insolvency, reorganization and other similar laws relating to the
enforcement of creditors' rights) and the terms of this Agreement and all
Supplemental Agreements thereto and entitled to the benefits of this Agreement
and all such Supplemental Agreements, and such Additional Bonds have been
duly and validly authorized and issued in accordance with the Act (or other
applicable laws) and this Agreement and all such Supplemental Agreements; and
(d) the issuance of the Additional Bonds will not adversely affect.the exclusion
from gross income for federal income tax purposes of interest on the Bonds and,
if then applicable, the Bonds or the exemption from State of California personal
income taxation of interest on the Bonds;
(4) An Officer's Certificate of the City containing such statements as
may be reasonably necessary to show compliance with the requirements of this
Agreement;
(5) A certificate of an Independent Financial Consultant certifying that
the maximum Special Tax that may be levied.in any Fiscal Year by the District
pursuant to the Act and the applicable resolutions and Ordinances of the District
is at least 1.10 times the amount required to pay Debt Service during the
Applicable Bond Year on all Outstanding Bonds following the issuance of such
Additional Bonds (excluding the Debt Service on any amount held in escrow) and
at least 75% of the rentable square feet on property subject to the Special Tax
shall be leased;
(6) Such further documents as are required by the provisions of this
Agreement and the Supplemental Agreement providing for the issuance of such
Additional Bonds; and
(7) A certificate of the appraiser providing the original appraisal for
the Bonds or a qualified MAI appraiser that the ratio of market value of land and
improvements subject to the Special Tax to the aggregate principal amount of all
Outstanding Bonds including the aggregate principal amount of such Additional
R VPUB\KAB1666669. 1
20
Bonds (excluding any principal amount held in escrow) is not less than three (3)
to one (1).
Section 2.13. Book-Entry. The Bonds shall be initially issued in the form of a single,
fully registered Bond for each maturity (which may be typewritten). Upon initial issuance, the
ownership of such Bonds shall be registered in the name of the Nominee identified below as
nominee of The Depository Trust Company, New York, New York and its successors and
assigns (the "Depository" or "DTC"). Except as.hereinafter provided, all of the Outstanding
Bonds shall be registered in the name of the nominee of the Depository, which may be the
Depository, as determined from time to time pursuant to this Section 2.13 (the "Nominee").
With respect to the Bonds registered in the name of the Nominee, neither the City nor the
Fiscal Agent shall have any responsibility or obligation to any broker-dealers, banks and other
financial institutions from time to time for which the Depository holds Bonds as securities
depository (the "Participant") or to any person on behalf of which such a Participant holds an
interest in-the Bonds. Without limiting the immediately preceding sentence, neither the City nor
the Fiscal Agent shall have any responsibility, liability or obligation whatsoever with respect to
(i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to
any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person, other
than an Owner of a Bond as shown in the registration books maintained by the Fiscal Agent
pursuant to Section 2.08 hereof (the "Registration Books"), of any notice with respect to the
Bonds, including any notice of redemption, (iii)the selection by the Depository and its
Participants of the beneficial interests in the Bonds to be redeemed in the event the City redeems
the Bonds in part, or (iv) the payment to any Participant or any other person, other than an
Owner of a Bond as shown in the Registration Books, of any amount with respect to principal of
or interest on the Bonds. The City and the Fiscal Agent may treat and.consider conclusively the
person in whose name each Bond is registered as the holder and absolute Owner of such Bond
for the purpose of payment of principal and interest with respect to such Bond, for the purpose of
giving notices of redemption, if applicable; and other matters with respect to such Bond, for the
purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever.
The City shall pay all principal of and interest on the Bonds only to or upon the order of'the
respective Owner of a Bond, as shown in the Registration Books, or his or her attorney duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge the City's obligations with respect to payment of principal of and interest on the Bonds
to the extent of the sum or sums so paid. No person other than an Owner of a Bond, as shown in
the Registration Books, shall receive a Bond evidencing the obligation of the City to make
payments of principal and interest pursuant to this Agreement. Upon delivery by the Depository
to the Owners of the Bond, and the City of written notice to the effect that the Depository has
determined to substitute a new nominee in place of the Nominee, and subject to the provisions
herein with respect to Record Dates, the word Nominee in this Agreement shall refer to such
nominee of the Depository.
In the event (i)the Depository determines not to continue to act as securities depository
for the Bonds, or (ii) the Depository shall no longer so act and gives notice to the City of such
determination, then the City will discontinue the book-entry system with the Depository. If the
City determines to replace the Depository with another qualified securities depository, the City
shall prepare or direct the preparation of a new, single, separate, fully registered Bond, per
RVPUB\KAB\666669. 1
21
maturity, registered in the name of such successor or substitute qualified securities depository or
its nominee. If the City fails to identify another qualified securities depository to replace the
Depository, then the Bonds shall no longer be restricted to being registered.in the Registration
Books in the name of the Nominee, but shall be registered in whatever name or names Owners of
the Bonds transferring or exchanging Bonds shall designate, in accordance with the provisions of
Sections 2.06 and 2.07 hereof, and the City shall prepare and deliver Bonds to the Fiscal Agent
for authentication and delivery to the Owners thereof for such purpose.
In the event of a reduction in aggregate principal amount of Bonds Outstanding or an
advance refunding of part of the Bonds Outstanding, the Depository, in its discretion, (a) may
request the City to prepare and issue a new Bond or (b) may make an appropriate notation on a
Bond indicating the date and amounts of such reduction in principal, but in such event the
Registration Books maintained by the Fiscal Agent. shall be conclusive as to what amounts are
Outstanding with respect to the Bond, except in the case of final maturity, in which case the
Bond must be presented to the Fiscal Agent prior to payment.
Notwithstanding any other provision of this Agreement to the contrary, so long as any
Bond is registered in the name of the Nominee, all payments of principal and interest with
respect to such Bond and all notices with respect to such Bond shall be made and given,
respectively, as provided in the Representation Letter or as otherwise instructed by the
Depository and acceptable to the City.
The initial Nominee shall be Cede & Co., as Nominee of DTC.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT
FUND; SPECIAL TAX FUND; ADMINISTRATIVE EXPENSE FUND;
COSTS OF ISSUANCE FUND
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 amounts set
forth in Section 2.01 hereof 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 Municipal Code, the Resolution and this Agreement, to authorize the payment of
Costs of Issuance 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 sale of the Bonds to 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 Reserve Fund the amount of$1,808,630.00;
RVPUBTAB\666669. 1
r
22
(B) Deposit in the Capitalized Interest Sub-account in the,Interest Account in
the Bond Fund the amount of $2,018,060.72 representing capitalized interest on the
Bonds for approximately 18 months.
(C) Deposit in the Costs of Issuance Fund the amount of$270,000;
(D) Deposit in the Improvement Fund the amount of$20,605,309.28; and
Section 3.03. Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established, as a separate
fund to be held by the Fiscal Agent, the "City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds, Improvement Fund" to the
credit of which deposits shall be made as required by paragraph (D) of Section 3.02 and Section
4.03(D) hereof. Moneys in the Improvement Fund shall be held by the Fiscal Agent for the
benefit of the Owners of the Bonds, shall be disbursed, .except as otherwise provided in
subsection(D) of this Section 3.03, for the payment or reimbursement associated with the costs
of the design, acquisition and construction of the Project.
(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 be in the form
attached hereto as Exhibit B and 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 no portion of the amount then being requested to be
disbursed was set forth in any Officer's Certificate previously filed with the Fiscal
Agent requesting disbursement, and that the amount being requested is an
appropriate disbursement from the Improvement Fund.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent
in the Improvement 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
construction and acquisition of 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, and further stating
that moneys on deposit in the Improvement Fund are not needed to complete the Project or
reimburse the cost thereof, the Fiscal Agent shall transfer the amount, if any, remaining in the
Improvement Fund to the Interest Account of the Bond Fund to be used to pay the interest on the
Bonds.
(E) Officer's Certificate. Upon receipt of an Officer's Certificate delivered pursuant
to this Section 3.03, the Fiscal Agent is authorized to act thereon without further inquiry and
shall not be responsible for the accuracy'of the statements made in such Officer's Certificate or
RVPUB\KAB\666669. I
23
the application of the funds disbursed pursuant thereto, and shall be absolutely protected and
incur no liability in relying on such Officer's Certificate.
Section 3.04. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established, as a separate
fund to be held by the Fiscal Agent, the "City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center), 2004 Special Tax Bonds, Special Tax Fund." The City
shall remit to the Fiscal Agent, not later than five (5) Business Days after receipt, all Special Tax
Revenues received by the City, and the Fiscal Agent shall deposit such amounts to the Special
Tax Fund. Moneys in the Special Tax 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 as provided below and,
pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
Notwithstanding the foregoing, any amounts received by the City which constitute
Special Tax Prepayments shall be transferred by the City immediately upon receipt to the Fiscal
Agent for deposit by the Fiscal Agent in the Special Tax Prepayments Account established
pursuant to Section 4.02(A)hereof.
(B) Disbursements. From time to .time as needed to pay the obligations of the
District, but no later than the Business Day before each Interest Payment Date, the Fiscal Agent
shall withdraw from the Special Tax Fund and transfer the following amounts in the following
order of,priority (i)to the Bond Fund an amount, taking into account any amounts then on
deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Reserve
Fund and the Special Tax Prepayments Account to the Bond Fund pursuant to Section 4.02(B),
such that the amount in the Bond Fund equals the principal (including any sinking payment),
.premium, if any, and interest due on the Bonds on the next Interest Payment Date, and (ii)to the
Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such
that the amount in the Reserve Fund is equal to the Reserve Requirement. Amounts then in the
Special Tax Fund shall also be transferred from time to time by the Fiscal Agent,at the written
direction of the City, to the Administrative Expense Fund, but the City agrees that any such
transfers shall not exceed, in any Fiscal Year, the amount included in the Special Tax levy for
such Fiscal Year for Administrative Expenses.
(C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in
accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Special Tax
Fund to.be used for the purposes of such fund.
Section 3.05. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established, as a
separate fund to be held by the Fiscal Agent, the "City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center), 2004 Special Tax Bonds, Administrative
Expense Fund" to the credit of which deposits shall be made as required by Section 3.02(E) and
Section 3.04(B) hereof. 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.
RVPUB\KAB\666669. I
24
(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 withdrawn, that such amount is to be used to pay an
Administrative Expense (or a Cost of Issuance) and the nature of such Administrative Expense
(or Cost of Issuance).
(C) Investment. Moneys in'the Administrative Expense Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings 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 fund to be held by the Fiscal Agent, the "City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center), 2004 Special Tax Bonds, Costs of Issuance
Fund"to the credit of which a deposit shall be made as required by paragraph (C) of Section 3.02
hereof. 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 to pay
Costs 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
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 Costs of Issuance Fund for a period of ninety (90) days from the Closing Date and
shall then transfer and deposit any moneys remaining therein, including any Investment Earnings
thereon, to the Improvement Fund for the purposes of such fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the
Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND; RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues.
The Bonds shall'be secured by a pledge of and lien upon (which shall be effected in the
mariner and to the extent herein provided) all of the Special Tax Revenues and all moneys
deposited in the-Bond Fund and all moneys deposited in the Reserve Fund and the Special Tax
Fund. The Bonds shall be equally secured by a pledge of and lien upon the Special Tax
Revenues and such moneys without priority for number, date of Bond, date of execution or date
of delivery; and the payment of the interest on and principal of the Bonds and any premium upon
RVPUB\KAB\666669. 1
25
the redemption of any thereof shall be and is secured by a pledge of and lien upon the Special
Tax Revenues and such moneys. The Special Tax Revenues and all moneys deposited into such.
accounts are hereby dedicated in their entirety to the payment of the principal of the Bonds, and
interest and any premium on, the Bonds, as provided herein and in the Act and the Municipal
Code, until all of the Bonds have been paid and retired or until moneys or Defeasance Securities
have been set aside irrevocably for that purpose in accordance with Section 9.03 hereof.
Section 4.02. Bond Fund.
(A) Deposits. There is hereby established, as a separate fund to be held by the Fiscal
Agent, the "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington
Center), 2004 Special Tax Bonds, Bond Fund" to the credit of which deposits shall be made as
required by Section 3.03(D), Section 3.04(B) and Section 4.03(D) hereof and any other provision
of this Agreement or the Act. There are hereby established in the Bond Fund, as separate
accounts to be held by the Fiscal Agent, the "Interest Account" and the "Principal Account."
There is hereby also established in the Bond Fund, as a separate account to be held by the Fiscal
Agent, the "Special Tax Prepayments Account" to the credit of which deposits shall be made as
required by Section 3.04(A) hereof. There is hereby also established in the Interest Account, as .
a separate sub-account to be held by the Fiscal Agent, the "Capitalized Interest Sub-Account" to
the credit of which a deposit shall be made as required by paragraph (B) of Section 3.02 hereof.
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 or before each Interest Payment Date, the Fiscal Agent shall
transfer from the Special Tax Fund and deposit into the following respective accounts in the
Bond Fund, the following amounts in the following order of priority, the requirements of each
such account (including the making up of any deficiencies in any such account resulting from
.lack of Special Tax Revenues sufficient to make any earlier required deposit) at the time of
deposit to be satisfied before any transfer is made to any account subsequent in priority:
(1) Interest Account. On or before each Interest Payment Date, the Fiscal
Agent shall deposit in the Interest Account an amount required to cause the aggregate
amount on deposit in the Interest Account to equal the amount of interest becoming due
and payable on the Bonds on such date (taking into account any expected transfers from
the Improvement Fund, the Reserve Fund and the Capitalized Interest Sub- account for
any such date). No deposit need be made into the Interest Account on any Interest
Payment Date if the amount on deposit therein is at least equal to the interest becoming
due and payable on the Bonds on such date. All moneys in the Interest Account shall be
used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on
the Bonds as it shall become due and payable (including accrued interest on any Bonds
redeemed prior to maturity). All amounts on deposit in the Interest Account on the first
day of any Bond Year, to the extent not required to.pay any interest then having become
due and payable on the Outstanding Bonds shall be withdrawn therefrom by the Fiscal
Agent and transferred to the Special Tax Fund.
RVPUB\KAB\666669. I
26
(a) Capitalized- Interest Sub-Account. On or before the Interest
Payment Dates which occur between the Closing Date and March 1, 2006, the
Fiscal Agent shall withdraw from the Capitalized Interest. Sub-Account and
transfer to the Interest Account the amount which is necessary to cause the
amount on deposit in the Interest Account to be equal to the amount of Debt
Service which is due and payable on the Outstanding Bonds on such Interest
Payment Date. The amount, if any, on deposit in the Capitalized Interest Sub-
Account on March 2, 2006 shall be withdrawn by the Fiscal Agent and transferred
to the Special Tax Fund and the Capitalized Interest Sub-Account shall be closed.
(2) Principal Account. -On or before each Interest Payment Date,-the Fiscal
Agent shall deposit in the Principal Account an amount required to cause the aggregate
amount on deposit in the Principal Account to equal the principal amount of the Bonds
becoming due and payable on such date pursuant to Section 2.02 hereof, or the
redemption price of the Bonds (consisting of the principal amount thereof and any
applicable redemption premium) required to be redeemed on such date pursuant to any of
the provisions of Section 2.03 hereof. All moneys in the Principal Account shall be used
and withdrawn by the Fiscal Agent solely for the purpose of (i)paying the principal of .
the Bonds at the maturity thereof, or (ii)paying the principal of and premium (if any) on
any Bonds upon the redemption thereof pursuant to Section 2.03 hereof. All amounts on
deposit in the Principal Account on the first day of any Bond Year, to the extent not
I equired to pay the principal of any Outstanding Bonds then having become due and
payable, shall be withdrawn therefrom and transferred to the Special Tax Fund.
On the first Business Day following each Interest Payment Date, the. Fiscal Agent shall
transfer any moneys remaining on deposit in the Bond Fund, including the Interest Account (but
not including the Capitalized Interest Sub-Account) and the Principal Account, to the Special
Tax Fund.
In the event that moneys on deposit in the Special Tax Fund will be insufficient on any
Interest Payment Date. for the Fiscal Agent to deposit the required amounts in the Interest
Account and the Principal Account of the Bond Fund as provided above, the Fiscal Agent shall
deposit the available funds first to the Interest Account up to the full amount required to cause
the aggregate amount on deposit therein to equal the amount'of interest becoming due and
payable on the Bonds on the Interest Payment Date, and shall then deposit the remaining
available funds in the Special Tax Fund to the Principal Account up to the full amount required
to cause the aggregate amount on deposit therein to equal the amount, if any, of principal
becoming due and payable on the Bonds on the Interest Payment Date. If, after making such
deposits to the Interest Account and the Principal Account, and after transferring moneys from
the Reserve Fund to such accounts, as provided in Section 4.03(B) hereof, the amount on deposit
in the Principal Account is insufficient to pay the full amount of the principal of each of the
Bonds which is to be redeemed on the Interest Payment Date, the Fiscal Agent shall make a
prorated payment of the principal of each of such Bonds as specified in an Officer's Certificate
provided to the Fiscal Agent.
RVPUB\KAB\666669. 1
27
(C) Special Tax Prepayments Account Deposits and Disbursements. Within five (5)
Business Days after receiving a Special Tax Prepayment the City shall deliver the amount
thereof to the Fiscal Agent, together with an Officer's Certificate notifying the Fiscal Agent that
the amount being delivered is a Special Tax Prepayment which is to be deposited in the Special
Tax Prepayments Account. Upon receiving a Special Tax Prepayment from the City and such an
Officer's Certificate, the Fiscal Agent shall deposit the amount of the Special Tax Prepayment in
the Special Tax Prepayments Account. Such an Officer's Certificate may be combined with the
Officer's Certificate which the City is required to deliver to the Fiscal Agent pursuant to Section
4.03(F) hereof. Moneys on deposit in the Special Tax Prepayments Account shall be transferred
by the Fiscal Agent to the Principal Account on the next date for which notice of the redemption
of the Bonds can timely be given under Section 2.03(E) hereof and shall be used to redeem the
Bonds on the redemption date selected in accordance with Section 2.03(A) hereof. Pending such
transfer, the moneys on deposit in the Special Tax Prepayments Account shall be invested by the
Fiscal Agent as directed pursuant to an Officer's Certificate in Defeasance Obligations at such
yield as Bond Counsel may determine is necessary to preserve the exclusion of interest on the
Bonds from gross income for purposes of federal income taxation.
(D) Investment. Moneys in the Bond Fund, including all accounts therein, shall be .
invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be
retained in the Bond Fund, except to the extent they are required to be deposited by the Fiscal
Agent in the Rebate Fund in accordance with Section 6.02 hereof.
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 "City of Huntington Beach Community Facilities District No.
2003-1 (Huntington Center), 2004 Special Tax Bonds, Reserve Fund" to the credit of which a
deposit shall be made as required by paragraph (A) of Section 3.02 hereof, which deposit is equal
to the Reserve Requirement and to which deposits shall be made as provided in Section 3.04(B)
hereof. 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 the 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 on deposit .
in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of
making transfers to the Interest Account and the Principal Account of the Bond Fund in the event
of any deficiency at any time in either of such accounts 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 subsection(E) of this Section 4.03, for the purpose of redeeming Bonds.
(C) Transfer Due to Deficiency in Interest and Principal Accounts. Whenever transfer
is made from the Reserve Fund to the Interest Account or the Principal Account due to a
deficiency in either such account, the Fiscal Agent shall provide written notice thereof to the
City.
(D) Transfer of Excess of Reserve Requirement. Whenever, on any September 2, the
amount in the Reserve_Fund, less Investment Earnings resulting from the investment of the funds
RVPUB\KAB\666669. 1
28
therein which pursuant to Section 6.02 hereof must be rebated to the United States, exceeds the
Reserve Requirement, the Fiscal Agent shall provide written notice to the City of the amount of
the excess. Upon receiving written direction from an Authorized Officer (upon which the Fiscal
Agent may conclusively rely),the Fiscal Agent shall, subject to the requirements of Section 6.02
hereof, transfer an amount from the Reserve Fund which will reduce the amount on deposit
therein to an amount equal to the Reserve Requirement to the Interest Account and the Principal
Account, in the priority specified in Section 4.02(B) hereof, to be used for the payment of the
interest on and principal of the Bonds on the next succeeding Interest Payment Date in
accordance with Section 4.02 hereof. Notwithstanding the preceding provisions of this
subsection (D), prior to the closing of the Improvement Fund, as provided in Section 3.03(D)
hereof, the Fiscal Agent shall on the Business Day after each Interest Payment Date, transfer any
such excess amount in the Reserve.Fund which constitutes Investment Earnings which are not
then required to be rebated to the United States (as provided in Section 6.04 hereof) to the
Improvement Fund.
(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, upon receiving written direction from an Authorized Officer,
transfer the amount in the Reserve Fund to the Interest Account and the Principal Account, in the
priority specified in Section 4.02(B) hereof, to be applied, on the next succeeding Interest
Payment Date, to the payment and redemption, in accordance with Section 2.03 and Section 4.02
hereof of all of the Outstanding Bonds. In the event that the amount available to be so
transferred from the Reserve Fund to the Interest Account and the Principal Account exceeds the
amount required to pay and redeem the Outstanding Bonds, the excess shall be transferred to the
City to be used for any lawful.purpose of the City.
(F) Transfer Upon Special Tax Prepay. Whenever Special Taxes are prepaid and
Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A), a
proportionate amount in the Reserve Fund as specified in an Officer's Certificate provided to the
Fiscal Agent (determined on the basis of principal amount of Bonds which will remain
outstanding) shall be transferred on the Business Day prior to the redemption date by the Fiscal
Agent to the Bond Fund to be applied to the redemption of the Bonds pursuant to Section
2.03(A).
(G) Investment. Moneys on deposit in the Reserve Fund shall be invested in
Permitted Investments which do not have maturities extending beyond five (5) years; provided,
however,-if the Reserve Fund is invested in an investment agreement (as defined in clause (vii)
of the definition of Permitted Investments in Section 1.03 hereof) or a repurchase agreement (as
defined in clause (ix) of such definition) such agreement may have a maturity longer than five
(5) years if the Fiscal Agent is authorized by the provisions of such agreement to draw the full
amount thereof, without penalty, if required for the purposes of the Reserve Fund. The City shall
cause the Permitted Investments, other than such investment agreements, in which moneys on
deposit in the Reserve Fund are invested to be valued at fair market value and marked-to-market
at least once in each Fiscal.Year.
RVPUB\KAB\666669. 1
29
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Pam. 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 to the extent that the Special
Tax Revenues are available therefor, 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. Special Obligation. The Bonds are special obligations of the City and 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 and the Special Tax Fund.
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 been so extended or funded.
Section 5.04. Against Encumbrances. The City shall 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 Accounts. The City shall 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 Administrative Expense Fund. Such books of record and accounts
shall at all times during business hours, upon reasonable notice, be subject to the inspection of
the Owners of not less than ten percent(10%) of the aggregate principal amount of the Bonds
then Outstanding, or their representatives duly authorized in writing.
Section 5.06. 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.
Section 5.07. Collection of Special Tax Revenues. The City shall comply with all
requirements of the Municipal Code and the Act, including the enactment. of necessary
Ordinances, so as to assure the timely collection of Special Tax Revenues, including without
limitation, the enforcement of the payment or collection of delinquent Special Taxes.
RVPUB\KAB\666669. 1
30
Not less than twenty (20) Business Days prior to each Interest Payment Date the Fiscal
Agent shall provide the Director of Administrative Services 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
and Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the
balance therein is equal to the Reserve Requirement. The receipt of or failure to receive such
notice by the Treasurer shall in no way affect the obligations of the Treasurer under the
following two paragraphs, and the Fiscal Agent shall not be responsible for any inability or
failure to provide such notice.
The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with
the Act and the Municipal Code by August 1 of each year (or such later date as may be
authorized by the Act and the Municipal Code or any amendment thereof) that the Bonds are
Outstanding, such that the computation of the levy is complete before the final date on which the
Auditor will'accept the transmission of the Special Tax amounts for the parcels within the
District, for inclusion on the tax roll for the Fiscal Year then beginning. Upon the completion of
the computation of the amounts of the levy of the Special Taxes, the City 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 tax roll. Notwithstanding the preceding provisions of this
paragraph, the City Council may elect, as permitted by the Act, and the Municipal Code to
collect the Special Taxes to be levied for any Fiscal Year directly from the owners or lessees of
the parcels of taxable property upon which the Special Taxes are levied rather than by
transmitting the Special Taxes to the Auditor for collection on the tax roll; provided that, in such
event,the City shall otherwise comply with the provisions of this Section 5.07.
The Treasurer or the Treasurer's designee shall fix and levy the amount of Special Taxes
within the District required for the payment of principal and of interest on any outstanding Bonds
of the District becoming due and payable on the next Interest Payment Date, including any
necessary replenishment or expenditure of the Reserve Fund and an amount estimated to be
sufficient to pay the Administrative Expenses (including amounts necessary to discharge any
obligation under Section 5.10) during such year, taking into account the balances in such
accounts, any transfer or expected transfer from the Reserve Fund to the Bond Account pursuant
to Section 4.03, and any balance or expected balance in the Special Tax Fund available for such
purpose. 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 have the same priority and bear the same proportionate penalties
and interest after delinquency as do the ad valorem taxes on interests in real property.
The City will not, in collecting the Special Taxes or in processing any such judicial
foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340,
53344.1, 53344.2, 53356.1 and 53356.5 of the California Government Code in any manner
which would materially and adversely affect the interests of the Bondowners and, in particular,
will not permit the tender of Bonds in full or partial payment of any Special Taxes except upon
receipt of a certificate of an Independent Financial Consultant that to accept such tender will not
result in the City having insufficient Special Tax Revenues to pay the principal of and interest on
the Bonds Outstanding following such tender.
RVPUB\KAB\666669. 1
31
Section 5.08. Levy of Special Taxes for Administrative Expenses. The City covenants
that, to the extent that it is legally permitted to do so, (a) it will levy the Special Taxes for the
payment of the Administrative Expenses which are expected to be incurred in each Fiscal Year,
and (b) it will not initiate proceedings under the Act to reduce the Maximum Special Tax rates
(the "Maximum Rates") on then existing property subject to Special Taxes below the amounts
which are necessary to provide Special Tax Revenues in an amount equal to one hundred ten
percent (110%) of Maximum Annual Debt Service on the Outstanding Bonds.
The City further covenants that in the event an ordinance is adopted by initiative pursuant
to Section 3 of Article XIII C of the California Constitution, which purports to reduce or
otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to
preserve its ability to comply with its covenant contained in the preceding paragraph.
Section 5.09. Further Assurances. The City will adopt, make, execute and deliver any
and all such further ordinances, 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 better assuring and confirming unto the Owners of the Bonds of the rights and benefits
provided in this Agreement.
Section 5.10. Tax Covenants. The City covenants that:
(A) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of the initial issuance and delivery of the Bonds, would have
caused any of the Bonds to be "arbitrage bonds" within the meaning of Section 103(b) and
Section 148 of the Code;
(B) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss .
of exclusion from gross income for purposes of federal income taxation.under Section 103(a) of
the Code of interest paid with respect to the Bonds;
(C) It will not take any action or omit to take any action, which action or omission, if
reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused
any of the Bonds to be "private activity bonds"within the meaning of Section 141 of the Code;
(D) It will comply with the Rebate Certificate as a source of guidance for achieving
compliance with the Code; and
(E) In order to maintain the exclusion from gross income for purposes of federal
income taxation of interest paid with respect to the Bonds,it will comply with each applicable
requirement of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.10 shall survive the payment,
redemption or defeasance of Bonds pursuant to Section 9.03 hereof.
Section 5.11. 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 as hereinafter provided, and thereafter diligently prosecute to judgment (unless
RVPUB\KAB\666669. 1
32
other delinquency is theretofore brought current), an action in the superior court to foreclose the
lien of any Special Tax or installment thereof not paid when due. as provided in the following
paragraph. The Administrative Services 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.
One (1) Business Day after each Interest Payment Date, the Treasurer or the Treasurer's
designee shall compare the amount of Special Taxes theretofore levied in the District to the
amount of Special Tax Revenues theretofore received by the City, and if the amount collected is .
less than 100% of the amount of the Special Taxes to be collected for such installment of
property taxes, then the City will undertake and diligently prosecute foreclosure proceedings not
later than thirty (30) days after each Interest Payment Date in the manner prescribed in the Act to
collect the amount of any delinquent Special Tax.
Section 5.12. Prepayment of Special Taxes. . The City shall cause all applications of
owners of property in the District to prepay and satisfy the Special Tax obligation for their
property to be reviewed by an Independent Financial Consultant and shall not accept any such
prepayment unless such consultant certifies in writing that following the acceptance of the
proposed prepayment by.the City and the redemption of Bonds with such prepayment, the ratio
of (i) the maximum amount of the Special Taxes that may be levied in the District following
such prepayment to (ii) Maximum Annual Debt Service on the Bonds .which will remain
Outstanding following such redemption (e.g., 1.10 to 1.0) will not be less than such ratio as it
existed prior to such prepayment.
Section 5.13. Use of Parking Structure. A portion of the proceeds of the Bonds will be
used to pay for the construction of a 6-story, approximately 1,400 parking space, public parking
structure (the "Parking Structure"). The City hereby covenants with and for the benefit of
Owners of the Bonds that it shall not use or permit the Parking Structure to be used for any
purpose other than public parking unless such changed use would not result in a reduction in the
"Appraised Value" (as defined below) of the property in the District subject to the Special Tax.
For purposes of the foregoing, the term "Appraised Value" means the appraised value of the
property within the District determined in accordance with the following procedures: The City
shall, at its own cost, appoint two (2) independent real estate appraisers, each of whom is a
member of the American Institute Real Estate Appraisers, to prepare an MAI appraisal of the
property. within the District setting forth the market value for the property if the Parking
Structure is used for public parking and the market value if it is used for a use other than parking.
The corresponding values for each of the two conditions (i.e., with public parking and without)
set forth in the two appraisals shall be added together and their total divided by two and the
resulting quotient shall be the Appraised Value for each condition.
Section 5.14. Continuing Disclosure and Filin of Reports. The City and the Fiscal
Agent, as Dissemination Agent, hereby.covenant and agree that they will comply with and carry
out all of the provisions of the Continuing Disclosure Agreement which are specifically
applicable to each of them. The City further agrees to comply with and file those reports
required under Sections 50075.1, 50075.3, 53359.5(b), 53410(d), and 53411 of the California
Government Code not later than March 31 of each year commencing March 31, 2004.
RVPUB\KAB\666669. 1
33
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 hereof, 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 (iv) of the definition of Permitted Investments in Section 1.03 hereof. The
Fiscal Agent shall not-have any responsibility for determining the legality of any Permitted
Investments. The Fiscal Agent shall have no obligation to pay additional interest or maximize
investment income on any funds held by it. Neither the City nor the Owners of the Bonds shall
have any claim of any kind against the Fiscal Agent in connection with investments properly
made pursuant to this Section 6.01. Obligations purchased as an investment of moneys in any
fund or account shall be deemed to be part of such fund or account, subject, however, to the
requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or
agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not
incur any liability for losses arising from any investments made pursuant to this Section 6.01.
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 hereof, investments in any and all
funds and accounts may be commingled in a single fund 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 hereunder,
provided that the Fiscal Agent 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 shall sell at the highest price reasonably obtainable (provided that the
highest of any three bids received by the Fiscal Agent shall be deemed 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 the Fiscal Agent
shall not be liable or responsible for any loss resulting from the acquisition or disposition of any
such investment security in accordance herewith.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the City or the District the right to receive brokerage
confirmations of securities transactions as they occur, the City for itself and the District
specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal
RVPUB\KAB\666664. 1
34
Agent shall furnish the City periodic cash transaction statements which include detail for all
investment transactions made by the Fiscal Agent hereunder.
Moneys credited to any fund or account under this Agreement which are uninvested
pending. disbursement or receipt of proper investment directions or as directed herein, may be
deposited to and held in a non-interest bearing demand deposit account established with the
commercial banking department of the Fiscal Agent or any bank affiliated with the Fiscal Agent.
The Fiscal Agent may make any investments hereunder through its own bond or
investment department or trust investment department, or those of its parent or any affiliate.
Section 6.02. Rebate Fund; Rebate to the United States. There is hereby created, to be
_held by the Fiscal Agent, as a separate fund distinct from all other funds and accounts held by the
Fiscal Agent under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with
written directions received from an Authorized Officer, deposit into the Rebate Fund moneys
transferred by the City to the Fiscal Agent pursuant to the Rebate Certificate or moneys
transferred by the Fiscal Agent from the Reserve Fund pursuant to Section 4.03(D). The Rebate
Fund shall be held either uninvested or invested only in Federal Securities at the written direction
of the City. Moneys on deposit in the Rebate Fund shall be applied only to payments made to
the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal
Agent shall, upon written request and direction of the City, make such payments to the United
States.
The Fiscal Agent's sole responsibilities under this Section 6.02 are to follow the written
instructions of the City pertaining hereto. The City shall be responsible. for any fees and
expenses incurred by the Fiscal Agent pursuant to this Section 6.02.
The Fiscal Agent shall, upon written request and direction from the City, transfer to or
upon the order of the City any moneys on deposit in the Rebate Fund in excess of the amount, if
any, required to be maintained or held therein in accordance with the Rebate Certificate.
Section 6.03. 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.
In the absence of bad faith, the City 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 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 and of its
RVPUB\KAB\666669. 1
35
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 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.
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 warranty 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 6.04. Employment of Agents by City_. In order to perform its duties and
obligations hereunder, the City 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 fully protected
in doing so, upon the opinions, calculations, determinations and directions of such persons or
entities.
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Age . U.S. Bank National Association is hereby
appointed Fiscal Agent,.registrar 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 7.01, shall be the successor to the 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
RVPUB\RAB\666669. 1
36
$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 7.01 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, at the expense of the City, or any Owner 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.
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 District, and the Fiscal Agent assumes no responsibility for the correctness of the
same, nor makes any representations as to the validity or sufficiency of this Agreement or of the
Bonds, nor-shall the Fiscal Agent incur any responsibility in respect thereof, other than in
connection with the duties 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 misconduct. 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. Except as
provided above in this paragraph, the 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 the
Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the
pertinent facts.
RVPUBTAB\666669. 1
37
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.
The Fiscal Agent shall not be responsible. for accounting for, or paying to, any .party to
this Agreement, including, but not limited to the City and the Owners, any returns on or benefit
from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of
the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this
Agreement.
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.
All indemnification and releases from liability granted herein to the Fiscal Agent shall
extend to the directors, officers and employees of 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, 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
advice or opinion of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by the Fiscal Agent hereunder in good faith and in
accordance therewith.
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 warranty 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
RVPUB\KAB\666669. 1
38
Agreement, and also all reasonable expenses, charges, fees and other disbursements, including
those of its attorneys, agents and employees, incurred in and about the performance of its powers
and duties under this Agreement, and the Fiscal Agent shall have a first priority lien therefor on
any funds at any time held by it in the Administrative Expense Fund, and the Fiscal Agent shall
pay and reimburse all expenses, charges, fees and other disbursements, including those of its
attorneys, agents and employees, incurred in.connection therewith from the funds held by it in
the Administrative Expense Fund. 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, costs, claims, expenses or charges of any kind whatsoever
(including fees and expenses of its attorneys) 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 7.05 shall survive resignation or removal of the
Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.
Section 7.06. Books and Accounts. The Fiscal Agent shall 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 made by it to the
expenditure of amounts disbursed from the Bond Fund, the Special Tax Fund, the Administrative
Expense Fund, the Reserve Fund and the Costs of Issuance Fund. Such books of record and
accounts shall, upon reasonable notice, 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 aggregate
principal amount of the Bonds then Outstanding, or their representatives duly authorized in
writing.
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
: Section 8.01. Amendments Permitted.
(A) This Agreement and the rights and obligations of the District and 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 the 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 hereof. No
such modification or amendment shall (i) extend the maturity of any Bond or the time for paying
interest thereon, or otherwise alter or impair the obligation of the City on behalf of the District 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 of any pledge of or lien upon the Special
Tax Revenues, or the moneys on deposit in the Bond Fund, the Reserve Fund, or the Special Tax
Fund, 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 Municipal Code, the laws of the State of
California or this Agreement), (iii)reduce the percentage of Bonds required for the amendment
hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the
interest rate thereon. Any such amendment may not modify any of the rights or obligations of
the Fiscal Agent without its written consent. The Fiscal Agent shall be furnished an opinion of
counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent
RVPUB\KAB\666669. 1
39
complies with the provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on
such opinion.
(B) This Agreement and the rights and obligations of the District and the City and 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:
(1) 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;
(2) to make modifications not adversely affecting any Outstanding series of
Bonds of the District in any material respect;
(3) - to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provisions of 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; or
(4) 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
moneys 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.
(5) to provide for the issuance of Additional Bonds pursuant to Section 2.12 .
hereof.
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 any such meeting and
to provide for the giving of notice thereof and to fix and adopt rules and regulations for the
conduct of the meeting.
Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and
the Fiscal Agent may at any time enter into 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(A) hereof, to take effect when and as provided in this
Section 8.03, A copy of the Supplemental Agreement, together with a request to Owners for
their consent thereto, shall be mailed by first class mail, postage prepaid, by the Fiscal Agent to
each Owner of Bonds Outstanding, but failure to mail copies of the Supplemental Agreement
and request shall not affect the validity of the Supplemental Agreement when assented to as in
this Section provided.
Such a 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
RVPUBTAB\666669. 1
40
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
hereof. 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 documents 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 VIII) upon the City, the District and the Owners
of all Bonds then Outstanding 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 (60)-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 participate in any 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 VIII, this Agreement shall
be deemed to be modified and.amended in accordance therewith, and 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 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 upon 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
RVPUB\KAB\666669. 1
41
new Bonds, so modified as in the opinion of the City are necessary to conform to such action,
shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds
then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent
without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.
Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII
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.
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 or 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.
If the City shall pay and discharge the entire indebtedness on all Outstanding Bonds 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 all such Bonds, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of
money which,together with the amounts then on deposit in the Bond Fund, the Special Tax Fund
and the Reserve Fund, is fully sufficient to pay all such Bonds, including all principal, interest
and redemption premiums, if any; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or non-callable
Defeasance Securities in such amount as the City shall determine, as confirmed by an
Independent Financial Consultant, will, together with the interest to.accrue thereon and amounts
then on deposit in the Bond Fund, Special Tax Fund and the Reserve Fund, be fully sufficient to
pay and discharge the indebtedness on all such Bonds (including .all principal, interest and
redemption premiums) at or before their respective maturity dates;
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,
RVPUBTAB\666669. I
42
and notwithstanding that any Bonds shall not have been surrendered for.payment, the pledge of
the Special Tax Revenues and other funds provided for in this Agreement and all other
obligations of the City and the District under this Agreement with respect to such Bonds shall
cease and terminate, except the obligation of the City to pay or cause to be paid to the Owners of
such Bonds not so surrendered and paid all sums due thereon,the obligation of the City to pay all
amounts owing to the Fiscal Agent pursuant to Section 7.05 hereof, and the obligations of the
City pursuant to the covenants contained in Section 5.10 hereof; and thereafter Special Taxes
shall not be payable to the Fiscal Agent. Notice.of such election shall be filed with the Fiscal
Agent. The satisfaction and discharge of this Agreement shall be without prejudice to the rights
of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it shall
thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on such Bonds,
upon payment of all fees and expenses of the Fiscal Agent, which are not required for such
payments and discharge, shall be paid over to the City.
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 a request, declaration or other instrument, or of a writing
appointing such an 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 a 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 registration books
maintained by the Fiscal Agentapursuant to Section 2.08 hereof.
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 or the District 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 (first
class, registered or certified) in a post office letter box addressed (until another address is filed
by the City with the Fiscal Agent) as follows:
RVPUB\KAB\666669. 1
43
City of Huntington Beach
Administrative Services Department -
P.O. Box 190
2000 Main Street
Huntington Beach, CA 92648.
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 (first class, registered or certified) in a post office letter box addressed
(until another address is filed by the Fiscal Agent with the City) as follows:
U.S. Bank National Association
633 West Fifth Street, 24`h Floor
Los Angeles, CA 90071
Attention: Corporate Trust Services
Reference: City of Huntington Beach CFD No. 2003-1
Section 9.07. Partial Invalidity. If any section, paragraph, sentence, clause or phrase of
this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or
unenforceable, such holding shall not affect the validity of the remaining portions of this
Agreement. The City hereby declares that it would have executed and delivered 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 payment of such principal, interest and premium have
become payable, if such moneys were held by the Fiscal Agent at such date, shall be paid 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 Owners of such Bonds shall
look only to the City for the payment of the principal of, and interest and any premium on, their
Bonds.
Section 9.09. Applicable 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 or Municipal Code. In the event of a conflict between
any provision of this Agreement with any provision of the Act or Municipal Code as in effect on
the.Closing Date, the provision of the Act or Municipal Code shall prevail over the conflicting
provision of this Agreement.
RVPUB\K"\666669. 1
44
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 payment of
interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption is
other than a Business Day, the payment of interest or principal (and premium, if any) 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 from and after such date.
Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
RVPUB\KAB\666669. l
45
IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its
name on behalf of the District and attested, and the Fiscal Agent, has caused this Agreement to
be executed in its name, all as of March 1, 2004.
CITY OF HUNTINGTON BEACH, for and on
behalf of CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT
NO. 2003-1 (HUNTINGTON CENTER),
COUNTY OF ORANGE, STATE OF
CALIFORNIA
By: /"
Mayor
ATTEST:
By- ('
ty Clerk v,
Reviewed and Approved as to Form:
B
Y•
City Attorney
By:
ity T(eaW
iret
By: 4W1'
Bond Coun el
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
By:
Authorized Officer
RVPUB\KAB\666669.1
46
IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its
name on behalf of the District and attested, and the Fiscal Agent, has caused this Agreement to
be executed in its name, all as of March 1, 2004.
CITY OF HUNTINGTON BEACH, for and on
behalf of CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT
NO. 2003-1 (HUNTINGTON CENTER),
COUNTY OF ORANGE, STATE OF
CALIFORNIA
By:.
Mayor
ATTEST:
By:
City Clerk
Reviewed and Approved as to Form:
By:
City Attorney
By:
City Treasurer
By:
Bond Counsel
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
By:
Authorized Officer
RVPUB\KAB\666669.1
y
46
EXHIBIT A
FORM OF BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE FISCAL AGENT AGREEMENT) TO THE FISCAL
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
BOND AUTHENTICATED AND DELIVERED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY .TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BOND
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
April 15, 2004
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
The City of Huntington Beach (the "City"), for and on behalf of The City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State
of California (the "District"), for value received, hereby promises to pay, from the Special Taxes
(as hereinafter defined) to be collected in the District or amounts in certain of the funds and
accounts held under the Agreement (as hereinafter defined)to the registered owner named above,
or registered assigns, on the maturity date specified above, the principal amount specified above,
and to pay interest on such principal amount from the Dated Date above, or from the most recent
interest payment date to which interest has been paid or duly provided for, semiannually on
March 1 and September 1, commencing September 1, 2004 ("Interest Payment Dates"), at the
interest rate specified above, until the principal amount hereof is paid or made available for
payment. The principal of this Bond is payable by check to the registered owner hereof in lawful
money of the United States of America upon presentation and surrender of this Bond at the
RVPUB\KAB\666669. 1
A-1
Principal Office of U.S. Bank National Association (the "Fiscal Agent"). Interest on this Bond
shall be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each
Interest Payment Date to the registered owner hereof as of the close of business on the fifteenth
(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; except that at the written request of the owner of at least
$1,000,000 in aggregate principal amount of outstanding Bonds filed with the Fiscal Agent prior
to the Record Date preceding any Interest Payment Date, interest on such Bonds shall be paid to
such owner on such Interest Payment Date.by wire transfer of immediately available funds to an
account in the United States of America designated in such written request.
This Bond is one of a duly authorized issue of bonds approved by the qualified electors of
the District pursuant to Chapter 3.56 of the Municipal Code of the City (commencing with
Section 3.56.010) (the "Municipal Code") and the Mello-Roos Community Facilities Act of
1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of
Title 5 of the California Government Code (the `.`Mello-Roos Act"), for the purpose, among
others, of financing the construction and acquisition of certain public facilities within and for the
District, and is one of the series of Bonds designated the "City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds" (the "Bonds"), in
the aggregate principal amount of$25,000,000. The issuance of the Bonds and the terms and
conditions thereof are provided for by a resolution adopted by the City Council of the City on
January 5, 2004 (the "Resolution"), and the Fiscal Agent Agreement, dated as of March 1, 2004;
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 the terms and conditions of the Resolution and the Agreement. The Resolution is adopted
under, the Agreement is executed under, this Bond is issued under, and all are to be construed in .
accordance with, the laws of the State of California.
Pursuant to the Municipal Code, the Mello-Roos Act, the Agreement and the Resolution,_
the principal of and interest on the Bonds are payable from the annual levy of Special Taxes
authorized under the Mello-Roos Act to be collected within the District (the "Special Taxes")
and are secured by a pledge of and first lien upon the revenues derived therefrom (the "Special
Tax Revenues") and certain funds held by the Fiscal Agent pursuant to the Agreement.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the
date of its authentication, unless (i) it is authenticated on an Interest Payment Date, in which
event it shall bear interest from such Interest Payment Date, 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 on or before the Record'Date preceding the first Interest Payment Date, in which
event it shall bear interest from the Dated Date above;.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, or from the Dated Date above, if no interest has previously been paid or made available
for payment hereon.
RVPUB\KAB\666669. l
A-2
Any.tax for the payment hereof shall be limited to the Special Taxes, except to the extent
that provision for payment has been made by the City as may be permitted by law. The Bonds
do not constitute obligations of the City for which the City is obligated to levy or pledge, or has
levied or pledged, general or special taxation other than as described hereinabove.
The City has covenanted for the benefit of the owners of the Bonds that it will order, and
cause to be commenced judicial foreclosure proceedings against properties with delinquent
Special Taxes and diligently pursue to completion such foreclosure proceedings.
The Bonds are subject to redemption prior to maturity on September 1, 2004 or on any
Interest Payment Date thereafter, in integral multiples of $5,000, on a pro rata basis among
maturities (and by lot within any one maturity), at the following redemption prices (expressed as
percentages of the principal amounts of the Bonds to be redeemed)together with accrued interest
to the date of redemption as follows:
Redemption Dates . Redemption Price
September 1, 2004 through March 1, 2012 103%
September 1, 2012 and March 1, 2013 102%
September 1, 2013 and March 1,2014 101%
September 1, 2014 and thereafter 100%
The outstanding Bonds maturing on September 1, 2017, September 1, 2023 and
September 1, 2033, respectively, are subject to mandatory sinking payment redemption, in part,
without premium, on September 1, 2016, with respect to Bonds maturing September 1, 2017,
September 1, 2018, with respect to Bonds maturing September 1, 2023, and September 1, 2024,
with respect to Bonds maturing September 1, 2033, and on each respective September 1
thereafter as provided in the Agreement.
Notice of redemption with respect to the Bonds to be redeemed shall be given to the
registered owners thereof, in the manner and to the extent provided in the Agreement.
From and after the date fixed for redemption, if funds available for the payment of the
redemption prices of the Bonds selected for redemption shall have been deposited in the Bond
Fund, such Bonds shall cease to be entitled to any benefit under the Agreement other than the
right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds
to be redeemed on the redemption date specified in the notice of redemption.
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 that purpose and authenticated by the manual signature of an
authorized.signatory of the Fiscal Agent upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be .valid for any purpose unless made by the
registered owner or his duly authorized attorney, by execution of the form of assignment
RVPUB\KAB\666669. 1
A-3
endorsed hereon, and authenticated as herein provided, and the-principal hereof and interest
hereon 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
hereof to pay any tax or other governmental charge required to be paid with respect to such
transfer or exchange.
The Agreement and the rights and obligations of the City and the District 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 hereon endorsed shall have been dated and manually signed on behalf of 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.
l
RVPU13\KAB\666669. 1
A-4
IN WITNESS WHEREOF, the City of Huntington Beach, for the City of Huntington
.Beach Community Facilities District No. 2003-1 (Huntington Center) thereof, has caused this
Bond to be dated as of the Dated Date above, and to be signed by the facsimile signature of the
Mayor of the City and countersigned by the facsimile signature of the City. Clerk.
CITY OF HUNTINGTON BEACH for and on
behalf of THE CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.
2003-1 (HUNTINGTON CENTER), COUNTY OF
ORANGE, STATE OF CALIFORNIA
ATTEST:
City Clerk of the Mayor of the City of Huntington Beach
City of Huntington Beach
RVPUB\KAB\666669. 1
A-5
CERTIFICATE OF AUTHENTICATION.
This is one of the Bonds described in the within-defined Agreement.
Dated: , 2004
Fiscal Agent
By:
Authorized Signatory
RVPUB\KAB\666669. 1
A-6
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer said Bond 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 an eligible guarantor.
RVPUBTAB\666669. 1
A-7
EXHIBIT B
FORM OF IMPROVEMENT FUND REQUISITION
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
REQUISITION NO. _PERTAINING TO DISBURSEMENT
FROM IMPROVEMENT FUND
The undersigned hereby states and certifies:
(i) that he is the duly appointed, qualified and acting City Administrator of the City
of Huntington Beach (the "City") and as such he is an Authorized Representative of the City
within the meaning of the Fiscal Agent Agreement hereinafter defined;
(ii) that, pursuant to Section 3.03 of the Fiscal Agent Agreement dated as of March 1,
2004 (the "Fiscal Agent Agreement"), between U.S. Bank National Association, as fiscal agent
(the "Fiscal Agent") and the City, the undersigned hereby requests the Fiscal Agent to disburse
from the Improvement Fund established under the Fiscal Agent Agreement to each of the payees
designated on Exhibit A, attached hereto and incorporated herein by this reference, the respective
sums set forth opposite such designation, in payment or reimbursement of previous payments of
such costs, set forth in Exhibit A, attached hereto;
(iii) no portion of the amount then being requested to be disbursed has been set forth
in any.Officer's Certificate previously filed with the Fiscal Agent requesting disbursement, and
that the amount being requested is an appropriate disbursement from the Improvement Fund for
the Project..
Date:
CITY OF HUNTINGTON BEACH
By:
City Administrator
RVPUB\KAB\666669. 1
B-1
EXHIBIT A
IMPROVEMENT COSTS
PAYEE AND ADDRESS DESCRIPTION AMOUNT
i
RVPUB\K"\666669. I
B-2
FUNDING AND CONSTRUCTION AGREEMENT
Relating to
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER) .
Between
THE CITY OF HUNTINGTON BEACH
and
HUNTINGTON CENTER ASSOCIATES,LLC
a Delaware limited liability company
dated as of
March 1, 2004
RVPUB/KAB/664311
FUNDING AND CONSTRUCTION AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
This FUNDING AND CONSTRUCTION .AGREEMENT (the "Agreement") or "Funding
Agreement") is entered into as of the 1st day of March, 2004 by and between the CITY OF
HUNTINGTON BEACH, a California charter city (the "City"), and HUNTINGTON CENTER
ASSOCIATES,L.L.C., a Delaware limited liability company ("Developer").
RECITALS
(A) Developer is in cooperation with the Redevelopment Agency of the City of Huntington
Beach (the "Agency") to improve that certain real property located on Edinger Avenue and comprised of
a shopping center commonly known as "Huntington Center" and more particularly described and depicted
in the legal description and map attached hereto as Exhibits "A" and "B," respectively (the "Property").
The Property consists of a total of approximately 46.86 acres of land area. Pursuant to that certain Owner
Participation Agreement.entered into by and between Huntington Center Associates, LLC, a Delaware
limited liability company and the Agency and dated October 2, 2000 (the "OPA"), Developer, as
successor in interest to Huntington Center Associates, LLC, is contractually obligated under the OPA to
improve the Huntington Center and ancillary .improvements on and adjacent to the Property (the
"Development").
(B) The City,upon the request of Developer and pursuant to a request from the Agency under
the OPA has undertaken to establish a community facilities district pursuant to the provisions of Chapter
2.5 (commencing with § 5331 f) of Part 1 of Division 2 of Title 5 of the Government Code,'commonly
known as the"Mello-Roos Community Facilities Act of 1982" the.("Act"), and Chapter 3.56 of the City's
Municipal Code (the "Municipal Code") over and including the Property for the purpose of selling bonds
(the "Bonds") in an amount sufficient to pay for the acquisition of land and improvements thereon for
public use, the demolition and clearance of said land and improvements and the design, planning,
engineering, financing, installation, and construction of those certain public facilities that are generally
RVPUB/KAB/664311
1
described in Exhibit "C" attached hereto (the "Public Facilities"), which Public Facilities are necessary to
the development of the Property. Said community facilities district is known as "City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) (the "District").
(C) Section 3.56.120 of the Municipal Code provides that a community facilities district may
finance the construction -of facilities completed after the adoption of the resolution of formation
establishing the community facilities district if the facilities have been constructed as if they had been
constructed under the direction and supervision, or under the authority of, the local agency whose
governing body is conducting proceedings for the establishment of the District.
(D) The purpose of this Agreement is to provide for the design and the construction of the
Public Facilities, and the issuance and sale of the Bonds of the District to finance the acquisition of public
land and public improvements, the demolition and clearance of said land and improvements, and the
design, planning, engineering, financing, installation, -and construction of the Public Facilities and
expenses incidental thereto.
AGREEMENTS
NOW, THEREFORE, in consideration of the preceding recitals and the mutual covenants
hereinafter contained,the parties agree as follows:
Section 1. Establishment of District. The City has initiated and prosecuted proceedings
pursuant to the Act and the Municipal Code for the establishment of the District. Such proceedings
included elections pursuant to Sections 53326 and 53353.5 of the Act on (i) the question of the issuance
of the Bonds for the District to finance the acquisition of public land and public improvements, the
demolition and clearance of said land and improvements, and the design, planning, engineering, and
financing and the installation and construction or acquisition of the Public Facilities, (ii) the question of
the annual levy of special taxes on those portions of the Property subject to the Special Taxes for the
payment of the principal of and interest on the Bonds of the District and the annual administrative
expenses of the City and the District in levying and collecting such.special taxes, paying the principal and
RVPUB/KAB/664311
2
interest on such Bonds and providing for the registration, exchange and transfer of such bonds, including
the fees of fiscal agents and paying agents, and any necessary replenishment of the reserve fund for such
Bonds or accumulation of funds for future bond payments, and (iii) the question of the establishment of
an.appropriations limit for the District.
Section 2. Sale of Bonds. The City may proceed, using its reasonable best efforts, as
hereinafter provided, with the sale of the Bonds for the District in an aggregate principal amount not to
exceed$30,000,000 and with a debt service amortization schedule of not more than thirty(30)years, or as
otherwise consistent with the terms of the OPA, for the purpose of raising an amount sufficient to pay for
the acquisition of public land and construction of public improvements, the demolition and clearance of
said land, and the design, planning, engineering, and financing, and the installation and construction or .
acquisition of the Public Facilities. The timing of the issuance and sale of the Bonds, the aggregate
principal amount thereof, and the terms and conditions upon which they shall be sold shall be as.set forth
in this Agreement and otherwise as determined by the City in its reasonable discretion. The Bonds may
be sold in one or more series in the reasonable discretion of the City and in consultation with the
Developer. Not by way of limitation of the foregoing,the timing of the issuance and sale of the Bonds in
one or more series shall be as soon as reasonably practicable, as determined by the City in consultation
with Developer.
Section 3. Advance of Certain Expenses. Pursuant to Paragraph (f) of the Schedule of
Feasibility Gap Payments (Attachment No. 7) of the OPA, Developer shall pay and advance all of the
City's costs reasonably associated with the establishment of the District and the sale of the Bonds.
Additionally, Developer has advanced the sum of$68,580 (the ".Initial Deposit") for an appraisal of the
Property and market study, together with other necessary costs for the formation of the District including
a special tax consultant and all other expenditures in connection with the issuance of the Bonds, and such
amount shall be reimbursed to Developer pursuant to Section 5 hereof. Any costs to be paid or advanced
by the City may be reimbursed from the proceeds of the Bonds, which costs include the City's reasonable
RVPUB/KAB/664311
3
out-of-pocket expenses, if any, associated with engineering services provided by City engineering staff
and outside engineering consultants which are normally charged in connection with,the establishment of
the District and the determination of the sizing of the Bonds and the method of apportioning and levying
the special taxes on the Property to pay the principal of and interest on the Bonds, and reasonable travel
expenses of the City relating to.the sale of the Bonds. Such costs of the City, together with the Initial
Deposit and any additional amount advanced by Developer in connection with the formation of the
District, the issuance of Bonds, the appraisal, and the market study shall be referred to herein
"Reimbursable Expenses." All of the Reimbursable Expenses paid or advanced by the City or Developer
shall be reimbursed to the City or Developer, as applicable, from the proceeds of the sale of the Bonds, as
soon after receipt of the proceeds of the Bonds as is reasonably possible.
The City shall keep records of all Reimbursable Expenses advanced by the City pursuant to this
Section 3 which records shall be available for inspection by Developer during regular business hours.
The City shall separately account for all expenses paid from the deposit of Developer and such records
shall be available for inspection by Developer during regular business hours. The sole source of funds for.
reimbursement of any advance expenditure made by the City or Developer shall be the proceeds of the
Bonds; provided, that it is understood by the parties hereto that this Agreement is not intended to
supercede or replace the provisions of the OPA.
Section 4. Tax Requirements. The timing of the sale of the Bonds, formation of the
District, the nature of the investments in which the proceeds of the Bonds shall be invested, the duration .
of such investments, and the timing of the expenditure of such proceeds shall be as set forth in this
Agreement and the OPA, in accordance with the Funding Agreement, and otherwise as determined by the
City in its reasonable discretion in consultation with Developer; provided, that in all such matters City
shall comply with the requirements of and limitations prescribed by the provisions of Sections 103 and
141 through 150 of the Internal Revenue Code of 1986, as amended, and the implementing regulations of
the United States Department of the Treasury. The City shall not be required to take any such action
RVPUB/KAB/664311
4
which in the opinion of the City's bond counsel could result in the Bonds being classified by the United
States Department of the Treasury as "arbitrage bonds" or which could otherwise result in the interest on
the Bonds being included in gross income for purposes of Federal income taxation. Should any change in
or regulatory interpretation of any such requirement or limitation which may occur after the date of this
Agreement require or necessitate, in the opinion of such bond counsel, any action on the part of the City
in order to avoid such a classification or loss of tax exemption, the City shall notwithstanding any
provision of this Agreement, forthwith take such action.
Section 5. Amounts to be Included in Bonds. To the extent economically feasible, the City
shall include in the aggregate principal amount of the Bonds an amount sufficient to fund the costs for
construction of the Public Facilities included in Exhibit C attached hereto,the reserve fund for the Bonds, .
.capitalized interest on the Bonds for such period, not in excess of 18 months, as the City, in consultation
with Developer, may determine is appropriate, the amount of the discount of.the underwriter who
purchases the Bonds, the Reimbursable Expenses of Developer pursuant to this Agreement, and other
typical and reasonable out-of-pocket expenses incurred by the City, Agency or Developer in connection
with the issuance and sale of the Bonds, including bond counsel fees, disclosure counsel fees, legal fees,
fees of the bank which will act as fiscal agent for the Bonds, fees and other costs of the appraisal and
other fees and costs normally incidental to the sale of Bonds. Subject to the City's right of review and
approval of specific costs as set forth in the next succeeding paragraph of this Section 5, the City shall
.also include in the aggregate principal amount of the Bonds an amount sufficient to cover all of the
following: (i) all of the eligible costs of public facilities for which Developer is entitled to payment or
reimbursement in accordance with Paragraph . (b) of the Schedule of Feasibility Gap Payments
(Attachment No. 7) of the OPA, including the amount advanced for any appraisal of the Property; (ii) all
City development and.building permit, application, plan checking, inspection and other fees and charges,
by whatever name called, that are attributable to the design, planning, engineering, installation, and
construction of the Public Facilities that are paid or payable by Developer out of the proceeds of the
RVPUB/KAB/664311
5
Bonds; and (iii) all other Developer costs and expenses not included in clause (i) or (ii) that are
reasonably determined by the City to equitably pay or reimburse. Developer for.costs and expenses
incurred by it which are related to the establishment of the District, including the Reimbursable Expenses,
and the design, planning, engineering, financing, and installation and construction or acquisition of the
Public Facilities, including the construction management fee payable to Developer pursuant to Section 10
of this Agreement for the services to be provided by Developer pursuant to Section 9 and costs and
expenses of consultants, attorneys and engineers.
The City Administrator or his/her designee, on behalf of the City, shall have the right to
reasonably approve all of Developer's costs and expenses to be paid or reimbursed from proceeds of the
Bonds subject to the following: (i) to the extent that Developer incurs costs that are eligible for inclusion .
in the principal amount of the Bonds together with other costs that are not eligible for inclusion in the
principal amount of the Bonds (for example, public facilities and other improvements constructed under
the. same Construction Contract), the City will approve a fair allocation of eligible versus non-eligible
costs; (ii) the valuation of the property interests to be transferred by Developer for the Public Facilities
has been computed based upon an appraisal prepared in accordance with the OPA and is set forth in
Exhibit C hereto, (iv) the City Administrator or his/her designee, on behalf of the City, shall approve or
disapprove Developer's submittals for cost approvals within fifteen (15)business days after receipt and, if
any submitted costs are disapproved, he/she shall specify in writing the reasons therefor; and(v) approval
of Developer's submittals shall not be unreasonably withheld or conditioned. Developer shall be entitled
to submit written requests to the City Administrator or his/her designee,-on behalf of the City, for
approval of costs to be paid or reimbursed with proceeds of the Bond on a periodic basis, as costs are
incurred but not more frequently than monthly. Each such submittal shall be supported by adequate
written documentation'to justify the submittal, including as applicable, copies of.relevant contracts,
invoices, evidence of payment, and such other supporting information as the City may reasonably require.
RVPUB/KAB/664311
6
Section 6. Disbursement of Bond Proceeds to Developer. Subject to the provisions of
Section 5 hereof, as soon as reasonably practicable after the sale of the Bonds, the City shall disburse or
cause to be disbursed to Developer, or its designee pursuant to Section 10 hereof, the portion of the Bond
proceeds payable for costs approved through such payment date. Subsequent disbursement shall be made
no more frequently than monthly. Developer's construction management fee payable from proceeds of the
Bonds pursuant to Section 10 of this Agreement shall be prorated monthly, based upon the number of
months in the estimated schedule for completion of construction of the "Developer-Managed Public
Facilities" identified in Section 8. Immediately upon receipt of the proceeds of the Bonds, the City shall,
disburse or cause to be disbursed to Developer, or its designee; the portion of.Developer's construction
management fee earned through that date; provided, however,that the City shall be entitled to withhold or
cause to be withheld from such payment an amount equal to ten percent (10%) of the amount then due,
with such retained amount to be paid to Developer, or its designee, upon satisfactory completion of
construction of the Developer-Managed Public Facilities, and the transfer of title of any public facilities
or land and other improvements as set forth in Section 11 hereof. The portion of Developer's
construction management fee earned after the sale of the Bonds shall be paid monthly, subject to the same
ten percent (10%) withholding procedure. The City shall use its reasonable best efforts to review
Developer disbursement requests as expeditiously as reasonably possible. With ten (10) business.days
after City's approval of such disbursement, City shall deliver an Officer's Certificate (as defined in the
Fiscal Agent Agreement dated as of December 15, 2003, (the "Fiscal Agent Agreement') by and between
the City and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent")) to the Fiscal Agent
authorizing payment to the Developer, its designee in writing, or if requested by Developer, the holder of
any first in priority lien holder on the property. A copy of such Officer's Certificate shall be delivered to
Developer.
In no event shall the City have any obligation to pay or reimburse Developer or cause Developer
to be paid or.reimbursed from any source of funds other than proceeds of the Bonds or additional bonds
RVPUB/KAB/664311
available in the Improvement Fund (as defined in the Fiscal Agent Agreement). The City shall have no
responsibility or liability for the payment of any amount to any employee or subcontractor of Developer.
Section 7. Surplus Bond Proceeds. In the event that any surplus proceeds of the Bonds
remain in the Improvement Fund after all of the Developer-Managed Public Facilities have been
completed and accepted by the City, said surplus shall be applied, to debt service on the Bonds in the
manner provided in the Fiscal Agent Agreement. Interest earnings on funds .deposited in the
Improvement Fund (as defined in the Fiscal Agent Agreement) shall be retained therein and used for such
purposes.
Section 8. Design and Construction. (a) Developer shall cause the Public Facilities
indicated as "Public Facilities" on Exhibit C (the "Public Facilities") to be built by Developer to be
expeditiously designed. The Owner and its design engineer shall consult with the City's Public
Works/Engineering Department at regular intervals as prescribed by said department as design
progresses. Upon completion of the design of each such Acquisition Public Facility to the reasonable
satisfaction of the City and when Developer_has paid to the City all applicable plan checking and building
permit fees, the City shall notify Developer.that the design of the Acquisition Public Facility is complete
and acceptable to the City.
Developer has been authorized by the City to commence the design of the Public Facilities, and
the City has approved Developer's retention of Bomel Construction Company, Inc. as engineers to design
and construct a portion of the Public Facilities.
(b) City's Determination of Facilities to be Constructed by the Owner. The City may, but
need not, elect to permit Developer to proceed with the construction of such Public Facilities that have
been reviewed and approved by the City's Public Works Department prior to the completion of design of
all of the Public Facilities, and if the City elects to so proceed it shall notify Developer in writing as to the
Public Facilities which may then be constructed by Developer. As of the date of this Agreement,City and
Developer have agreed that Developer shall construct the Parking Structure and all other Public Facilities
RVPUB/KAB/664311
8
listed on Exhibit C hereto. All Public Facilities which the City determines will be constructed by
Developer are referred to herein as "Developer Managed Public Facilities."
Section 9. Construction Management. The City and Developer have determined .that
because of other construction activities of Developer which will be ongoing on and around the Property
concurrently with the installation and construction of the Developer-Managed Public Facilities, which
will necessitate continuous coordination between Developer's contractor and the various subcontractors,
it is in the .best interests of the City that the City retain Developer as agent of the City to manage the
installation and construction of all of the Developer-Managed Public Facilities. As construction manager
and agent of the City with respect to the construction of the Developer-Managed Public Facilities,
Developer's duties and responsibilities have been and shall be as follows:
(a) Developer shall manage, as agent of the City, all aspects and phases of the installation
and construction of the Developer-Managed Public Facilities and shall act as the City's representative in
all dealings with the contractor and subcontractors who will install and construct the Developer-Managed
Public Facilities pursuant to contracts entered into by Developer and described below; provided, however,
that Developer's authority to act as agent of the City shall be limited solely to the construction of the
Developer-Managed Public Facilities as set forth herein and that any change .or modification to such
authority shall be agreed to by the City in writing.
(b) Developer has caused contracts for construction of the parking improvements to be bid
on September 5, 2002, and received five bids. From such bids Developer selected and entered into a
construction agreement with Bomel Construction Company, Inc., pertaining to the parking structure and
adjacent improvements pursuant to that certain Standard Form of Agreement between Owner and
Design/Builder (AIA) document A191-Electronic Format 1996 Edition, dated as of December 3, 2002,
between Developer and Bomel Construction Company, Inc. (the "Public Parking Construction Contract").
Developer caused contracts for construction of certain additional Developer-Managed Public Facilities to
be bid on November 25, 2002, and four bids were received. From such bids Developer selected and
RVPUB/KAB/664311
9
entered into with Bayley Construction Company that certain Standard Form of Agreement between
Owner and Design/Builder, AIA Document 111-Electronic Format 1997 Edition, dated as of December
18, 2002, which relates to certain Developer-Managed Public Facilities (the "Initial Public Improvement
Contract," and together with the Public Parking Construction Contract, the "Construction Contracts").
Developer has represented to City that (i) the Construction Contracts were entered into by Developer
prior.to any obligation on the part of the City to pay for the construction of the Public Facilities, (ii)
procedures utilized by Developer for selection bf the contractors and entry into the Construction Contracts
were generally consistent with the City's policy for the construction of public facilities and the OPA, and
(iii) the Construction Contracts provide for payment of prevailing wages for labor. Further, Developer
represents that because such Construction Contracts have been entered into and work on the construction
of the Developer-Managed Public Facilities has commenced,together with the overlapping and integrated
nature of the Developer-Managed Public Facilities and the private work being concurrently performed by
or on behalf of Developer on and adjacent to the Property, it is necessary to have Developer's contractors
perform the work in constructing and installing the Developer-Managed Public Facilities pursuant to the
Construction Contracts, and that-it is therefore not feasible to have a contract or contracts for construction
and installation of the-Developer-Managed Public Facilities publicly bid. The Construction Contracts
shall comply with the requirements of contracts described in (3) through (17) set forth in Exhibit D
attached hereto. In addition, Developer shall have the right to extend, modify, and approve change orders
to the Construction Contracts which may alter the scope of work in such Construction Contracts by no
more than 25% with notice to the City and without obtaining City approval provided that no change to
the plans and specifications for any of the Developer-Managed Public Facilities shall be permitted unless
approved by the City in accordance with the City's normal requirements for public improvement design
review. Except as described in the immediately preceding sentence for change orders, any Public
Facilities to be funded with proceeds.of the Bonds and not described in the Construction Contracts as of
February 3, 2003, shall be publicly bid and shall comply with the requirements of(1) through (17) set
forth in Exhibit D attached hereto. Any costs of the Public Facilities in excess of the amount available in
RVPUB/KAB/664311
10
the Improvement Fund, or additional public facilities not otherwise listed herein and Facilities not
otherwise provided in the proceeds of the Bonds, will be paid by Developer unless.City agrees to issue
additional bonds pursuant to the Fiscal Agent Agreement.
(c) Developer shall in cooperation with the City's Public Works Department schedule and
coordinate preconstruction meetings with Developer's contractor, and as a result thereof, shall develop in
coordination with the Public Works Department schedules for completion of the construction and
installation of the Developer-Managed Public Facilities which shall be coordinated to the extent necessary
and desirable and permitted by the Construction Contract with schedules for the completion of other
construction work which Developer will have concurrently ongoing in connection with its Development.
(d) During construction and installation of the Developer-Managed Public Facilities and all
portions thereof, Developer shall act as representative of the City in coordinating with the contractor and
in delivering the City's instructions and requirements to Developer's contractor. As representative of the
City, Developer shall cooperate and consult with representatives of the City's Public Works Department
and the City's inspectors as reasonably required by the City or that department or the inspectors.
(e) . Developer shall in coordination with the City's inspectors at all times keep the Public
Works Department advised of the progress of construction of the Developer-Managed Public Facilities.
(f) Developer shall make all necessary arrangements with its contractors to afford the City's
inspectors adequate access to job sites at all times required by the inspectors for purposes of performing
their inspection services.
(g) Developer shall be responsible for resolving any dispute with its contractors with regard
to the interpretation of the plans and specifications or contract documents, the progress of work, or the
adequacy of the contractor's performance; provided that, in performing such responsibility, Developer
shall consult with and act in accordance with the valid and reasonable directives of the City's inspectors
or the Director of the Public Works Department.
RVPUB%KAB/664311
11
(h) In accordance with the second paragraph of Section 5 of this Agreement and in
consultation with the City's inspectors, Developer shall analyze and certify to the Public Works
Department the progress payment requests of its contractors, advising those departments as to whether or
not the contractor's estimate of the percentage of completion of the construction of the Developer-
Managed Public Facilities is correct and of the amount to be paid by the City to Developer or directly to
its contractor on the basis of each progress payment request.
(i) Upon completion of the construction and installation of the Developer-Managed Public
Facilities, or any portion thereof, Developer in consultation with the City's inspectors and representatives
of the Public Works Department, as appropriate, shall determine whether construction and installation of
the Developer-Managed Public Facilities or the portion thereof which is then completed has been .
satisfactorily completed in accordance with the plans and specifications, and shall report to the Public
Works Department the results of such analysis and investigation; provided, however, that Developer has
no authority hereunder to accept completed work, approve plans or incur obligations on behalf of the City
other than as expressly set forth herein.
(j) In..accordance with the second paragraph of Section 5 of this Agreement, Developer, in
consultation with-the City's inspectors, shall notify the City when the final payment is to be made to
Developer or directly to its contractor upon completion of the construction of the Developer-Managed
Public Facilities which the contractor is constructing.
Section 10. Staffing and Compensation for Construction Management. In performing its
construction management services pursuant to Section_9 hereof, Developer shall employ or designate and
make available for the performance of such services a qualified project manager who shall have
experience reasonably satisfactory to the City in the management of similar construction projects. For
performing its services as construction manager, Developer shall be entitled to reimbursement out of the
proceeds of the Bonds in an amount not to exceed four percent (4%) of the"total amount of the
Construction Contracts payable to Developer, or its designee, Snyder Huntington Development, L.L.C.
RVPUB/KAB/664311
12
that is allocable to the Developer-Managed'Public Facilities (including change orders), with such amount
to be disbursed to Developer in accordance with Section 6 of this Agreement. . Snyder Huntington
Development, L.L.C. may hire a co-manager or additional project manager to assist it in performing its
construction management services, provided however, that no additional management fee will be
provided from the proceeds of the Bonds or any other funds of the City, Agency or District.
Section 11. Facilities to be Owned,by the City.
(a) Conveyance of Land and Easements to City. Acceptable Title to all property on, in or
over which each Public Facility will be located, shall be deeded over to the City by way of grant deed,
quitclaim, or dedication of such property, or easement thereon, if such conveyance of interest is approved
by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain
such Public Facility located therein, thereon or thereover, and to permit Developer to perform its
obligations as set forth in this Agreement. - Developer agrees to assist the City in obtaining such
documents as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be
accomplished as soon as the conditions set forth herein have been satisfied, but in any event-prior to the
final payment for the construction of the Public Facilities and shall be evidenced by recordation.of the
acceptance thereof by the City Council or the designee thereof.
(b) Title Evidence. Upon the request of the City, Developer shall furnish to the City a
preliminary title report for the land underlying the to Public Facilities not previously dedicated or
otherwise conveyed.to the City, for review and approval at least fifteen (15) calendar days prior to the
transfer of Acceptable Title of the Public Facility to the City. The City shall approve the preliminary title
report unless it reveals a matter which, in the judgment of the City, could materially affect the City's use
and enjoyment of any part of the property or easement covered by the preliminary title report. In the
event the City does not approve the preliminary title report, the City shall not be obligated to accept title
to such Public Facility from Developer for the construction thereof until Developer has cured such
objections to title to the reasonable satisfaction of the City.
RVPUB/KAB/664311
13
(c) "Acceptable Title" means title to land or interest therein, in form reasonably acceptable to
the City Administrator, free and clear of all liens, taxes, assessments, leases, easements and
encumbrances, whether or not recorded,but subject to any exceptions reasonably determined by the City
Administrator as not interfering with the actual or intended use of the land or interest therein.
Notwithstanding the foregoing, an irrevocable offer of dedication may constitute land with an
"Acceptable Title" if: (i) such offer is necessary to satisfy a condition to a tentative or final parcel map,
(ii) such offer is in a form reasonably acceptable to the City Administrator, (iii) the City Administrator
has no reason to believe that such offer of deduction will not be accepted by the applicable public
agency, and (iv) the City Administrator commits in writing not to allow any liens to be imposed on such
property prior to its acceptance.
(d) Transfer of title of real property to the City shall be accomplished through an escrow to
be established with an escrow company mutually agreed to by the parties hereto and proper title shall be
delivered upon satisfaction of the escrow conditions and proper delivery of funds for the purchase of such
real property.
Section 12. Indemnification, Insurance. Developer shall protect, defend,_indemnify and hold
harmless the City, the Agency and the District, and their officers, elected or appointed officials,
employees, agents and volunteers from and against any and all claims, actions, liability, damages; losses,
expenses, judgments, demands and defense costs, and consequential damage or liability of any kind or
nature, however caused, including those resulting from death or injury to Developer's employees and
damage to Developer's property, arising directly or indirectly out of the obligations or operations herein
undertaken by Developer and out of Developer's performance of its duties and responsibilities with
respect to the Construction Contracts and as Construction Manager hereunder (including any liability
arising under the California Public Contract Code with respect to satisfaction of public bidding
requirements) caused in whole or in party by any negligent act or omission of Developer, any
subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of
RVPUB/KAB/664311
14
them may be liable, including but not limited to concurrent active or passive negligence, except where
caused by the active negligence, sole negligence, or willful misconduct of City, .Agency or District.
Developer will conduct such defense at its sole cost and expense, and the City, Agency or District.shall
approve selection of Developer's legal counsel, which approval shall not be unreasonably withheld. This
indemnity shall apply to all claims and liability regardless of whether any insurance policies are
applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided
by Developer.
To secure its indemnification obligation, Developer shall obtain and maintain throughout the
period of its construction management services a broad form commercial general liability policy of
insurance, including motor vehicle coverage, in a form and with coverages acceptable to the City, Agency .
and District, having a single aggregate limit of liability as to all coverages provided thereby in the amount
of $5,000,000, and naming the City, the Agency, the District and their officers, elected and appointed
officials, agents and employees while acting in the scope of their duties as additional insureds. Developer
shall provide to the City, Agency and District a certified copy of the policy for such insurance or a
certificate of such insurance coverage in a form reasonably satisfactory to the City, Agency and District.
Any such certificate of insurance shall include an endorsement providing that the City, the Agency, the
District, their officers, elected and appointed officials, and employees, and to the extent insurance
coverage for such purpose is commercially available, their agents, are additional insureds under the
commercial general liability policy, and shall provide that the policy may only be canceled for
nonpayment upon 10 days' advance written notice for nonpayment, or for other matters upon 30 days'
advance written notice to the City, Agency and District. Under no circumstances shall such insurance
contain a self-insured retention or a deductible or any other.similar form of limitation on the required
coverage.
Developer shall also maintain throughout the period of its construction management services
workers' compensation insurance as required pursuant to California Labor Code Section 1861. Developer
RVPUB/KAB/664311
15
acknowledges awareness of Section 3700'et seq. of the California Labor Code which requires every
employee to be insured against liability for worker's compensation; Developer covenants that it will
comply, or cause its contractors to comply, with such provisions prior to commencing performance of the
work hereunder. Developer shall obtain and furnish, or cause its contractors and subcontractors to obtain
and furnish, to City worker's compensation and employee's liability insurance in an amount of not less
than the State statutory limits. Developer;.its contractors and sub-contractors, shall furnish to the City a,
waiver of subrogation under the terms of the workers'compensation and employer's liability insurance.
Prior to commencing performance of the work .hereunder,.Developer shall furnish .to City,
Agency and District, certificates of insurance subject to approval of the City Attorney, Agency Counsel
and Counsel to.the District evidencing the foregoing insurance coverages as required by this Agreement; .
the certificates shall:
1. provide the name and policy number of each carrier and policy;
2. state that the policy is currently in force; and
3. promise to provide that such policies will not be canceled or modified without thirty (30)
days'prior written notice of City.
Developer shall maintain the foregoing insurance coverages in force until the work under this
Agreement is fully completed and accepted by City.
The requirement for carrying the foregoing insurance coverages shall not derogate from the
Developer's defense, hold harmless and indemnification obligations as set forth under this Agreement.
City,Agency and District or their respective representatives shall at all times have the right to demand the
original or a copy of all the policies of insurance. Developer shall pay, in a prompt and timely manner,
the premiums on.all insurance hereinabove required.
Developer shall provide a separate copy of the additional insured endorsement to each of
Developer's insurance policies, naming City, Agency and District, their officers, elected and appointed
RVPUB/KAB/664311
16
officials, employees, agents and volunteers'as Additional Insureds, to the City Attorney, Agency Counsel
and Counsel to the District for approval prior to any payment hereunder.
Section 13. Independent Contractor. In performing its construction management services,
Developer shall be an independent contractor, and this Agreement shall not and does not create a joint
venture or partnership between the City and Developer. The City shall have no responsibility or liability
for the payment of any amount to any employee or subcontractor of Developer.
Section 14. Special Taxes. Following the sale of the Bonds, the City shall annually
thereafter, as appropriate,levy and collect special.taxes on that portion of the Property subject to the
Special Taxes, in an amount sufficient to pay the principal and interest coming due on the Bonds in each
year and shall levy the Parking Structure Maintenance Special Tax, as defined in the Rate and Method of
Apportionment of Special Tax incorporated as Exhibit "B" to City Council Resolution No. 2003-3
adopted January 6, 2003 initiating proceedings to establish the District. Such special taxes shall be,levied
at the rate or rates and in accordance with the Rate and Method of Apportionment of Special Tax. The
City may include in the amount of the annual levy of special taxes on the Property in any year an amount
sufficient to replenish the reserve fund for the Bonds, the fees associated with the administration of debt
service on the Bonds, and to pay the City's reasonable administrative expenses in connection with the
levy and collection of such Special Taxes and shall also levy for.the maintenance and operation of the .
parking structure in the manner and at the rates established in the Rate and Method of Apportionment of
the Special Tax.
Section 15. Termination.
(a) No Bonds.- If, for any reason,the City does not issue any of the Bonds for the District by
December 31,2004,this Agreement shall terminate and be null and void'and of no further effect.
(b) Mutual Consent. This Agreement may be terminated by the mutual, written consent of
the City and Developer, in which event the City may let contracts for any remaining work related to the
RVPUB/KAB/664311
17
Facilities not theretofore constructed by Developer hereunder, and use all or any portion of the monies in
the Improvement Fund to pay for same, and Developer shall have no claim or .right to any further
payments for the Construction of the Public Facilities, except as otherwise may be provided in such
written consent.
(c) City Election for Cause. The following events shall constitute grounds for the City, at its
option,to terminate this Agreement, without the consent of Developer:
(i) Developer shall voluntarily file for reorganization or other.relief under any
Federal or State bankruptcy or insolvency.
(ii) Developer shall have any involuntary bankruptcy or insolvency action filed
against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of the assets
of Developer, or shall suffer an attachment or levy of execution to be made against the property it owns
within the District unless, in any of such cases, such circumstance shall have been terminated or released
within 120 days thereafter.
(iii) Developer shall abandon construction of the Facilities. Failure for a period of
four consecutive months to undertake substantial work related to the construction of the Public Facilities,
other than for a reason specified in Section 15(d) hereof, shall constitute a noninclusive example of such
abandonment.
(iv) Developer shall breach any material covenant or default in the performance of
any material obligation hereunder.
(v) Developer shall transfer any of its rights or obligations under this Agreement
without the prior written consent of the City.
RVPUB/KAB/664311
18
(vi) Developer shall have made any material misrepresentation or omission in any
written materials furnished in connection with any preliminary official statement, official statement or
bond purchase contract used in connection with the sale of any series of the Bonds.
(vii) Developer,.or any assignee of Developer shall at any time challenge the validity
of the District or any of the Bonds, or the levy of Special Taxes within the District, other than on the
grounds that such levy was not made in accordance with the terms of the Rate and Method of
Apportionment of the Special Taxes for the District.
If any such event occurs, the City shall give written notice of its knowledge thereof to Developer
(and any mortgage or trust deed beneficiary specified in writing by Developer to the City to receive such
notice) and Developer agrees to meet and confer with the City Administrator and other appropriate City
staff and consultants as to options available to assure timely completion of the Facilities. If City elects to
terminate this Agreement, the City. shall first notify Developer (and any mortgagee or trust deed
beneficiary specified in writing by Developer to the City to receive such notice) of the grounds for such
termination and allow Developer a minimum of thirty(30) days to eliminate or mitigate to the satisfaction
of the City Administrator the grounds for such-termination. Such period may be extended if Developer
has commenced and is proceeding with diligence to eliminate or mitigate such grounds for termination. If
at the end of such period (and any extension thereof while Developer is -diligently eliminating or
mitigating such grounds for termination), as determined solely by the City, Developer has not eliminated
or completely mitigated such grounds, to the satisfaction of the City, the City may then terminate this
Agreement.
Notwithstanding the foregoing, so long as any event listed in any of the clauses (i) through and
including (vii) above has occurred, notice of which has been given by the City to Developer, and such .
event has not been cured or otherwise eliminated by Developer, the City may in its discretion cease
making payments to Developer pursuant to Section 6 hereof.
RVPUB/KAB/664311
19
(d) Force Majeure. Whenever performance is required of a party hereunder (other than
payments), that party shall use all due diligence and take all necessary measures in good faith to perform,
but if completion of performance is delayed by reasons of floods, earthquakes or other acts of God, war,
civil commotion, riots, strikes, picketing, or other labor disputes, damage to work in progress by casualty
governmental actions, including those of the City (provided that City's actions shall not excuse City
performance) or by other cause beyond the reasonable control of the party (financial inability excepted),
then the specified time for performance shall be extended by the amount of the delay actually so caused.
Section 16. Binding on Community Facilities District. The District shall automatically.
become a party to this Agreement, and all provisions hereof which apply to the City shall also apply to the
District. The City Council of the City, acting as the legislative body of the District, shall perform all parts
of this agreement which require performance on the part of the District.
Section 17. Assignment. Developer .shall have the right without obtaining the City's
approval or consent to assign this Agreement and any right or duty of Developer hereunder to any
permitted or approved successor or assignee of Developer's interest to the Property in accordance with
Sections 105 and 410 of the OPA. Otherwise, Developer shall not assign this Agreement or any right or
obligations hereunder without the express prior written approval of the City. .As a condition.of such
approval, the City may require reasonable proof of the financial responsibility and experience of a
.proposed assignee to undertake and perform the duties and responsibilities of Developer under this
Agreement. The City's approval of an assignment of this Agreement and the rights and duties of
Developer hereunder shall not be unreasonably withheld, delayed,or conditioned.
Section 18. Limited Liabili , of City. Developer agrees that any and all obligations of the
City arising out of or related to this Agreement are special and limited obligations of the City and the
City's obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the
Improvement fund and from no other source. No member of the City Council, or-City staff member,
RVPUB/KAB/664311
20
employee or agent shall incur any liability hereunder to Developer or any other party in their individual
capacities by reason of their actions hereunder or execution hereof.
Section 19. Excess Costs. Developer agrees to pay all costs of the Public Facilities that it is
obligated to construct hereunder and under the OPA in excess of the moneys available therefor in the
Improvement Fund.
Section 20. Audit. The City Administrator and/or the Treasurer or other finance officer of
the City shall have the right, during normal business hours and upon the giving of two (2) business days
prior written notice to Developer, to review all books and records of Developer pertaining to costs and
expenses incurred by Developer in relation to any of the Public Facilities, and any bids taken or received
for the construction thereof or materials therefor.
Section 21. Attorneys' Fees. In the event that any action or suit is instituted 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 expense of suit, including reasonable
attorneys'fees.
RVPUB/KAB/664311
21
Section 22. 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 transmitted by telecopy or facsimile transmission (which shall be immediately confirmed by
telephone and shall be followed by mailing an original of the same within twenty-four hours after such
transmission), or seventy-two hours following deposit of the same in any United States Post Office,
registered or certified mail,postage prepaid,addressed as follows:
City,Agency or City of Huntington Beach
District: 2000 Main Street
Huntington Beach, CA 92648
Attn: City Administrator,Director of Economic Development and
Director of Public Works
Developer: Huntington Center Associates,LLC
5757 Wilshire Blvd., Penthouse 30
Los Angeles,CA 90036
Attn: Mike Wise
with a copy to: Allen Matkins Leck Gamble & Mallory LLP
515 South Figueroa Street,#700
Los Angeles, CA 90071
Attn: Michael J. Kiely,Esq.
Construction Snyder Huntington Development,L.L.C.
Manager: 5757 Wilshire Blvd.,Penthouse 30
Los Angeles, CA 90036
Attn: Daniel J. Schneider
with a copy to: Allen Matkins Leck Gamble &Mallory LLP
515 South Figueroa Street,#700
Los Angeles, CA 90071
Attn: Michael J. Kiely,Esq.
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.
Section 23. 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
possible.
RVPUB/KAB/664311
22
Section 24. Other Agreements. The obligations of Developer hereunder shall be those of a party
hereto and not as an owner of the property in the District. Nothing herein shall be construed as affecting
the City's or Developer's rights, or duties to perform their respective obligations, under other agreements,
use regulations or subdivision requirements relating to the development of the lands in the District. This
Agreement-shall not confer any additional rights, or-waive any rights given, by either party hereto under
any development or other agreement to which they are a party.
Section 25. 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 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.
Section 26. Merger. No other agreement, statement or promise made by any party or any
employee, officer or agent of any party with respect to any matters covered hereby that is not in writing
and signed by all the parties to this Agreerpent shall be binding.
Section 27. Parties in Interest. Nothing in this Agreement, expressed or implied, is intended
to or shall be construed to confer upon or to give to any person or entity other than the City and
Developer any rights, remedies or claims under or by reason of this Agreement or any covenants,
conditions or stipulations hereof-, and all covenants, conditions, promises, and agreements in this
Agreement contained by or on behalf of the City or Developer shall be.for the sole and exclusive benefit
of the City and Developer.
Section 28. Amendment. This Agreement may be amended, from time to time, by written
supplement hereto and executed by both the City and Developer. ,
Section 29. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original.
RVPUB/KAB/664311
23
Section 30. Prompt Action. All consents, approvals and determinations required of either the
City or Developer pursuant to this Agreement shall be promptly given or made, and shall not be
unreasonably withheld or conditioned.
Section 31. General. This Agreement and the OPA contain the entire agreement between the
parties with respect to.the matters herein provided for. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns .of the parties. This Agreement shall be construed and
governed by the Constitution and laws of the State of California. The captions of the.sections of this
Agreement are provided for-convenience only, and shall not have any bearing on the interpretation of any
section hereof.
RVPUB/KAB/664311
24
IN WITNESS WHEREOF,the parties have caused this agreement to be signed as-of the date first
above written.
DEVELOPER
HUNTINGTON CENTER ASSOCIATES,LLC,
a Delaware limited liability company
By: Huntington Management Ent.,LLC,
a Delaware limited liability company,
Its Manager
By: BMLF/Huntington,LLC,
a Delaware limited liabili company,
Its Ma/na
B /
L a E616,Trustee of the
Bryan Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
By:
City Clerk Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Manager City Manager
Bond Counsel
RV PUB/KAB/664311
25
IN WITNESS WHEREOF,the parties have caused this agreement to be signed as of the date first
above written.
DEVELOPER
HUNTINGTON CENTER ASSOCIATES,LLC,
a Delaware limited liability,company
By: Huntington Management Ent.,LLC,
a Delaware limited liability company,
Its Manager
By: BMLF/Huntington,LLC,
a Delaware limited liability company,
Its Manager
By:
Bryan Ezralow,Trustee of the
Bryan Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
r .
&ye LV By:
City Clerk Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
C� Q
City Malrager City<nager
Bond Coun el
RVPUB/KAB/664311
25
EXHIBIT "A"
LEGAL DESCRIPTION OF RETAIL PARCEL PROPERTY
Parcels 2 through 9 as shown on Parcel Map No. 86-200 filed in Book 255,pages 40-45, of
Parcel Maps in the Official Records of the County Recorder of Orange County, California,
EXCEPT those portions of Parcel A (being portions of said parcel 4 and 8) conveyed to the City
of Huntington Beach, a municipal corporation by deed recorded May 1, 1991 as Instrument No.
91-209426 of Official Records.
EXHIBIT"A"
TO
FUNDING AGT.
12/23r 2003 10:54 9494860779 EN ENG PAGE 02i 04
EXHIBIT "A"
LEGAL DESCRIPTON OF RETAIL -PARCEL PROPERTY
LD 1018 SHEET 1 OF 2
02-'I 00
LEGAL DESCRIPTION FOR
BELLA TERRA PARKING STRUCTURE
THE:: LAND BEING REFERRED TO HEREIN IS SITUATED IN THE CITY OF
HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA.
PARCEL "A"
BEING A PORTION OF PARCEL 2 AS SHOWN IN PARCEL MAP NO. 86-200,
RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL
MAPS 1N THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF
ORANGE, DESCRIBED AS FOLLOWS:
BEGINNING AT THE EASTERLY TERMINUS OF THE NORTH LINE OF SAID
PARCEL 2, SHOWN AS "NORTH 89°29'30" WEST 763.76 FEET' ON SAID
PARCEL MAP NO. 86-200, SAID. POINT ALSO BEING ALONG THE
SOUTHERLY LINE OF THE SOUTHERN CALIFORNIA EDISON RIGHT OF
WAY (150.00 FEET IN WIDTH) PER GRANT DEED RECORDED IN BOOK
3675, PAGE 63 AND GRANT DEED RECORDED IN BOOK 3159, PAGE 483 .
BOTH OF OFFICIAL RECORDS; THENCE ALONG 'SAID LINE NORTH
89`29'30" WEST A DISTANCE OF 67.51 FEET TO THE TRUE POINT OF
BEGINNING; THENCE DEPARTING SAID "LINE SOUTH 00°30'30" WEST A.
DI::iTANGE OF 334.58 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 135.12 FEET; THENCE SOUTH 70°32'16" WEST A DISTANCE OF 4.39
FEET; NORTH 89°29'30"WEST A DISTANCE OF 3.00 FEET; THENCE NORTH
00`30'30" EAST A DISTANCE OF 126.75 FEET; THENCE NORTH 89°29'30"
WEST A DISTANCE OF 148.33 FEET; THENCE NORTH 00°30'30" EAST A
DISTANCE OF 26.67 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 109.65 FEET; THENCE SOUTH 75030'30" WEST A DISTANCE OF 9.34
FEET; THENCE NORTH 89029'30" WEST A DISTANCE OF 7.25 FEET;
THENCE NORTH 00030'30" EAST A DISTANCE OF 185.08 FEET TO ABOVE
ME:NTIONED-NORTH LINE; THENCE EASTERLY ALONG SAID LINE SOUTH
89'29'30" EAST A DISTANCE OF 416.50 FEET TO THE TRUE POINT OF
BEGINNING.
CONTAINING AN AREA OF 2.33 ACRES MORE OR LESS.
CHRIST-OPHEA /-
W DANIELS
0�yfo3 �z/3•/o�
CHRISTOPHER W. DANIELS � NO.W
EXHIBIT "A"
PAGE 2 OF 4
12/23i2003 10:54 9494360r79 E%AIBIT .A,EN ENG PAGE 03/04
LEGAL DESCRIPTION OF RETAIL. PARCEL PROPERTY
.` SHEET 2 OF 2
LD 1018 02-100 CENTER DRIVE
N39'29_30'W 53+.08'
SOUTHERN CALIFORNIA EDISON RIGHT OF WAY
BK. 31:59,
PG 485 O.R. "lv� BK. 4519,
5LY LINE OF THE N'LY 150' OF THE SOUTH 1/2 PG 491 O.R.
— OF THE SOUTHFEAST.1/4,OF SECTION 14 —
(NBK. 3675, PG. 63 O.R.- /
89'29'30*W 763.76'
416.50' 67.51'
•��
T.P.0.8. P.0.8.
i., - PARCEL 'A„ m
2.33 AC 1- ;
PARKING STRUCTURE '-'
z V N00 30'30"E , / •1
L1 26,6-,
H
N8929'30"w
109.65' N8 'W 148.33' o «�
1 O •—+
� O aa�
r z
rQQ7
.M
z 4
IR%
N8929'30"W
135.12'
L3
LINE TABLE I
UNE BEARING LENGTH
Lt N75'30'30"E 9.34
L2 N89'29'30"W 7.25
L3 N7032'16"E 4.39
L4 N89'29'30'W 3.00
DATE: 09-24-03
Engineers I Planners r Surveyors EXHIBIT
soluw;mrer,v+easa. uaa+1
SKETCH TO ACCOMPANY LEGAL DESCRIPTION
SCALE: 1" =80' +sew..wyaara.�.m,otl+avEa�; es++a FOR PARKING STRUCTURE
_ [7 ria rameeateos r.xa=imw a
EXHIBIT "A" BELLA TERRA MALL, HUNTINGTON BEACH, CA.
PAGE .3 OF 4
12/23/2003 10:54 9494360779 EN ENG PAGE 04/04
EXHIBIT "A"
LEGAL DESCRIPTION OF RETAIL PARCEL PROPERTY
,pkg-structure.t:ct
RUNTINGTOU BEACH N1ALL PARKING STRUCTURE SEPT. 23, 2003 JN 02100 14ENG
Parcel name: prkgstrul "
North: 2214735.2241 East 6031229.0658
Line Cou::se: N 89-29-30 W Length: 109.65
North: 2214736.1969 East : 6031119.4201
Line Course: S 75-30-30 w Length: 9.34
North: 2214733.8597 East : 603,1110.3772
Line Course: N 89-29-30 w Length: `7.25
N'Drth: 2214733.9240 East : 6031103.1275
Line Course: N 00-30-30 E Length: 185.08
N•zprth: 2214918.9967 East : 6031104.7695
Line Course: S 89-29-30 E Length: 416.50
North: ..2214915.3015 East : 6031521.2531
Line Course: S 00-30-30 W Length: 334.58
North: 2214580.7347 East : 6031518.2848
Line Course: N 89-29-30 W Length: 135.12
Korth: 2214561.9335 East : 6031383.1'701
Line Course: S 70-32-16 W Length: 4.39
North: 2214550.4708 East : 6d31379.0309
Line Course: N 89-29-30 w Length: 3.00
North: 2214580.4974 East : 6031376.0310
Line Coarse: N 00-30-30 E Length: 126.75
North: 2214707.2424 East : 6031377.3.556 _
Line Coarse: N 89-29-30 W Length: 148.33
North: 2214708.5584 East : 6031228.8314
Line Coijrse: N 00-30-30 E Length: 26.67
tlorth: 2214735.2273 East : 6031229.0680
Perimeter: 1506.66 Area: 101.,662.2856 sq.ft. 2.3343 acres
Mapcheck Closure - (Uses listed courses, radii, and deltas)
Error Closure: 0.004o Course: N 34-43-03 E
Error forth: 0.00326 Fast 0.00226
Precision 1: 376, 665.00
Page 1 .
EXHIBIT "A"
PAGE 4 OF 4.
PROPOSED BOUNDARIES OF `SAT-1"`°
CITY OF HUNTINGTON BEACH om OF p �
ai"T OF"{ua
COMMUNITY FACILITIES DISTRICT TM:
No. 2003-1 0OW ' •'G
(HUNTINGTON CENTER) AF ME a_onnu- o.,a=
Ar Mt XOYII _
COUNTY OF ORANGE [ [
STATE OF CALIFORNIA MOO' 1.OFn4w-"Off Cp&
KAT90 ROf rnamwrtrd OAA1gL
inr[d aurauw
OMILNN L 960 M
NIL%W OOUN CXVWMCOMA
Own'
Fk"w MO..C.la Mlff mf-
d M!—d—TwomX�Acw r
0 OAr a ioit -
,�'?r
/ NT, j cowl OHO 1.1X[O'noWROF
THE cry OF wpf N OX WA
({. ogwwo M[loiwo.Asl OF TX[Qf'T
�O' � tg,�' I - aXX1(TNOTOM lIKX m.wm
p'/ .1.6. r•p OwrNcr x0.NOs�
� f wrcFAwor—awmftmuXna
OMl10f.{lAT!a eAtnawMti w•l
j AI�.IIWtONM[OITl canndrn[
ma dXVO[ QrwIAOIATa
KOUW MtlT[IO MIIWA XnD 011 _
aor«e m�ouw••.Me an aiwt a
Me ur.OF wXTNOTaX st—
I s
j � P
i
M0F'°d X
! ( �A{iT 16 7mY•1. I I N'Jl.�m�io[II AA-[OO X�IIiTM
LOCATION MAP
v m Tm m
aNANC N•.ua .
' Xa.A.nJw rti A�
L9K
I'.MC[li 7 7XAilOV{N{IOMN ON MNC[1 YN NO.IW[{
A.W wpp{ilf..AOli O.{.d�MC[lYMl NTX[0A/G! .
d Mt'Hair KO0110N1 d O[.NOf f1)IIITrT.CYYONAA
SHEET 1 OF 1
EXHIBIT B TO FUNDING AGT.
EXHIBIT C
PUBLIC FACILITIES
A. Developer Managed Public Facilities Cost Estimate
1. Edinger Avenue Improvements $ 3,400,000
2. Center Avenue Improvements 600,000
3. Design/Build Parking Structure 11,771,250
4. On-Site Public Utilities—Wet 1,200,000
5. Fire Sprinklers for Garage 400,000
6. Technical Services,Fees &Permits 880,000
7. Parking Garage Land Value 1,600,000
8. Police Substation Improvements 165,000
9. Relocation of existing utilities for Garage foundations 450,000
Total Costs $20,466,250
RVPUB/KAB/664311
C-1
1
EXHIBIT D
PUBLIC CONTRACT REQUIREMENTS
(1) CONTRACTOR'S LICENSE/INVITATION TO BID
Developer shall specify the type of contractor's license required in both the plans and the
invitation for bids. Cal. Pub. Cont. Code § 3300. The contractor must include.its license number in the
bid documents.. Cal. Bus. & Prof. Code § 7030.5. Developer, as City's agent, may exercise its discretion
in determining which license class is permitted for a particular project, subject to consultation with the
Contractor's License Board, to determine the validity of the license and what license category is required.
Developer hereby warrants that all contractors hired as of the effective date of this agreement were
properly licensed at the time it submitted its bid, prior to awarding a contract or prior to issuing a
purchase order. Cal. Bus. &Prof. Code § 7028.15(e).
. (2) MAJOR SUBCONTRACTORS
Developer hereby warrants that the bid specifications or general conditions issued prior to
entering into the Construction Contracts required the bidder to list in its bid all its subcontractors who will
perform work in excess of one-half percent of the total bid or, in the case of streets or highways, one-half
percent or*$10,000, whichever is greater. Cal. Pub. Cont. Code §.4104.
(3)- DEBARRED CONTRACTORS AND SUBCONTRACTORS
Developer hereby warrants that the Construction Contracts contained a provision prohibiting
work by contractors or subcontractors who are ineligible pursuant to Labor Code sections 1777.1 .and
1777.7. Cal. Pub. Cont. Code § 6109. [The California Department of Industrial Relations publishes a list
of debarred contracts on the Internet at: www.dir.ca.gov/dlse/debar.html
<http://www.dir.ca.gov/dlse/debar.html>.]
(4) UNFAIR BUSINESS PRACTICE CLAIMS
Developer hereby warrants that the Construction Contracts contained a provision assigning unfair
business practices claims (Clayton Act and Cartwright Act) from the contractor to the City. Cal. Pub.
Cont. Code § 7103.5.
(5) TRENCHING REQUIREMENTS
Developer hereby warrants that the Construction Contracts contained a provision that where
trenching is more than four feet deep, the contractor shall notify Developer of hazardous materials,
subsurface or latent physical site conditions different from those indicated and unusual site conditions, set
forth the duties of Developer as to investigation thereof and specify how disputes must be addressed.
Cal. Pub. Cont. Code § 7104.
(6) NON-COLLUSION AFFIDAVIT
Developer hereby warrants that the Construction Contracts contain a "noncollusion affidavit"
signed by the bidder in the statutory form. Cal. Pub. Cont. Code.§ 7106.
RVPUB/KAB/664311
D-1
(7) RETENTION
Developer shall retain at least ten percent of the contract price. Cal. Pub: Cont. Code §9203.
After one-half of the work is completed and Developer determines satisfactory progress is being made to
complete the job, Developer may make the remaining payments in full. The retention shall be released
(with the exception of one hundred fifty percent of any disputed amount)within 60 days after the "date of
completion" of the work. Cal. Pub. Cont. Code § 7107. Developer shall make progress payments within
30 days after receipt of an undisputed and properly submitted request. Cal. Pub. Cont. Code § 20104.50.
(8) SECURITIES IN LIEU OF RETENTION
Developer hereby warrants that the Construction Contracts contain a statement that the contractor
may substitute securities in place of retained funds withheld by the City: Cal. Pub. Cont. Code § 22300.
Alternatively, an escrow agreement, in the form prescribed by the code, may be used by the contractor.
(9) RESOLUTION OF CLAIMS
Developer hereby warrants that the Construction Contracts contain certain mediation and .
arbitration provisions to claims of$375,000 or less. Cal. Pub. Cont. Code §§ 20104, 20104.2,20104.4.
(10) PREVAILING WAGE LAW
The following provisions of the prevailing wage law are discussed in greater detail below in
section IV.B.8. of this handbook.
(a) Developer.hereby.warrants that the Construction Contracts contain a provision
specifying the general rate of per.diem wages ("prevailing wage") for each craft, classification or type of
worker needed to execute the contract or contain a statement that copies of the.prevailing rate of per diem .
wages are on file at Developer's principal office. Cal. Lab. Code § 1773.2. Developer must also cause a
copy of the wage rates to be posted at each job site. The Construction Contracts also require payment of
travel and subsistence payments as required by statute. Cal. Lab. Code § 1773.8.
(b) Developer hereby warrants that the Construction Contracts state the statutory
provisions for penalties for failure to pay prevailing wages and the state's wage and hour laws will be
enforced. Cal. Lab. Code § §1775, 1813.
(c) Developer hereby warrants that the Construction Contracts contain a provision
requiring compliance with the statutory requirements relating to certified copies of payroll records
including the maintenance of the records,their certification and their availability for inspection(Cal. Lab.
Code § 1776),. the employment of apprentices. (Cal. Lab. Code §1777.5), and that eight hours labor
constitutes a legal day's work. (Cal. Lab. Code § 1810.)
(11) WORKER'S COMPENSATION
Developer hereby warrants that the Construction Contracts state the contractor must secure the
payment of worker's compensation to its employees,as provided in Labor Code section 3700. Cal. Lab.
Code § 1860.
RVPUB/KAB/664311
D-2
(12) BRAND OR TRADE NAMES
Developer hereby warrants that the Construction Contracts do not specify brand or trade names
except: (1) when at least two are listed (including California manufacturers, if known) and "or equal"
substitutions are permitted, or (2) when necessary to match existing items in use on a specific public
improvement, or (3) when a unique or novel product application-is required, or (4) when only one brand
or trade name is known. Cal. Pub. Cont. Code § 3400.
(13) RELEASE OF CLAIMS
Developer hereby warrants that the Construction Contracts do not provide that acceptance of a.
payment is a waiver of all claims, or which require submission of a release of.all claims as a precondition
to payment. Cal. Pub. Cont. Code § 7100. However, Developer may require a release .of claims for
undisputed payments. Cal. Civ. Code § 3262.
(14) LIQUIDATED DAMAGES
Developer hereby warrants that the Construction Contracts do not limit a contractor's damages for
delays caused by Developer to a time extension only. Cal. Pub. Cont. Code §7102.
(15) RESOLUTION OF CONTRACT DISPUTES
i
Developer hereby warrants that the Construction Contracts do not require construction contract
disputes to be decided by its agent or employee. Cal. Civ. Code § 1670.
(16) LIMITS ON INDEMNIFICATION
Developer hereby warrants that the Construction Contracts do not impose on the contractor
indemnification against the contractor's sole negligence or willful misconduct, or relieve Developer from
liability for its active negligence. Cal. Civ. Code § 2782(b).
(17) ASSUMPTION OF RESPONSIBILITY FOR PLANS AND SPECIFICATIONS
Developer hereby warrants that the Construction Contracts do not require a contractor to assume
responsibility for the completeness and accuracy of architectural or engineering plans and specifications,
except on clearly designated design-build projects, and further, that the contractor reviewed the plans and
specifications and report any errors or omissions. Cal. Pub. Cont. Code §11-04.
RVPUB/KAB/664311
D-3
OPERATING AGREEMENT
FOR
HUNTINGTON CENTER PARKING STRUCTURE
THIS OPERATING AGREEMENT ("Agreement") is entered into as of januafy
March 1_ 2004, between the CITY OF HUNTINGTON BEACH, a California charter city
("City"), HUNTINGTON CENTER ASSOCIATES, L.L.C., a Delaware limited liability
company ("Operator"), pursuant to a resolution adopted by the City Council of the City of
Huntington Beach at its meeting held on January 5, 2004.
- Recitals:
A. City will be the owner of a parking structure (the "Structure") to be constructed
on the site identified in Exhibit A hereto, which the City desires to utilize for public parking .
purposes.
B. The Structure is being financed with bonds issued under the provisions of the
Mello-Roos Community Facilities Act of 1982, as amended, and Chapter 3.56 of the City's
Municipal Code, the interest on which is excluded from gross income under applicable Federal
tax law.
C. The City acquired the Structure subject to that certain Parking and Reciprocal
Easement -Agreement and Option to Purchase, dated as of March 1. 2004, and
effective as of its date of recordation(the "Reciprocal Easement Agreement").
D. City desires that Operator maintain and operate the structure consistent with the
Reciprocal Easement Agreement for the public purpose of the City to provide adequate public
parking and City and Operator wish to set forth their agreement as.to -the operation of the
Structure. -
Agreement:
In consideration of the foregoing recitals and for other consideration the receipt and
sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows:
Section 1. Use.. City authorizes Operator to operate the Structure, and Operator agrees to
use the Structure solely for the purpose of vehicular parking, and vehicular and pedestrian
ingress and egress, and for no other use or purpose. No portion of the Structure shall be used for
the sale of goods, wares, merchandise, services or other commercial purposes other than (a) the
display of advertising in, on, and about the Structure and (b) incidental uses such as pay
telephones and vending machines not occupying two percent (2%) or more of the floor area of
the Structure. Operator acknowledges that the use of the Structure is to provide adequate public
parking for the City. Operator acknowledges that no portion of the Structure, other than the
Private Retail Spaces (as defined in and designated pursuant to Section 2(a) of the Reciprocal
RVPUB\KAB\659574.1
1
Easement Agreement), shall be reserved for parking by its employees or employees of any other
business. Operator shall make the Structure available to members of the general public, without
preference or priority for any class of persons over any other class of persons except as otherwise
expressly provided herein. The Structure shall at all times be posted with signs acceptable to the
Operator and the City designating the Structure as "public parking."
Subject to the provisions of Section 19 of this Agreement, Operator shall (a) manage and
operate the Structure, (b) employ sufficient personnel for the operation of the Structure, (c)
maintain accounting records of all revenues and expenses related to the operation of the
Structure, and (d)periodically consult with the City regarding such operation. Operator agrees to
comply with all statutes, ordinances, rules, orders, regulations of federal, state, county and city
governments regulating the use by Operator of the Structure. Operator shall not use or permit
the use of the Structure.in any manner that will create or tend to create a nuisance. The hours of
operation for the Structure shall be determined in Section 8 hereof and shall be consistent with
the purposes of the Reciprocal Easement Agreement.
The Operator acknowledges that the Structure shall be used for unrestricted free parking,
except for 5% of spaces as set forth in the_Reciprocal Easement Agreement, and that the City, in
consultation with Operator, shall have the power to establish rates and charges for the use of the
Structure at a later date. In consideration of the foregoing, the Operator hereby agrees to operate
the structure in the manner described in Section 7(a) of the Reciprocal Easement Agreement.
Section 2.- Rates. Parking rates to be initially charged_for the Structure shall be free. City
shall determine, from time to time, revisions to the rates to be charged for the Structure, in
consultation with the Operator and upon City's obtaining a parking rate study, which illustrates
the range of fees charged at competing parking facilities and shall advise the Operator in writing
of any changes to the Structure rates at least 30 days prior to the date any such change becomes
effective. Notwithstanding the foregoing, final determination of rates and charges for the
Structure shall be made by the City Council.
Section 3. Operator's Employees. All of Operator's employees and the employees of
any subcontractor of the Operator that operates the Structure as provided in Section 19 hereof,
shall, at all times while on duty at the Structure, wear standard uniforms, conduct themselves
with exemplary demeanor, be courteous and polite to the public and not engage in any raucous or
offensive conduct. The City shall be the sole judge, using reasonable discretion, as to whether
the conduct of the employees of Operator meets the requirements hereof and upon notice from
City of any non-conformity with these standards, Operator shall immediately take all steps
necessary to eliminate the condition complained of. Any laborers or employees engaged by the
Operator shall not be the employees of the City and the City shall in no any way be liable for the
payment of any wages or benefits to any such laborers or employees. Any such laborers or
employees shall in no way be third party beneficiaries of this Agreement.
Section 4. Operating Fee. City shall pay to Operator as.its management fee for each
month of the term of this Agreement, a fee of$1,500.00, such amount to be increased on each
annual anniversary of the Commencement Date of this Agreement by a percentage increase
agreed to by the City and the Operator as reflective of the percentage increase during the
preceding year in the Consumer Price Index-Urban Wage Earners and Clerical Workers (Los
2
RVPUB\KAB\659574.1
Angeles-Anaheim-Riverside, CA, All Items, Base .1982-84 = 100) as published by the United
States Department of Labor, Bureau of Labor Statistics. In addition, City shall reimburse
Operator for those reasonable expenses and costs incurred by Operator in the performance of its
parking services ("Operating Expenses"). Such Operating Expenses shall include, without
limitation; the aggregate of. subcontractor fees and expenses, salaries and wages, health
insurance, uniforms, security guard service, supplies, signs, utilities, Structure maintenance,
public liability, garage keepers liability and other insurance (including but not limited to
insurance required by Section 10 of this Agreement and Section 7(b) of the Reciprocal Easement
Agreement), and all other necessary and reasonable costs related to the provision of such parking
services by the Operator and/or any subcontractor thereof, provided, that such costs are
reasonable, and are not duplicative (in the event the Operator engages a subcontractor as
described in Section 19 hereof). Payroll taxes, workers' compensation insurance and sick leave
pay shall be reimbursed'at the percentage of gross payroll as may be determined by the Operator
in accordance with applicable State and Federal laws. Operating Expenses shall not include any
of Operator's general overhead expense which shall include, but shall not be limited to:
(a) Administrative and related costs and expenses incurred in the operation of
the Structure or the other operations of Operator,.as they are incurred in the general .
management of the affairs of Operator generally, including the monitoring of the
operation and management of Operator;
(b) Maintenance of the general books and records of Operator;
(c) Office supplies and equipment used by_Operator which are not used
exclusively for the Structure;
(d) Postal, telephone and travel expense which are not directly related to the
management of the Structure;
(e) The cost of any managers or. supervisors who are not employed at the
Structure on a full time basis; and
(f) Capital repairs required. to be paid for by parties other than the City
pursuant to the Reciprocal Easement Agreement.
Within 30 days after the end of each month, Operator shall submit to City a reasonably
detailed written statement of the management fee. earned and the Operating Expenses incurred
during the preceding month. The City shall remit to Operator, within 30 days after City's receipt
of the statement, the amount invoiced on the statement. No delay in the delivery of such written
statement will affect the Operator's right to receive such amounts within 30 days of the date such
statement.is actually delivered to the City. The management fee and all operating expenses shall
be payable solely from the Parking Fund, discussed in Section 5 below, and proceeds of the
"Parking Structure Maintenance Special Tax" collected from Community Facilities District No.
2003-1 of the City of Huntington Beach (the "CFD") which have been levied for the purpose of
paying for the maintenance and operation of the Structure. No other funds of the City shall be
available to pay for the operation and maintenance of the Structure.
3
RVPUB\KAB\659574.1
Notwithstanding any other provision hereof, Operating Expenses shall not include, and in
no event shall the City be liable for payment of, any management fee of any subcontractor of the
Operator hereunder, but such limitation on liability of the City shall not prevent or in any way
restrict the Operator from using or assigning all or a portion of its management fee described in
the first sentence of this Section 4 for such purpose.
The City shall levy the Parking Structure Maintenance Tax on the taxable real property
within the CFD monthly, bi-monthly or semi-annually as determined by the Treasurer.
Section 5. Payment of Operating Revenues to City. Any revenues received by the
Operator in connection with the operations of the Structure (including any vending machine or
other incidental revenues, and any revenues 'from advertising or other promotions at the
Structure) shall be transferred by the Operator to the City as such funds are received, for deposit
in the "Parking Fund" to be established and maintained by the City for the benefit of the City and
the Operator. The Operator shall maintain records of all revenues so received, and transferred to
the City. The City shall maintain records of deposits to the Parking Fund. Monies deposited in
the Parking Fund shall be applied first to the maintenance and operation of the structure, second
to the payment of cost of repairing and replacement of the Structure, and third to the payment of the operating fee set forth in Section 4 hereof. City shall pay Operator expenses billed solely
from moneys deposited in the Parking Fund and such payment shall be made 30 days from
receipt of the invoice from the Operator. City shall provide Operator with monthly statements:__
showing income and.expenses of the Parking Fund.
Section 6. Accounting and Budget. Operator shall maintain, for a period of 36 months
from the date of mailing such statements to City, records of such gross revenues collected and
Operating Expenses disbursed -in accordance with recognized accounting practices. Upon
reasonable notice to Operator, City or its designated agents may examine Operator's records
pertaining to the Structure, including amounts for maintenance.
Upon completion of the Structure and annually on each July 15 thereafter during the term
of this Agreement, Operator shall submit to City a proposed budget for the operation of the
Structure such proposed budget shall set forth the projected,income, special taxes to be levied
and expenses to be incurred by Operator (the "Proposed Budget"). Each Proposed Budget shall
include both an annual aggregate budget for the structure and monthly budgets for each calendar
month during the applicable Fiscal year covered by the proposed Budget. Each Proposed Budget
shall be submitted in a form reasonably acceptable to City. Each Proposed Budget shall be for
planning and information purposes only and shall not be deemed to be binding upon either
Operator or City. Each such budget, prior to adoption and implementation by Operator, shall
require the written approval of City such approval not to be unreasonably withheld or delayed.
Any budget so approved by City shall become the budget for the ensuing fiscal year and shall
form the basis on which Operating Expenses are incurred in that fiscal year. If the budget is not
approved, then the budget effective the in the prior fiscal year shall govern the operating costs of
the Structure until a new budget is agreed upon by the City and the Operator. The budget for any
fiscal year may only be amended in writing, subject to the written approval of City. Operator
shall not incur any Operating Expenses which is in excess of five percent (5%) of the annual
amount allocated for that particular Operating Expense line item in the budget, unless Operator
has obtained the prior written approval of the City Administrator(or his designee), such approval
4
RVPUB\KAB\659574.1
not to be unreasonably withheld or'delayed, or such increased expenditure is otherwise
authorized by this Agreement.
All financial statements submitted pursuant to the last sentence of Section 5 and this
Section 6 shall be certified as fairly representing the Structure's financial condition.
Section 7. Term of Agreement. This Agreement shall commence on the day the
Structure is open for parking by the general public and the City has issued a certificate of
occupancy (temporary or final) for the Structure (the "Commencement Date"), and shall
terminate on the earlier of(a) the date on which1he City no longer owns the Structure, or (b) the
date which is fifteen(15) years after the Commencement Date.
Notwithstanding the foregoing, upon the termination of this Agreement, pursuant to
clause (b) above, the Developer irrevocably agrees to extend the term of this Agreement for an
additional fifteen years.
Section 8. Hours of Operation. Unless otherwise determined by the City in consultation
with Operator, and consistent with the Reciprocal Easement Agreement, the hours of operation
of the Structure shall be from 8 a.m. to 2 a.m. daily, and the City shall advise the Operator of
such hours and any change thereto.
Section 9. Indemnification. Operator expressly agrees to defend, protect, indemnify and
hold harmless the City and its officers, agents, elected and appointed officials, employees and
volunteers free and harmless from and against any and all claims, demands, damages, expenses,
losses, judgments or liability of any kind or nature whatsoever which City, and its officers,
agents, elected and appointed officials, employees and volunteers may sustain or incur or which
may be imposed upon them or any of them for injury to or death of persons or damage to
property arising out of or resulting from the alleged acts or omissions of Operator, its officers,
agents or employees or in any manner connected with this Agreement or with the occupancy, use
or misuse of the Structure by Operator, its officers, agents, employees, subtenants or licensees,
patrons or visitors; and Operator agrees to defend at its own cost,.expense and risk all claims or
legal actions that may be instituted against either the City (provided the City has timely tendered
a request for a defense to Operator) and the Operator agrees to pay any settlement entered into
with Operator's consent and satisfy any final judgment that may be rendered against the Operator
or the City or any other parry indemnified by the Operator hereunder as a result of any injuries or
damages which are alleged to have resulted from or be connected with this Agreement or the
occupancy or use of the Structure.
Notwithstanding the foregoing in no event shall the Operator or any such subcontractor
be obligated to indemnify the City for the City's intentional misconduct.
Section 10. Insurance.-
A. Insurance. Prior to the first date on which the Structure is open for public parking,
Operator, or a subcontractor of Operator, shall procure and maintain insurance as set forth in
Section 7(b) of the Reciprocal Easement Agreement, which insurance shall be considered an
Operating Expense for purposes of Section 4 above, and shall remain in effect for the duration of
this Agreement, including any extensions, renewals, or holding over thereof, from insurance
5
RVPUB\KAB\659574.1
companies that are admitted to write insurance in the State of California or from authorized
nonadmitted insurers that have ratings of or equivalent to an A:VIII by A.M. Best Company.
Operator shall pay the.premium on all insurance required herein in a prompt and timely manner.
Operator acknowledges awareness of Section 3700 et seq. of the California Labor Code,
which requires every employer to be insured against liability for workers' compensation.
Operator covenants that it shall comply with such provisions prior to the commencement of this
Agreement. Operator shall obtain and furnish to City workers' compensation and employers'
liability insurance in amounts not less than the State statutory limits. Operator shall require all
sub-contractors to provide such workers' compensation and employers' liability insurance for all
of the sub-contractors' employees. Operator shall furnish to City a certificate of waiver of
subrogation under the terms of the worker$' compensation and employers' liability insurance and
Operator shall similarly require all sub-contractors to waive subrogation.
The requirements hereunder for insurance coverage shall not diminish Operator's
obligations to defend, hold harmless and indemnify set forth in this Agreement.
B. Subcontractors. So long as a subcontractor of the Operator maintains insurance in
compliance with the provisions of this Section, the Operator shall not be required to obtain such
insurance (except to the extent required by applicable law, such as worker's compensation
insurance as described in Section 10.A. above).
C. Self-insurance and deductibles. Any self-insurance program, self-insured retention or
deductible must be reasonably approved separately in writing by City and shall protect the City
and its officials, employees, and agents in the same manner and to the same extent as they would
have been protected had the policy or policies not contained such self-insurance or deductible
provisions.
D. Cancellation: severability of interests: primary and noncontributing. Each insurance
required hereunder shall be endorsed to provide as follows: (i) that coverage shall not be voided,
canceled or changed by either party except after thirty (30) days prior written notice to City, (ii)
that the insurance shall apply separately to each insured against whom claim is made or suit is
brought, except with respect to the limits of the insurer's liability; and (iii) and that coverage
shall be primary and not contributing to any other insurance or self-insurance maintained by City
and its officials, employees, or agents.
E. Delivery of insurance documentation. Prior to the commencement of public parking
in the Structure, Operator shall deliver to City certificates of insurance and the endorsements
required hereunder for approval as to sufficiency and form, including the certificates of insurance
and endorsements of any subcontractor to Operator. The certificates and endorsements for each
insurance policy shall contain the original signature of a person authorized by that insurer to bind
coverage on its behalf. In addition, Operator shall, at least fifteen (15) days prior to expiration of
such policies, furnish City with evidence of renewals. City reserves the right to require complete
certified copies of all said policies at any time. City, or its representatives, shall have the right to
demand the original or a copy of any or all of the policies of insurance required in this
Agreement.
6
RVPUB\KAB\659574.1
F. No limitation of liability. Such insurance as required herein shall not be deemed to
limit Operator's liability relating to performance under this Agreement. The procuring of.
insurance shall not be construed as a limitation on liability or as full performance of the
indemnification and hold harmless provisions of this Agreement. Operator understands and
agrees that, notwithstanding any insurance, Operator's obligation to defend, indemnify, and hold
City, and its officials, agents, and employees harmless hereunder is for the full and total amount
of any damage, injuries, loss; expense, costs, or liabilities caused by the condition of the
Structure or in any manner connected with or attributed to the acts or omissions of Operator, its
officers, employees, agents, or subcontractors, or the operations conducted by or on behalf of
Operator, or the Operator's use, misuse, or neglect of the Structure, all as more particularly
provided in Section 9 above.
G. Books and records. Operator agrees to make available to City all books, records, and
other information relating to the insurance coverage required by this Agreement during normal
business hours.
H. Amendments to the insurance provisions.
(1) Not more frequently than every year, if in the reasonable opinion of City's
Risk Manager or designee, based on practices in other publicly owned parking structures
at or adjacent to large retail facilities in Southern California, the amount or scope of the
foregoing insurance coverages is not adequate, Operator shall, to the extent any
additionally required coverage is available at commercially reasonable rates, amend its
insurance coverage and/or, if applicable, require its subcontractors to amend their
insurance coverage, as reasonably required by City's Risk Manager or designee.
(2) Any modification or waiver of the insurance requirements herein shall be
made only with the written approval of the City's Risk Manager or designee.
Section 11. Assignment. Operator covenants that it will not assign, transfer; convey,
sublet, sell, mortgage, pledge, or encumber this Agreement, the Structure or any part of it, or any
rights of Operator under this Agreement, whether voluntary or by operation of law, except upon
written consent of City which consent shall not be unreasonably withheld or delayed; provided
that no such consent shall be required for an assignment by the Operator to an entity which is a
successor to the "Developer" under (and as such term is defined in)the OPA.
Section 12. Surrender of Possession. Upon termination of this Agreement, any
improvements constructed or installed at the Structure shall .become the property of the then
owner of the Structure, and Operator shall surrender to such owner the Structure in good order,
condition and repair except for ordinary wear and tear and casualty damage. Operator will be
required to remove all personal property prior to the termination of this Agreement unless other
arrangements are made with and approved by the then owner of the Structure. Operator agrees
that City will have, without prior notice, the right to sell or otherwise dispose of any personal
property belonging to Operator which has been left at the Structure after Operator has vacated
the Structure.
Section 13. Defaults of Operator;Remedies Upon Default. Operator agrees that:
RVPUB\KAB\659574.1
(a) If Operator shall be in default in the payment of any sum due from it to City
pursuant to this Agreement for ten (10) days after written demand shall have been made
therefor by City; or
(b). If Operator shall neglect, violate, be in default under, of fail to perform or
observe any of the other covenants, agreements, terms or conditions contained in this
Agreement on its part to be performed and shall not have remedied, or commenced action
which will promptly remedy same which action is thereafter diligently pursued, within
thirty (30) days after written notice thereof given by City, or if such violation or default
cannot reasonably be remedied in.such period and Operator commences to cure such
default within such thirty (30) day period, such additional time as the City determines is
reasonably necessary to complete §uch remedy but not more than one hundred twenty
(120)days; or
(c) If the Operator shall fail to operate the premises for any forty-eight (48) hour
period;
then at the option of the City, (x) this Agreement and the term hereof shall, upon the date
specified in a written notice given by City to Operator setting forth the nature of such default,
breach, matter, or condition, be terminated and City may recover possession of the Structure, or
(y) the City may keep this Agreement in effect and pursue all other legal remedies available to
City, including specific performance.
Section 14.. Independent Contractor. It is expressly acknowledged that Operator shall be
an independent contractor with respect to all services performed under this Agreement and
Operator agrees to and accepts .full and exclusive liability for the payment of any and all
contributions or taxes for social security, unemployment insurance, or old age retirement
benefits, pensions, or annuities now or later imposed under any state or federal law which are
measured by the wages, salaries, or other remuneration paid to persons employed by Operator on'
work performed under the terms of this Agreement, and further agrees to obey all rules and
regulations which are now, or later may be,-issued or promulgated under these respective laws by
any duly authorized state or federal officials; and Operator shall indemnify and save harmless
City from any such contributions or taxes or liability therefor.
Section 15. Maintenance and Security of Facility. Operator shall be responsible for the
maintenance of the Structure at a level consistent with the Standards of Maintenance in Exhibit B
hereto and the Reciprocal Easement Agreement. Operator shall also be responsible for providing
security upon or about the Structure and the premises through a subcontract with a licensed
security company (the City agrees to accept any security company selected by the Operator in
good faith that is providing security services for other improvements in the area of the Structure).
The security company and the contract shall be reasonably approved in writing by City and the
company so employed shall hold Operator and City harmless with respect to its activities.
Operator shall be responsible for securing access to and from the facilities in accordance with
written operating policies and procedures to be mutually agreed upon from time to time and be
responsible for monitoring the security service contract as to hours worked and level of service.
8
RVPUB\KAB\659574.1
Section 16. Property Rights; Access to the Structure. No property rights in the Structure,
or right of possession thereof, is granted by this Agreement. However, and in accordance with
California Revenue and Taxation Code Section 107.6(a), the City advises the Operator that by
entering into this Agreement, a possessory interest subject to property taxes may be created, and
the Operator or other party in whom the possessory interest is vested may be subject to the
payment of property taxes levied on such interest. Notwithstanding the foregoing, it is the intent
of the City and the Operator that this Agreement shall in no way create a possessory interest of
the Operator in the Structure for purposes of possessory interest taxes under California Revenue
and Taxation Code Section 107.6(a) and that any interest conveyed hereunder not be subject to
any possessory interest, ad valorem or any other similar tax imposed by the State or any other
governmental entity.
The Operator agrees that any authorized representative of the City shall have the right at
all reasonable times to enter upon and to examine and inspect'the Structure. The Operator further
agrees that any such authorized representative shall have such rights of access to the Structure as
may be reasonably necessary to cause the proper maintenance of the Structure in the event of
failure by the Operator to perform its obligations hereunder.
Section IT Remedies Will Be Cumulative. All rights and remedies of City enumerated
will be cumulative and none will exclude any other right or remedy allowed by law. Likewise,
the exercise by City of any remedy provided or allowed by law will not be the exclusion of any
other remedy.
Section 18. Limitation of City Liability. Any and all monetary obligations of the City
under this Agreement shall be payable solely from any revenues derived by the City from the
Structure or from the proceeds of the Parking Structure Maintenance Special Tax. In no event
shall City's general fund be liable hereunder.
Section 19. Waiver. One or more waivers of any covenant, term or condition of this
Agreement by either party will not be construed by the other party as a waiver of subsequent
breach of the same covenant,term or condition. The consent or approval of either party to or of
any act by the other party of a nature requiring consent or approval will not be deemed to waive
or render unnecessary consent to or approval of any subsequent similar act.
Section 20: Subcontracts. Operator shall have the right to engage a subcontractor to
conduct the physical operation of the Structure. Any such entity shall be subject to the prior
written approval of the City, such approval not to be unreasonably withheld or delayed, provided
that the City may base its approval or denial, in part, on the financial condition of the
subcontractor in light of the provisions of the second paragraph of Section 10 hereof.
Section 21. Anti-Discrimination. Operator agrees that this Agreement. is made and
accepted on and subject to the following conditions: That there will be no discrimination against
or segregation of any.person or group of persons, on account of race, color, religion, national
origin, sex, sexual orientation, AIDS, AIDS-related.condition, age, marital status, disability or
handicap, or Vietnam Era veteran status in the leasing, subleasing, transferring, use, occupancy,
hiring, employment, tenure or enjoyment of the Structure, nor will Operator or any person
9
RVPUB\KAB\659574.1
claiming under or through it.establish'or permit any practice or practices of discrimination or
segregation with reference to the Structure.
Section 22. Attorneys' Fees. In the event that either party fails to comply with any of the
terms of.this Agreement and the other party commences legal proceedings to enforce any of the
terms of this Agreement, the prevailing party in any such suit will receive .from the other
attorneys' fees including applicable court costs.
Section 23. Notices. Any and all notices to be given under this Agreement or required
by law to be served on either of the parties may be given by first-class mail deposited in the
United States mail, postage prepaid, addressed as follows:
To City: City of Huntington Beach
P.O. Box 190
2900 Main Street
Huntington Beach, CA 92648.
Attention: Economic Development Department
with a copy to: City of Huntington Beach
P.O. Box 190
2900 Main Street
Huntington Beach, CA 92648
Attention: City Attorney
To Operator: Huntington Center Associates LLC
5757 Wilshire Blvd., Penthouse 30
Los Angeles, CA 90036
Attention: Mike Wise
With a copy to: Allen Matkins Lock Gamble & Mallory LLP .
515 South Figueroa, 7ch Floor
Los Angeles, CA'90071-3398
Attn: Michael J. Kiely, Esq.
Any notices may be personally served on the party to be given notice. Any notice served
by means of the UnitedStates mail will be effective three business days from the date of mailing.
Section 24. Execution. This Agreement may be simultaneously executed in any number
of counterparts, each of which when so executed shall be deemed to be an original, but all
together shall constitute but one and the same Agreement.
Section 25. Validity. If any one or more of the terms, provisions, promises, covenants,
conditions or option provisions of this Agreement shall to any extent be adjudged invalid,
unenforceable, void or'voidable for any reasons whatsoever by a court of competent jurisdiction,
each and all of the remaining terms, provisions, promises, covenants, conditions, and option
provisions of this Agreement shall not be affected thereby and shall be valid and enforceable to
the fullest extent permitted by law.
10
RVPUB\KAB\659574.1
Section 26. Amendments. This Agreement may only be amended in writing executed by
both of the parties hereto.
Section 27. Entire Agreement. It is understood that there are no oral agreements
between the parties affecting this Agreement, and this Agreement supersedes and cancels any
and all previous negotiations and understanding, if any, between the parties and none will be
used to interpret or construe this Agreement.
OPERATOR:
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a
Delaware limited liability company,.
Its Manager
By: BMLF/Huntington, LLC, a Delaware
limited liability company,
Its Mana
y:
ryan Ezralow,
Trustee of the Bryan
Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
By:
City Clerk Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrator City Attorney
Bond Counsel
11
RVPUB\KAB\659574.1
Section 26. Amendments. This Agreement may only be amended in writing executed by
both of the parties hereto.
Section 27. Entire Agreement. It is understood that there are no oral agreements
between the parties affecting this Agreement, and this Agreement supersedes and cancels any
and all previous negotiations and understanding, if any, between the parties and none will be
used to interpret or construe this-Agreement.
OPERATOR:
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a
Delaware limited liability company,
Its Manager
By: BMLF/Huntington, LLC, a Delaware
limited liability company,
Its Manager
By:
Bryan Ezralow,
Trustee of the Bryan
Ezralow 1994 Trust,
Its Manager
ATTEST: CITY OF HUNTINGTON BEACH
City Clerk 0 Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City AcKinistrator City Attorney
Bond Counsel
11
RVPUB\KAB\659574.1
LD 1018 SHEET 1 OF 2
02-100
LEGAL DESCRIPTION FOR
BELLA TERRA PARKING STRUCTURE
THE LAND BEING REFERRED TO HEREIN IS SITUATED IN THE CITY OF
HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA.
PARCEL "A"
BEING'A PORTION OF PARCEL 2 AS SHOWN IN PARCEL MAP NO. 86-200,
RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF
ORANGE, DESCRIBED AS FOLLOWS:
BEGINNING AT THE EASTERLY TERMINUS OF THE NORTH LINE OF SAID
PARCEL 2, SHOWN AS "NORTH 89°29'30" WEST 763.76 FEET" ON SAID
PARCEL MAP NO. 86-200, SAID POINT ALSO BEING ALONG THE
SOUTHERLY LINE OF THE SOUTHERN CALIFORNIA EDISON RIGHT OF
WAY (150.00 FEET IN WIDTH) PER GRANT DEED RECORDED IN BOOK
3675, PAGE 63 AND GRANT DEED RECORDED IN BOOK 3159, PAGE 483
BOTH OF - OFFICIAL RECORDS; THENCE ALONG SAID LINE NORTH
89029'30" WEST A DISTANCE OF 67.51 FEET TO THE TRUE POINT OF
BEGINNING; THENCE DEPARTING SAID LINE SOUTH 00130'30" WEST A .
DISTANCE OF 334.58 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 135.12 FEET; THENCE SOUTH 70132'16" WEST A DISTANCE OF 4.39
FEET; THENCE NORTH. 89°29'30" WEST A DISTANCE OF. 3.00 FEET;
THENCE NORTH 00030'30" EAST A DISTANCE OF 126.75 FEET; THENCE
NORTH 89029'30" WEST 'A DISTANCE OF 274.25 FEET; THENCE NORTH
00030'30 EAST A DISTANCE OF 209.33 FEET TO ABOVE MENTIONED
NORTH LINE; THENCE EASTERLY ALONG SAID LINE SOUTH 89°29'30"
EAST A DISTANCE OF 416.50 FEET TO THE TRUE POINT OF BEGINNING.
CONTAINING AN AREA OF 2.41 ACRES MORE OR LESS.
CHRISTOPHER W. DANIELS
---� SHEET 2 OF 2
D1018 - - - - - - - - - -- - - - - -
2-100 CENTER DRIVE
N89'29'30"W _ . 534.08'
SOUTHERN CALIFORNIA EDISON RIGHT .OF WAY I
BK. 3159,
PG 483 O.R. � ` BK. 4519,
S LY LINE OF THE N LY 150 OF THE SOUTH 1/2 PG 491 O.R.
OF THE SOUTHEAST 1/4 OF SECTION 14
_ CBK. 3675, PG. 63 O.R.�—o
N89'29'30"W 763.76' _
416.50' 67.51'
TROR P.O.B.
cn
N PARCEL "A
�.� r. 00
2.41 AC un
po
PARKING STRUCTURECD
�•-
W
a
N89'29'31"W 274*25' M
in o
r` z
- cc
O
M
O
o L1
z
►- I_5 YI; r 1 ;i
I , . N8929'30"W
135.12'
VL2
►• ,1 ►% r-, -i
LINE TABLE
LINE BEARING LENGTH
L1 N89-29'30"Wl 3.00
L2 N70'32'16°E 1 4.39
DATE: 05-13-04
Engineers/Planners/Surveyors EXHIBIT „E3
1920 AWN STREET.SURE 9W,IRVINE,U 92914
p ® TEL'0`9'a8°m FAX
j949'ae�79 SKETCH TO ACCOMPANY LEGAL DESCRIPTION .
SCALE: 1"— 00' 245 E.WARM SPRINGS RGAG,SUITE 100,LAS VEGAS,NV 99119
❑ TEL(792)999E5G• FAX V02i999-99G5 FOR,PARKING STRUCTURE
BELLA TERRA MALL, HUNTINGTON BEACH, CA.
EXHIBIT B
STANDARDS OF MAINTENANCE
During the term of the Agreement and any extensions hereof; the Operator shall:
1. Clean and maintain all surfaces of the Public Parking Structure and keep such
surfaces level and evenly covered with the type of surfacing material originally installed thereon,
or such substitute thereof as shall be equal thereto in quality, appearance and durability;
2. Remove all papers, debris, filth and refuse from the.Public Parking Structure and
wash or thoroughly sweep paved areas;
3. Remove trash from trash receptacles and clean trash receptacles;
4. Clean, maintain, repair and replace entrance, exit and directional signs, traffic
control signage, markers and lights into and with the Public Parking Structure;
5. Keep the parking areas, stairways, elevators and other portions of the Public
Parking Structure well-lit from dusk each day until dawn at least during the applicable hours of
operation of the Public Parking Structure, and clean, relamp and reballast all lighting fixtures;
6. Maintain, repair and replace striping and curbing;
7. Maintain and replace as necessary the landscaping surrounding the Public Parking
Structure;
8. Maintain and repair the structure of the Public Parking Structure, as needed;
9. Repaint and refinish all painted and finished surfaces;
10. Clean, maintain and repair all stairs, stairwells and stairwell .doors within the
Public Parkirig,Structure;
11. Clean, maintain, repair and operate all elevators;
12. Maintain, repair and replace, if needed, all mechanical, electrical and utility
facilities and systems that are a part of or serve the Public Parking Structure, including; without
limitation, sprinkler and fire control systems, parking revenue control equipment, parking access
control.equipment, security systems and equipment, mechanical venting systems, lighting and
emergency lighting systems, rollup doors and traffic barriers;
13. Making all repairs, improvements or alterations required to comply with
applicable laws;
14. Except to the extent maintained by a utility company, maintain the Utility
Facilities located within the Public Parking Structure, other than those which are owned by
B-1
RVPUB\KAB\659574.1
Developer or are exclusively serving the Retail Parcel pursuant to the Developer Utilities
Easement;
15. Obtain and maintain the public liability insurance and property/casualty insurance
required in the Operating Agreement; and
16. Provide, or cause to be provided, reasonable security services within the Public
Parking Structure.
B-2
RVPUB\KAB\659574.1
1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Allen Matkins Leck Gamble & Mallory LLP
515 South Figueroa Street, 7th Floor'
Los Angeles, California 90071
Attn: Michael J. Kiely, Esq.
(Above Space for Recorder's Use Only)
PARKING AND
RECIPROCAL EASEMENT AGREEMENT,
AND OPTION TO PURCHASE
This PARKING AND RECIPROCAL EASEMENT AGREEMENT AND OPTION TO
PURCHASE ("Agreement") is made and entered into as of the 1 st day of March, 2004 (the
"Effective Date"), by and between HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware
limited liability company ("Developer"), and the CITY OF HUNTINGTON BEACH,
CALIFORNIA, a California charter city ("City").
RECITALS:
A. Developer is the fee owner of that certain parcel of real property located in the
City-of Huntington Beach, County of Orange ("County"), State of California("State") formerly
known as "Huntington Center" and recently renamed as "Bella Terra Mall", and more
particularly described on Exhibit."A" attached hereto (together with all improvements now or
hereafter located on such property, the "Retail Parcel"). Pursuant to that certain Owner
Participation Agreement dated as of October 2, 2000, between Developer and the
Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic
(the 'Agency"), Developer has agreed to redevelop Retail Parcel to include up to 800,000 square
feet of retail and entertainment uses.
.
B: Concurrently herewith, Developer has conveyed to City the fee interest in that
certain parcel of real property located in the City of Huntington Beach, County of Orange, State
of California, more particularly described on Exhibit "B", attached hereto (the "Parking .
Parcel"). The Parking Parcel is currently improved with an asphalt surface parking lot and is
contiguous on all sides to the Retail Parcel.
C. Pursuant to the Mello-Roos Community Facilities Act of 1982, as amended,
Chapter 2.5 (commencing with Section 53311),Part 1, Division 2,Title 5 of the Government
Code of the State of California, the City on January 6, 2003, adopted a Resolution of Intention to
form a community facilities district over and including the Retail Parcel designated "City of
Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)" (the
"District") and a resolution of intention to issue bonds of the District for the purpose of
providing through the sale of bonds proceeds in an amount not to exceed $30,000,000 for the
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp
financing (the "CFD Financing") of the design, construction and acquisition of certain public
facilities, including a six-level parking structure on the Parking Structure Parcel containing
approximately 1,532 automobile parking spaces (the "Public Parking Structure")to be owned
by City and available for parking use by the public..
D. City desires to grant a temporary exclusive easement to Developer over the
Parking Parcel for the purpose of constructing the Public Parking Structure.
E. City and Developer desire to establish certain reciprocal and other easements
including,but not limited to,vehicular and pedestrian ingress and egress,utilities, subjacent and
lateral support, encroachment and other easements, including certain limited parking rights, .
together with various other conditions and covenants, which are intended to burden and benefit
the Retail Parcel and the Parking Parcel, as the case may be.
F. In addition to"the terms defined in the foregoing Recitals,the following defined
terms,when used in this Agreement, shall have the meaning set forth below:
(i) "Funding Agreement" means that certain Funding and Construction
Agreement Relating to City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) dated as of March 1, 2004, between City and Developer.
(ii) "Force Majeure" shall mean any event or occurrence outside the
reasonable control of Developer and which Developer did not learn of in time to reasonably
avoid a delay in completion of construction of the Public Parking Structure including, but not ti
limited to: (1) a strike or labor stoppage; (2) delay resulting from inclement weather beyond that
which would reasonably be anticipated for the seasons during which the work on the Public
Parking Structure is continuing; (3) riot; (4) insurrection; (5) war; (6) governmental order or
decree; (7) unforeseen site conditions, including, without limitation, the presence of Hazardous
Substances in, on, around or under the Project site that could not have been discovered through
the exercise of reasonable due diligence prior to commencement of construction of the
Improvements on or within the Project.
(iii) "Hazardous Substances" means any chemical, substance, material,
object, condition, waste or combination thereof(i) the presence of which requires investigation
or remediation under any applicable statute, regulation, ordinance, order, action, policy or
common law; (ii) which is defined as a "hazardous waste", ."hazardous substance", "hazardous
material", pollutant, toxic or contaminant under any statute, regulation, rule or ordinance or . .
amendments thereto of any governmental agencies having jurisdiction thereof, (iii) which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic;or
otherwise hazardous and is regulated by any governmental agencies having jurisdiction thereof;
or(iv) the presence of which on the Project causes or threatens to cause a nuisance or injury
upon the Project, to adjacent properties or to the environment or poses or threatens to pose a
hazard to the health or safety of persons on or about the Project.
(iv) "Improvements" shall mean and refer to any building or structure located
on the Parking Parcel or Retail Parcel.
604377.13ILA
H4 5 64-0 02/3-29-04/mj k/rp -2-
(v) "Mortgage" shall moan and refer to any mortgage, indenture of mortgage,
deed of trust(whether fee or leasehold), sale and leaseback transaction or assignment and
subleaseback transaction which covers all or any portion of the Retail Parcel, made by a
reputable third party bank or other institutional investor.
(vi) "Mortgagee" shall mean and refer to a mortgagee and/or a trustee and
beneficiary under a Mortgage and, to the extent applicable, a fee owner if the Retail Parcel is the
subject of a sale and leaseback transaction.
(vii) "Operating Agreement" means that certain Operating Agreement dated
as of March 1, 2004, between the City and Developer, pursuant to which Developer has
undertaken certain of the obligations of the,City hereunder.
(viii) "Parcel" or "Parcels", as the case may be, shall mean and refer to the
Retail Parcel and the Parking Parcel, or either of them, as applicable.
(ix) "Party" or "Parties", as the case may be, shall mean and refer to City and
Developer, or either of them, as applicable, and any party after the date hereof acquiring an
interest in or to the Retail Parcel and/or the Parking Parcel.
(x) "Permittees" shall mean and refer to each Party, the tenants of each Party,
and their respective officers, directors, employees, agents, contractors, subcontractors,
customers,visitors, invitees, licensees, utility suppliers and concessionaires entering such Party's
Parcel or such tenant's premises within such Parcel.
(xi) "Project means, collectively,the Retail Parcel, the Parking Parcel and the
Public Parking Structure.
(xii) "Utility Facilities" shall mean all utility and service lines and systems
serving the Project or portions thereof, including sewers; ejector pumps; water pipes and -
systems; intake and exhaust vents; gas pipes and systems; sprinkler pipes and systems; drainage
lines and systems; electrical power conduits, lines and wires; energy transfer stations and
substations; chillers; transformers; electrical panels; vaults; cable television lines; microwave
communication systems; telephone conduits, lines and wires; security lines and systems; any
utilities required for teleconferencing facilities; and other service or utility lines necessary or
convenient to operate the Project.
NOW, THEREFORE, for good and valuable consideration,the receipt and sufficiency of
which are hereby acknowledged, City and Developer hereby agree as follows:
1. CONSTRUCTION EASEMENT.
City hereby grants to Developer for the use by Developer and its Permittees a
temporary ingress, egress and general access easement (the "Construction Easement"),
appurtenant to and for the benefit of the Retail Parcel over, beneath and across the Parking Parcel
for the purpose of(a) constructing and installing the Public Parking Structure, including, without
limitation, all foundations, footings, columns, floors, Utility Facilities, directional signs,
hardware, painting, striping, lighting and other improvements comprising the Public Parking
604377.13/LA
H4 5 64-0 02/3-29-04/mj k/rp -3-
Structure (all of which construction shall comply with the provisions of Section 6 below), and
(b) vehicular and pedestrian ingress, egress and access by Developer and its Permittees for
purposes of such construction, and (c) parking of vehicles in connection with the construction
and project management of the construction of the Public Parking Structure, and (d) if
applicable, performing the maintenance, repair and reconstruction obligations of the City as
contemplated hereunder, if the City fails to do so. The Construction Easement(other than the
easement in clause (d), which shall survive completion of the Public Parking Structure but shall
be effective only during periods when the Developer or its Permittees are performing the
applicable obligations of the City) shall terminate upon completion of the Public Parking
Structure (as determined by the issuance by the City (acting in its governmental capacity) of a
final certificate of occupancy for the Public Parking Structure and delivery to and acceptance by
the City (in its proprietary capacity) of the Public Parking Structure.
2. EASEMENT FOR DEVELOPER PARKING.
City hereby grants to Developer and its Permittees, including any valet parking
services operators engaged by Developer in connection with the operation of the Retail Parcel,
and such operators employees and contractors) an exclusive.easement(the "Developer Private
Parking Easement") over and across the Parking Parcel and all levels of the Public Parking
Structure for the purpose of providing to Developer and its Permittees the exclusive right to use
up to five percent(5%) of the total parking spaces striped in the Public Parking Structure (the
"Private Retail Spaces") for so long as the Public Parking Structure exists. The Private Retail
-Spaces shall be located generally on the upper-most portions of the Public Parking Structure at
specific locations to be reasonably agreed upon between City and Developer. Pursuant to the
Developer Private Parking Easement, Developer shall have the rights at its sole expense to
(i) install signs designating the Private Retail Spaces, (ii) segregate the.Private Retail Spaces by
partition, ropes, barricades or other means provides such_devices do not interfere with the orderly
flow of traffic in the Private Parking Structure by the City and its Permittees, and (iii) tow
vehicles parked in such spaces that are not invitees of Developer or its Permittees.
3. EASEMENT FOR CITY INGRESS AND EGRESS TO STRUCTURE.
Developer hereby grants to City for the use of City and its Permittees a non-
exclusive permanent easement (the "City Access Easement"), appurtenant to and for the benefit
of the Parking Parcel, over and across all areas of the Retail Parcel designated from time to time
by Developer and regularly used for vehicular ingress,.egress and access of the vehicles of
Developer and/or its Permittees, but specifically excluding any areas designated and exclusively
reserved for loading or emergency access, for the purpose of providing vehicular and pedestrian
ingress and egress to and from the Public Parking Structure to public streets adjacent to the
Project.
4. UTILITIES AND OTHER EASEMENTS.
(a) Developer Utility Easement. City hereby grants to Developer for the use
of Developer and its Permittees a non-exclusive permanent easement, appurtenant to and for.the
604377.13/LA
H4564-002/3-29-04/mjk/rp 4-
benefit of the Retail Parcel, in, over, under and across the Parking Parcel (the "Developer Utility
Easement"), and any portion thereof, for the purpose of(i) installation, construction, operation,
maintenance, repair or replacement of the Developer's Utility Facilities, and (ii) ingress, egress
and access by vehicles and pedestrians to the Developer's Utility Facilities for the purposes
stated above; provided,however, in no event shall any portion of the Developer's Utility
Easement materially adversely affect or impair City's operation, use or enjoyment of the Parking
Parcel. Except as otherwise provided herein, Developer shall be solely responsible for the cost
of maintaining and servicing the Developer's Utility Facilities that serve Retail Parcel. As may
be reasonably required, Developer shall have the right to relocate the Developer's Utility
Facilities to a different location in the Parking Parcel; provided, however, (X) Developer shall be
solely responsible for any all costs incurred in connection with or as a result of such relocation,
(Y) there shall be no material interruption of power service or other utilities to the Parking Parcel
as a result of or in connection with the relocation of any utility lines or equipment, and(Z) there.
shall be no material adverse effect on the City's operation, use and enjoyment of the Parking
Parcel. Developer shall use its-,reasonable good faith efforts to consult with the appropriate
utility company providing service to the Parking Parcel to reduce the amount of interruption of
service to City as a result of the re-location of utility lines and equipment, including, but not
limited to, performing such work at a time when the Public Parking Structure is least used by the
public, City and its Permittees.
(b) City Utility Easement. Developer hereby grants to City for the use of City
and its Permittees, in common with all others entitled to use the same, a non-exclusive
permanent easement, appurtenant to and for the benefit of the Public Parking Structure, in, over,
under and across the Retail Parcel (the "City Utility Easement") for the purpose of ingress to,
egress from, and the construction, installation, operation, maintenance, repair, removal, and
replacement of future public utilities necessary to service the Public Parking Structure; provided,
however, in no event shall any portion of the City Utilities Easement materially adversely affect
or impair Developer's.operation, use or enjoyment of the Retail Parcel.
(c) Easement for Common Structural Support. Each Party hereby establishes
for the benefit of the other Party, appurtenant to and for the benefit of such other Party's Parcel
and burdening the burdened Party's Parcel, an easement on the first Party's Parcel (to the extent
reasonably necessary for the benefited Party's enjoyment or preservation of its Improvements
situated upon or adjacent to the burdened Party's Parcel) for the installation, construction,
restoration, replacement, modification, repair and maintenance of any: (a) separate or common
footings, girders, columns, braces, foundations, tieback systems and other standard support
elements as may be necessary for the structural support of any Improvements of the benefited
Party situated upon or.adjacent to the burdened Party's Parcel, and (b) common walls shared by
burdened Party and benefited Party as may be necessary for the structural support and enclosure
of adjacent or subjacent Improvements of the benefited Party; provided that, at the request of
either burdened Party, the benefited Party shall prepare and record an instrument specifying the
exact locations of such footings, girders, columns, braces, foundations, common walls, tieback
systems and other standard support elements, and provided further that the manner of attachment
shall be designed in accordance with good construction and engineering practice in the manner
customary for such.improvements.
604377.13/LA
H4564-002/329-04/mjk/rp -5-
(d) Easement for Lateral and Subjacent SupQort. Each Party hereby grants
and establishes for the use and benefit of the other Party, appurtenant to and for the benefit of
such other Party's Parcel and burdening the burdened Parry's Parcel, an easement for lateral and
subjacent support of improvements (i) on the Parking Parcel, approved and constructed (or
reconstructed) pursuant to Section 6 below, and (ii) on the Retail Parcel, that are approved and
constructed pursuant to the requirements of and in accordance with plans and specifications
approved pursuant to,the OPA.
(e) Easement for Minor Encroachment. Each Party hereby grants and
establishes for the use and benefit'of the other Party, appurtenant to and for the benefit of such
benefited Party's Parcel and burdening the burdened Party's Parcel, an easement for unintentional
minor encroachments onto the burdened Party's property or air rights which unintentional minor
encroachments exist or result from construction of any new,.rebuilt, repaired or reconstructed
building or improvement; provided, however, that no such encroachment shall interfere, even
temporarily, with the operation or maintenance of the improvements on the burdened Party's
Parcel.
(f) Securit . Each Party hereby grants to the other Party, for the use and
benefit of such benefited Party and establishes for the benefit of and appurtenant to such
benefited Party's Parcels and burdening the burdened Party's Parcels, at no charge, a non-
exclusive easement over and upon the pedestrian ways and vehicular ways on the burdened
Party's Parcel for security purposes to include pedestrian and vehicular access over the burdened
Parcels by security personnel employed or engaged by the benefited Party.
5. [INTENTIONALLY OMITTED]
6. CONSTRUCTION OF PUBLIC PARKING STRUCTURE.
(a) Developer to Obtain Permits. Pursuant to the Funding Agreement,
Developer shall cause the Public Parking Structure to be constructed and shall obtain all
necessary permits, entitlements and other authorizations from the City (acting in its
governmental capacity) and any other governmental entity maintaining jurisdiction over the
Parking Parcel permitting Developer to construct the Public Parking Structure. In constructing
the Public Parking Structure, Developer shall comply with all applicable City ordinances, codes,
rules, regulations and applicable conditions of approval to the entitlements for the Public Parking
Structure and the Retail Parcel renovation as specified in the Funding Agreement. The review of
any such plans and specifications shall not constitute the assumption of any responsibility by, or
impose any liability upon, City as to the accuracy, efficacy, sufficiency or legality thereof.
(b) Developer's Cost. Any and all construction or other improvement work
undertaken by Developer for purposes of constructing the Public Parking Structure as described
in the Funding Agreement shall be at the sole cost and expense of Developer(other than as
provided in the OPA and/or the Funding Agreement).
(c) Insurance. In connection with the construction and improvement work
contemplated herein, Developer shall maintain builder's all risk insurance with commercially
reasonable limits of coverage and deductibles, and commercial general liability insurance and in
604377.13/1"A
H4 5 64-0 02/3-29-04/mj k/rp -6-
accordance with this Agreement and the Funding Agreement. Developer covenants to keep the
Parking Parcel free and clear from and against any mechanic's and/or materialmen's liens or stop
notice which may be recorded against the Parking Parcel relating to Developer's construction or
improvement work referred to herein. Developer further agrees that it will undertake such
reasonable actions as may by necessary to cause any such mechanic's or materialmen's liens or
stop notice to be removed within sixty(60) days of receipt of notice that such lien or stop notice
has been attached to the Parking Parcel, including, but not limited to, bonding around any such
lien or stop notice in accordance with statute.
7. MAINTENANCE OF PUBLIC PARKING STRUCTURE.
(a) Covenant to Maintain Public Parking Structure. City covenants and
warrants it will, solely from the proceeds of the Parking Structure Maintenance Special Tax
authorized to be levied in the District and from revenues, if any, from the operation of the.Public
Parking Structure, (1)promptly pay prior to delinquency all real and personal property taxes
assessed against the Parking Parcel, and (2) operate, maintain or repair, or cause to be operated,
maintained and repaired, the Public Parking Structure in good order, condition and repair. The
Public Parking Structure shall remain open and accessible for parking and retrieval of vehicles
(at least) from 8:00 a.m. (or such earlier time that is at least two (2)hours before the tenants and
occupants of the Retail Parcel open for business) until 2:00 a.m. (or such later time that is at least
one (1) hour after all tenants and occupants of the Retail Center have closed for business), seven
days a week(including all holidays), and such additional hours as City may elect.
Notwithstanding the generality of the foregoing, City shall,solely from the proceeds of the
Parking Structure Maintenance Special Tax authorized to be levied in the District and from
revenues, if any, from the operation of the Public Parking Structure, maintain, repair and operate,
or cause to be maintained, repaired or operated the Public Parking Structure in accordance with
the practices generally prevailing in the operation of structured parking adjacent to other retail
facilities located in Southern California similar in character to those located on the Retail Parcel,
and shall at all times perform the following services as frequently as reasonably required for the
Public Parking Structure to satisfy such standard of operation and remain in good order,
condition and repair (the "Operating Standard"):
i. Clean and maintain all surfaces of the Public Parking Structure and
keep such surfaces level and evenly covered with the type of surfacing material originally
installed thereon, or such substitute thereof as shall be equal thereto in quality, appearance and
durability;
ii. Remove all papers, debris, filth and refuse from the Public Parking
Structure and wash or thoroughly sweep paved areas;
iii. Remove trash from trash receptacles and clean trash receptacles; .
iv. Clean, maintain, repair and replace entrance, exit and directional
signs, traffic control signage, markers and lights into and within the Public Parking Structure;
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -7-
V. Keep the parking areas, stairways, elevators and other portions of
the Public Parking Facility well-lit from dusk each day until dawn at least during the applicable
hours of operation set forth in 7(a) above, and clean,relamp and reballast all lighting fixtures;
vi. Maintain, repair and replace striping and curbing;
vii. Maintain and replace as necessary the landscaping surrounding the
Public Parking Structure;
viii. Maintain and repair the structure of the Public Parking Structure,
as needed (except as provided in Section 10(a);
ix. Repaint and refinish all painted and finished surfaces;
X. Clean, maintain and repair all stairs, stairwells and stairwell doors
within the Public Parking Structure;
xi. Clean, maintain, repair and operate all elevators;
xii. Maintain, repair and replace, if needed, all mechanical, electrical
and utility facilities and systems that are a part of or serve the Public Parking Structure,
including, without limitation, sprinkler and fire control systems,parking revenue control
equipment, parking access control equipment, security systems and equipment, mechanical
venting systems, lighting and emergency lighting systems, rollup doors and traffic barriers;
xiii. Make all repairs, improvements or alterations required to comply
with applicable laws;
xiv. Except to the extent maintained by a utility company, maintain the
Utility Facilities located within the Public Parking Structure, other than those which are owned
by Developer or are exclusively serving the Retail Parcel pursuant to the Developer's Utilities
Easement;
xv. Obtain and maintain the public liability insurance and
property/casualty insurance required by this Agreement; and
xvi. Provide, or cause to be provided, reasonable security services.
within the Public Parking Structure.
Notwithstanding the foregoing, following completion of the Public Parking
Structure Developer shall be solely responsible for capital repairs and improvements thereto and
capital replacements therein, and shall maintain reasonably adequate capital reserves for such
purposes. Such capital reserve may be included within a capital reserve fund covering the
Project as whole. As used in the previous sentence, Developer shall be deemed to have
maintained adequate capital reserves.during any time it is in compliance with the capital reserve
requirements set forth in any first in priority Mortgage (or in loan agreement or other documents
incorporated by reference into such Mortgage) encumbering the Retail Parcel.
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -8-
(b) Covenant to Maintain Insurance. City hereby covenants and agrees to all
times maintain(i) commercial general liability insurance and (ii) "all-risk" casualty insurance in
connection with the ownership and operation of the Public Parking Structure. Except as may
otherwise be prohibited by law, Developer shall be named as an additional insured on all such .
liability insurance policies and, solely for purposes of performing its obligations to reconstruct
the Public Parking Structure under Section 10(a) below, on such casualty insurance policy. Such
insurance shall (v) (with respect to liability insurance) include coverage for any accident
resulting in personal.injury to or death of any person and consequential damages arising
therefrom in an amount not less than Five Million Dollars ($5,000,000) per occurrence, and
excess limits under a commercial umbrella liability policy of not less than Twenty Five Million
Dollars ($25,000,000)per occurrence; (w) (with respect to property/casualty insurance) include
comprehensive property damage insurance'in an amount equal to the greater of(A) Twelve
Million Dollars ($12,000,000), or (B) the full replacement value of the Public Parking Structure,
(x) shall be issued by a financially reasonable insurance company or companies having a rating
of not less than A-VIII in Best's Key Rating Guide, (y) shall provide that the same may not be
canceled without at least thirty (30) days prior written notice being given by the insurer to
Developer, and (z) shall contain a.waiver of subrogation provision for the benefit of Developer
and the tenants of the Retail Parcel. City shall furnish to Developer evidence that such insurance
is in full force and effect.
(c) City Indemnity. Subject to Section 34 hereof, City shall indemnify and
hold Developer harmless from and against any claim(s), loss or other damage, including, but not
limited to, reasonable attorneys' fees and costs, arising out of the operation, use, maintenance,
repair or replacement of the Public Parking Structure by City or any party or person acting on
behalf or under the authority or control of City. Notwithstanding, the indemnity set forth above
shall not extend to any claims, loss or other damage arising out of or resulting from (i)the design
or construction of the Public Parking Structure, (ii) land conditions that existed prior to the
construction of the Public Parking Structure, or (iii)the operation, use, maintenance, repair or
replacement of the Public Parking Structure during any period in which Developer is acting as a
Qualified Operator.
(d) Developer Indemnity. Developer shall indemnify and hold the City
harmless from and against any claim(s), loss or other damage, including; but not limited to,
reasonable attorneys' fees and costs, arising out of the operation, use, maintenance, repair or
replacement of the Retail Parcel by Developer or any party or person acting on behalf or under .
the authority or control of Developer. Notwithstanding, the indemnity set forth above shall not
extend to any claims, loss or other damage arising out of or resulting from the negligence or
willful misconduct of the City, or any party or person acting on behalf or under the authority or
control of City, in or around the Project.
(e) Right of Self-Help. In the event City shall fail in its duty to perform its
obligations under this Agreement(including Section 7, 9 and 10), including without limitation its
obligation, if any, to pay real property taxes assessed against the Parking Parcel,then Developer
or any Permittee of the Retail Parcel may give City written notice of such fact, and thereupon
City shall, within ten (10) working days of such notice, commence the performance of the
actions required and diligently pursue such actions to completion in a timely manner.- Should
City fail to fulfill this duty after such notice, Developer or its designee shall have the right and
604377.13/LA,
H4564-002/3-29-04/mjk/rp -9-
power, but not the obligation, to perform such actions and pay any necessary costs or expenses
and City shall promptly reimburse (subject to Section 34 hereof) Developer or its designee for
any costs or expenses paid by Developer or its designee or incurred in connection with
Developer's or its designee's performance of such actions.
(f) Assumption of Operation by Parking Operator. City shall have the right to
delegate all of the obligations under this Article 7 and Article 9 below to a "Qualified
Operator" (as defined below). As used herein, the term "Qualified Operator" means a person
or entity of good general reputation engaged in the business of management, maintenance and
operation of multi-level parking structures of similar type and similar or larger size in Southern
California, adhering to a standard of operation commensurate with the Operating Standard
established hereunder, with reasonably sufficient financial resources to.adequately indemnify,
protect and defend Developer and City, taking into account the nature of the indemnities herein
and the potential risks thereunder. Developer or any Affiliate of Developer shall be deemed to
be a Qualified Operator in all circumstances. As used herein, "Affiliate of Developer" mean any
entity which controls, is controlled by, or is under common control with Developer, J.H. Snyder
Company, Jerry Snyder, Michael Wise or Bryan Ezralow. For the purposes of the preceding
sentence, "control" means the legal power and right to control the operations and business affairs
of the subject entity. Provided that such Qualified Operator expressly assumes the obligations of
the City hereunder pursuant to a written management agreement, including, without limitation,
City's operation, indemnification and insurance obligations hereunder, and agrees that Developer
shall be an express third party beneficiary of such assumption, Developer agrees to look solely to
the Qualified Operator with respect to any breach of the City's obligations hereunder during the
term of such management agreement. Without limiting the generality of the foregoing, if the
Qualified Operator (i) maintains the insurance required to be maintained hereunder and causes
Developer to be named as an additional insured thereunder, and (ii) does not seek to avoid
indemnification of Developer with respect to any claim made against Developer that would
otherwise be covered by City's indemnification of Developer hereunder,-Developer shall not
make any demand, claim or cross claim against City with respect to such claim.
8. USE OF PUBLIC PARKING STRUCTURE. Except as provided in Section 2(a)
above with respect to the Private Retail Spaces, the Public Parking Structure will be used only
for daily public parking, and for no other use whatsoever. Notwithstanding the generality of the
foregoing, long term and leased parking are specifically prohibited. City shall be permitted to
charge parking fees in its sole discretion. Prior to setting initial fees or any increase thereafter,
City shall consult with Developer and obtain a written parking rate study of other publicly
accessible parking facilities in the vicinity of the Project illustrating the range of fees charged for
parking in such facilities prepared by a reputable consultant possessing knowledge and
experience commensurate with the needs of such study. If City elects to impose parking fees for
use of the Public Parking Facility, City shall establish a procedure for paid validation service to
facilitate payments of parking fees directly by Developer and/or other business owners on behalf
of individual users of the Public Parking Structure. At any time the Public Parking Structure is
not owned by City, the District or other public agency,then the right to charge parking fees shall
terminate and no fees may be charged to park in the Public Parking Structure.
9. MAINTENANCE OF EASEMENT AREAS. Notwithstanding anything herein to
the contrary, each Party shall maintain, or cause to be maintained, the easement area(s)within its
604377.13/LA
H4564-002/3-29-04/mjk/cp -10-
Parcel, in good order, condition and repair, without expense to the other Party, subject in any
event on the part of the City to Section 34 hereof. Without limiting the generality of the
foregoing, each Party shall observe the following minimum standards in connection with the
maintenance of the easement area(s) located on its respective Parcel:
(a) Maintain the surface of any driveway areas and sidewalks level, smooth
and evenly covered with the type of surfacing material originally installed thereon, or with such
substitute therefor as shall be in all respects equal to in quality, appearance and durability.
(b) Remove all papers, debris, filth and refuse from such easement areas and
wash or thoroughly sweep paved areas as required.
(c) Maintain such appropriate entrance, exit or directional signs, markers and
lights within such easement areas as shall be reasonably required or necessary and in accordance
with all applicable governmental-rules and regulations.
(d) Clean, repair and maintain all lighting fixtures necessary to provide
adequate light for the easement area(s) and relamp and reballast such fixtures as needed.
(e) Repaint striping, markers, directional signs, et cetera, as necessary, to
maintain the same in a condition commensurate with the Operating Standard.
(f) Maintain landscaping as necessary to keep the easement area(s) and the
applicable Parcel in a condition commensurate with the Operating Standard.
(g) Maintain all signs thereof in a clean and orderly condition, including
relamping and repairs as may be required.
In the event a Party shall fail in its duty to maintain all or any part of any easement
area(s) located within such Party's Parcel, or a Party or its Permittees shall cause damage to any
portion of an easement area; whether on such Party's Parcel or the other Party's Parcel, due to any
intentional or unintentional misuse of such easement area(s) and such shall not be corrected by
the Party who caused such damage (the "Non-Performing Party"),then the other Party(the
"Performing Party") may give the Non-Performing Party written notice of such fact, and
'thereupon the Non-Performing Party shall, within ten(10) working days of such notice,
commence the performance of the actions required and diligently pursue such actions to
completion in a timely manner. Should the Non-Performing Party fail to fulfill this duty after
such notice, the Performing Party shall have the right and power, but not the obligation, to
perform such actions and the Non-Performing Party (subject, in the case of the City,to
Section 34 hereof) shall promptly reimburse the Performing Party for the cost of such work.
10. CASUALTY AND CONDEMNATION.
(a) Parking Structure Repair. In the event of any casualty to the Public
Parking Structure (including but not limited to acts of God, fire, earthquake, explosion or similar
occurrences)which results in damage or destruction to the Public Parking Structure (or any
portion thereof), Developer shall promptly restore, repair or rebuild such damaged portion to the
condition that existed immediately prior to the occurrence of such casualty pursuant to the
604377.13/LA
H4 5 64-0 02/3-29-04/mj k/rp -1 1-
Construction Easement and the provisions of Article 6, proceeds of property/casualty insurance
for such damage shall be placed in a separate account held by the City and shall be made
available to Developer, or such contractor as may be agreed to by City and Developer, for the
purpose of reconstructing the Public Parking Structure on terms and conditions similar to those
in the Funding Agreement. Provided that City is in compliance with its insurance maintenance
obligations hereunder, and provided that the proceeds thereunder are available for the
reconstruction of the Public Parking Structure, Developer shall be responsible for all uninsured
costs of such reconstruction. To the extent that City was in default of its obligations to maintain
insurance under this Agreement at the time of the destruction, then, subject to Section 34 hereof,
City shall be responsible for paying all costs of restoration, rebuilding and repair that would have
been covered by the insurance required to be maintained. All such restoration, repair and
rebuilding shall be performed in a good and workmanlike manner and shall conform to and
comply with, in all material respects, all applicable requirements, laws, codes, rules and
regulation of governmental agencies having jurisdiction thereof. Upon completion of
restoration, rebuilding and repair in accordance with the foregoing, excess insurance proceeds
shall be used by the City for the sole purpose of paying and redeeming Bonds of the District:
(b) Driveway Repair. In the event of any casualty to the easement areas
located on the Retail Parcel (including but not limited to acts of God, fire, earthquake, explosion
or similar occurrences) which results in damage or destruction to such easement areas (or any
portion thereof), Developer shall promptly restore, repair or rebuild such damaged portion to the
condition that existed immediately prior to the occurrence of such casualty, at its sole cost. All
such restoration, repair and rebuilding shall be performed in a good and workmanlike manner
and shall conform to and comply with, in all material respects, all applicable requirements, laws,
codes, rules and regulations of governmental agencies having jurisdiction thereof.
(c) Condemnation. In the event proceedings to take by eminent domain or
condemn the Parking Parcel or any portion thereof(including, without limitation, the Public
Parking Structure) are commenced (collectively, a "Taking"), City shall give immediate notice
thereof to Developer. In the event of a Taking, the Parties rights shall be as set forth below:
i. Complete Taking Prior to Commencement of Construction. If a
Taking occurs with respect to the whole of the Parking Parcel or if City shall grant a deed or
other instrument in lieu of such Taking prior to commencement of construction of the Public
Parking Structure prior to the issuance of bonds of the City for the District and prior to the
commencement of construction of the Public Parking Structure, then Developer shall be entitled
to receive the entire award or payment in connection therewith (the "Proceeds"), except that City
shall have the right to file any separate claim available to City for(a)the Taking of any personal
property of City, (b)the Taking of the Land underlying the Parking Parcel, and
(c) reimbursement to City for any and all costs incurred as of such date relating to the
development of the Parking Parcel as contemplated hereunder, so long as such claim is payable
separately to City and does not diminish or otherwise adversely affect the Proceeds payable to
Developer hereunder.'
ii. Partial Taking Prior to Commencement of Construction. In the
event of a partial Taking of the Parking Parcel prior to the issuance of bonds of the City for the
District and prior to commencement of construction of the Public Parking Structure, then City
604377.13/LA
H4564-002/3-29-04/mj k/rp -12-
B
shall deliver a quitclaim deed.with respect to the Parking Parcel to Developer and assign to
Developer the right to receive all Proceeds in connection with such.Taking (provided, however,
City shall have the right to file a separate claim for the matters which, in the case of the City,
shall include all amounts expended by the City in connection with construction of the Public
Parking Structure referred to.in clause (i)(a) and (b) above), and upon delivery of such quitclaim
deed from City for recordation in the Official.Records, City shall be relieved of any further
obligations under this Agreement.
iii. Complete Taking Following Issuance of the Bonds. If a Taking
occurs with respect to the whole of the Parking Parcel (including, without limitation,the Public
Parking Structure) or if City shall grant a deed or other instrument in lieu of such Taking at any
time after the issuance of bonds of the City'for the District, then the Proceeds in connection
therewith shall be paid to the City, except that either Developer or City shall have the right to file
any separate claim available to such Party for any Taking of such Party's personal property and
fixtures belonging to such Party (including,.in the case of Developer, Taking of Developer's right
to use the Private Retail Spaces), so long as such claim is payable separately to such Party.
Provided that Developer undertakes to promptly construct a replacement public parking structure
on another portion of the Retail Parcel or other real property in the vicinity of the Project
("Replacement Public Parking Structure"), the City's share of such condemnation proceeds
shall be placed in a separate account held by the City and shall be made available to Developer,
or such contractor as may be agreed to by City and Developer, for the purpose of constructing
the Replacement Public-Parking Structure on terms and conditions similar to those in the
Funding Agreement. Provided that such condemnation proceeds are available for the
construction of the Replacement Public Parking Structure, Developer shall be responsible for all
uninsured costs of such construction. Upon completion of construction of the Replacement
Public Parking Structure in accordance with the foregoing, excess condemnation proceeds shall
be used by the City for the sole purpose of paying and redeeming Bonds of the District. Any
insurance proceeds remaining following completion of construction of the Replacement Public
Parking Structure in accordance with the foregoing and payment and redemption in full of the
Bonds of the District shall be the property of the City.
iv. Partial Taking Following Issuance of the Bonds. If a Taking
occurs with respect to a portion of the Parking Parcel (including, without limitation, the Public
Parking Structure)that constitutes less than substantially all of the Public Parking Structure, or if
City.shall grant a deed or other instrument in lieu of such Taking following the issuance of the
Bonds of the City for the District, then(A).Proceeds thereof shall be paid to City; (B) City's
obligation to provide the number of Private Retail Spaces set forth in Section 2(b) shall be
reduced to five percent (5%) of the remaining total number of spaces, and (C) either Developer
or City shall have the right to file any separate claim available to such Party for any Taking of
such Party's personal property and fixtures belonging to such Party (including, in the case of
Developer, Taking of Developer's right to use the Private Retail Spaces), so long as such claim is
payable separately to such Party. Provided that Developer undertakes to promptly construct a
Replacement Public Parking Structure, City's share of condemnation proceeds shall be placed in
a separate account held by the City and shall be made available to Developer, or such contractor
as may be agreed to by City and Developer, for the purpose of constructing the Replacement
Public Parking Structure on terms and conditions similar to those in the Funding Agreement.
Provided that such condemnation proceeds are available for the construction of the Replacement
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -13-
Public Parking Structure, Developer shall be responsible for all costs of such construction in
excess of the amount of such condemnation proceeds. Upon completion of construction of the
Replacement Public Parking Structure in accordance with the foregoing, excess condemnation
proceeds shall be used by the City for the sole purpose of paying and redeeming Bonds of the
District. Any condemnation proceeds remaining following completion of construction of the
Replacement Public Parking Structure in accordance with the foregoing and payment and
redemption in full of the Bonds of the District shall be the property of the City.
11. DEVELOPER'S OPTION TO PURCHASE PUBLIC PARKING STRUCTURE
SITE.
(a) Grant of Option. In consideration of Developer's agreement to enter into
this Agreement, City hereby grants to Developer the exclusive right and option(the "Option") to
purchase the Parking Parcel for a purchase price equal to the fair market value of the Parking
Parcel at the time the option is exercised (the "Exercise Price") upon the terms and conditions
set forth more particularly set forth in this Section.
(b) Conditions to Exercise of Option. Developer's right to exercise the Option
shall only be effective after the earliest to occur of the following (the "Exercise Date"): (i) the
date on which the CFD Financing has been fully paid and retired, or(ii)the date on which the
Public Parking Structure is no longer.owned either by (A) City, or (B) other governmental entity.
It shall be a further condition to exercise of the Option by Developer that Developer furnishes the
City with an opinion of nationally recognized bond counsel, which opinion may contain
reasonable and customary assumptions and exclusions, that the exercise of the Option and
acquisition of the Parking Parcel by Developer pursuant to this Section 11 would not by itself
render the interest payable under the Bonds to.be taxable for federal income tax purposes.
(c) Determination of Fair Market Value of the Parking Parcel. City and
Developer shall attempt in good faith to agree upon the Exercise Price. If Developer and City (or
City's successor-in-interest) fail to reach an agreement within ninety (90) days following the
Exercise Date (the "Outside Agreement Date"), then each Party shall submit to the other a
separate written determination of the fair market value of the Parking Parcel within ten (10)
business days after the Outside Agreement Date, and such determinations shall be submitted to
arbitration in accordance with the provisions below. The failure of City or Developer to submit a
written determination of the fair market value of the Parking Parcel within such ten(10) business
day period shall conclusively be deemed to be such Party's approval of the fair market value of
the Parking Right submitted within such ten (10)business day period by the other Party.
J. Developer and City shall each appoint one (1) arbitrator who shall
by profession be an independent real estate broker who shall have no ongoing relationship with
either Party and who shall have been active over the five (5) year period ending on the date of
such appointment in the purchase and sale or financing of large retail projects in Orange County
or Los Angeles County. The determination of the arbitrators"shall be limited solely to the issue
of whether City's or Developer's submitted fair market value of the Parking Parcel is the closer to
the actual fair market value of the Parking Parcel as determined by the arbitrators. Each
arbitrator shall be appointed within fifteen (15) days after the Outside Agreement Date.
604377.13/LA
H4 5 6 4-00213-2 9-0 4/mjk/rp -14-
ii. The two (2) arbitrators appointed shall, within fifteen(15) days of
the date of the appointment of the last appointed arbitrator, agree upon and appoint a third
arbitrator who shall be qualified under the same criteria set forth hereinabove for qualification of
the initial two (2) arbitrators.
iii. The three (3) arbitrators shall, within thirty (30) days of the
appointment of the third arbitrator, reach a decision as to which Party's submitted fair market
.value of the Parking Parcel is closer to the actual fair market value of the Parking Parcel. The
three (3) arbitrators shall then select such closer determination as the fair market value of the
Parking Parcel and notify City and Developer.thereof.
iv. The decision,of the majority of the three (3) arbitrators shall be
binding upon City and Developer.
V. If either Party fails to appoint an arbitrator within the time period
specified above, the arbitrator appointed by one of them shall reach a decision, notify the Parties
thereof, and such arbitrator's decision shall be binding upon City and Developer.
vi. If the two (2) arbitrators fail to agree upon and appoint a third
arbitrator, within the time period provided above, then the Parties shall mutually select the third
arbitrator. If Developer and City are unable to agree upon the third arbitrator within ten (10)
days after the ten (10) day period described above, then either party may, upon at least five (5)
days' prior written notice to the other party,petition the Orange County Superior Court pursuant
to California Civil Code Section 1281.6, to appoint the third arbitrator. Following the .
appointment of the third arbitrator, the panel of arbitrators_shall within thirty (30) days thereafter
reach a decision as to which Party's submitted Fair market value of the Parking Parcel shall be
used as the Exercise Price and shall notify Developer and City thereof.
vii. The cost of the arbitrators and the arbitration proceeding shall be
paid by the party whose fair market value of the Parking Parcel was not selected by the
arbitrators.
(d) Closin . The closing of a purchase and sale of the Parking Parcel held
pursuant to this Section 11 shall be held through escrow within ninety (90) days following the
determination of the Exercise Price pursuant to Section 11(c) above. The Exercise Price for the
Parking Parcel shall be paid by Developer by delivering, at the closing through escrow, cash in
the amount of the Exercise Price. The Parking Parcel shall be conveyed free and clear of all
liens, encumbrances and other title matters other than those on title to the Parking Parcel as of
the date of acquisition thereof by the City or otherwise approved by Developer. The City shall
deliver to Developer,through escrow upon the closing, such grants deeds, bills of sale,
assignments and other instruments of transfer and such evidence of due authorization, execution,
and delivery, and of the absence of any such liens, encumbrances and other title matters, as
Developer shall reasonably request. All costs associated with removing or curing unpermitted
title exceptions, and any legal fees incurred by the City shall be paid by the City. All escrow
charges, title premiums, recording fees, and other closing costs shall be paid by Developer.
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -15-
12. DEVELOPER AS OPERATOR. During any period in which Developer or any
Affiliate of Developer is acting as operator of the Public Parking Structure, Developer waives
any right or remedy with respect to the breach by City of any obligation of City hereunder that
has been delegated to and assumed by Developer or such Affiliate of Developer.
13. DOMINANT AND SERVIENT TENEMENTS. Each easement and right granted
pursuant to the provisions of this Agreement is expressly for the benefit of the Retail Parcel or
the Parking Parcel, as the case may be, and the Parcel-so benefited shall be the dominant
tenement and the Parcel upon which easement is located shall be the servient tenement.
Notwithstanding the preceding sentence, where only a portion of such Parcel is bound and
burdened, or benefited by a particular easement, only that portion so bound and burdened, or
benefited, as the case may be, shall be deemed to be the servient or dominant tenement, as the
case may be. Any easement granted pursuant to the provisions of this Agreement may be
abandoned or terminated-only by an agreement in writing executed by the owners of the
dominant and servient tenements.
14. COVENANTS RUNNING WITH THE LAND. Each easement granted or
described herein, and every covenant of a Party contained herein, shall be deemed to be a
covenant running with the land, or in the alternative, an equitable_servitude, affecting and
binding the servient tenement and successive owners thereof, and inuring to the benefit of the
dominant tenement and the successive owners thereof.
15. NO EASEMENT BY IMPLICATION; PREVENTION OF PRESCRIPTIVE
RIGHTS. Neither the execution of this Agreement or any instrument which may be executed in
connection herewith nor the granting of the easements described herein shall be deemed to grant.
any other easement to any third party or to establish any easement by implication. The Parties to
this Agreement understand and agree that the only easements made and granted by the Parties
are those easements which are expressly made and granted by this Agreement. Each Party
hereby reserves the right to eject or cause the ejection from its Parcel any person not authorized,
empowered or privileged to use that Parcel. Further, each Party reserves the right to restrict
access to its Parcel for such reasonable period or periods of time as may be legally necessary to
prevent the acquisition of prescriptive rights by any person; provided, however, that prior to such
restriction of access the Party exercising that right shall give written notice to the other Party of
its intention to do so and shall coordinate such restriction of access with the other Party so that
no unreasonable interference with the operation of the other Party's Parcel shall occur. Nothing
contained herein shall be deemed to be a gift or dedication of any portion of either Parcel to the
general public or for the general public or for any public purpose whatsoever.
16. RECIPROCAL REPRESENTATIONS AND WARRANTIES. The following
constitute reciprocal representations and warranties of both City and Developer to the other
Party.
(a) Power. Each Party, has the legal power, right and authority to enter into
this Agreement and the instruments referenced herein, and to consummate the transactions
contemplated hereby.
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -16-
(b) Requisite Action. All requisite action (corporate, trust,partnership or
otherwise) has been taken by each Party in connection with the entering into this Agreement, the
instruments referenced herein, and the consummation of the transactions contemplated hereby.
Except as expressly described in this Agreement, no consent of any partner, shareholder,
.creditor, investor,judicial or administrative body, governmental authority or other party is
required.
(c) Authority. The individuals executing this Agreement and the instruments
referenced herein on behalf of each Party and the partners, officers or trustees of such Party, if
any, have the legal power, right, and actual authority to bind such Party to the terms and
conditions hereof and thereof.
(d) Validity. This Agreement and all documents required hereby to be
executed by each Party-are and shall be valid, legally binding obligations of and enforceable
against such Party in accordance with their terms, subject only-to applicable bankruptcy,
insolvency, reorganization, moratorium laws or similar laws or equitable principles affecting or
limiting the rights of contracting parties generally.
17. LIMITATION ON PREPAYMENT OF SPECIAL TAX. Developer
acknowledges that the prepayment of the Special Tax (as defined in the Fiscal Agent Agreement)
prior to defeasance of the Bonds in full with respect to any sub-parcel within the Retail Parcel
may result in the expiration of the City's subsequent right to levy the Parking Structure
Maintenance Tax (as defined in the Operating Agreement) on such sub-parcel. Accordingly,
Developer agrees that, at all times prior to defeasance of the Bonds, neither it nor its successor or
assign with respect to any portion of the Project shall prepay the Special Tax with respect to any
portion.of the Retail Parcel constituting less than the entire Retail Parcel, unless it provides the
City with reasonable assurances that the Parking Structure Maintenance Tax collectible from the
remainder of the Retail Parcel and the Parking Fund (as defined in the Operating Agreement),
will be sufficient to cover the reasonably estimated costs of operating and maintaining the Public
Parking Structure.
18. ATTORNEYS' FEES. In the event at any time during the term of this Agreement
any action or suit is brought by a Party against another Party hereunder by reason of any breach
of any of the covenants, agreements or provisions on the part of the other Party arising out of this
Agreement, then in that event the prevailing Party shall be entitled to have and recover of and
from the other party all costs and.expenses of the action or suit, including actual attorneys' fees,
accounting and engineering fees, and any other professional fees resulting therefrom.
19. NOTICE TO PARTIES. All notices or other communications required or
permitted hereunder shall be in writing, and shall be personally delivered (including by means of
professional messenger or overnight courier service) or sent by fax showing confirmed receipt,
and shall be deemed received upon the date of receipt thereof.
604377.13/LA
H4564-002/3-29-04/mjk/rp -17-
To Developer: Huntington Center Associates,-LLC
c/o J.H. Snyder Company
5757 Wilshire Boulevard,Penthouse 30
Los Angeles, California 90036
Attn: Mr. Michael Wise
Telephone: (323) 857-5546
Facsimile: (323) 857-7042
With a copy to: Huntington Center Associates, LLC
c/o The Ezralow Company
23622 Calabasas Rd., Suite 100
Calabasas, CA 91302-1549
Attn: Mr. Bryan Ezralow
Telephone: (818) 223-3500.
Facsimile: ((818) 223-3536
and Allen Matkins Leck Gamble & Mallory LLP
515 S. Figueroa, Suite 700
Los Angeles, California 90071
Attn- Michael J. Kiely, Esq.
Telephone:. (213) 622-5555
Facsimile: (213) 620-8816
To City: City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attn: Director of Economic Development
Telephone: (714) 536-5509
Facsimile: (714) 375-5087
With copies to: City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attn: Scott F. Field,Esq.
Assistant City Attorney
Telephone: (714) 536-5555
Facsimile: (714) 374-1590
Notice of change of address shall be given by written notice in the manner detailed in this
Section 19.
20. AMENDMENT. The provisions ofthis Agreement may be modified or amended,
in whole or in part, only with the consent of both Parties, by declaration in writing, executed and
acknowledged by all of the same, duly recorded in the Official Records of Orange County,
California(the "Official Records").
604377.13/LA
H4564-002/3-29-04Jmjk/p -18-
21. NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement are for
the exclusive benefit of the Parties, any Mortgagees and Permittees-(as expressly provided
herein) of the Retail Parcel, and as to Section 34 for the intended benefit of the Agency, and of
their successors and assigns, and not for the benefit of any other party(ies), nor shall this
Agreement be deemed to have conferred any rights, express or implied, upon any other
party(ies). It is expressly understood and agreed that no modification or amendment, in whole or
in part, of this Agreement shall require any consent or approval of any third party(ies).
22. TERMINATION. Except as otherwise specifically provided in this Agreement,
the easements granted hereunder shall last in perpetuity, unless sooner terminated by written
agreement between the Parties which is recorded in the Official Records or until such earlier date
as the Developer exercises the option granted in Section 11.
23. ESTOPPEL CERTIFICATE. Each Party hereby severally covenants that upon
written request of the other Party, it will within twenty (20) days of such request, issue to such
other Party, or to any Mortgagee or any other party specified by such requesting Party, an
estoppel certificate stating: (i) whether the Party to whom the request has been directed knows
of any default under the Agreement, and if there are any known defaults, specifying the nature
thereof, (ii) whether to its knowledge the Agreement has been assigned, modified or amended in
any way (or if it has, then stating the nature thereof), and (iii) that to the Party's knowledge the
Agreement as of that date is in full force and effect. Such statement shall act as a waiver of any
claim by the Party furnishing it to the extent such claim is based upon facts contrary to those
asserted in the statement and to the extent the claim is asserted against a bona fide encumbrancer
or purchaser for value without knowledge of facts to the contrary of those contained in the
statement, and who has acted in reasonable reliance upon the statement. However, such
statement shall in no event subject the Party furnishing it to any liability whatsoever,
notwithstanding the negligence or other inadvertent failure of such Party to disclose correct
and/or relevant information.
24. NO PARTNERSHIP. Nothing contained in this Agreement, nor any acts of the
Parties, shall be deemed or construed to create any relationship of principal and agent, or of
partnership, or of joint venture, or of any association betweenrthe Parties.
25. PARTIAL INVALIDITY. If any term, provision or condition contained in this
Agreement or the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which ivis held invalid or
unenforceable, shall not be affected thereby, and each such term and.provision of this Agreement
shall be valid-and be enforced to the fullest extent permitted by law provided, however, if the
intent and purpose of the parties hereto is rendered unachievable due to such'invalid term or
provision, then either party shall have the right to terminate this Agreement.
26. SUCCESSORS AND ASSIGNS.:/This Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the Parties hereto. Notwithstanding
anything contained herein to the contrary, either Party may delegate all or any portion of its
respective rights and obligations under this Agreement to any third party, so long*as such
assignee expressly assumes in writing the obligations of such delegating Party hereunder and
604377.13/LA
H4564-002/3-29-04/mjk/rp -19-
such delegating Party remains principally liable for such assignee's performance.under this
Agreement, except in the event that a Party sells its entire interest in its Parcel, in which case it
shall be relieved of any and all obligations under this Agreement from and after the time of
closing of any such sale provided such purchaser enters into an assumption agreement pursuant
to which such purchaser shall assume each of the assigning parry's obligations hereunder.
27. MUTUAL COOPERATION. The parties recognize that, subject to the terms of
this Agreement, Developer retains the right to redevelop or further develop the Retail Parcel and
nothing in this Agreement is intended to limit or restrict such right so long as Developer is in
compliance with its obligations under this Agreement. The Parties agree that in the event
Developer elects to redevelop or further develop the Retail Parcel,then the Parties shall
cooperate with one.another in all reasonable respects so as to allow for such development to
occur with minimal impact to the rights of the non-developing Party under this Agreement;
provided, however, in no event shall the non-developing Party be required to incur any material
cost or expense in connection with such cooperation. In the event (i) such development
cooperation causes City to incur additional costs and expenses with respect to the Public Parking
Structure and/or (ii) such development prevents City from fully realizing its rights under this
Agreement,then Developer shall reimburse City for any costs.or expenses incurred by City as a
result of such development. Moreover, City agrees to reasonably cooperate with Developer's
construction and permanent lenders, including making such immaterial changes to this
Agreement which may be requested by Developer's construction and permanent lenders, so long
as such changes do not (i) increase City's obligations hereunder, or (ii) adversely effect or reduce
City's rights hereunder. With respect to those matters relating to the development of the Public
Parking Structure for which City's consent or approval is required, except where City is entitled
to withhold such consent or approval in its sole and absolute discretion, City agrees that it shall
exercise such consent or approval on a reasonable basis and with the understanding that the
Parties desire that the Project be a commercially viable project and that any bonds issued for the
District remain tax-exempt.
28: TIME OF ESSENCE.-The Parties hereby acknowledge and agree that time is
strictly of the essence with respect to each and every term, condition, obligation and provision
hereof and that failure to timely perform any of the terms, conditions, obligations or provisions
hereof by either party shall constitute a material breach of and a non-curable (but waivable)
default under this Agreement by the party so failing to perform.
29. CONSTRUCTION. Headings at the beginning of each paragraph are solely for
the convenience of the Parties and are not a part of the Agreement. Whenever required by the
context of this Agreement,the singular shall include the plural*and the masculine shall include
the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by
one of the parties, but rather as if both parties had prepared the.same. Unless otherwise
indicated, all references to paragraphs and subparagraphs are to this Agreement. All exhibits
referred to in this Agreement are attached and incorporated by this reference.' In the event the
date on which either Party is required to take any action under the terms of this Agreement is not
a business day, the action shall be taken on the next succeeding business day.
30. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which,together, shall constitute one and the same
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -20-
instrument. Signature pages may be detached.from the counterparts and attached to a single
copy of this document to physically form one document.
31. GOVERNING LAW. The Parties acknowledge that this Agreement.has been
negotiated and entered into in the State of California. The Parties expressly agree that this
Agreement shall be governed by, interpreted under, and construed and enforced in accordance
with the laws of the State of California.
32. NO EFFECT ON MORTGAGE. The Parties acknowledge and agree that any
default or breach by Developer of its obligations hereunder shall in no way-defeat, affect, render
void or reduce in any way the rights of any Mortgagee of the Retail Parcel.
33. DISPUTE RESOLUTION.
(a) Any action or proceeding, whether in law or equity, to interpret or enforce
the provisions of this Agreement or to declare the rights and obligations of the parties hereto
shall be determined and conducted by the filing of a complaint in Orange County Superior Court
and immediate referral thereof to a reference with respect to all issues, whether fact or law, as
provided in California Code of Civil Procedure ("CCP") Section 638(A). A referee shall be.
selected in the manner set forth below. As provided for in CCP Section 645, any party may take
exception to and/or appeal from the decision of the referee in the same manner provided for
decisions of a court hearing a matter and rendering a judgment without a jury. Notwithstanding
anything to the contrary herein, each party shall have the right to seek temporary restraining
orders, preliminary injunctions and similar provisional and equitable relief in a court of
competent jurisdiction in the event of a material breach of the terms of this Agreement.
(b) The referee for any such reference shall be selected in the following
manner: the party initiating the proceeding ("Initiating Party") shall nominate a proposed
referee from the Orange County Superior Court list of retired judges, who shall be independent
parties and shall so notify the other party of such choice. If the other party.("Responding
Party") disagrees with the selection made by the Initiating Party, the parties shall endeavor to
agree upon another referee within ten (10) days ("Negotiation Period") following written notice
to the Responding Party from the Initiating Party of the Initiating Party's selection. In the
absence of an agreement between the parties within the Negotiation Period,the referee shall be
selected by the court in accordance with CCP Section 640.
(c) The referee's decision shall be made by application of statutory and
common law of the State*of California, including without limitation the rules of evidence, to the
facts as found by the referee. The proceeding shall be transcribed by court reporter unless the
parties agree otherwise. The reference proceedings-shall be held in Orange County, California
unless mutually agree otherwise. The cost of any fees or expenses incurred by the prevailing
parry, including without limitation attorneys' fees, shall be included in the award to such
prevailing party.
(d) The parties shall have all rights of discovery in connection with the
reference proceedings as would be allowed and/or permitted in a case being heard under the
unlimited jurisdiction of the Orange County Superior Court.
604377.13/LA
H4564-002/3-29-04/mj1d p -21-
34. LIABILITY OF CITY. Notwithstanding anything herein to the contrary, City
shall not have any liability or obligation of any kind under this Agreement in connection with
(i) the design or construction of the Public Parking Structure, (ii) land conditions that existed
prior to the construction of the Public Parking Structure, (iii)the operation, use, maintenance,
repair or replacement of the Public Parking Structure during any period in which Developer is
acting as a Qualified Operator, (iv) any failure by Developer to complete the Public Parking
Structure or otherwise make the Public Parking Structure available on or before any scheduled
date, or (v) any failure of the Public Parking Structure, as initially constructed by Developer,to
comply with any legal requirements relating to such construction. Notwithstanding anything
herein to the contrary, any and all monetary obligations of the City under this Agreement, .
including, but not limited to, obligations pursuant to Sections I I(c) (vii) and 18 shall be payable
solely from any revenues derived by the City from the Public Parking Structure or from the
proceeds of the Parking Structure Maintenance Special Tax (after deduction for the costs of
collection and other administrative expenses) levied by the City on the District. In no event shall
the City's general fund be liable hereunder. Developer hereby waives and releases City from any
and all such liability or obligation. Developer shall indemnify and hold City, the Agency, and
their respective councilmembers, board members, commissioners, officers and employees
harmless from and against any claim(s), loss or other damage, including, but not limited to,
reasonable attorneys' fees and costs, arising out of or resulting from the matters described in
clauses (i) through (v) above.
[Signatures on following page]
604377.13/LA
H4564-002/3-29-04/mjk/rp -22-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.as of the date
and year hereinabove written.
"Developer" HUNTINGTON CENTER ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: Huntington Management Ent., LLC,
a Delaware limited liability company,
its Manager
By: BMLF/Huntington, LLC,
a Delawar 'mited liability
comp y, ' s Mana
B
t(rydn tzralow, Trustee of
the Bryan Ezralow 1994
Trust, its Manager
"City" CITY OF HUNTINGTON BEACH.
By:
Mayor
ATTEST:
City Clerk
REVIEWED AND APPROVED: APPROVED AS TO FORM:
City Administrator City Attorney
Bond Counsel
604377.13/LA
H4564-002/3-29-04/mjk/p -23-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year hereinabove written.
"Developer" HUNTINGTON CENTER ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: Huntington Management Ent., LLC,
a Delaware limited liability company,
its Manager
By: BMLF/Huntington, LLC,
a Delaware limited liability
company, its Manager
By:
Bryan Ezralow, Trustee of
the Bryan Ezralow 1994
Trust, its Manager
"city" CITY OF HUNTINGTON BEACH
By:
Mayor
ATTEST
City Clerk Co-44 ,W 5��
REVIEWED AND APPROVED: APPROVED AS TO FORM:
c�
City A ministrator City Attorney
&,4,4
B nd Counsel
604377.13/LA
H4 5 64-0 02/3-29-04/mj k/rp -23-
STATE OF(q
ss.
COUNTY OF (gAmwtLee.
On ' �. ,before me,��Th l�'� -�e,jA�}, a Notary
Public in and r said state, personally appeared 4 personally known
to me (er�eved e-r -e l� to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/'*.s executed the same in
his/h=authorized capacity, and that by his/,�r signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.
.WITNESS my hand and official seal.
tary Public in Ad for said State
JUAN CARLOS HERNANDEZJ .
Commission# 1380176 Z
Z Notary Public - Callfornio
... Los Angeles County
My Comm.Expires Oct l a 2006
604377.13/LA
H4 5 64-002/3-29-04/mj k/rp -24-
STATE OF lam- rued )
ss.
COUNTY OF
On c206 , before me, a Notary
Public in and fc • said state, personally appeared ,personally known
to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that-he/she executed the same in
4i-s/her authorized capacity, and that by-hiiS/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Not_ Public in and f r said State
KATHLEEN NELSON
Commiss arf 41126875/
Notary Pubac-Co111crft
orange Cam"
QMvCwrrmB0mjLin25,ZD4
604377.13/LA ,
H4564-002/3-29-04/mjk/rp
EXHIBIT "A"
LEGAL DESCRIPTION OF RETAIL PARCEL PROPERTY
Parcels 2 through 9 as shown on Parcel Map No. 86-200 filed in Book 255,pages 40-45, of
Parcel Maps in the Official Records of the County Recorder of Orange County, California,
EXCEPT those portions.of Parcel A (being portions of said parcel 4 and 8) conveyed to the City
of Huntington Beach, a municipal corporation by deed recorded May 1, 1991 as Instrument No.
91-209426 of Official Records,AND FURTHER EXCEPTING THE PARCEL DESCRIBED
ON-PAGES 2 -4 OF THIS EXHIBIT"A".
EXHIBIT"A"
604377.13/LA TO
H4564-002/12-23-03/miwr PREA
EXHIBIT"B"
LEGAL DESCRIPTION OF PARKING PARCEL PROPERTY
604377.13/LA
H4564-002/3-29-04/mj k/rp EXHIBIT"B"
LD 1018 SHEET 1 OF 2
02-100
LEGAL DESCRIPTION FOR
BELLA TERRA PARKING STRUCTURE
THE LAND BEING REFERRED TO HEREIN IS SITUATED IN THE CITY OF
HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA.
PARCEL "A"
BEING A PORTION OF PARCEL 2 AS SHOWN IN PARCEL MAP NO. 86-200,
RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF
ORANGE, DESCRIBED AS FOLLOWS:
BEGINNING AT THE EASTERLY TERMINUS OF THE NORTH LINE OF SAID
PARCEL 2, SHOWN AS "NORTH 89029'30" WEST 763.76 FEET" ON SAID
PARCEL MAP NO. 86-200, SAID POINT ALSO BEING ALONG THE
SOUTHERLY LINE OF THE SOUTHERN CALIFORNIA EDISON RIGHT OF
WAY (150.00 FEET IN WIDTH) PER GRANT DEED RECORDED IN BOOK
3675, PAGE 63 AND GRANT DEED RECORDED IN BOOK 3159, PAGE 483
BOTH OF OFFICIAL RECORDS; THENCE ALONG SAID LINE NORTH
89029'30" WEST A DISTANCE OF 67.51 FEET TO THE TRUE POINT OF
BEGINNING; THENCE DEPARTING SAID LINE SOUTH 00130'30" WEST A
DISTANCE OF 334.58 FEET; THENCE NORTH 89°29'30" WEST A DISTANCE
OF 135.12 FEET; THENCE SOUTH 70032'16" WEST A DISTANCE OF 4.39
FEET; THENCE NORTH 89029'30". WEST A DISTANCE OF 3.00 FEET;
THENCE NORTH 00030'30" EAST A DISTANCE OF 126.75 FEET; THENCE
NORTH 89029'30" WEST A DISTANCE OF 274.25 FEET; THENCE NORTH
00030'30" EAST A DISTANCE OF- 209.33 FEET TO ABOVE MENTIONED
NORTH LINE; THENCE EASTERLY ALONG SAID LINE SOUTH 89029`30"
EAST A DISTANCE OF 416.50 FEET TO THE TRUE POINT OF BEGINNING.,
CONTAINING AN AREA OF 2.41 ACRES MORE OR LESS.
CHRISTOPHER W. DANIELS
-� SHEET 2 OF 2
.D1018 - - - - - -- - -- - - - - -
j2-100 CENTER DRIVE
N89'29'30"W _ . 534.08'
SOUTHERN CALIFORNIA EDISON RIGHT OF WAY I
BK. 3159,
PG 483 O.R. o I BK. 4519,
S'LY LINE OF THE N'LY 150' OF THE SOUTH 1/2 PG 491 O.R.
OF THE SOUTHEAST 1/4 OF SECTION 14
_ CBK. 3675, PG. 63 O.R. b
N8929'30"W 763.76'
416.50' 67.51' —
T.P.0.B. P.O.B.
4A
PARCEL "An
2.41 AC
aa_ O
PARKING STRUCTURE
1
W
N89'29'30"W 274.25' M -
, 1
O air
' __j
Z aa_
t:• N
� aa_
, s
O
M
O
o L1
z
rw • rw�•r—1
N89'29'30"W
L2 135.12'
r♦ • r♦r r—1
1 / \1 \wI L_a_ •_ _
LINE TABLE
LINE BEARING LENGTH
L1 N89'29'30"W 3.00
L2 N70'32'16"E 4.39
DATE: 05-13-04
Engineers/Planners/Surveyors EXHIBIT „B„
1920 MAIN STREET.SURE 850.IRVINE.CA M14
® TEL(949)488-0777 FAX(949)48"779 SKETCH TO ACCOMPANY LEGAL DESCRIPTION
SCALE: 1 11 —80' 1411.WARM SMNGS ROAD,SUITE IOq LAS VEGAS,NV 89119
❑ TEL(702)888.8804 FAX(702)868-N05 FOR PARKING STRUCTURE
BELLA TERRA MALL, HUNTINGTON BEACH, CA.
EXHIBIT C
PUBLIC FACILITIES
A. Developer Managed Public Facilities Cost Estimate
1. Edinger Avenue Improvements $ 3,400,000
2. Center Avenue Improvements 600,000
3. Design/Build Parking Structure 11,771,250
4. On-Site Public Utilities -Wet 1,200,000
5. Fire Sprinklers for Garage 400,000
6. Technical Services,Fees &Permits 886,000
7. Parking Garage Land Value 1,600,000
8. Police Substation Improvements 165,000
9. Relocation of existing utilities for Garage foundations 450,000
Total Costs $20,466,250
RVPL93\KAB\645932 C-1
EXHIBIT D
PUBLIC CONTRACT REQUIREMENTS
(1) CONTRACTOR'S LICENSE/INVITATION TO BID
Developer shall specify the type of contractor's license required in both the plans and the
invitation for bids. Cal.Pub. Cont. Code § 3300. The contractor must include its license number in
the bid documents. Cal. Bus. &Prof. Code § 7030.5. Developer, as City's agent,may exercise its
discretion in determining which license class is permitted for a particular project, subject to
consultation with the Contractor's License Board, to determine the validity of the license and what
license category is required. Developer hereby warrants that all contractors hired as of the effective
date of this agreement were properly licensed at the time it submitted its bid, prior to awarding a
contract or prior to issuing a purchase order. Cal. Bus. &Prof. Code § 7028.15(e).
(2) MAJOR SUBCONTRACTORS
Developer hereby warrants that the bid specifications or general conditions issued prior to
entering into the Construction Contracts required the bidder to list in its bid all its subcontractors who
will perform work in excess of one-half percent of the total bid or,in the case of streets or highways,
one-half percent or$10,000, whichever is greater. Cal. Pub. Cont. Code § 4104.
(3) DEBARRED CONTRACTORS AND.SUBCONTRACTORS
Developer hereby warrants that the Construction Contracts contained a provision prohibiting
work by contractors or subcontractors who are ineligible pursuant to Labor Code sections 1777.1
and 1777.7. Cal. Pub. Cont. Code § 6109. [The California Department of Industrial Relations
publishes a list of debarred contracts on the Internet at: www.dir.ca.gov/dlse/debar.html
<http://www.dir.ca.gov/dlse/debar.html>.]
(4) UNFAIR BUSINESS PRACTICE CLAIMS
Developer hereby warrants that the Construction Contracts contained a provision assigning
unfair business practices claims (Clayton Act and Cartwright Act) from the contractor to the City.
Cal. Pub. Cont. Code § 7103.5.
(5) TRENCHING REQUIREMENTS
Developer hereby warrants that the Construction Contracts contained a provision that where
trenching is more than four feet deep,the contractor shall notify Developer of hazardous materials,
subsurface or latent physical site conditions different from those indicated and unusual site conditions,
set forth the duties of Developer as to investigation thereof and specify how disputes must be.
addressed. Cal. Pub. Cont. Code § 7104.
(6) NON-COLLUSION AFFIDAVIT
Developer hereby warrants that the Construction Contracts contain a"noncollusion affidavit"
signed by the bidder in the statutory form. Cal. Pub. Cont. Code § 7106.
RVPU13\KAB\645932 D-1
(7) RETENTION
Developer shall retain at least ten percent of the contract price. Cal.Pub. Cont. Code§9203.
After one-half of the work is completed and Developer determines satisfactory progress is being made
to complete the job, Developer may make the remaining payments in full. The retention shall be
released(with the exception of one hundred fifty percent of any disputed amount)within 60 days after
the"date of completion"of the work. Cal.Pub. Cont. Code §7107._Developer shall make progress
payments within 30 days after receipt of an undisputed and properly submitted request. Cal. Pub.
Cont. Code § 20104.50.
(9) SECURITIES IN LIEU OF RETENTION
Developer hereby warrants that the Construction Contracts contain a statement that the
contractor may substitute securities in place of retained funds withheld by the City. Cal.Pub. Cont.
Code§22300.Alternatively,an escrow agreement,in the form prescribed by the code,may be used
by the contractor.
(9) RESOLUTION OF CLAIMS
Developer hereby warrants that the Construction Contracts contain certain mediation and
arbitration provisions to claims of $375,000 or less. Cal. Pub. Cont. Code §§ 20104, 20104.2,
20104.4.
(10) PREVAILING WAGE LAW
The following provisions of the prevailing wage law are discussed in greater detail below in
section IV.B.8. of this handbook.
(a) Developer hereby warrants that the Construction Contracts contain a provision
specifying the general rate ofper diem wages("prevailing wage")for each craft,classification or type
of worker needed to execute the contract or contain a statement that copies of the prevailing rate of
per diem wages are on file at Developer's principal office. Cal:Lab. Code§ 1773.2. Developer must
also cause a copy of the wage rates'to be posted at each job site. The Construction Contracts also
require payment of travel and subsistence payments as required by statute. Cal.Lab. Code§ 1773.8.
(b) Developer hereby warrants that the Construction Contracts state the statutory
provisions for penalties for failure to pay prevailing wages and the state's wage and hour laws will be
enforced. Cal. Lab. Code § §1775, 1813.
(c) Developer herebywarrants that the Construction Contracts contain a provision
requiring compliance with the statutory requirements relating to certified copies of payroll records
including the maintenance of the records,their certification and their availability for inspection(Cal.
Lab. Code § 1776),the employment of apprentices. (Cal. Lab. Code §1777.5), and that eight hours
labor constitutes a legal days work. (Cal. Lab. Code § 1810.)
(11) WORKER'S COMPENSATION
RVPUB\KAB\645932 D-2
Developer hereby warrants that the Construction Contracts state the contractor must secure
the payment of worker's compensation to its employees as provided in Labor Code section 3700.
Cal. Lab. Code § 1860.
(12) BRAND OR TRADE NAMES
Developer hereby warrants that the Construction Contracts do not specify brand or trade
names except:(1) when at least two are listed(including California manufacturers,ifknown)and"or
equal"substitutions are permitted,or(2)when necessary to match.existing items in use on a specific
public improvement,or(3) when a unique or novel product application is required,or(4)when only
one brand or trade name is known. Cal. Pub. Cont. Code § 3400.
(13) RELEASE OF CLAIMS
Developer hereby warrants that the Construction Contracts do not provide that acceptance
of a payment is a waiver of all claims, or which require submission of a release of all claims as a
precondition to payment. Cal.Pub. Cont. Code § 7100. However,Developer may require a release
of claims for undisputed payments. Cal. Civ. Code § 3262.
(14) LIQUIDATED DAMAGES
Developer hereby warrants that the Construction Contracts do not limit a contractor's
damages for delays caused by Developer to a time extension only. Cal. Pub. Cont. Code §7102.
(15) RESOLUTION OF CONTRACT DISPUTES
Developer hereby warrants that the Construction Contracts do not require construction
contract disputes to be decided by its agent or employee. Cal. Civ. Code § 1670.
(16) LIMITS ON INDEMNIFICATION
Developer hereby warrants that the Construction Contracts do not impose on the contractor .
indemnification against the contractor's sole negligence or willful misconduct,or relieve Developer
from liability for its active negligence. Cal. Civ. Code § 2782(b).
(17) ASSUMPTION OF RESPONSIBILITY FOR PLAINS AND SPECIFICATIONS
Developer hereby warrants that the Construction Contracts.do not require a contractor to
assume responsibility for the completeness and accuracy of architectural or engineering plans and
specifications, except on clearly designated design-build projects, and further, that the contractor
reviewed the plans and specifications and report any errors or omissions. Cal. Pub. Cont. Code
§1104.
RVPUB\KAB\645932 D-3
7Ue(come 6
y.+/i
THE CITY'Of HUNTfNMN BEACH:
_..fie_•• - — r
j ! g
The document you are viewing
contains additional information
that is not possible to produce
electronically. For information on
how to locate this document for
viewing , please contact or visit the
City Clerk's Office for assistance.
2000 Main Street
2nd Floor — City Hall
Huntington Beach CA 92648
(714) 536-5227
CITY CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement") is made
and entered into as of March 1, 2004, by the City of Huntington Beach, California (the "Issuer") and
U.S. Bank National Association (the"Dissemination Agent"), in connection with the issuance by the
Issuer of its Community Facilities District No. 2003-01 (Huntington Center) (the "Community
Facilities District") 2004 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to
a Fiscal Agent Agreement, dated as of March 1, 2004, by and between the Issuer and U.S. Bank
National Association as Fiscal Agent(the "Fiscal Agent Agreement")..
The Issuer and the Dissemination Agent hereby agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered, for the benefit of the Owners and Beneficial Owners of the Bonds and in
order to assist the Participating Underwriter in complying with the Rule.
SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent
Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise
defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person who (a) has the power, directly or indirectly, to
vote or consent with respect to, or to dispose of ownership of, any Bond (including a person holding
Bond through a nominee, depository or other intermediary), or (b) is treated as the owner of any
Bond for federal income purposes.
"Disclosure Representative" shall mean any Authorized Officer (as defined in the Fiscal.
Agent Agreement) designated in writing as such by the Issuer to the Dissemination Agent.
"Dissemination Agent" shall mean U& Bank National Association or any successor
Dissemination Agent designed in writing by the Issuer.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purpose of the Rule. The Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule are identified in the Securities and Exchange
Commission website located at http://www. sec.gov/info/municipal/nrmsir.htm.
"Official Statement" shall mean the Issuer's official statement with respect to the Bonds.
"Participating Underwriter" shall mean UBS Financial Services Inc.
"Repository" 'shall mean each National Repository and each State Repository.
"Method of Apportionment" means that certain Rate and Method of Apportionment of
Special Tax which appears as Exhibit A to the city's Resolution No. 2003-10.
DOC SOC/1008065v5/22173-0089
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository" shall mean any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized as such by the
Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State
Repository.
"Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for.
federal income tax purposes, whether or not such interest is includable as an item of tax preferences
or otherwise includable directly or indirectly for purposes of calculating any other tax liability,
including any alternative minimum tax or environmental tax.
SECTION 3., Provision of Annual Reports.
(a) Not later than six months after the end of the Issuer's fiscal year (which currently
ends on September 30), commencing with the fiscal year.ending September 30, 2004, the Issuer
shall, or shall cause the Dissemination Agent to, provide to each Repository and.the Participating
Underwriter an Annual Report which is consistent with the requirements of Section 4 of this .
Disclosure Agreement. Not later than 15 business days prior to the date referred to in the prior
sentence hereof, the Issuer shall provide the Annual Report (in a form suitable for filing with the
Repositories) to the Dissemination Agent. The Annual Report may be submitted as a single
document or as separate documents comprising a package and may include by reference other
information as provided in Section 4 of this Disclosure Agreement. The Issuer-shall provide a
written certification with each Annual Report furnished to the Dissemination Agent to the effect that
such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The
Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no
duty or obligation to review such Annual Report.
(b) If by the date required in subsection (a) the Dissemination Agent has not received a
copy of the Annual Report, the Dissemination Agenf shall contact the Issuer to determine if the
Issuer will be filing the Annual Report in compliance with subsection (a).
(c) If the Dissemination Agent is unable to verify that an Annual Report has been
provided to the Repositories and the Participating Underwriter-by the date required in subsection (a),
the Dissemination Agent shall send a notice in substantially the form attached as Exhibit A to the
Municipal Securities Rulemaking Board ("MSRB") and each State Repository.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report and the
name and address of each National Repository and each State Repository, if any;
(ii) provide any Annual Report received by it to each Repository and the
Participating Underwriter, as provided herein; and
(iii) ` if it has provided the Annual Report pursuant to (ii) above, file a report with
the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement, stating the date it was provided and listing all the Repositories to which it was
provided.
2
DOCSOC/1008065v5/22173-0089
SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or
include by reference:
(a) Financial Statements. The audited financial statements of the Issuer for the most
recent fiscal year of the Issuer then ended. If the audited financial statements are not available by the
time the Annual Report is required.to be filed, the Annual Report shall contain any unaudited
financial statements of the Issuer in a format similar to the audited financial statements, and the
audited financial statements shall be filed in the same manner as the Annual Report when they
become available.
(b) Financial and Operating Data. The Annual Report shall contain or incorporate by
reference the following information:
(i) the principal amount of Bonds outstanding as of the September 2 preceding
the filing of the"Annual Report;
(ii) the balance in each. fund and account referred to in the Fiscal Agent
Agreement as of the September 2 preceding the filing of the Annual Report;
(iii) the assessed valuation of the Taxable Property within the Community
Facilities District;
(iv) any changes to the Rates and Method of Apportionment approved or
submitted to the qualified electors for approval prior to the filing of the Annual Report;
(v) for each fiscal year in which a delinquency exists, the total Special Tax levy
for such fiscal year,the amount delinquent and the percent delinquent;
(vi) the status of any then pending foreclosure actions filed by or on behalf of the
Issuer with respect to delinquent Special Taxes;
(vii) the status of the construction of the public improvements to be acquired or
constructed with proceeds of the Bonds and any changes in the types of public facilities to be
constructed or acquired from those described in the Official Statement; and
(viii) such further information, if any, as may be necessary to.make the statements
specifically required pursuant to this Section 4(b), in the light of the circumstances under
which they are made, not misleading.
(c) Any or all of the items listed in (a) or(b) above may be included by specific reference
to other documents, including official statements of debt issues of the Issuer or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange Commission.
If the document included by reference is a final official statement, it must be available from the
MSRB. The Issuer shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the
Dissemination Agent to give, notice of the occurrence of any of the following events with respect to
the Bonds, if material:
3
DOCSOC/I 008065v5/22173-0089
(1) principal and interest payment delinquencies,
(2) non-payment related defaults,
(3) unscheduled draws on the Reserve Fund reflecting financial difficulties,
(4) unscheduled draws on any credit enhancements reflecting financial
difficulties,
(5) substitution of credit or liquidity providers, or their failure to perform,
(6) adverse tax opinions,or events adversely affecting the Tax-Exempt status of
the Bonds,
(7) modifications to the rights of Bond Owners,
(8) unscheduled redemption of any Bond,
(9) defeasances,
(10) any release, substitution, or sale of property or letters of credit securing
repayment of the Bonds, and
(11) rating changes.
(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the
Issuer shall as soon as possible determine if such event would e material under applicable federal
securities laws.
(c) If the Issuer has determined that the Listed Event would be material under applicable
federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such
notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d).
(d) If the Dissemination Agent has been instructed by the Issuer to report the occurrence
of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB and
each State Repository and the Participating Underwriter. Notwithstanding the foregoing, notice of
`Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any
earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant
to the Fiscal Agent Agreement.
(e) In the event that the Issuer's fiscal year changes, the Issuer shall give notice of such
change to the Dissemination Agent and shall instruct the Dissemination Agent to report such change
in the same manner and to the same parties as a material Listed Event would be reported pursuant to
this Section.
(f) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement
is the responsibility of the Issuer, and the Dissemination Agent shall not be responsible for
determining whether the Issuer's instructions to the Dissemination.Agent under this Section comply -
with the requirements of the Rule.
4
DOCS061008065v5/22173-0089
SECTION 6. Termination of Reporting Obligation. The obligations of the Issuer and the
Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance,
prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final
maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a
Listed Event under Section 5.
SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and
may discharge any such Dissemination Agent, with or without appointing a successor Dissemination
Agent. The Dissemination Agent may resign by providing (i)thirty days written notice to the Issuer,
and (ii) upon appointment of a new Dissemination Agent hereunder.
SECTION 8. Amendment.
(a) This Disclosure Amendment may be amended, by written agreement of the parties,
without the consent of the Owners, and any provision of this Dissemination Agreement may be
waived, if all of the following conditions are satisfied: (1) such amendment or waiver is made in
connection with a change in circumstances that arises from a change in legal (including regulatory)
requirements, a change in law, or a change in the identity, nature or status of the Issuer or the type of.
business conducted thereby, (2) the undertakings in this Disclosure Agreement as so amended or
waived would, in the opinion of a nationally recognized bond counsel, have complied with the
requirements of the Rule as of the date of.this Disclosure'Agreement, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances, and (3) the
amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as
provided in the Fiscal Agent Agreement for.amendments to the Fiscal Agent Agreement with the
consent of Owners or (ii) does not, in the determination of the Issuer, materially impair the interests
of the Owners or Beneficial Owners of the Bonds.
(b) To the extent any amendment to this Disclosure Agreement results in a change in the
type of financial information or operating data provided pursuant to this Disclosure Agreement, the
first Annual Report provided thereafter shall include a narrative explanation of the reasons for the
amendment and the impact of the change in the type of operating data or financial information being
provided.
(c) If an amendment is made to the basis on which financial.statements are prepared, the
Annual Report for the year in which the change is made shall present a comparison between the
financial statements or information prepared on the basis of.the new accounting principles and those
prepared on the basis of the former accounting principles. Such comparison shall include a
quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the
accounting principles and the impact of the change in the accounting principles on the presentation of
the financial information.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall .be _
deemed to prevent the Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event, in
addition to that which is required by this Disclosure.Agreement. If the Issuer chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that which
is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this .
5
DOCSOC/1008065v5/22173-0089
Agreement to update such information 'or include it in any future Annual Report or notice of
occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination_Agent to
comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the
Bonds may take such actions as may be.necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the Issuer and/or the Dissemination Agent to comply
with their respective obligations under this Disclosure Agreement. A default under this Disclosure
Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole
remedy under this Disclosure Agreement in the event of any failure of the Issuer or the
Dissemination Agent to comply with this .Disclosure Agreement .shall be an action to compel
performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The
Dissemination. Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the Issuer agrees to indemnify and save.the Dissemination Agent,and its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they may
incur arising out of or in the exercise or performance of their powers and duties hereunder, including
the costs and expenses (including attorneys fees) of defending against any claim of liability, but
excluding liabilities due to the Dissemination Agent's negligence- or willful misconduct. Any
Dissemination Agent shall be paid.(i) compensation by the Issuer for its services provided hereunder
in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and
advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
-The Dissemination Agent shall have no duty or obligation to review any information provided to it
by the Issuer pursuant to this Disclosure Agreement. The obligations of the Issuer under this Section
shall survive resignation or removal of the Dissemination Agent and payment of the.Bonds. No
person shall have any right to commence any action against the Dissemination Agent seeking any
remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination
Agent shall not be liable under any circumstances for monetary damages to any person for any
breach under this Disclosure Agreement.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the Issuer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial
Owners from time to time of the Bonds; and it shall create no rights in any other person or entity.
SECTION 13. Mer er. Any person succeeding to all or substantially all of the
Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without
the filing of any paper or any further act.
SECTION 14. Severability. In case any one or more of the provisions contained herein shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
SECTION 15. Governing Law. The validity, interpretation and performance of this
Disclosure Agreement shall be governed by the laws of the State of California.
6
DOCS001008065v5/22173-0089
SECTION 16. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
CITY OFHUNTINGTON BEACH
By:
Authorized Signatory
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By:
Its: Authorized Officer
S-1
DOCSOC/]008065v5/22]73-0089
SECTION 16. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
CITY OF HUNTINGTON BEACH
By:
Authorized Signatory
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By: �—
Its: Authori ed Officer
S-1
DOCSOC/1008065v5/22173-0089
EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Huntington Beach, California
Name of Bond Issue: City of Huntington Beach Community Facilities District No. 2003-01
(Huntington Center) 2004 Special Tax Bonds
Date of Issuance: April 15, 2004
NOTICE IS HEREBY GIVEN that the City of Huntington Beach, California (the "Issuer")
has not provided an Annual Report with respect to the above-named Bonds as required by Section 3
of the City Continuing Disclosure Agreement, dated as of March 1, 2004. The Issuer anticipates that
the Annual Report will be filed by
Dated:
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By:
cc: Issuer
A-1
DOCSOC/]008065v5/22173-0089
LANDOWNER CONTINUING DISCLOSURE AGREEMENT
This Landowner Continuing Disclosure Agreement, dated as of March 1, 2004, (the
"Disclosure Agreement"), is made and entered into by and between Huntington Center
Associates, LLC, a Delaware limited liability company (the "Landowner"), and .U.S. Bank National
Association, as dissemination agent (the "Dissemination Agent") in connection with the issuance by
the City of Huntington Beach, California (the "Issuer") of its Community Facilities District
No. 2003-01 (Huntington Center) 2004 Special Tax Bonds (the "Bonds"). The Bonds are issued
pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act") and a Fiscal
Agent Agreement, dated as of March 1, 2004,.by and between the Issuer and U.S. Bank National
Association as Fiscal Agent (the "Fiscal Agent Agreement").
The Landowner and the Dissemination Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered for the benefit of the Bond Owners and Beneficial Owners of the Bonds and
in order to assist the Participating Underwriter in complying with the Rule.
SECTION 2. Definitions. In addition.to the definitions set forth in the Fiscal 'Agent.
Agreement or parenthetically defined herein, which apply to any capitalized terms used in this
Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall
have the following meanings:
"Affiliate" of another Person means (a) a Person directly or indirectly owning, controlling, or.
holding with power to vote, 25% or more of the outstanding voting securities of such other Person,
(b) any Person 25% or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly
controlling, controlled by, or under common control with, such other Person; for purposes hereof,
control means the power to exercise a controlling influence over the management or policies of a.
Person, unless such power is solely the result of an official position with such Person.
"Annual Report" means any Annual Report provided pursuant to, and as described in,
Sections 3 and 4 of this Disclosure Agreement.
"Annual Report Date=" means the date.that is four months and one day after the end of the
Landowner's fiscal year, which fiscal year currently ends on December 31. The first Annual Report
Date shall be May 1, 2005.
"Assumption Agreement" means an agreement between a Successor, or an Affiliate thereof,
and the Dissemination Agent containing terms substantially similar to this Disclosure Agreement,
whereby such Successor or Affiliate agrees to provide Annual Reports, Semi-Annual Reports and
notices of Listed Events with respect to the portion of the Property owned by such Major Landowner
and its Affiliates,
"Bond Counsel" means an attorney or a firm of attorneys whose experience in matters
relating to the issuance of obligations by the states and their political subdivisions and the tax-exempt.
status of the interest thereon is recognized nationally.
1
DOCSOC\10080800\22173.0089
"Community Facilities District" means City of Huntington Beach Community Facilities
District No. 2003-01 (Huntington Center).
"Development Plan" means, with respect to the Landowner or a Successor, the specific
improvements such Person intends to make, or-cause to be made, to the portion of.the Property
owned by such Person in order for such portion of the Property to reach the Planned Development
Stage, the time frame in which such improvements are intended to be made and the estimated costs
of such improvements. As of the date hereof, the Development Plan for the Property owned by the
Landowner- and its Affiliates is described in the Official Statement under the caption "THE
PROJECT, THE LANDOWNER AND THE DEVELOPER—The Project."
"Dissemination Agent" means U.S. Bank National Association, acting in its capacity as the
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the
Landowner and which has filed with the Issuer a written acceptance of such designation.
"Event of Bankruptcy" means, with respect to a Person, that such Person files a petition or
institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or
subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a
bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such.
Person asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of
such Person's debts or obligations, or offers to such Person's creditors to effect a composition or
extension of time to pay such Person's.debts or asks, seeks or prays for reorganization or to effect a
plan of reorganization, or for a readjustment of such Person's debts, or forany other similar relief,,or
if any such petition or any such proceedings of the same _or similar kind or character is filed or
instituted or taken against such Person and the same shall remain undismissed for a period of sixty
days, or if a receiver of the business or of the property or assets of such Person is appointed by any
court, or if such Person makes a general assignment for the benefit of such Person's creditors.
"Financing Plan". means, with respect to the Landowner or a Successor, the method by
which such Person intends to finance its Development Plan, including specific sources of funding for
such Development Plan. As of the date hereof, the Financing Plan for.the Landowner and its
Affiliates is described in the Official Statement under the caption "THE PROJECT, THE
LANDOWNER AND THE DEVELOPER—Financing Plan.
"Financial Statements" means, with respect to the Landowner or a Successor, the full
financial statements, special purpose financial statements, project operating statements or other
reports.reflecting the financial position of each entity, enterprise, fund, account or other person (other
than a financial institution acting as a lender in the ordinary course of business) identified in such
Person's Development Plan or its Financing Plan as a source of .funding for such Person's
Development Plan, which statements shall be prepared in accordance with tax-based accounting
principles, and which statements may be audited or unaudited; provided that, if such financial
statements or reports are otherwise prepared as audited financial statements or reports, then
"Financial Statements" means such audited financial statements or reports.
"Independent Financial Consultant"means a financial consultant or special tax consultant or
firm of such consultants generally recognized to be well qualified in the financial consulting or
special tax consulting field, appointed and paid by the Landowner,.who is not controlled by either the
Issuer or Landowner, does not have any substantial interest (direct or indirect) in the Issuer or
2
DOCSOC\10080800122173.0089
Landowner and is not a member, officer or employee of the Issuer or Landowner, but who may be
regularly retained to make annual or other reports to the Issuer or Landowner.
"Listed Event" means any of the events listed in Section 5(a) of this Disclosure Agreement.
"National Repository" means any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The Nationally Recognized Municipal Securities Information
Repository for purposes. of the Rule are identified in the Securities and Exchange Commission
website located at www.sec.gov/consumer/nrmsir.htm.
"Official Statement" means the Official Statement, dated March 30, 2004, relating to the
Bonds.
"Participating Underwriter"means UBS Financial Services Inc.
"Person" means an individual, a corporation, a partnership, an association, a joint stock
company, a trust, a limited liability company, any unincorporated organization or a government or
political subdivision thereof.
"Property" means the parcels within the boundaries of the Community Facilities District
subject to Special Taxes.
"Repository"means each National Repository and each State Repository.
"Rule" means Rule 1562-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"Semi-Annual Report" means any Semi-Annual Report- provided pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"Semi-Annual Report Date" means the.date that is ten months and one day after the end of
Landowner's fiscal year, which fiscal year currently ends on December 31. The first Semi-Annual
Report Date shall be November 1, 2004.
"State Repository" means any public or private repository or entity designated by the State of
California as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Disclosure Agreement, there is no State
Repository.
"Successor" means any Person, other than the Landowner, who owns any portion of the
Property.
SECTION 3. Provision of Annual Reports and Semi-Annual Reports.
(a) Not later than five (5) business days prior to each Annual Report Date, the
Landowner shall provide to the Dissemination Agent an Annual Report which is consistent with the
requirements of Section 4 hereof and which is in a form suitable for filing with the Repositories. The
Annual Report may be submitted as a single document or as separate documents comprising a
package and may cross-reference other information as provided in Section 4 of this Disclosure
Agreement; provided that the Financial Statements of the Landowner (if required) may be submitted
3
DOCSOC\10080800\22173.0089
separately from the balance of the Annual Report and later than the date required above for the filing
of the Annual Report if the audited Financial Statements are not available by that date. Not later than
five business days after its receipt of the foregoing material from the Landowner, the Dissemination
Agent shall provide a copy thereof to each Repository and the Participating Underwriter. The
Landowner shall provide a written certification with each Annual Report furnished to the
Dissemination Agent to the effect that such Annual Report constitutes.the Annual Report required to
be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such .
certification of the-Landowner and shall have no.duty or obligation to review such Annual Report.
(b) Not later than five (5) business days prior to each Semi-Annual Report Date, the
Landowner shall provide to the Dissemination Agent a Semi-Annual Report which is consistent the
requirements of Section 4 hereof and which is in a form suitable for filing with the Repositories. The
Semi-Annual Report may be submitted as a single document or as separate documents comprising a
package and may cross-reference other information as provided in Section 4 of this Disclosure
Agreement. Not later than five (5) business days.after its receipt of the foregoing material from the
Landowner, the Dissemination Agent shall provide a copy thereof to each Repository and the
Participating Underwriter. The Landowner shall provide a written certification with each Semi-
Annual Report furnished to the Dissemination Agent to the effect that such Semi-Annual Report
constitutes the Semi-Annual Report required to be furnished by it hereunder. The Dissemination
Agent may conclusively rely upon such certification of the Landowner and shall have no duty .or
obligation to review such Annual Report.
(c) If the Dissemination Agent has not received a copy of the Annual Report by the date
required in Subsection (a) or if the Dissemination Agent has not received a copy of the Semi-Annual
Report by the date required in Subsection (b), the Dissemination Agent shall notify the Landowner of
such failure to receive the applicable report. If the Dissemination Agent is unable to verify that an
Annual Report-has been provided to the Repositories and the Participating Underwriter by the date
required in Subsection (a), or if the Dissemination Agent is unable to verify that a Semi-Annual
Report has been provided to the Repositories and the Participating Underwriter by the date. required
in Subsection (b), the Dissemination Agent shall send a notice to the Municipal .Securities
Rulemaking Board ("MSRB") and to the State Repository, if.any, in substantially the form attached
as Exhibit"A".
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report and the
Semi-Annual Report, the name and address of each National Repository and each State
Repository, if any;
(ii) provide any Annual Report and any Semi-Annual Report received by it to
each Repository and to the Participating Underwriter, as provided herein; and
(iii) if it has provided the applicable report pursuant to (ii) above, file a report-with
the Issuer and the Landowner certifying_that it provided the Annual Report or. the Semi-
Annual Report, as the case may be, pursuant to this Disclosure Agreement, stating the date it
was provided and listing all the Repositories to which it was provided.
SECTION 4. Content of Annual Reports and Semi-Annual Reports. (a) The Landowner's
Annual Report shall contain or incorporate by reference Financial Statements for itself and each
4
DOCSOC\10080800\22173.0089
Successor for the prior fiscal year if required; provided, that, if such information is required from the
Landowner as to a Successor, the Landowner shall only be required to provide such information that
it.has actual knowledge of after reasonable inquiry. If audited Financial Statements are required to
be provided, and such audited Financial Statements are not available by the time the Annual Report
is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited Financial
Statements, if prepared, and the audited Financial Statements shall be filed in the same manner as, or
as an amendment or supplement to, the Annual Report when-they become available. Such Financial
Statements shall be for the most recently ended fiscal year for the entity covered thereby hereunder.
If the annual financial information or operating data provided in an Annual Report or a Semi-
Annual Report is amended pursuant to the provisions hereof, the first Annual Report or Semi-Annual
Report filed pursuant hereto containing_the,amended operating data or financial information shall
explain, in narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
As required by the Rule, if an amendment is made to the provisions hereof specifying the
accounting principles to be followed in preparing Financial Statements, the annual financial
information for the year in which the change is made shall present a comparison between the
Financial Statements or information prepared on the basis of the new accounting principles and those
prepared on the basis of the former accounting principles. The comparison shall include a qualitative
discussion of the differences in the accounting principles and the impact of the change in the
accounting principles on the presentation of the financial information. To the extent reasonably
feasible, the comparison shall be quantitative. A notice of the change in the accounting principles
shall be provided in the manner as for a Listed Event under Section 5(c).
(b) The Landowner's Annual Report and Semi-Annual Report shall contain or
incorporate by reference the following information with respect to itself and.each Successor:
(i) If information regarding such Person has not previously been included in an
Annual Report, a Semi-Annual Report or the Official Statement, the Development Plan of
such Person; or, if information regarding such Person has previously been included in an
Annual Report, a Semi-Annual Report or the Official Statement, a description of the progress
made in the implementation of the Development Plan of such Person since the date of such
information and a description of any significant changes in such Development Plan and the
causes or rationale for such changes.
(ii) If information regarding such Person.has not previously been included in an
Annual Report, a Semi-Annual Report or the Official Statement, the Financing Plan of such
Person; or, if information regarding such Person has previously been included in'an Annual
Report, a Semi-Annual Report or the Official Statement, .a description of any significant
changes in the Financing Plan of such Person and the causes or rationale for such changes.
(iii) A description of any sales of all or any portion of such Person's Property and
of any material leases of space within any of the buildings located on such Person's portion
of the Property during the period covered by such Annual Report or Semi-Annual Report,
including the identification of each buyer or lessee and the area that was sold or leased and
the length of the applicable lease. (As used herein, "material lease" means a lease of more
than 5,000 square feet.) '
5
DOCSOC\10080800\22173.0089
(iv) With respect to any portion of the Property owned by such Person and any of
its Affiliates, a statement as to whether any taxes or assessment installments applicable to
such portion of the Property are delinquent.
(v) A description of any change in the ownership structure of such Person and/or
the financial condition of such Person or any of its Affiliates, if such change in ownership
structure and/or financial condition could materially interfere with such Person's'ability to
complete its Development Plan.
(vi) Any amendments to land use entitlements for any portion of the Property
owned by such Person that could have a material adverse affect on such Person's most
recently disclosed Financing Plan or,Development Plan or on the ability of such Person, or
any Affiliate of such Person, to pay installments of Special Taxes when due.
(vii) Any precondition to commencement or continuation of development on any
portion of the Property owned by such Person imposed by a governmental entity after the
date of issuance of the Bonds which has not been previously disclosed and which could have
a material adverse affect; or any change in the status of any such.precondition that was
previously disclosed in the Official Statement, an Annual Report or a Semi-Annual Report,
which could have a material adverse affect, on such Person's most recently disclosed
Financing Plan_or Development Plan or on the ability of such Person, or any Affiliate of such
Person, to pay installments of Special Taxes when due.
(viii) Any previously undisclosed legislative, administrative or judicial challenges
to development on any portion of the Property owned by such Person, or any material change
in the status of any such challenge that was.previously disclosed in the Official Statement, an
Annual Report or a.Semi-Annual Report, that'could have a material adverse affect on such
Person's most recently disclosed Financing Plan or Development Plan or on the ability of
such Person, or any Affiliate of such Person, to pay installments of Special Taxes when due.
(ix) An update of the status of any.previously reported Listed Event described in
Section 5.
(c) -In addition to any of the information expressly required to be provided under
Subsections (a) and (b) of this Section, the Landowner shall provide such-further information, if any,
as may be necessary to make the specifically required statements, in the light of the circumstances
under which they are made, riot misleading.
Persons that are Affiliates of each other may file either separate Annual Reports and.Semi-
. Annual Reports or combined Annual Reports and Semi-Annual Reports covering all such entities.
Any or all of the items listed above may be included by specific reference to other documents which
have been submitted to each of the Repositories or the Securities and Exchange Commission. If the
document included by reference is a final official statement, it must be available from the MSRB.
The Landowner shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events. (a) The following events are Listed Events
for purposes of this Agreement:
6
DOCSOC\1008080.0\22173.0089
(i) Any conveyance by.a Person of any portion of the Property• owned by such
Person to an entity that is not an Affiliate of such Person;
(i i) Any failure of a Person, or any Affiliate of such Person, to pay when due
taxes or Special Taxes with respect to any portion of the Property owned by such Person or Affiliate;
(iii) Any refusal to provide funds pursuant to or any termination of, or any event
of default under, any line of credit, loan or other arrangement to provide funds to the Landowner or a
Successor or any other loss of a source of funds that could have a material adverse affect on such
Person's most recently disclosed Financing Plan or Development Plan or on the ability of such
Person, or any Affiliate of such Person, to pay installments of Special Taxes when due;
(iv) The occurrence of an$vent of Bankruptcy with respect to a the Landowner or
a Successor or any Affiliate of such Person that owns any portion of the Property;
(v) Any amendments to land use entitlements for any portion of the Property, if
material to the most recently disclosed Development Plan for such portion of the Property;
(vi) The filing of any lawsuit against the Landowner or a Successor which, in the
reasonable judgment of such Person, will adversely affect the completion of the development of
Property owned by such Person, or litigation which if decided against such Person, in the reasonable
judgment of such Person, would materially adversely affect the financial condition of such Person.
(vii) The assumption of any obligations by a Successor pursuant to Section 6
hereof; and
(viii) A change in the fiscal year of the Landowner or a Successor.
(b) Whenever the Landowner obtains knowledge of the occurrence of a Listed Event, the
Landowner shall promptly (i) determine whether such event would be material under applicable
federal securities laws and (ii) if the Landowner determines that such event would be material under
applicable federal securities laws, notify the Dissemination Agent and the Issuer in writing. Such
notice shall instruct the Dissemination Agent to report the occurrence pursuant to Subsection (c) and
shall be in a format suitable for reporting to the MSRB and the State Repository, if any.
(c) If the Dissemination Agent has been instructed by the Landowner to report the
occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the
MSRB, the State Repository and the Participating Underwriter.
SECTION 6. Assumption of Obligations. If a portion of the-Property is conveyed, the
obligations of the Landowner or a Successor hereunder with respect to such portion of the Property
may be assumed by the applicable Successor or by an Affiliate thereof. In order to effect such
assumption, the applicable Successor or Affiliate shall enter into an Assumption Agreement.
SECTION 7. Termination of Reporting Obligation. The Landowner's obligations
hereunder shall terminate (except as provided in Section 12) upon the earlier to occur of(a) the legal
defeasance, prior redemption or payment in full of all the Bonds, (b) the date on which those portions
of the Rule which require this written undertaking are held to be invalid by a court of competent
jurisdiction in a non-appealable action, have been repealed retroactively or otherwise do not apply to
the Bonds. The Landowner's obligations hereunder shall terminate with respect to any portion of the
7
DOCSOC\10080800\22173.0089
Property on the date such obligations have been assumed by one or more Successors or Affiliates
thereof pursuant to an Assumption Agreement. The Landowner's obligations under this Disclosure ..
Agreement with respect to a Person that purchased Property from the Landowner shall terminate
upon the earlier to occur of(y)the date on.which the Landowner's obligations with respect to such
Person are assumed under an Assumption Agreement entered into pursuant to Section 6 or (z)the
date on which all Special Taxes applicable to.the portion of the Property owned by such Person and
its Affiliates are prepaid in full; provided however, until the occurrence of either of the events
described in clauses (y) through (z), the Landowner's obligations hereunder with respect to each
Successor, if any, shall remain in full force and effect. Upon the occurrence of any such termination
prior to the final maturity of the Bonds, the Landowner shall cause the Dissemination Agent to give
notice of such termination in the same manner as for a Listed Event under Section 5(c).
Notwithstanding the foregoing, the Landowner shall have no obligation to provide Semi-Annual
Reports pursuant to Section 3 subsequent to the date on which it provides an Annual Report or a
Semi-Annual Report which indicates that the then-applicable Development Plan for each portion of
the Property has been fully implemented.
SECTION 8. Dissemination Agent. The Landowner may, from time to time, discharge the
Dissemination Agent with or without appointing a successor Dissemination Agent. The
Dissemination Agent may resign by providing thirty (30) days' written notice to the Landowner and
the Issuer. If at any time there is no other designated Dissemination Agent, the Landowner shall be
the Dissemination Agent. If the Dissemination Agent is an entity other than the Landowner, the
Landowner shall be responsible for paying the fees and expenses of such Dissemination Agent for its
services provided hereunder.
SECTION 9. Amendment, Waiver. Notwithstanding any other provision of this Disclosure-
Agreement, the Landowner and the Dissemination Agent may amend this Disclosure Agreement(and
the Dissemination Agent shall agree to any amendment so requested by the Landowner, so long as
such amendment does not adversely affect the rights or obligations.of the Dissemination Agent), and
any provision of this Disclosure Agreement may be waived, provided that (a) if the amendment or
waiver relates to Sections 3(a), 4 or 5(a) hereof, such amendment or waiver is made in connection with a change in legal requirements, change in law or change in the identity, nature, or status of the
Landowner or the type of business conducted; (b) the undertakings herein, as proposed to be
amended or waived, would, in the opinion of Bond Counsel approved by the Issuer and the
Participating Underwriter, have complied with the requirements of the Rule at the time of the
primary offering of the Bonds, after taking into account any amendments or interpretations of the
Rule, as well as any change in circumstances; and (c) the amendment or waiver either (i) is approved
by the Bond Owners in the same manner as provided in the Fiscal Agent Agreement for amendments
to the Fiscal Agent Agreement with the consent of Bond Owners, or (ii) does not, in the opinion of
the Issuer or Bond Counsel, materially impair the interests of the Bond Owners or Beneficial Owners
of the Bonds..
SECTION 10. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the Landowner from disseminating any other information, using the means of-
dissemination set forth in this Disclosure Agreement or any other means of communication, 'or
including any other information in any Annual Report or Semi-Annual Report or notice of
occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If
the Landowner chooses to include any information in any Annual Report or Semi-Annual Report or
notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the Landowner shall have no obligation under this Agreement to update such
� 8
DOCSOC\l 008080v3\22173.0089
information or include it in any future Annual Report or Semi-Annual Report or notice of occurrence
of a Listed Event.
SECTION 11. Default. In the event of a failure of the Landowner or the Dissemination
Agent to comply with any provision of this Disclosure Agreement, the Dissemination Agent may
(and, at the written request of the Participating Underwriter or the Owners of at least 25% of the
aggregate principal amount of Outstanding Bonds, and upon being indemnified to its reasonable
satisfaction against the costs, expenses and liabilities to be incurred in compliance with such request,
shall), or the Participating Underwriter or any Bond Owner or Beneficial Owner of the Bonds may,
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Landowner or the Dissemination Agent, as the case may be, .
to comply with its obligations under this Disclosure Agreement. A default under this Disclosure
Agreement shall not be deemed an event of default under the Fiscal Agent Agreement, and the sole
remedy under this .Disclosure Agreement in the event of any failure of the Landowner or the
Dissemination .Agent to comply with this Disclosure Agreement shall be an action to compel
performance.
SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall not have any responsibility for the content of any Annual Report, Semi-
Annual Report or notice of a Listed Event. The Dissemination Agent shall have only such duties as
are specifically set forth in this Disclosure Agreement, and the Landowner agrees to indemnify and
save the Dissemination Agent, including.its officers, directors, employees and agents (each, an
"Indemnified Party"), harmless against any loss, expense and liabilities which it may incur arising
out of or in the exercise or performance of its powers and duties hereunder, including the reasonable
costs and expenses (including attorneys fees) of defending against any claim of liability, but
excluding ,losses, expenses and liabilities due to such Indemnified Party's negligence or willful
misconduct. The obligations of the Landowner under this Section shall survive resignation or
removal of the Dissemination Agent and payment of the Bonds.
The Dissemination Agent will not, without the Landowner's prior written consent, settle,
compromise or consent to the entry of any judgment in any pending or threatened claim, action or
proceeding in respect of which indemnification may be sought hereunder unless.such settlement,
compromise or consent includes an unconditional release of the Landowner and its Affiliates from all_
liability arising out of any such claim, action or proceedings. A request by the Dissemination Agent
for the Landowner's written consent shall be answered within a reasonable amount of time to allow
the Dissemination Agent to act in a timely manner. If any claim, action or proceeding is settled with
the consent of the Landowner or if there is a judgment (other than a stipulated final judgment without
the approval of the Landowner) for the plaintiff in any such claim, action or proceeding, with or
without the consent of the Landowner, the Landowner agrees to indemnify and hold harmless the
Dissemination Agent to the extent described herein.
SECTION 13. Notices. Any notices or communications to or among any of the parties to
this Disclosure Agreement may-be given as follows:
Issuer: City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attention.: Director of Economic Development
With a copy to: City Attorney
9
DOCSOCU 0080800\22173.0089
Dissemination Agent: U.S. Bank National Association
633 West.Fifth Street, 20 Floor
Los Angeles, California 90071
Attn: Corporate Trust Department
Landowner: Huntington Center Associates,LLC
c/o The Ezralow Company
23622 Calabasas Road, #100
Calabasas, CA 91302
With a copy to:
Snyder Huntington Development, LLC .
JH Snyder Development
5757 Wilshire Boulevard, Penthouse 30
Los Angeles, CA 90036
Participating Underwriter: UBS Financial Services Inc.
Municipal Securities Group
777 South Figueroa Street,50`11 Floor
Los Angeles, CA 90017
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the.benefit of
the Issuer, the Dissemination Agent, the Landowner, the Participating Underwriter and Bond Owners
and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person
or entity.
SECTION 15. Assignability. The Landowner shall not assign this Disclosure Agreement or .
any right or obligation hereunder except to the extent permitted to do so under the provisions of
Section 6 hereof. The Dissemination Agent may, with prior written notice to the Landowner and the
Issuer, assign this Disclosure Agreement and the Dissemination Agent's rights and obligations
hereunder to a successor Dissemination Agent.
SECTION 16. Merger. Any person succeeding to all or substantially all of the
Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without
the filing of any paper or any further act.
SECTION 17. Severability. In case any one or more of the provisions contained herein shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
SECTION 18. Governing Law. The validity, interpretation and performance of this
Disclosure Agreement shall be governed by the laws of the State of California.
10
DOCS 00I 0080800\22173.0089
SECTION 19. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By:Huntington Management Ent., LLC,
a Delaware limited liability company,
its Manager
By:BMLF/Huntington, LLC,
a Delawar limited liability company,
its na
By:
ryan Ezralow, Trustee of the Bryan
Ezralow 1994 Trust, its Manager
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By:
Its: Authorized Officer
S-1
DOCSOC\10080800\22173.0089
SECTION 19. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
HUNTINGTON CENTER ASSOCIATES,LLC, a
Delaware limited liability company
By:Huntington Management Ent., LLC,
a Delaware limited liability company,
its Manager
By:BMLFIHuntington, LLC,
a Delaware limited liability company,
its Manager
By:
Bryan Ezralow, Trustee of the Bryan
Ezralow 1994 Trust, its Manager
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By: ` I a, - -�74 .-
Its: Authorized Officer
S-1
DOC SOC\10080800\22173.0089
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO
FILE ANNUAL REPORT
Name of Obligated Person: Huntington Center Associates, LLC,
Name of Bond Issue: Community Facilities District-No. 2003-01 (Huntington Center)
2004 Special Tax Bonds
Date of Issuance: April 15, 2004
NOTICE IS HEREBY GIVEN that Huntington Center Associates,LLC has not provided [an
Annual Report] [a Semi-Annual Report] with respect to the above-named Bonds as required by
Section 3 of the Landowner Continuing Disclosure Agreement, dated as of March 1, 2004.
Huntington Center Associates, LLC anticipates that the required report will be filed by
Dated:
U.S. BANK NATIONAL ASSOCIATION, as
Dissemination Agent
By:
cc: Huntington Center Associates, LLC
A-1
DOCSOC\I OO8080v3\2.2173.0089
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER)2004 SPECIAL TAX BONDS
BOND PURCHASE AGREEMENT
March 30, 2004
City Council
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Council Members:
UBS Financial Services Inc. (the "Underwriter"), acting not as a fiduciary or agent for you,
but on behalf of itself, offers to enter into this Bond Purchase Agreement with the City of Huntington
Beach (the "City")which, upon acceptance, will be binding upon the City and the Underwriter. This
offer is made subject to its acceptance by the City on the date hereof, and it is subject to withdrawal
by the Underwriter upon notice delivered to the City at any time prior to the acceptance by the City.
Capitalized terms that are used in this offer and not otherwise defined herein shall have the respective
meanings ascribed to them in the Fiscal Agent Agreement, dated as of March 1,2004, by and
between U.S. Bank National Association (the "Fiscal Agent") and the City (the"Fiscal Agent
Agreement").
1. Purchase, Sale and Delivery of the Bonds.
(a) . Subject to the terms and conditions, and in reliance upon the representations,
Warranties and agreements set forth herein,the Underwriter agrees to purchase from the City, and the
City agrees to sell to the Underwriter, all (but not less than all) of the City of Huntington Beach
Community Facilities District No. 2003-01 (Huntington Center) 2004 Special Tax Bonds (the
"Bonds") in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated
the Closing Date (as hereinafter defined), bear interest from said date (payable semiannually on
March 1 and September 1 in each year, September 1, 2004) at the rates per annum, and mature on the
dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the
amount specified as such in Exhibit A.
(b) The Bonds shall be substantially in the form described in, shall be issued and secured
under the provisions of, and shall be payable and be subject to redemption as provided in, the Fiscal
Agent Agreement.
(c) The Underwriter has previously distributed to potential purchasers of the Bonds the
Preliminary Official Statement for the Bonds, dated March 18, 2004 (which Preliminary Official
Statement, together with its cover page and all appendices thereto, is herein referred to as the
"Preliminary Official Statement"and which, as amended with the prior approval of the Underwriter
and executed by the City, will be referred to herein as the"Official'Statement").. Such distribution of
1
DOC SOC/1002280v9/22 1 73-0089
the Preliminary Official Statement by the Underwriter subsequent to its receipt of a certificate from
the City deeming the Preliminary Official Statement final for purposes of Rule 15c2-12 of the
Securities and Exchange Commission ("Rule 15c2-12"). The City hereby ratifies.the use by the
Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and
distribute the Official Statement, the Fiscal Agent Agreement, the City Continuing Disclosure
Agreement, dated as of March 1, 2004, by and between the City and the Fiscal Agent, as
Dissemination Agent (the"City Continuing Disclosure Agreement"), this Bond Purchase Agreement,
any other documents or contracts to which the City is a party, and all information contained therein,
and all other documents, certificates and statements furnished by the City to the Underwriter in
connection with the transactions contemplated by this Bond Purchase Agreement, in connection with
the offer and sale of the Bonds by the Underwriter.
(d) At 8:00 A.M., local time in Huntington Beach, California, on April 15, 2004, or at
such earlier time or date as shall be agreed upon by the Underwriter and the City (such time and date
being herein referred to as the"Closing Date"), the City will deliver(i)to The Depository Trust
Company or its agent the Bonds in definitive form (all Bonds being in book-entry form registered in
the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly
executed by the officers of the City, as provided in the.Fiscal Agent Agreement, and (ii)to the
Underwriter, at the Riverside, California offices of Best Best&Krieger LLP ("Bond Counsel")the
documents herein mentioned;and the Underwriter shall accept such delivery and pay the purchase
price of the Bonds in same day funds (such delivery and payment being herein referred to as the
"Closing").
(e) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial
offering prices set forth in the Official Statement, which prices may be changed from time to time by
the Underwriter after such offering.
2. Representations, Warranties and Agreements of the City. The City represents,
warrants and covenants to and agrees with the Underwriter that:
(a) The City was duly organized and is validly existing as a municipal corporation under
the Constitution of the State of California and the Huntington Beach City Charter, has full legal right,
power, and authority(i)to execute, deliver and perform its obligations under this Bond Purchase
Agreement, the Fiscal Agent Agreement, the City Continuing Disclosure Agreement, the Funding
and Construction Agreement, dated as of March 1, 2004 (the "Funding and Construction
Agreement"), by and between the City and Huntington Center Associates, LLC (the "Landowner"),
the Operating Agreement for Huntington Center Parking Structure, dated as of March 1, 2004, by
and between the City and the Landowner(the "Operating Agreement") and the Parking and
Reciprocal Easement Agreement and Option to Purchase, dated as of March 1, 2004, by and between
the Landowner and the City(the "Reciprocal Easement Agreement" and;together with this Bond
Purchase.Agreement, the Fiscal Agent Agreement, the City Continuing Disclosure Agreement, the
Funding and Construction Agreement and the Operating Agreement, the "City Agreements") and to
carry out all of the transactions contemplated by each of the City Agreements, (ii) to sell, issue and
deliver the Bonds to the Underwriter pursuant to the Fiscal Agent Agreement as provided herein and
(iii)to carry out, give effect to and consummate the transactions contemplated by the City
Agreements;
(b) The City Council of the City(the "City Council") has duly adopted a resolution (the
"Resolution of Formation") forming the City of Huntington Beach Community Facilities District
No. 2003-1 (Huntington Center) (the "Community Facilities District") and an ordinance authorizing
2
DOCSOC/1002280v9/22173-0089
the levy of a special tax on the taxable property within the Community Facilities District(the
"Special Tax Ordinance") and all other ordinances and resolutions referred to in the Resolution of
Formation and the Special Tax Ordinance and has caused to be recorded in the real property records
of the County of Orange a Notice of Special Tax Lien (the "Notice of Special Tax Lien") (such
ordinances and resolutions and Notice of Special Tax Lien being collectively referred to herein as the
"Formation Documents"and, together with the City Agreements as the "City Documents").
(c) The City has complied, and at the Closing Date will be in compliance, in all material
respects, with the City Documents; and any immaterial compliance therewith by the City will not
impair the ability of the City to carry out, give effect to or consummate the transactions contemplated
by the foregoing; and after the date of issuance of the Bonds, the City will continue to comply with
the covenants of the City contained in the City Documents;
(d) The City Council.has duly and validly: (i)taken or caused to be taken, all
proceedings necessary under the Constitution and laws of the State of California in order to form the
Community Facilities District, to authorize the levy of a special tax (the "Special Tax") on the
taxable property within the Community Facilities-District pursuant to the Rate and Method of
Apportionment of Special Tax approved pursuant to the Resolution of Formation (the "Rate and
Method of Apportionment"), to cause the Special Tax to be secured by a continuing lien on each
parcel of Taxable Property (as defined'in the Rate and Method of Apportionment)within the
Community Facilities District and to authorize the sale and issuance of the Bonds, (ii) authorized and
approved the execution and delivery of the.City Documents, (iii) authorized the preparation and
delivery of the Preliminary Official Statement and the Official Statement, and (iv) authorized and
approved the performance by the City of its obligations contained in, and the taking of any and all
action as may be necessary to carry out, give effect to and consummate the transactions contemplated
by, each of the City Documents (including, without limitation,the collection of the Special Tax); and
the Community Facilities District has been validly formed,the Special Tax has been.approved and its
levy authorized, and (assuming due authorization, execution and delivery by other parties thereto,
where necessary)the City Agreements and the Bonds will constitute the valid, legal and binding
obligations of the City enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights
in general and to the application of equitable principles;
(e) The City is not in breach of or default under any applicable law or administrative rule
or regulation of the United States or the State of California, or of any department, division, agency or
instrumentality of either of them, or under any applicable court or administrative decree or order, or
under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to
which the City is a party or is otherwise subject or bound, a consequence of which could be to
materially and adversely affect the performance by the City of its obligations under the City
Documents or the Bonds; and.compliance with the provisions of each thereof will not conflict with or
constitute a breach of or default under any applicable law or administrative rule or regulation of the
United States or the State of California, or of any department, division, agency or instrumentality of
either of them, or under any applicable court or administrative decree or order, or a material breach
of or default under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City is a party or is otherwise subject or bound;
(f) Except for compliance with the"blue sky" or other states securities law filings, as to
which the City makes no representations, all approvals, consents, authorizations, elections and orders
of or filings or registrations with any State governmental authority, board, agency or commission
3
DOC SOC/1002280v9/22173-0089
having jurisdiction which would constitute a condition precedent to, or the absence of which would
materially adversely affect, the performance by the City of its obligations hereunder, or under the
City Documents or the Bonds, have been obtained and are in full force and effect;
(g) The Special Tax has been duly and lawfully authorized and may be levied and
collected under the laws of the State of California; and, when levied, the Special Tax will constitute a
valid and legally binding continuing lien on the properties on which it levied in accordance with the
Rate and Method of Apportionment;
(h) Until the date which is twenty-five (25) days after the "end of the underwriting
period'.' (as hereinafter defined), if any event shall occur of which the City becomes aware, as a result
of which it may be necessary to supplement the Official Statement in order to make the statements in
the Official Statement, in light of the circumstances existing at such time, not misleading, the City
shall forthwith notify the Underwriter of such event and shall cooperate fully in furnishing any
information available to it for any supplement to the Official Statement necessary so that the
statements.therein, as so supplemented, will not be misleading in light of the circumstances existing
at such time;and the City shall promptly furnish to the Underwriter a reasonable number of copies of
such supplement (as used herein, the term "end of the underwriting period" means the later of suc_ h
time as (i)the City.delivers the Bonds to the Underwriter, or(ii)the Underwriter does not retain,
directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the
public.; and, unless the Underwriter delivers written notice to the contrary to the City prior to the
Closing specifying another date to be deemed the "end of the underwriting period,"the "end of the
underwriting period" shall be deemed to be the Closing Date);
(i) The Fiscal Agent Agreement creates a valid pledge of the Special Taxes and the
moneys in Bond Fund and the moneys in the Reserve Fund established pursuant to the Fiscal Agent
Agreement, including the investments thereof, subject in all cases to the provisions of the Fiscal
Agent Agreement permitting the application thereof for the purposes and on the terms and conditions
set forth therein;
(j) Except as disclosed in the Official Statement, no action, suit,proceeding, inquiry or
investigation, at law or in equity, before or by any court, regulatory agency, public board or body is
pending or, to the knowledge of the City, threatened against the City(i)which would materially
adversely affect the ability of the City to perform its obligations under the City Documents or the
Bonds, or(ii) seeking to restrain or to enjoin: (A)the improvement of any of the property within the
Community Facilities District, (B)the issuance, sale or delivery of the Bonds, (C)the application of
the proceeds thereof in accordance with the Fiscal Agent Agreement or the Funding and Construction
Agreement, or(D)the collection or application of the Special Tax, or the pledge thereof, or in any
way contesting or affecting the validity or enforceability of the Bonds, the City Documents, any
planning, zoning, subdivision or building permit approval applicable to property within-the
Community Facilities District any other instruments relating to the improvement of any of the
property within the Community Facilities District or any action contemplated by any of said
documents, or(iii) in any way contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or the powers or authority of the City with respect to the Bonds,
the City Documents, or any action of the City contemplated by any of said documents; nor is there
any action pending or,to the knowledge of the City, threatened against the City which alleges that
interest on the Bonds is not excludable from gross income for federal income tax purposes or is not
exempt from California personal income taxation;
4
DOC SOC/1002280v9/22173-0089
(k) The City will furnish such information, execute such instruments and take such other
action in cooperation with the Underwriter as the Underwriter may reasonably request in order for
the Underwriter 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,the City shall not be required to register as a dealer or a broker of
securities or to consent to service of process in connection with any blue sky filing;
(1) Any.certificate signed by any authorized official of the City authorized to do so shall
be deemed a representation and warranty to the Underwriter as to the statements made therein;
(m) The City will apply the proceeds of the Bonds and the Special Taxes in accordance
with the Fiscal Agent Agreement and the Funding and Construction Agreement and as described in
the Official Statement; .
(n) The Official Statement (except the portion thereof entitled THE PROJECT, THE
LANDOWNER.AND THE DEVELOPER," as to which no view need be expressed) is, as of the date
thereof, and will be, as of the Closing Date, true, correct and complete in all material respects; and
the Official Statement (except the portion thereof mentioned above, as to which no view need be
expressed) does not, as of the date thereof, and will not, as of the Closing Date, contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made,not
misleading; and
(o) The Preliminary Official Statement heretofore delivered to the Underwriter has been
deemed final by the City as of its date, except for the omission of such information as is permitted to
be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and
agrees that, within seven (7) business days from the date hereof, or(upon reasonable written notice
from the Underwriter)within sufficient time to accompany any confirmation requesting payment
from any customers of the Underwriter, the City shall cause a final printed form of the Official
Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter
and the City so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and
Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter
to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the
Underwriter,to the accuracy in all material respects of the representations and warranties on the part
of the City contained herein, as of the date hereof and as of the Closing Date;to the accuracy in all
material respects of the statements of the officers and other officials of the City and the statements of
the officers and other officials of the Landowner made in any certificates or other documents
furnished pursuant to the provisions hereof,to the performance by the City of its obligations to be
performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the City Documents and the Landowner Continuing Disclosure
Agreement (as hereinafter defined) shall be in full force and effect, and shall not have been amended,
modified or supplemented, except as may have been agreed to in writing by the Underwriter, and
there shall have been taken in connection therewith, with the issuance of the Bonds and with the
transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as, in the
opinion of Bond Counsel, shall be necessary and appropriate;
5
DOCSOC/1002280v9/22173-0089
(b) Between the date hereof and the Closing Date, the market price or marketability of
the Bonds at the initial offering prices set forth in the Official Statement shall not have been
materially adversely affected, in the judgment of the'Underwriter(evidenced by a.written notice to
the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds) by
reason of any of the following:
(1) legislation introduced in or enacted (or resolution passed) by the Congress of
the United States of America or recommended to the Congress by the President of the United States,
the Department of the Treasury,the Internal Revenue Service, or any member of Congress, or.
favorably reported for passage to either House of Congress by any committee of such House to
which such legislation had been referred for consideration or a decision rendered by a court
established under Article III of the Constitution of the United States of America or by the Tax Court
of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press
release or other form of notice issued or made by or on behalf of the Treasury Department or the
Internal Revenue Service of the United States of America; with the purpose or effect, directly or
indirectly, of imposing federal income taxation upon the interest that would be received by the
holders of the Bonds beyond the extent to which such interest is subject to taxation as of the date
hereof;
(2) legislation introduced in or enacted (or resolution passed) by the Congress of
the United States of America, or an order, decree or injunction issued by any court of competent
jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form
of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other
governmental agency having jurisdiction of the subject matter, to the effect that obligations of the
general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of 1933, as amended, or
that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the
Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the
general character of the Bonds, or of the'Bonds, including any or all underwriting arrangements, as
contemplated hereby or by the Official Statement or otherwise is or would be in violation of the
federal securities laws, rules or regulations as amended and then in effect;
(3) any amendment to the federal or California Constitution or action by any
federal or California court, legislative body, regulatory body or other authority materially adversely
affecting the tax status of the City, its property, income,securities (or interest thereon),the validity or
enforceability of the Special Tax or the ability of the City to construct or acquire the improvements
as contemplated by the City Documents or the Official Statement or the right of any owner of the
property within the Community Facilities District to improve and operate such property in the
manner described in the Official Statement;
(4) a general suspension of trading in securities on the New York Stock
Exchange or a general banking moratorium declared by federal or State or California officials
authorized to do so or an escalation of terrorist activities in this country or in our nation's military
activities or any other national calamity;
(5) any material difference between the form of opinion of Bond Counsel
appended to the Preliminary Official Statement and the form of the opinion that Bond Counsel
proposes to deliver in lieu thereof; or
6
D OC SOC/1002280v9/22173-0089
(6) any event occurring, or information becoming known,which, in the judgment
of the Underwriter, makes untrue in any material respect any statement or information contained in
the Official Statement, or results in the Official Statement containing any untrue statement of a
material fact or omitting to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(c) On the Closing Date,the Underwriter shall have received counterpart originals or
certified copies of the following documents, in each case satisfactory in form and substance to the
Underwriter:
(1) The City Documents, together with a certificate dated as of the.Closing Date
of the City Clerk to the effect that each such document is a true, correct and complete copy of the one
duly approved by the City Council;
(2) The Official Statement, duly executed by the City;
(3) The opinion of Bond Counsel, dated the Closing Date and'addressed to the
City, in substantially the form attached to the Preliminary Official Statement as Appendix_G,
modified if and to the extent necessary to conform to regulations promulgated by the U.S.
Department of the Treasury subsequent to the date of the Preliminary Official Statement, and a
reliance letter from such firm, dated the Closing Date and addressed to the Underwriter,to the effect
that such approving opinion addressed to the City may be relied upon by the Underwriter to the same
extent as if such opinion was addressed to them;
(4) The supplemental opinion of Bond Counsel, dated the Closing Date and
addressed to the Underwriter,to the effect that (i)the City Agreements have been duly authorized,
executed and delivered by the City, and, assuming-such agreements constitute valid and binding
obligations of the respective other parties thereto, constitute the legally valid and binding agreements
of the City enforceable in accordance with their terms, except as enforcement may be limited by
bankruptcy, moratorium, insolvency or other laws affecting creditor's rights or remedies and is
subject to general principles of equity and to the exercise of judicial discretion in appropriate cases;
(ii)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; and (iii)the statements contained in the Official Statement under
the captions "THE FINANCING PLAN," "THE 2004 BONDS," "SECURITY FOR THE 2004
BONDS," "THE COMMUNITY FACILITIES DISTRICT," "CONCLUDING INFORMATION—
Continuing Disclosure" and "CONCLUDING INFORMATION—Tax Matters" and in
Appendices A and G, insofar as such statements expressly summarize certain provisions of the
Bonds, the Fiscal Agent Agreement,the other City Agreements and the opinion of such firm
concerning the exclusion from gross income for federal income tax purposes and exemption from .
State of California personal income taxes of interest on the Bonds, are accurate in all material
respects;
(5) The opinion of Quint&Thimmig LLP ("Disclosure Counsel")dated the
Closing Date and addressed to the City and to the Underwriter, to the effect that, without having
undertaken to determine independently the accuracy or completeness of the statements contained in
the Official Statement, but on the basis of their participation in conferences with representatives of
the City, the Landowner, the Appraiser and others, and their examination of certain documents,
nothing has come to their attention which has led them 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
7
DOC SOC/1002280v9/22173-0089
necessary to make the statements therein,'in light of the circumstances under which they were made,
not misleading (except that no opinion or belief need be expressed as to any financial statements or
other financial; statistical or engineering data.or forecasts, numbers, charts, estimates, projections,
assumptions, or expressions of opinion, any information about valuation,appraisals,absorption,
archeological or environmental matters, or any information about The Depository Trust Company or
the book-entry-only system);
(6) A certificate, dated the Closing Date and signed by an authorized
representative of the City, ratifying the use and distribution by the Underwriter of the Preliminary
Official Statement and the Official Statement in connection with the offering and sale of the Bonds
and certifying that (i)the representations and_warranties of the City contained in Section 2 hereof are
true and correct in all material respects on and as of the Closing Date with the same effect as if made
on the Closing Date except that all references therein to the Preliminary Official Statement shall be
deemed to be references to the Official Statement; (ii)to the best of his or her knowledge, no event
has occurred since the date of the Official Statement affecting the matters contained therein 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 not misleading in any
material respect,and the Bonds and the City Documents conform as to form and tenor to the
descriptions thereof contained in the Official Statement; and (iii)the City has complied with all the
agreements and satisfied all the conditions on its part to be performed or satisfied.under the City
Documents and the Official Statement at or prior to the Closing Date;
(7) An opinion, dated the Closing Date and addressed to the Underwriter, of the
City Attorney,to the effect that(i)the City was duly organized and is validly existing as a municipal
corporation under the Constitution of the State of California and the Huntington Beach City Charter,
(ii) the City has full legal right,power, and authority to execute and deliver the Funding and
Construction Agreement, the Operating Agreement and the Reciprocal Easement Agreement, (iii)the
Funding and Construction Agreement, the Operating Agreement and the Reciprocal Easement
Agreement have been duly.authorized, executed, and delivered by the City and, assuming due
authorization and execution thereof by the Landowner, they constitute a valid and binding obligation
of the City, enforceable in accordance with their terms, subject to laws relating to bankruptcy,
insolvency, or other laws affecting the enforcement of creditors' rights generally and the application .
of equitable principles if equitable remedies are sought, (iv)the City Council adopted the resolutions
and ordinances forming the Community Facilities District, confirming the Special Tax, approving the
City Documents and authorizing the sale and issuance of the Bonds at meetings of the City Council
which were called, held and conducted pursuant to law and with all public notice required by law and
at which a quorum was present and acting throughout, (v) to the best of such counsel's knowledge,
after due inquiry, there are no actions, suits,proceedings, inquiries, or investigations, at law or in
equity, before or by any court, governmental agency,public board, or body,pending or threatened
against the City, for which the City has been served, to restrain or enjoin the issuance of the Bonds;
the collection or application of the Special Tax, or the payment of principal of and interest on the
Bonds, or in any way contesting the validity of the Bonds or the City Documents, and (vi)to the best
of such counsel's knowledge, without conducting an independent investigation, the information
contained in the Official Statement(except for the financial statements and other financial, statistical
or.engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions
of opinion, any information about valuation, appraisals, absorption, archeological or environmental
matters, the Appendices thereto,or the portion thereof entitled"THE PROJECT, THE
LANDOWNER AND THE DEVELOPER" or any information about The Depository Trust
Company or the book-entry-only system, as to which no view need be expressed) is correct in all
8
DOC SOC/1002280v9/22173-0089
material respects and does not contain any untrue or misleading statement of a material fact or omit a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(8) The Landowner Continuing Disclosure Agreement, dated as of March 1,
2004, by and between the Landowner and U.S.Bank National Association;
(9) A certificate of the Landowner, dated the Closing Date, in substantially the
form attached hereto as Exhibit B;
(10) An opinion or.opinions of counsel to the Landowner, dated the Closing Date
and addressed to the Underwriter and the City, to the effect that, (i) the Landowner has been duly
formed and is validly existing and in good standing under the laws of the state of its organization,
and is qualified to do business in the State of California, and has the limited liability company power
and authority to own and improve its property in the Community Facilities District; (ii)the
Landowner has duly authorized all action necessary to be taken by it or on its behalf for(a)the
execution and delivery of the Landowner Continuing Disclosure Agreement,the Financing and .
Construction Agreement, the Operating Agreement and the Reciprocal Easement Agreement and
(b)the carrying out, giving effect to, and consummation of the transactions contemplated by the
Landowner Continuing Disclosure Agreement,the Financing and Construction Agreement,the
Operating Agreement and the Reciprocal Easement Agreement; (iii)the Landowner Continuing
Disclosure Agreement, the Financing and Construction Agreement, the Operating Agreement and the
Reciprocal Easement Agreement have been duly and validly authorized, executed and delivered by
the Landowner and, except as otherwise expressly provided therein, have not been to the knowledge
such counsel amended, modified, or supplemented, and, assuming due authorization and execution
by any other applicable parties thereto, each constitutes a valid and binding obligation of the
Landowner, enforceable against the Landowner in accordance with its terms,subject to laws relating
to bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and
the application of equitable principles if equitable remedies are sought; (iv)the execution and .
delivery by the Landowner of the Landowner Continuing Disclosure Agreement, the Financing and
Construction Agreement, the Operating Agreement and.the Reciprocal Easement Agreement and the
performance of its obligations thereunder do not and will not result in violation of any provision of,
or in default under,the Landowner's organizational documents; (v) except as described in the
Official Statement and except for governmental approvals and permits that are required to be
obtained in the ordinary course of property improvement, all actions necessary to be taken by the
Landowner have been taken, and no additional approval, authorization, consent, or other order of any
public City Council or body is legally required to allow the Landowner to enter into the Landowner
Continuing Disclosure Agreement,the Financing and Construction Agreement, the Operating
Agreement and the Reciprocal Easement Agreement; (vi)to such counsel's knowledge,based solely
upon a litigation search performed by or at the request of such counsel in State of California and
federal courts'specified by such counsel and.a certificate of the Landowner, there are no legal or
governmental actions, proceedings, inquiries, or investigations pending or threatened by
governmental authorities or to which the Landowner is a party or of which any property of the
Landowner is subject, which, if determined adversely to the Landowner, would individually or in the
aggregate (a) have a material adverse effect on the financial position or results of operations of the
Landowner or(b) otherwise materially and adversely affect the transactions contemplated by the
Official Statement to be engaged in by the Landowner; and (vii) based upon such counsel's
experience as counsel for the Landowner and on such counsel's review of and participation in the
drafting of the Official Statement, and without having undertaken to determine independently the
9
D O C S O C/10022 8 0v9/22173-008 9
accuracy, completeness or fairness of the statements contained in the Official Statement, no facts
have come to such counsel's attention that would cause such counsel to believe that the statements
contained in the Official Statement relating to the property owned by the Landowner within the
Community Facilities District and the improvement of such property by the Landowner(except any
financial, statistical or engineering information, data or forecasts, numbers, charts, estimates,
projections, assumptions or expressions of opinion, including, without limitation, descriptions or
summaries of the Appraisal, included therein, as to which no view need be expressed) contain any
untrue statement of a material fact or omit any material fact necessary in order to make such
statements, in the light of the circumstances under which they were made, not misleading;
(11) A certificate;dated the Closing Date, of Psomas (the "Special Tax
Consultant")to the effect that (i)the Special,Tax, if collected in the maximum amounts permitted
pursuant to the Rate and Method of Apportionment, will generate in each Fiscal Year at least 110%
of the debt service payable with respect to the Bonds in the calendar year that begins in such Fiscal
Year, based on such assumptions and qualifications as shall be acceptable to the City and the
Underwriter and (ii)the statements concerning the Rate and Method of Apportionment and the
statistical and financial data set forth in the tables and discussion in the Official Statement which
were derived from information supplied by the Special Tax Consultant for use in the Official
Statement are true, correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made, not
misleading and no events or occurrences have been ascertained by the Special Tax Administrator or
have come to-its attention that would substantially change such information set forth in the Official
Statement;
(12) A.letter from Integra Realty Resources (the "Appraiser"), dated the Closing
Date and addressed to the City and the Underwriter,to the effect that the Appraiser has prepared the
appraisal report, dated as of November 17, 2003 (the "Appraisal") and that: (a)the Appraisal was
included in the Preliminary Official Statement and the Official Statement with its permission,
(b) neither the Appraisal nor the information in the Official Statement referring to it contains any
untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, and
(c) no events or occurrences have been ascertained by the Appraiser or have come to the Appraiser's
attention that would materially change the opinion set forth in the Appraisal;
(13) A letter from Robert Charles Lesser& Co., LLC (the "Absorption
Consultant"), dated the Closing Date and addressed to the City and the Underwriter,to the effect that
the Absorption Consultant has prepared the report, dated as of October, 2003 (the "Absorption
Consultant's Report")and that: (a)the Absorption Consultant's Report was included in the
Preliminary Official Statement and the Official Statement with its permission, (b) neither the
Absorption Consultant's Report nor the information in the Official Statement referring to it contains
any untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, and (c)
no events or occurrences have been ascertained by the Absorption Consultant or have come to the
Absorption Consultant's attention that would materially change the opinion set forth in the
Absorption Consultant's Report;
(14) A certificate of the Fiscal Agent, dated the Closing Date, in form and
substance reasonably acceptable to the Underwriter;
10
DOCSOC/1002280v9/22173-0089
(15) An opinion, dated the Closing Date and addressed to the Underwriter and the
City, of counsel to the Fiscal Agent in form and substance acceptable to the City and the
Underwriter;
(16) A letter, dated the Closing Date and addressed to the Underwriter of Stradling
Yocca Carlson & Rauth, a Professional Corporation.in form and substance acceptable to the
Underwriter;
(17) Evidence satisfactory to the Underwriter that no ad valorem taxes, special
taxes or Special Tax applicable to the property within the City are delinquent;
(18) A certificate of Bank One,N.A., dated the Closing Date, in form and
substance reasonably satisfactory to the Underwriter to the effect that Bank One,N.A. has approved
a construction loan to the Landowner in an aggregate principal amount of not less than $105,000,000
and that all conditions precedent to any advance of funds by Bank One,N.A.pursuant to said
construction loan have been satisfied; and
(19) Such additional legal opinions, certificates, instruments and other documents
as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof
and as of the Closing Date, of the statements and information contained in the Preliminary Official
Statement and the Official Statement, of the City's representations and warranties contained herein,
and of the Landowner's representations and warranties set forth in its certificate hereto'and the due
performance or satisfaction by the City at or prior to the Closing of all agreements then to.be
performed and all conditions then to be satisfied by the City in connection with the transactions
contemplated hereby and by the Official Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, or if
the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase
Agreement shall terminate and neither the Underwriter nor the City shall be under any further
obligation hereunder, except that the respective obligations of the City and the Underwriter set forth'
in Section 5 and Section 6 hereof shall continue in full force and.effect.
4. Conditions of the City's Obligations: The City's obligations hereunder are subject to
the Underwriter's performance of its obligations hereunder, and are also subject to the following
conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly
authorized officer of the City executing the certificate referred to in Section 3(c)(6) hereof,
threatened,to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any
authority.for or the validity of the Bonds or the City Documents or the existence or powers of the
City; and
(b) As of the Closing Date, the City shall receive the opinions referred to in
Section 3(c)(3) and (5)hereof.
11
DOC SOC/1002280v9/22173-0089
5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth
herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or cause.
to be paid (out of any legally available funds of the City) all expenses incident to the performance of
the City's obligations hereunder, including, but not limited to, the cost of preparing and delivering
the Bonds to DTC, the.cost of preparation,printing, distributing and delivering of the Fiscal Agent
Agreement, the Preliminary Official Statement,.the Official Statement and all other agreements and
documents contemplated hereby(and drafts of any thereof) in such reasonable quantities as requested
by.the Underwriter; and the fees and disbursements of the Fiscal Agent, Bond Counsel, Disclosure
Counsel and any financial advisors, special tax consultants, appraisers, accountants, engineers or any
other experts or consultants the City retained,in connection with the Bonds; and
(b) . The City shall be under no obligation to pay, and the Underwriter shall pay, any fees
of the California Debt and Investment Advisory Commission,the cost of preparation of any"blue
sky" or legal investment memoranda and this Bond Purchase Agreement; expenses to qualify the
Bonds for sale under any"blue sky" or other state securities laws; and all other expenses incurred by
the Underwriter in connection with its public offering and distribution of the Bonds (except those .
specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its
counsel and any advertising expenses.
6. Notices. Any notice or other communication to be given to the City under this Bond
Purchase Agreement may be given by delivering the same in writing to the City at the address shown
on page one hereof; and any notice or other communication to be given to the Underwriter under this
Bond Purchase Agreement may be given by delivering the same in writing to`UBS Financial Services
Inc., 777 South Figueroa Street, 50th Floor, Los Angeles, California 90017.
7. Parties in Interest. This Bond Purchase Agreement 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.
8. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements of the City set forth-in or made pursuant to this Bond Purchase Agreement
shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the
Closing and regardless of any investigations made by or on behalf of the Underwriter(or statements
as to the results of such investigations) concerning such representations and statements of the City.
and"regardless of delivery of and payment for the Bonds.
9. Effective. This Bond Purchase Agreement shall become effective and binding upon
the respective parties hereto upon the execution of the acceptance hereof by the City and shall be
valid and enforceable as of the time of such acceptance.
10. No Prior Agreements. This Bond Purchase Agreement supersedes and replaces all
prior negotiations, agreements and understandings between the parties hereto in relation to the sale of
Bonds for the City.
11. Governing Law. This Bond Purchase Agreement shall be governed by the laws of .
the State of California.
12
DOCSOC/1002280v9/22173-0089
b
12. Counterparts. This Bond Purchase Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which shall constitute one and the
same instrument.
Very truly yours,
UBS FINANCIAL SERVICES INC.,
By:
Managing Director
By:
Vice President
ACCEPTED: March 30, 2004
CITY OF HUNTINGTON BEACH
By:
City Administrator
By:
Economic Development Director
APPROVED AS TO FORM:
By:
City Attorney
By:
Bond Counsel
13
DOCSOC/1002280v 10/22173-0089
12. Counterparts. This Bond Purchase Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which shall constitute one and the
same instrument.
Very truly yours,
UBS FINANCIAL SERVICES INC.,
By:
Managing Director
By:
Vice President
ACCEPTED:AU61�V004
CITY OF HUNTINGTON BEACH
By:
City Adm nistrator
By:
Economic Development Director
APPROVED AS TO FORM:
By:
City Attorney
By:
B nd Counsel
I
13
DOC SOC/1002280v9/22173-0089
EXHIBIT A
MATURITY SCHEDULE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER)2004 SPECIAL TAX BONDS
Maturity Date
(September 1) Principal Amount Interest Rate Yield
2006 $440;000 2.65% 2.65%
2007 450:000 3.10 3.10
2008 465,000 3.55 3.55
2009_ 485,000 3.85 3.85
2010 500,000 4.15 4.15
2011 520,000 4.35 4.35
2012 545,000 4.60 4.60
2013 570,000 4.80 4.80
2014 595,000 4.90 4.90
2015 625,000 5.00 5.00
2017 1,355,000 -5.30 5.30
2023 5,060,000 5.80 5.80
2033 13,390,000 5.85 5.85
The purchase price of the Bonds shall be $24,702,000, which is the principal amount of
$25,000,000 less Underwriter's discount of$298,000.
A-1
DOC S OC/1002280v9/22173-0089
EXHIBIT B
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO, 2003-01
(HUNTINGTON. CENTER)2004 SPECIAL TAX BONDS
CERTIFICATE OF LANDOWNER
In connection with the issuance and sale of the above-captioned bonds,and pursuant to the
Bond Purchase Agreement, dated , 2004, by and between the City of Huntington Beach
and the Underwriter named therein (the "Bond Purchase Agreement"),the undersigned hereby
certifies, represents, warrants and covenants,*on behalf.of Huntington Center Associates, LLC, a
Delaware limited liability company(the "Landowner")that:
1. The undersigned is, and at all pertinent times mentioned herein has been, an
authorized representative of the-Landowner and is authorized to make this
certification on behalf of the Landowner.
2. Capitalized terms.that are not defined herein shall have the meanings ascribed to
them in the Bond Purchase Agreement.
3. The Landowner is a duly organized and validly existing limited liability company in
good standing under the laws of the State of California.
4. The Landowner has full power and authority to execute,.deliver, and perform its.
obligations under the Landowner Continuing Disclosure Agreement, the Financing
and Construction Agreement, the Operating Agreement and the Reciprocal Easement
Agreement; and the Continuing Disclosure Agreement, the Financing and
Construction Agreement, the Operating Agreement•and the Reciprocal Easement
Agreement have been duly authorized, executed, and delivered by the Landowner
and, assuming due authorization, execution and delivery by the other parties thereto,
as applicable, constitute legal, valid, and binding agreements of the Landowner,
enforceable against the Landowner in accordance with their respective terms, subject
to-laws relating to bankruptcy, insolvency, or other laws affecting the enforcement of
creditors' rights generally and the application of equitable principles if equitable
remedies are sought.
5. The undersigned has reviewed the contents of the Preliminary Official Statement and
the contents of the Official Statement. The undersigned has reviewed the contents of
this Certificate and have conferred with counsel for the purpose of discussing the
meaning of its contents.
6. All information concerning the Landowner, the property owned by the Landowner in
the Community Facilities District, and the improvement of such property by the
Landowner submitted by, or on behalf of,the Landowner to the Underwriter, the
City, or Disclosure Counsel in connection with the preparation.of the Preliminary
Official Statement and the Official Statement, to the Appraiser in connection with
preparation of the Appraisal, and to the Special Tax Administrator in connection with
the Rate and Method of Apportionment was, to the best of our knowledge, true,
complete, and correct in all material respects.
B-1
DOCSOC/1002280v9/22 1 73-0089
7. The statements relating to the Landowner, its property ownership and its proposed
improvement of the property within the Community Facilities District contained in
the Official Statement under the captions"THE COMMUNITY FACILITIES
DISTRICT," "THE PROJECT,THE LANDOWNER AND THE DEVELOPER,"
and "SPECIAL RISK FACTORS"do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not
misleading.
8. No proceedings are pending or, to the best knowledge of the undersigned, after due
inquiry,threatened in which the Landowner or any of its members may be
adjudicated as bankrupt or discharged from any and all of its debts or obligations or
granted an extension of time to pay its debts or a reorganization or readjustment of
the debts.
9. No action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by
any court, regulatory agency,public board or body, is pending or, to the best
knowledge of the Landowner, threatened in any way seeking to restrain or to enjoin
the improvement of the property within the Community Facilities District.
10. None of the property owned by the Landowner within the Community Facilities
District is delinquent in the.payment of any taxes or assessments.
I I. The Landowner agrees to indemnify and hold harmless, to the extent permitted by
law, the City, the Underwriter and their officials, employees, and agents (each of the
City,the Underwriter and such entity and person being hereinafter called an
"Indemnified Party"), against any and all losses, claims, damages, or liabilities,joint
or several, to which such Indemnified Party may become subject under any statute or
at law or in equity or otherwise, and shall reimburse any such Indemnified Party for
any legal or other expenses incurred by it in connection with investigating any claims
against it and defending any actions, insofar as such losses, claims, damages,
liabilities, or actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or the omission or alleged omission to state a
material fact necessary to make the statements in the Official Statement or in any
amendment or supplement to such information not misleading, but only to the extent
that such material fact relates to the Landowner, its property ownership and its
proposed improvement of the property within the Community Facilities District
under the captions "THE COMMUNITY FACILITIES DISTRICT," "THE
PROJECT, THE LANDOWNER AND THE DEVELOPER" and "SPECIAL RISK
FACTORS" in the Official Statement or in any amendment or supplement to such
information. This indemnity provision shall not be construed as a limitation on any
other liability which the Landowner may otherwise have to any Indemnified Party,
provided that in no event shall the Landowner be obligated for double
indemnification.
12. Promptly after receipt by any Indemnified Party of notice of any complaint or the
commencement of any action or proceeding in connection with any matter for which
the Landowner is obligated to indemnify an Indemnified Party as set forth in the
preceding paragraph, the Indemnified Party shall notify the Landowner in writing of
B-2
DOCSOC/1002280v9/22173-0089
such complaint or of the commencement of such action or proceeding and, if the
Landowner so elects or is requested by the Indemnified Party, the Landowner shall
assume the defense of such action or proceeding, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment'of the fees
and disbursements of such counsel, in which event the Landowner shall not be
obligated to pay the reasonable fees and disbursements of separate counsel for the
Indemnified Party in such action: In the event, however,that an Indemnified Party's
legal counsel has determined that defenses may available to an Indemnified Party
that are different from or in addition to those available to the Landowner or that there
is or could reasonably be expected to be a conflict of interest by reason of the
Landowner and an Indemnified Party having common counsel in any action or
proceeding,then the Indemnified Party may employ separate counsel to represent or
defend it in any such action or proceeding in which such Indemnified Party may
become involved or is named as defendant and the Landowner shall pay the
reasonable fees and disbursements of such separate counsel.
13. The Landowner is fully qualified by all necessary permits, licenses, and certifications,
to conduct its business as it is presently being conducted and, except as may be
required under blue sky or other securities laws of any state, and except for such
licenses, certificates, approvals, variances, and permits which may be necessary for
the construction and operation of the Landowner's project in the Community
Facilities District(the "Project"), there is no consent, approval, authorization, or other
order of, or filing with, or certification by, any regulatory authority having
jurisdiction over the Landowner except as such have been obtained and are in full
force and effect, for the consummation by the Landowner of the actions contemplated
to be consummated by the Landowner with respect to the Project under the Official
Statement.
14. To the best.knowledge of the undersigned, after due inquiry, the Landowner is not in
violation of any provision of, or in default under, its organizational documents or any
material agreement, lease, or other contract, the violation of or default under which
would materially and adversely affect the Landowner's ability to own and improve its
project as described in the Official Statement or to pay Special Taxes for which it is
responsible.
15. The Landowner is not aware of any previous material failures to comply with any
previous undertaking with respect to the Securities and Exchange Commission Rule
15c2-12 to provide annual reports or notices of material events.
B-3
DOC SOC/1002280v9/22173-0089
16. The execution and delivery by the Landowner of the Continuing Disclosure
Agreement,the Financing and Construction Agreement,the Operating Agreement
and the Reciprocal Easement Agreement and the performance of its obligations
thereunder do not and will not result in violation of any provision of, or in default
under, the Landowner's organizational documents or any material agreement, lease,
or other contract to which the Landowner is a party or by which it or its properties are
bound.
Dated: [Closing Date]
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a Delaware
limited liability company, its Manager
By: BMLF/Huntington, LLC, a Delaware limited
liability company, its Manager.
By:
Bryan Ezralow, Trustee of the Bryan Ezralow
1994 Trust, its Manager
B-4
DOCSOC/1002280v9/22173-0089
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE FISCAL AGENT AGREEMENT) TO THE FISCAL
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
BOND AUTHENTICATED AND DELIVERED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS. REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER .
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
No. R-
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BOND
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
1 004
REGISTERED OWNER:
S OW& E .
PRINCIPAL AMOUNT:
The City of Huntington Beach (the "City"), for and on behalf of The City.of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State
of California (the "District"), for value received, hereby promises to pay, from the Special Taxes
(as hereinafter defined) to be collected in the District or amounts in certain of the funds and
accounts held under the Agreement(as hereinafter defined) to the registered owner named above,
or registered assigns, on the maturity date specified above, the principal amount specified above,
and to pay interest on such principal amount from the Dated Date above; or from the most recent
interest payment date to which interest has been paid or duly provided for, semiannually on
March 1 and September 1, commencing September 1, 2004 ("Interest Payment Dates"), at the
interest rate specified above, until the principal amount hereof is paid or.made available for
payment. The principal of this Bond is payable by check to the registered owner hereof in lawful
money of the United States of America upon presentation and surrender of this Bond at the
Principal Office of U.S. Bank National Association (the "Fiscal Agent"). Interest on this Bond
shall be paid by check of the Fiscal Agent mailed by first class mail, postage-prepaid, on each
Interest Payment Date to the registered owner hereof as of the close of business.on the fifteenth
(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
Page 1 of 6
maintained by the Fiscal Agent; except that at the written request of the owner of at least
$1,000,000 in aggregate principal amount of outstanding Bonds filed with the Fiscal Agent prior
to the Record Date preceding any Interest Payment Date, interest on such Bonds shall be paid to .
such owner on such Interest Payment Date by wire transfer of immediately available funds to an
account in the United States of America designated in such written request.
This Bond is one of a duly authorized issue of bonds approved by the qualified electors of
the District.pursuant to Chapter 3.56 of the Municipal Code of the City (commencing with
Section 3.56.010) (the "Municipal Code") and the Mello-Roos Community Facilities Act of
1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of
Title 5 of the California Government Code (the "Mello-Roos Act"),' for the purpose, among
others, of financing the construction and acquisition of certain public facilities within and for the
District, and is one of the series of Bonds designated the "City of Huntington Beach Community
.Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds" (the "Bonds"), in
the aggregate principal amount of $25,000,000. The issuance of the Bonds and the terms and
conditions thereof are provided for by•a resolution adopted by the City Council of the City on
January 5, 2004 (the "Resolution"), and the Fiscal Agent Agreement, dated as of March 1, 2004,
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 the terms and conditions of the Resolution and the Agreement. The Resolution is adopted
under, the Agreement is executed under, this Bond is issued under, and all are to be construed in
accordance with, the laws of the State of California.
Pursuant to the Municipal Code, the Mello-Roos Act, the Agreement and the Resolution,
the principal of and interest on the Bonds are payable from the annual levy of Special Taxes
authorized under the Mello-Roos Act to be collected within.the District (the "Special Taxes")
and are secured by a pledge of and first lien upon the revenues derived therefrom (the "Special
Tax Revenues") and certain funds held by the Fiscal Agent pursuant to the Agreement.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the
date of its authentication, unless (i) it is authenticated on an Interest Payment'Date, in which
event it shall bear interest from such Interest Payment Date, 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 on or before the Record Date preceding the first Interest Payment Date, in which
event it shall bear interest from the Dated Date above; 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, or from the Dated Date above, if no interest has previously been paid or made available
for payment hereon.
Any tax for the payment hereof shall be limited to the Special Taxes, except to the extent
that provision for payment has been made by the City as may be permitted by law. The Bonds
do not constitute obligations of the City for which the City is obligated to levy or pledge, or has
levied or pledged, general or special taxation other than as described hereinabove.
Page 2 of 6
The City has covenanted for the'benefit of the owners of the Bonds that it will order, and
cause to be commenced judicial for proceedings against properties with delinquent
Special Taxes and diligently pursue to completion such foreclosure proceedings.
The Bonds are subject to redemption prior to maturity on September 1, 2004 or on any
Interest Payment Date thereafter, in integral multiples of $5,000, on a pro rata basis among
maturities (and by lot within any one maturity), at the following redemption prices (expressed as
percentages of the principal amounts of the Bonds to be redeemed) together with accrued interest
to the date of redemption as follows:.
Redemption Dates Redemption Price
September 1, 2004 through March 1, 2012 103%
September 1, 2012 and March 1, 2013 102%
September 1, 2013 and March 1, 2014 101%
September I, 2014 and thereafter 100%
The outstanding Bonds maturing on September 1, 2017, September 1, 2023 and
September 1, 2033, respectively, are subject to mandatory sinking payment redemption, in part,.
without premium, on September 1, 2016, with respect to Bonds maturing September 1, 2017,
September 1, 2018, with respect to Bonds maturing September 1, 2023, and September, 1, 2024,
with respect to Bonds maturing September 1, 2033, and on each respective September 1
thereafter as provided in the Agreement.
Notice of redemption with respect to the Bonds to be redeemed shall be given to the
registered owners thereof, in the manner and to the extent provided in the Agreement.
From and after the date fixed for redemption, if funds available for the payment of the
redemption prices of the Bonds selected for redemption shall have been deposited in the Bond
Fund; such Bonds shall cease to be entitled to any benefit'under the Agreement other than the
right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds
to be redeemed on the redemption date specified in.the notice'of redemption.
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 that purpose and authenticated by the manual signature of an
authorized signatory of the Fiscal Agent upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the
registered owner- or his--duly-authorized attorney, by- execution of the form of assignment
endorsed hereon, and authenticated as herein provided, and the principal hereof and interest
hereon shall be payable only to the registered owner or to such owner's order.
Page 3 of 6
The Fiscal Agent shall require the registered owner requesting transfer or exchange
hereof to pay any tax or other governmental charge required"to be paid with respect to such
transfer or exchange.
The Agreement and the rights and obligations.of the City and the District 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 hereon endorsed shall have been dated and manually signed on behalf of 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.
IN WITNESS WHEREOF, the City of Huntington Beach, for the City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) thereof, has caused this
Bond to be dated as of the Dated Date above, and to be signed by the facsimile signature of the
Mayor of the City and countersigned by the facsimile signature of the City Clerk.
CITY OF HUNTINGTON BEACH for and on
behalf of THE CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.
2003-1 (HUNTINGTON CENTER), COUNTY OF
ORANGE, STATE OF CALIFORNIA
TTES
i } Kh each
H on Beach
ow
Page 4 of 6
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-defined Agreement.
Dated: , 2004
U.S. BANK NATIONAL ASSOCIATION,
Fiscal Agent
By:
Authorized Signatory
Page 5 of 6
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within registered Bond and hereby irrevocably.constitute(s) and appoint(s)
attorney,to transfer said Bond 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 names) 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 an eligible guarantor.
Page 6 of 6
REPORT OF FINAL SALE For Office Use Only
California Debt and Investment Advisory Commission
915 Capitol Mall,Room 400,Sacramento,CA 95814
P.O.Box 942809,Sacramento,CA 94209-0001
Tel.:(916)653-3269 FAX:(916)654-7440
Under California Government Code Section 8855(i),"The issuer of any new public debt issue shall,not
later than 45 days after the signing of the bond purchase contract in a negotiated or private financing,
or after the acceptance of a bid in a competitive offering, submit a report of final sale and official
statement to the Commission.The Commission may require information to.be submitted in the report CDIAC#: 2003-2070
of final sale that is considered appropriate."
ISSUERNAME: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1
(If pool bond,list participants)
ISSUE NAME: (Huntington Center)2004 Special Tax Bonds
IF THIS IS A POOLED FINANCING,WHICH ISSUANCE STATUTE IS IT AUTHORIZED UNDER?
0 1)Marks-Roos Local Bond Pooling Act 0 2)JPA Law 0 3)Installment Sales Agreement,Lease... 0 4)Housing Revenue Bond Law &
Industrial Development Bond Law ❑5)Other.
WILL A VALIDATION ACTION BE PURSUED: 0 No 0 Yes D Unknown
ACTUAL SALE DATE: March 30, 2004 PRINCIPAL SOLD: $ 25,000,000
IS ANY PORTION OF THE DEBT FOR REFUNDING?'
11 No p Yes,refunding amount(including costs)$
Issuer Contact:
Name: David Biggs
Title: Economic Development Director
Address: 2000 Main Street, Huntington Beach, CA 92648
Phone: (714) 536-5582 ISSUER LOCATED IN Orange COUNTY
Filing Contact: Name of Individual(representing: 0 Bond Counsel, ❑ Issuer, 0 Financial Advisor,or 0 Lead Underwriter)who completed this
form and may be contacted for information:
Name: Kim A. Byrens, Esq.
Firm/Agency: Best Best& Krieger LLP
Address: 3750 University Avenue,400 Mission Square, Riverside, CA 92501
Phone: (909) 686-1450 E-Mail: Kim.Byrens(@bbklaw.com
Send acknowledgement/copies to:
Name of individual to whom an invoice for the CDIAC issue fee should be sent:'
Name: Dan Gangwish
Firm. UBS Financial Services Los Angeles, CA
Address: 777 South Figueroa Street, 50th Floor, Los Angeles, CA 90017
Phone: (213)253-5409
1 Section 53583(c)(2)(B) of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated
basis shall send a written statement, within two weeks after the bonds are sold, to the CDIAC explaining the reasons why the local agency determined to
sell the bonds at a private sale or on a negotiated basis instead of at public sale.
2 This fee is authorized by Section 8856 of the California Government Code and is charged to the lead underwriter or purchaser of the issue. The fee is
administratively set by the Commission. The current fee schedule may be obtained from CDIAC.
GAMAC\2000ncw final.doc I2001
CDIAC:Report of Final Sale Page 2
FINANCING PARTICIPANTS(Firm name) OFFICE LOCATION(City/State)
FINANCIAL ADVISOR:
LEADUNDERWRITER/PURCHASER: UBS Financial Services Los Angeles, CA
BOND COUNSEL. Best Best& Krieger LLP Riverside, CA
TRUSTEE/PAYING AGENT: U.S. Bank National Association Los Angeles, CA
MATURITY SCHEDULE IS THE INTEREST ON THE DEBT TAXABLE?
0 Attached Z Included in Official Statement
MATURITY STRUCTURE Under State.Law:® No(tax-exempt)0 Yes(taxable)
Under Federal Law:D No(tax-exempt)0 Yes(taxable)
Serial(S) 0 Term(T) If the issue is federally tax-exempt,is interest a specific preference
® Serial and term bonds or two or more term(B) item for the purpose of alternative minimum tax? 0 Yes Z No
FINAL MATURITY DATE:9/1/2033
FIRST OPTIONAL CALL DATE: 9/1/2004 INTEREST TYPE: NIC TIC 0 Variable
SENIOR/SUBORDINATE STRUCTURE 13 Yes No INTEREST COST: 5.662794
OFFICIAL STATEMENT/OFFERING MEMORANDUM: CAPITAL APPRECIATION BOND: 0 Yes1 No
�Cl Enclosed 0 None prepared
ISSUANCE COSTS AND FEES:
WAS THE ISSUE INSURED OR GUARANTEED? A)Management Fee $
�F3(No
(] Bond Insurance(I) B)Total Takedown $
Letter of Credit(L) C)Underwriter Expenses $ -
0 State Intercept Program(T) Underwriter Spread or Discount $ 298,000.00
0 Other(0) 73,500.00
D)Bond Counsel $
GUARANTOR:
E)Disclosure Counsel $ 32,000.00
ENHANCEMENT EXPIRATION DATE:
F)Financial Advisor $
INDICATE CREDIT RATING-
G)Rating Agency $
(For example,"AAA"or"Aaa") _
H)Credit Enhancement $
)5(Not Rated
El Rated I)Trustee Fee $ 4,150.00
Standard&Poor's: 160,350.00
Fitch: n Other Expenses $
Moody's: Total Issuance Costs $ 270,000.00
Other:
K)ORIGINAL ISSUE PREMIUM $
REASON FOR NEGOTIATED REFUNDINGS
If the issue is a negotiated refunding,indicate the reason(s) - L)ORIGINAL ISSUE DISCOUNT $
why the bonds were issued at a private or negotiated versus a M)NET ORIGINAL ISSUE
competitive sale. . DISCOUNT/PREMIUM $
0 (1)Timing of the sale provided more flexibility than a public sale
0 (2)More cost savings were expected to be realized than a public sale
0 (3)More flexibility in debt structure was available than a public sale
0 (4)Issuer able to work with participants familiar with issue/r than a FOR OFFICE USE ONLY
public sale
0 (5)All of the above
0 (6)Other(please specify) FEE: $
'GAMIA02000new rinal.doc 112001
1' Phil Angelides
STATE OF CALIFORNIA State Treasurer and Chair
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION
915 CAPITOL MALL, ROOM 400
P.O. BOX 942809
SACRAMENTO, CA 94209-0001
TELEPHONE: (916) 653-32 69 Lisa M. Harris
FAX: (916) 6 5 4-7 4 4 0 Executive Director
November 25, 2003.
TO: Kim A Byrens
Best Best & Krieger
3750 University Ave
400 Mission Sq
Riverside, CA 92501
FROM: Lisa M. Harris, Executive Director
RE: ACKNOWLEDGEMENT OF REPORT OF PROPOSED DEBT ISSUANCE
Section 8855 (g) of the California Government Code requires written notice to be
given to the California Debt and Investment Advisory Commission (CDIAC) no later
than 30 days prior to the proposed sale of any public agency debt issue.
The Commission acknowledges your written notice of the following proposed debt
issuance:
CDIAC Nbr: 2003-2070
Issuer:• Huntington Beach CFD No 2003-1
Project: Huntington Ctr
Proposed Amount: $25, 000, 000.00
Proposed Sale Date: December 18, 2003
Date Notice Received: November 20, 2003
Please submit the Report of Final Sale and the Official Statement (or offering
circular) on this issue within 45 days of sale date. Any questions regarding
reporting requirements may be directed to the CDIAC staff at (916) 653-3269.
Cc: David C Biggs
Director of Economic Development
r
REPORT OF PROPOSED DEBT ISSUANCE For Office Use Only
California Debt and Investment Advisory Commission
915 Capitol Mall,Room 400,Sacramento,CA 95814 _ .C-DIAC NO.:
P.O.Box 942809,Sacramento,CA 94209-0001
.Tel.: (916)653-3269 FAX:(916)654-7440
Ci�, ti0`q
Completion and timely submittal of this form to the California Debt and Investment Advisory Commission
(CDIAC)at the above address will assure your compliance with existing California State law and will assist in; DEB I
1:�^
01L,i
the maintenance of a complete database of public debt in California. Thank you for your cooperatiot t,,;I - "t C Q S 10 H
ISSUER NAME: COMMUNITY FACILITIES DISTRICT NO.2003-1 (HUNTINGTON CENTER)OF THE CITY OF HUNTINGTON BEACH
ISSUE NAME: 2003 SPECIAL TAX BONDS
Please specify type/name of project:
PROPOSED SALE DATE: December 18,2003 PRINCIPAL TO BE SOLD: S 25,000,000
IS ANY PORTION OF THE DEBT FOR REFUNDING?Z
® No Yes,proposed amount for refunding $.
Issuer Contact:.
Name: David Biggs
Title: Economic Development Director
Address: 2000 Main Street Huntington Beach,CA 92648
Phone: (714)536-5582 Issuer Located In Orange County
Filing Contact: Name of Individual (representing: dd Bond Counsel, 0 Issuer, ❑Financial Advisor,or 0 Lead Underwriter)who completed this
form and may be contacted for information:
Name: Kim A.Berens. Esci.
Firm/Agency: Best Best&Krieger LLP
Address: 3750 University Avenue 400 Mission Square Riverside CA 92501
Phone: (909)686-1450 E-mail: KABerens(abbklaw.com
Send acknowledgemem/copies to:
FINANCING PARTWANTS: ,
BOND COUNSEL: Best Best&Krieger LLP
FINANCIAL ADVISOR:
UNDERWRITER\PURCHASER:_ UBS Financial Services Inc.
IS THE INTEREST ON THE DEBT EXEMPT FROM TAXATION?
Under State law: 0 NO(taxable) YES(tax-exempt)
Under Federal law: NO(taxable) ® YES(tax-exempt)If the issue is federally tax-exempt,is interest a specific preference
item for the purpose of alternative minimum tax?
0 Yes,preference item ® No,not a preference item
TYPE OF SALE: 0 Competitive E Negotiated
t Section 8855(g)of the California Government Code requires the issuer of any proposed new public debt issue to give written notice of the proposed sale to the CDIAC no later than
30 daysprior to the sale.Under California Government Code Section 8855(i)."The issuer of any new public debt issue shall,not later than 45 days after the signing ofthe bond
purchase contract in a negotiated or private financing,or after the acceptance of a bid in a competitive offering,submit a report offs nal sale and official statement to the
commission.The Commission may require information to be submitted in the report offinal sale that is considered appropriate."
Section 53583(c)(2)(3)of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated basis shall send a written
statement,within two weeks after the bonds are sold.to the CDIAC explaining the reasons why the local agency determined to sell the bonds at private sale or on a negotiated basis
instead of at public sale. - - -
G:CDIAM2000proposeform.doc,9/2000
f 7 � •
,A
CDIAC•Report of Proposed Debt Issuance Paee 2
TYPE OF DEBT INSTRUMENT
NOTE BOND
0 Bond anticipation(BAN) ❑ Conduit revenue(Private obligor)(CRB)
0 Grant obligation(GAN) 0 General obligation(GOB)
0 Other note(Please specify below.)(OTHN) Di Limited tax obligation(LTOB)
0 Revenue anticipation(RAN) 0 Other bond(Please specify below.)(OTHB)
0 Tax allocation(TALN) 0 Public lease revenue(PLRB)
❑ Tax and revenue anticipation(TRAN) 0 Revenue(Pool)(RB)
0 Tax anticipation(TAN) 0 Revenue(Public enterprise)(PERB)
❑ Sales tax revenue(STRB)
0 Commercial paper(CP) 0 Special assessment(SAB).
0 Certificates of participation/leases(COPL) ❑ Tax allocation(TAB_)
❑ Other(Please specify below.)(OTH)
Please specify if"Other note/Other bond/Other was checked:
SOURCE(S)OF REPAYMENT
0 Bond proceeds(BDPR) 0 Property tax revenues(PRTX)
0 General fund of issuing jurisdiction(GNFD) 0 Public enterprise revenues(PER)
0 Grants(GRNT) 0 Sales tax revenues(SATR)
0 Intergovernmental transfers other than grants(ITGV) 0 Special assessments(SA)
0 Local obligations(LOB) ® Special tax revenues(SPTR)
0 Private obligor payments(POP) 0 Tax-increment(TI)
0 Other(Please specify.)(OTHS):
PURPOSE(S)OF FINANCING
0 Cash flow,interim financing(CFIF) 0 Airport(APRT)
❑ Project,interim financing(PIF) 0 Bridges and highways(BRHI)
. 0 Convention center(CCTR)
❑ College/university housing(CUH) ❑ Equipment(EQUP)
0 Multifamily housing(MFH)' 0 Flood control/storm drainage(FLDS)
0 Single-family housing(SFH)' - Multiple capital improvements and public works(MCAP)
0 Other capital improvements and public works(OCAP)
0 Health care facilities(HCF) 0 Parking(PRKG)
0 Hospital(HOSP) 0 Parks/open space(PRKO)
0 Other/multiple health care purposes(equipment; 0 Ports and marinas(PRTS)
etc.)(OMHC) ❑ Power generation/transmission(PWR)
0 Prisons/jails/correctional facilities(PRSN)
0 College/university facility(CUF) 0 Public building(PB)
0 K-12 school facility(KSCH) 0 Public transit(PTR)
0 Other/multiple education uses(equipment,etc.)(OMED) 0 Recreation and sports facilities(RCSP)
0 Student loans(SLC) 0 Seismic safety improvements/repair(SSI)
0 Solid waste recovery facilities(SWST)
0 Redevelopment,multiple uses(RD) ❑ Street construction and improvements(SCI)
0 Wastewater collection and treatment(WSTW)
0 Commercial development(CMDV) 0 Water supply/storage/distribution(WTR)
0 Industrial development(INDV)
t
0 Pollution control(PC) 0 Insurance/pension funds(IPF)
0 Other than listed above(OTH)
Please Specify type/name of project:
' Certain local government issuers afhousing bonds are required to obtain a certification from the State Treasurer attesting to their compliance with the State housing reporting-
requiremenrs prior to issuance ofthe bonds ro finance single-or multifamily housing.
CMA02000proposeform.doc,9//2000 -
l /
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
INCUMBENCY AND SIGNATURE CERTIFICATE
The undersigned hereby state and certify:
(i) that they are the duly appointed, qualified and acting Mayor and Assistant City
Clerk of the City of Huntington Beach, a 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 the
beginning of their respective current terms of office shown below, the duly elected, qualified and
acting Mayor and members of the City Council of the City, and the date of the ending of their
respective current terms of office are hereunder correctly designated opposite their names:
Date of
Ending of
Member Current Term
Cathy Green, Mayor November 2006
Jill Hardy, Mayor Pro Tem November 2006
Connie Boardman November 2004
Gil Cooper November 2006
Debbie Cook November 2004 .
Pam Houchen November 2004
Dave Sullivan November 2006
(iii) that the signatures set forth opposite the names and titles 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 below:
RVPUB\KAB\669050.1
Name/Title Signature
Cathy Green, Mayor
Ray Silver, City Administrator
Clay Martin,
Director of Administrative Services
Sheri L. Freidenrich,
City Treasurer
Liz Ehring, Assistant City Clerk
for Connie Brockway, City Clerk
David Biggs,
Director of Economic Development U
OW
(iv) that the bonds of the City designated "City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds" in the aggregate
principal amount set forth in the caption of this certificate (the "Bonds") have been executed by
the facsimile signatures of the Mayor and City Clerk named herein, and the seal of the City is
impressed hereon and has been reproduced on the Bonds in facsimile.
Dated: April 15, 2004 CITY OF HUNTINGTON BEACH
By:
Cathy G en, r
v
By:
Liz 8hrinF, Assistant City C e k
for Connie Brockway, City Clerk
RVPUB\KAB\669050. 1 2
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO.2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
CERTIFICATE OF CITY OF HUNTINGTON BEACH
I, Ray Silver, hereby certify that I am the City Administrator of the City of Huntington
Beach (the "City") and that as such, I am authorized to execute this Certificate on behalf of the
City and the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington
Center) (the "District") in connection with the issuance of the City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center), 2004 Special Tax Bonds (the
"Bonds").
I hereby further certify on behalf of the City and the District that:
(1) the representations, warranties and covenants of the City and the District
contained in Section 2 of that certain bond purchase agreement by and between the City and
UBS Financial Services Inc. dated March 30, 2004 (the "Purchase Agreement") are true and
correct and in all material respects as of the date hereof as if made on the date hereof, except that
all references to the Preliminary Official Statement shall be deemed to be references to the
Official Statement;
(2) the Purchase Contract, the Fiscal Agent Agreement, the Funding Agreement and
the CFD Disclosure Certificate (collectively, the "Community Facilities District Documents"),
the Bonds and the Official Statement have been duly executed and delivered by the City, and
when executed and delivered by the other respective parties thereto, will constitute valid and
binding obligations of the City enforceable in accordance with their respective terms and such
documents conform to the descriptions thereof in the Official Statement;
(3) the representations and warranties of the City and the District contained in the
Community Facilities District Documents are true and correct in all material respects as of the
date hereof as if made on the date hereof;.
(4) the City and the District have complied with all agreements, covenants and
conditions to be complied with by the City and the District under the Community Facilities
District Documents on or prior to the date hereof; and
(5) to the best knowledge of the undersigned, no event affecting the City or the
District has occurred since the date of the Official Statement affecting matters described therein
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 not misleading
in any material respect, and the Bonds and the City Documents conform as to form and tenor to
the descriptions thereof contained in the Official Statement:
RVPUB\KAB\669055.1
Capitalized terms not defined herein shall have the same meaning as is set forth in the
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
hereinbelow set forth.
Dated: April 15, 2004.
CITY OF HUNTINGTON BEACH
By:
City AdSinistrator
Attest:
By:
City erk &ac/cw
Reviewed and Approved as to Form:
By:
City Attorney
RVPUB\KAB\669055. 12
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
CERTIFICATE OF THE CITY OF HUNTINGTON BEACH
AS TO COMPLIANCE WITH FEDERAL INCOME TAXATION AND
ARBITRAGE REQUIREMENTS
On the date of this certificate, the City of Huntington Beach (the "City") will
cause the above-referenced bonds (the.`Bonds") to be delivered on behalf of City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) (the "District"). Together
with other officials of the City, the undersigned is charged with the responsibility of authorizing
the sale and delivery of the Bonds.
Unless otherwise indicated by the context in which used, words and phrases used.
herein have the meanings given to them in the Regulations (as hereinafter defined), and the terms
with initial letters capitalized have the meanings given in the financing documents included in
the final transcript of documents delivered at the Closing with respect to the Bonds.
A. General.
1. This certificate is given for the purpose of setting forth the facts and
estimates upon which the City bases its reasonable expectation that the Bonds are not arbitrage
bonds. Applicable current federal law includes (i) Section 103 (b) and Section 148 of the
Internal Revenue Code of 1986, as amended (the "Code'),. and (ii) Sections 1.148-1 through
1.148-11 of the Regulations of the United States Department of the Treasury (the "Regulations").
2. The Bonds are being executed and delivered by appropriate officers of the
City for and on behalf of City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) under and pursuant to the Constitution and laws of the State of California,
including the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5
(commencing with Section 53311) of Article 1, Division 2, Title 5 of the California Government
Code, the City of Huntington Beach Special Tax Financing Improvement Code (constituting
Chapter 3.56 of the City's Municipal Code), a Fiscal Agent Agreement dated as of March 1,
2003 (the "Agreement") between the District and U.S. Bank National Association, as fiscal
agent, registrar and paying agent (the "Fiscal Agent"), and Resolution No. 2004-1, adopted by
the City Council of the City on January 5, 2004 (the "Resolution").
3. The Bonds are being issued to (i) finance a portion of the costs which have
been and will be incurred in connection with the design, construction, and acquisition of various
public facilities within and of benefit to the District, (ii) pay capitalized interest on the Bonds,
(iii) pay certain expenses incurred in connection with the issuance of the Bonds (the "Costs of
Issuance"), and (iv) to fund a reserve fund.
RVPUB\KAB\669062.1
i
B. The Bonds.
,1. The receipts and disbursements with respect to the Bonds, including the
Costs of Issuance, underwriting discount and accrued interest, are detailed as follows:
SOURCES
Principal Amount $25,000,000.00
Less Underwriter's Discount 298,000.00
Total Sources $24,702,000.00
USES
Reserve Fund $ 1,809,630.00
Capitalized Interest Account 2,018,060.72
Costs of Issuance Fund 270,000.00
Improvement.Fund 20,605,309.28
Total Uses $24,702,000.00
2. The principal amounts and interest rates with respect to the Bonds are set
forth in Exhibit A attached hereto and incorporated herein by reference.
3. Using the initial offering price as the "purchase price" the yield on the
Bonds, as represented to the City by the Underwriter, is 5.662794%. For the. purpose of
computing the yield on the Bonds, underwriting discount and costs of issuance with respect to
the Bonds have not been taken into account.
4. The Agreement creates and establishes the following funds and accounts
with respect to the Bonds:
The Bond Fund
The Improvement Fund
The Special Tax Fund
The Costs of Issuance Fund
The Administrative Expense Fund
The Reserve Fund
The.Interest Account(l)
Principal Account(l)
Capitalized Interest Sub-Account(l)
Special Tax Prepayment Account(l)
The Rebate Fund
This account is in the Bond Fund.
5. The Bond Fund, including the amount on deposit in the Interest Account,
will be used primarily to achieve a proper matching of Special Tax Revenues (as defined in the
Agreement) and debt service on the Bonds within each Bond Year. Pursuant to the Agreement,
the Special Tax Revenues deposited in the Bond Fund will be depleted at least once a year
except for a reasonable carry-over amount, if any, which will not exceed the greater of (i) one
RVPUB\KAB\669062. 1 2
year's earnings on such amounts during the preceding Bond Year, or (ii) one-twelfth of the
annual debt service on-the Bonds for the preceding Bond Year.
6. On the date of this certificate, there will be deposited in the Capitalized
Interest Sub-Account of the Interest Account in the Bond Fund from the proceeds of the sale of
the Bonds the amount of $2,018,060.72 representing capitalized interest to be used to pay
interest on the Bonds on September 1, 2004 and thereafter to February 1, 2006.
7. Proceeds of the sale of the Bonds in the amount of $370,000.00 will be
deposited in the Costs of Issuance Fund and will be expended promptly for the payment of Costs
of Issuance. Taking into account the services rendered in conjunction with the structuring and
sale of the Bonds, the principal amount of,the Bonds, the contingent nature of the fees paid and
costs incurred by the City in connection with the issuance and sale of the Bonds, such costs of
issuance are considered reasonable.
8. Proceeds of the sale of the Bonds in the amount-of $1,808,630.00, an
amount equal to the Reserve Requirement(as defined in the Agreement), will be deposited in the
Reserve Fund. The Reserve Requirement is not greater than the lesser of. (i) maximum annual
Debt Service on the Bonds, (ii) 125 percent of average annual Debt Service on the Bonds, or (iii)
10 percent of the issue price (net of accrued interest) of the Bonds. The City has been advised by
UBS Financial Services Inc. the underwriter of the Bonds (the "Underwriter"), in a certificate
delivered at the closing with respect to the Bonds, that the Reserve Fund is reasonably required,
is a vital factor in marketing the Bonds, and facilitates the marketing of the Bonds at interest
rates comparable to those of other bonds of a similar type.
9: A binding obligation in an amount of not less than $100,000 to commence
design, construction, furnishing and equipping of the Project has been entered into by the City.
Construction of the Project will proceed with due diligence to the completion thereof. The City
does not intend to sell or otherwise dispose of the Project prior to the final maturity date of the
Bonds, except such minor parts or portions thereof as may be disposed of due to normal wear,
obsolescence or depreciation in the ordinary course of business. The amount of the proceeds of
the Bonds deposited in the Improvement Fund on the date of this certificate and amounts to be
deposited therein as provided in the Agreement, are expected to be fully expended to pay the
costs of the Project by April 1, 2007.
10. [Intentionally Omitted]
11. Other than the Special Tax Fund, the Bond Fund, including the Interest
Account therein, and the Reserve Fund, there are no funds or accounts established pursuant to
the Resolution, the Agreement or otherwise that are reasonably expected to be used to pay Debt
Service on the Bonds or that are pledged as collateral for the Bonds and for which there is'a.
reasonable assurance that amounts on deposit therein will be available to pay Debt Service on the
Bonds if the District and the City encounter financial difficulties.
12. The proceeds derived from the sale of the Bonds and the amounts on
deposit in the aforementioned funds and accounts will be invested without regard to yield.
RVPUB\KAB\669062. 1 3
However, the amount, if any, remaining on deposit.in the Improvement Fund on April 15, 2007
will be invested at a yield that is not materially (i higher .e., 1/8 %) than the yield on the Bonds.
13. The City will not allow any of the proceeds of the Bonds or any of the
capital improvements _financed with the Bonds to be used in the trade or business of any
nongovernmental persons (other than in their roles as members of the general public) and will
-not loan any of the proceeds to any nongovernmental persons. The Project will be owned by the
City and no user of the Project will be entitled to use the Project on a basis which is superior to
the rights of any other user of the Project.
14. Federal Guarantee. The City will not directly or indirectly use or permit
the use of any proceeds of the Bonds or any other funds of the City or take or omit to take any
action that would cause the Bonds to be obligations which are "federally guaranteed" within the
meaning of Section 149(b) of the Code. In furtherance of this covenant, the City will not allow
the payment of the principal or interest with respect to the Bonds to be guaranteed (directly or
indirectly) in whole or in part by the United States or any agency or..instrumentality thereof. The
City also will not, except as provided in the.next.sentence, use 5% or more of the proceeds of the
Bonds to make.loans,the payment of the principal or interest with respect to which is guaranteed
(in whole or in part) by the United States (or any agency or instrumentality thereof), nor will it
invest (directly or indirectly) 5% or more of the proceeds in federally insured deposits or
accounts. The preceding sentence shall not apply to temporary period investments of proceeds
until they are needed for the purpose for which the Bonds are issued, i.e., to investments in the
Bond Fund and the Reserve Fund, or to investments in bonds issued by the United States
Treasury.
15. Information Reporting. The City shall cause a_Form 8038-G to be filed
with respect to the Certificates no later than August 14, 2004. The City's Employer
Identification Number is 95-6000723.
16. No Pooling. The City does not expect to use and will not use the proceeds
of the Bonds directly or indirectly to make or finance.loans to two or more ultimate borrowers.
17. No Hedge Certificates. Less than 50% of the proceeds of the Bonds will
be invested in investment securities with a `.`substantially guaranteed yield" for four years or
longer.
18. Reimbursement of Preliminary Expenditures. Qualifying reimbursements
are those expenditures which (i) paid for costs of execution and delivery of the Bonds, (ii)
preliminary capital expenditures incurred before commencement of acquisition or construction of
the Project that do not exceed twenty percent (20%) of the issuance price of the Bonds, and
(iii) capital expenditures that (A) were paid no earlier than sixty (60) days before the date of the
adoption by the City of a declaration of intent to reimburse such expenditures from the proceeds
of Bonds, and (B) are reimbursed no later than eighteen (18) months after the later of the date
the expenditure was paid or the date the Project is placed in service (but no later than three (3)
years after the expenditure is paid). Proceeds (if any) used for reimbursement of expenditures
will be deposited in the general funds of the City and will not be used to replace funds of the City
to be used to refund debt of the City, other than. as described herein, to create a sinking or
RVPUB\W\669062. 1 4
pledged fund for such debt or the Bonds or otherwise create replacement proceeds for such debt
for the Bonds.
19. Weighted Life of the Bonds. The weighted average maturity of the Bonds
is not greater than 120% of the remaining economic life of the Project.
20. Management Contract. The Project shall continue to be used in its entirety
by the City or other local governmental units or agencies or employees of any of such entities in
their capacities as employees-thereof. The City has entered into a management contract with
Huntington Center Associates, L.L.C. dated as of March 1, 2004, The City represents that the
terms (including renewal options) of such contract complies with the requirements of applicable
Treasury Regulations or Revenue Procedures, see, e.g., Revenue Procedure 97-13, so that none
of such facilities is subject to "private business use" within the meaning of Section 141(b)(6) of
the Code.
C. Rebate .
The Agreement contains a covenant on the part of the City to periodically calculate and
pay to the United States of America "Excess Investment Earnings," as defined in and all for the
purpose of complying with the requirements of Section 148(f) of the Code. The Agreement
further creates a Rebate Fund. Excess Investment Earnings are to be deposited into the Rebate
Fund. Moneys in the Rebate Fund are to be used to make periodic payments to the United States
of America, as required by Section 148(f) of the Code.. The City shall comply with the
provisions set forth below as such provisions may be amended from time to time in complying
with the requirements of Section 148(f) of the Code.
To perform the City's obligations"under the covenants described above and otherwise, the
City hereby covenants to comply with the provisions of this Certificate regarding the investment
of money in various funds and accounts held by.the Fiscal Agent and the rebate of certain
investment earnings to the U. S. Treasury so that the investment of such money and the retention
of investment earnings will comply with the requirements of Section 148 of the Code. All City
personnel concerned with the funds and accounts held by the•Fiscal Agent shall be familiar with
the provisions of this Certificate because the exclusion from gross income for federal income tax
purposes of the interest on the Bonds depends upon compliance with such limitations.
a. Nonpurpose Investments. These rules shall apply to the investment of Gross
Proceeds, as defined below, in any security, obligation, annuity contract or any
other investment-type property that is not acquired to carry out the governmental-
purpose of the Bonds ("Nonpurpose Investments"). Nonpurpose Investments
shall not include:
i. United States Treasury - State and Local Government Series, Demand
Deposit Securities; and
ii. tax-exempt obligations.
For purposes of this Certificate, the term "tax-exempt obligations" shall include only obligations
the interest on which is (i) excludable from gross income for federal income tax purposes, and
RVPUB\KAB\669062. 1 5
(ii)not treated as an item of tax preference under Section 57(a)(5) of the Code. The term "tax-
exempt obligation" shall, however, also include stock in a "qualified regulated investment
company," which is a corporation that (i) is a regulated investment company within the meaning
of Section 851(a) of the Code and meets the requirements of Section 852(a) of the Code for the
taxable year; (ii) has only one class of stock authorized and outstanding; (iii) invests all of its
assets in tax-exempt obligations (as defined above) to the extent practicable; and (iv) has at least
98% of(A) its gross income derived from interest on, or gain from the sale or other disposition
of, tax-exempt obligations, or (B) the weighted average value of its assets is represented by
investments in tax-exempt obligations.
b. Gross Proceeds. For purposes of this Certificate, the term "Gross Proceeds"
means:
i. proceeds derived from the sale of the Bonds;
ii. transferred proceeds;
iii. amounts that are reasonably expected to be or are in fact used to pay debt
service with respect to the Bonds;
iv. amounts pledged as security for the payment of debt service with respect
to the Bonds; and
V. investment earnings on amounts described in (i)-(iv) above.
C. Yields and Debt Service. Yields are to be calculated by means of an actuarial
method of yield calculation whereby the term "yield means that discount rate
that when used in.computing the present worth of all payments of principal and
interest to be paid on the obligation produces an amount equal to the purchase
price of the obligation. For purposes of calculating the yield on the Bonds, the
purchase price of the Bonds is the issue price of the Bonds, which is defined in
Section 1273 of the Code, which is equal to the initial offering price to the public
(excluding bondhouses, brokers and other persons acting in the capacity of
underwriters or wholesalers) at which a substantial amount of each maturity (at
least 10 percent) of the Bonds was sold, adjusted to take into account the premium
payments with respect to any "qualified guarantee" and which produces a yield on
the Bonds equal to 5.662794%. The yield on investments must be computed by
the use of the same frequency interval of compounding interest with respect to the
Bonds. For purposes of calculating the yield on Nonpurpose Investments, the
purchase price will be the amount paid for such investments or, if different, the
fair market value of such an investment on the date it becomes Gross Proceeds.
d. Market Price.
i. For purposes of calculation of the yield on any investment as required
under this Certificate, the purchase price of the investment will be the fair
market price at which a willing buyer would purchase the investment from
a willing seller in a bona fide, arm's-length transaction. Except as
RVPUB\KAB\669062. 1 6
provided below, an investment that is not of a type traded on an
established securities market is presumed to be acquired for a price that is
not equal to its fair market value. This means that the.City (or the Fiscal
Agent acting at.the direction of the City) will not pay a premium and will
not accept a lower interest rate than is usually paid to adjust the yield on
an investment.
ii. The purchase price of any certificate of deposit is treated as its fair market
value on the purchase date if the yield on the certificate of deposit is not
less than (i) the yield on reasonably comparable direct obligations of the
United States; and (ii) the highest yield that is published or posted by the
provider to be currently available from the provider on reasonably
comparable certificates of deposit offered to the public.
iii. The purchase price of a guaranteed investment contract is treated as its fair
market value on the purchase date if (i) the issuer makes a bona fide
solicitation for a specified guaranteed investment contract and receives at
least three bona fide bids from providers that have no material financial
interest in the issue (e.g., as underwriters,or brokers); (ii) the issuer
purchases the highest-yielding guaranteed investment contract for which a
qualifying bid is made (determined net of broker's fees); (iii) the yield on
the guaranteed investment contract (determined net of broker's fees) is not
less than the yield then available from the provider on reasonably
comparable guaranteed investment contracts, if any, offered to other
persons from a source of funds other than gross proceeds of tax-exempt
bonds; (iv) the determination of the terms of the guaranteed investment
contract takes into account as a significant factor the issuer's reasonably
expected drawdown schedule for the amounts to be invested, exclusive of
amounts deposited in debt service funds and reasonably required reserve
or replacement funds; (v) the terms of the guaranteed investment contract,
including collateral security requirements, are reasonable; and (vi) the
obligor on the guaranteed investment contract certifies the administrative
costs that it is paying (or expects to pay) to third parties in connection with
the guaranteed investment contract.
iv. The fair market value of a United States Treasury. Obligation that is
purchased directly from the United States Treasury is its purchase price.
For investments which are obligations of the United States (or any agency
or'instrumentality thereof) and are backed by the full faith and credit of
the United States (or any such agency or instrumentality) and are traded on
an established market, the fair market price shall be determined on.the
basis of a competitive bid wherein the following has been represented:
(1) all bidders are reasonably competitive providers of federal
securities, the party conducting the bid proceeds has not bid, and no bidder
has been given the opportunity to review other bids before bidding;
RVPUB\KAB\669062. 1 7
(2) at least 3' bonafide bids were received from bidders having no
material financial interest in the City;
(3) the City purchases the highest yielding federal securities for which
a qualifying bid has been made;
(4) the yield on the federal securities is not significantly less than the
yield available from the provider on reasonably comparable federal
securities offered to other persons for purchase on comparable terms from
a source other than tax-exempt bond proceeds; and
(5) in no event is the yield on any federal security less than the highest
yield available on SLGS with the same maturity on the date bids were
taken for such federal securities.
V. Where amounts must be restricted to a certain yield and investments
cannot be purchased on an established market or a bona fide fair market
price cannot be established at a yield that does not exceed the maximum
permissible yield, the City may acquire or hold tax:exempt securities,
currency or United States Treasury Certificates of Indebtedness,Notes and
Certificates - State and Local Government Series ("SLGs") that yield no
more than the maximum permissible yield. SLGs are, available at the
Federal Reserve Bank.
e. Rebate Requirement Calculation and Payment.
i. The City will prepare or have prepared an annual calculation of the Rebate
Requirement consistent with the rules described in this Section. (the .
interim calculations not falling at the lose of the periods referred to in
Section e. iii. below may be made as of the close of the Bond Years
involved or as of other dates more convenient to the City, and such dates
shall be treated as the close of Bond Years for purposes of this Section e..)
The City will'deliver or have delivered to the Fiscal Agent a completed
copy of the annual calculation of the Rebate Requirement within 55 days
after the close of each Bond Year and within 55 days after the first date on
which there are no outstanding Bonds. If the City fails to deliver to the
Fiscal Agent such calculations by such dates, the Fiscal Agent shall
immediately request the City to provide such calculations. Concurrent
with the delivery of such calculations to the Fiscal Agent the City shall
deposit with the Fiscal Agent or direct the Fiscal Agent to transfer from
designated funds for deposit in the Rebate Fund an amount which when .
added to amounts already on deposit therein will equal the Rebate
Requirement. If an amount in excess of the amount of the Rebate
Requirement is held in the Rebate Fund, the City may direct that the
excess to be remitted to it.
RVPUB\KAB\669062. 1 8
ii. For purposes of calculating the Rebate Requirement (i) the aggregate
amount earned with respect to a Nonpurpose Investment shall be
determined by assuming that the Nonpurpose Investment was acquired for
an amount equal to its fair market value (determined as provided in
Section 1.148-5(d)(6) of the Treasury Regulations) at the time it becomes
a Nonpurpose Investment, and (ii) the aggregate amount earned with
respect to any Nonpurpose Investment shall include any unrealized gain or
loss with respect to the Nonpurpose Investment (based on the assumed
purchase price at fair market value and adjusted to take into account
amounts received with respect to the Nonpurpose Investment and earned
original issue discount or premium) on the first date when there are no
outstanding. Bonds or when the investment.ceases to be a Nonpurpose
Investment.
iii. The City will direct the Fiscal Agent in writing to pay to the United States
Department of the Treasury from the Rebate Fund (A) not later than 60
days after the end of each five-year period beginning with October 1;
2008, a payment equal to 90% of the Rebate Requirement with respect to .
the Bonds, calculated as of the date of such payment; and (B) not later
than 60 days after the first date when there are no outstanding Bonds, an
amount.equal to 1.00% of the Rebate Requirement (determined as of the
first date when there are no outstanding Bonds)plus any actual or imputed
earnings on such Rebate Requirement, as all set forth in Sections 1.148-1
and following of the Treasury Regulations.
iv. Each payment required to be made pursuant hereto shall be filed with the
Internal Revenue Service Center, Ogden, Utah' 84201, on or before the
date such payment is due and shall be accompanied by Form 8038. The
Authority must retain records of the calculations required by this Section
e. until 6 years after the retirement of the last of the Bonds.
f. Exceptions to Rebate.
(i) Generally. All, or certain discrete portions, of an issue are treated as
meeting the Rebate Requirement if one or more of the spending
exceptions set forth in this Certificate are satisfied. Use of the spending
exceptions is not mandatory, except that where an issuer elects to apply
the 1 1/2 percent penalty (as described below) the issuer must apply that
penalty to the Construction Issue. An_ issuer may apply the Rebate
Requirement to an issue that otherwise satisfies a spending exception.
Special definitions relating to the spending exceptions are contained in
section (h) of this Certificate.
Where several obligations that otherwise constitute a single issue are used
to finance two or more separate governmental purposes, the issue
constitutes a "multipurpose issue" and the bonds, as well as their
respective proceeds, allocated to each separate purpose may be treated as
RVPUB\KAB\669062. 1 9
separate issues for purposes of the spending exceptions. In allocating an
issue among its several separate governmental purposes, "common costs"
are generally not treated as separate governmental purposes and must be
allocated ratably among the discrete separate purposes unless some other
allocation method more accurately reflects the extent to which any
particular.separate discrete purpose enjoys the economic benefit (or bears
the economic burden) of the certain common costs (e.g., a newly funded
reserve for a parity issue that is partially new money and partially a
refunding for savings on prior bonds).
Separate purposes include refunding a separate prior issue, .financing a
separate Purpose Investment (e.g., a separate loan), financing a
Construction Issue; and any clearly discrete governmental purpose
reasonably expected to be financed by the issue. In addition, as a general
rule, all integrated or functionally related capital projects qualifying for
the same initial temporary period (e.g., three years) are treated as having a
single governmental purpose. Finally, separate purposes may be combined
and treated as a single purpose if the proceeds are eligible for the same
initial temporary period (e.g., advance refundings of several separate prior
issues could be combined, or several non integrated and .functionally
unrelated capital projects such as airport runway improvements and a
water distribution system).
The spending exceptions described in this Certificate are applied
separately to each separate issue component of a multipurpose issue unless
otherwise specifically noted.
(ii) Six Month Exception. An issue . is treated as meeting the Rebate
Requirement under this exception if(i)the gross proceeds of the issue are
allocated to expenditures for the governmental purposes of the issue
within the six month period beginning on the issue date _(the "six month
spending period") and (ii) the Rebate Requirement is met for amounts not
required to be spent within the six month spending period (excluding
earnings on a bona fide debt service fund). For purposes of the six month
exception, "gross proceeds" means Gross Proceeds other than amounts (i)
in a bona fide debt service fund, (ii) in a reasonably required reserve or
replacement fund, (iii) that, as of the issue date, are not reasonably
expected to be Gross Proceeds but that become Gross Proceeds after the
end of the six month spending period, (iv) that represent Sale Proceeds or
Investment Proceeds derived from payments under any Purpose
Investment of the issue and (v) that represent repayments of grants (as
defined in Treasury Regulation Section 1.148 6(d)(4)) financed by the
issue. In the case of an issue no bond of which is a'private activity bond
(other than a qualified 501(c)(3) bond) or a-tax or revenue anticipation
bond, the six month spending period is extended for an additional six
months for the portion of the proceeds of the issue which are not expended
RVPUB\KAB\669062. 1 10
within the six month spending period if such portion does not exceed the
lesser-of five percent of the Proceeds of the issue or$100,000.
(iii) 18 Month Exception. An .-issue is treated as meeting the Rebate
Requirement under this exception if all of the following requirements are
satisfied:
(a) the gross proceeds are allocated to expenditures for a
governmental purpose of the issue in accordance with the following
schedule (the "18 month expenditure schedule") measured from the issue
date: (A) at least 15 percent within six months, (B) at least 60.percent
within 12 months and (C) 100 percent within 18 months;
(b) the Rebate Requirement is met for all amounts not required
to be spent in accordance with the 18 month expenditure schedule (other
than earnings on a bona fide debt service fund); and
(c) all of the gross proceeds of the issue qualify for the initial
temporary period under Treasury Regulation Section 1.148 2(e)(2).
For purposes of the 18 month exception, "gross proceeds" means Gross
Proceeds other than amounts (i) in a bona fide debt service fund, (ii) in a
reasonably required reserve or replacement fund, (iii) that, as of the issue
date, are not reasonably expected to be Gross Proceeds but that become
Gross Proceeds after the end of the 18 month expenditure schedule, (iv)
that represent Sale Proceeds or Investment Proceeds derived from
payments under any Purpose Investment of the issue and (v) that represent
repayments of grants (as defined in Treasury Regulation Section 1.148
6(d)(4)) financed by the issue. In addition, for purposes of determining
compliance.with the first two, spending periods, the investment proceeds
included in gross proceeds are based on the issuer's reasonable
expectations as of the issue date rather than the actual Investment
Proceeds; for the third, final period, actual Investment Proceeds earned to
date are used in place of the reasonably expected earnings. An issue does
not fail to satisfy the spending requirement for the third spending period
above as a result of a Reasonable Retainage if the Reasonable Retainage is
allocated to expenditures within 30 months .of the issue date. The 18
month exception does not apply to an issue any portion of which is treated
as meeting the Rebate Requirement as a result of satisfying the two year
exception.
(iv) Two Year Exception. A Construction Issue is treated as meeting the
Rebate Requirement for Available Construction Proceeds under this
exception if those proceeds are allocated to expenditures for governmental
purposes of the issue in accordance with the following schedule (the "two
year expenditure schedule"), measured from the issue date:
RVPUB\KAB\669062. I 11
(i) at least 10 percent within six months;
(ii) at least 45 percent within one year;
(iii) at least 75 percent within 18 months; and
(iv) 100 percent within two years.
An issue does not fail to-satisfy the spending requirement for the fourth
spending period above as a result of unspent amounts for Reasonable
Retainage if those amounts are allocated to expenditures within three years
of the issue date.
(v) Expenditures for Governmental Purposes of the Issue. For purposes of the
spending exceptions, expenditures for the governmental purposes of an
issue include payments for interest, but not principal, on the issue, and for
principal or interest on another issue of obligations. The preceding
sentence does not apply for purposes of the 18 month and two year
exceptions if those payments cause the*issue to be a refunding issue.
(f) De minimis Rule. Any failure to satisfy the final spending requirement of
the 18 month exception or the two year exception is disregarded if the
issuer exercises due diligence to complete the project financed and the
amount of the failure does not exceed the lesser of three percent of the
issue price of the issue or $250,000.
(g) Elections Applicable to the Two Year Exception. An issuer may make.one
or more of the following elections with respect to the two year spending
exception:
(1) Earnings on Reasonably Required Reserve or Replacement
Fund. An issuer may elect on or before the issue date to exclude from
Available Construction Proceeds the earnings on any reasonably.required
reserve or replacement fund. If the election is made, the Rebate
Requirement applies to the excluded amounts from the issue date.
(2) Actual Facts. For the provisions relating to the two year
exception that apply based on the issuer's reasonable expectations, an
issuer may elect on or before the issue date to apply all of those provisions
based on actual facts. This election does not apply for purposes of
determining whether an issue is a Construction Issue if the 1 1/2 percent
penalty in lieu of rebate election described in subsection (g)(4) of this
Certificate is made.
(3) Separate Issue. For purposes of the two year exception, if
any proceeds of an issue are to be used for Construction Expenditures, the
issuer may elect on or before the issue date to treat the portion of the issue
that is not a refunding issue as two, and only two, separate issues, if(i) one
RVPUB\KAB\669062. 1 12
of the separate issues is a Construction Issue, (ii) the issuer reasonably
expects, as of the issue date,that such Construction Issue will finance all
of the Construction Expenditures to be financed by the issue and (iii) the
issuer makes an election to apportion the issue in which it identifies the
amount of the issue price of the issue allocable to the Construction Issue.
(4) Penalty in Lieu of Rebate. An issuer of a Construction
Issue may.irrevocably elect on or before the issue date to pay a penalty
(the "1 1/2 percent.penalty") to the United States in lieu of the obligation
to pay the rebate amount on Available Construction Proceeds upon failure
to satisfy the spending requirements of the two year expenditure schedule.
The 1 1/2 percent `penalty is calculated separately for each spending
period, including each semiannual period after the end of the fourth
spending period, and is equal to 1.5 percent.times the under expended
proceeds as of the end of the spending period. For each spending period,
under expended proceeds equal the amount of Available Construction
Proceeds required to be spent by the end of the spending period, less the
amount actually allocated to expenditures for the governmental purposes
of the issue by that date. The 1 1/2 percent penalty must be paid to the
United States no later than 90 days after the end of the spending period to
which it relates. The 1 1/2 percent penalty continues to apply at the end of
each spending period and each semiannual period thereafter until the
earliest of the following: (i) the termination of the penalty under Treasury
Regulation Section 1.148 7(1), (ii).the expenditure of all of the Available
Construction Proceeds or (iii) the last stated final maturity date of bonds
that are part of the issue and any bonds that refund those bonds. If an issue
meets the exception for Reasonable Retainage except that all Retainage is
not spent within three years of the issue date, the issuer must pay the 1 1/2
percent penalty to the United States for any Reasonable Retainage that
was not so spent as of the close of the three year period and each later
spending period.
(viii) Special Definitions Relating to Spending Exceptions.
(1) Available Construction Proceeds shall mean, with respect
to an issue, the amount equal to the sum of the issue price of the issue,
earnings on such issue price, earnings on amounts in any reasonably.
required reserve or replacement hind not funded from the issue (subject to
the election referred to in section (g)(1) of this Certificate) and earnings on
all of the foregoing earnings, less the amount of such issue price in any
reasonably required reserve or replacement fund and less the issuance
costs financed by the issue. For purposes of this definition, earnings
'include earnings on any Tax exempt Bond. Unless the issuer otherwise
elects as described in Section (g)(2) of this Certificate, for the first three
spending periods of the two year expenditure schedule described in
Treasury Regulation Section 1.148-7(e), Available Construction Proceeds
include the amount of future earnings that the issuer reasonably expected
RVPUB"\669062. 1 13
as of the issue date. For the fourth spending period described in Treasury
Regulation Section 1.148 7(e) and any subsequent date, as of which
computations are made, Available Construction Proceeds include the
actual earnings received to that date and earnings expected as of that date
to be earned in the future. Earnings on any reasonably required reserve or
replacement fund are Available Construction Proceeds only if the issuer
did not elect to exclude such earnings pursuant to the election described in
paragraph (g)(1) of this Appendix and only to the extent that those earnings
accrue .before the earlier of (i) the date construction is substantially
completed or (ii) the date that is two years after the issue date. For this
purpose, construction may be treated as substantially completed when the
issuer abandons construction or when.at least 90 percent of the total costs
of the construction.that the issuer reasonably expects as of such date will
be financed with proceeds of the issue have been allocated to
expenditures.. If only a portion of the construction is abandoned, the date
of substantial completion is the date.that the nonabandoned portion of the
construction is substantially completed.
(2) Construction Expenditures shall mean capital expenditures
(as defined in Treasury Regulation Section 1.150 1) that are allocable to
the cost of Real Property or Constructed Personal Property. Construction
Expenditures do not include expenditures for acquisitions of interests in.
land or other existing Real Property.
(3) Construction Issue shall mean any issue that is not a
refunding issue if (i) the issuer reasonably expects, as of the issue date,
that at least 75 percent of the Available Construction Proceeds of the issue
will be allocated to Construction Expenditures for property owned by a
governmental unit or a 501(c)(3) organization and (ii) any private activity
bonds that are part of the issue are qualified 501(c)(3) bonds or private
activity bonds issued to finance property to be owned by a governmental
unit or a 501(c)(3) organization.
(4) Constructed Personal Property shall mean Tangible
Personal Property or Specially Developed Computer Software if (i) a
substantial portion of the property is completed more than six months after
the earlier of the date construction or rehabilitation commenced and the
date the issuer entered into an acquisition contract; (ii) based on the
reasonable expectations of the issuer, if any, or representations of the
person constructing the property, with the exercise of due diligence,
completion of construction or rehabilitation (and delivery to the issuer)
could not have occurred within that six month period; and (iii) if the issuer
itself builds or rehabilitates the property, not more than 75 percent of the
capitalizable cost is attributable to property acquired by the issuer.
(5) Real Property shall mean land and improvements to land,
such as buildings or other inherently permanent structures, including
RVPUB\KAB\669062. 1 14.
interests in real property. For example, Real Property includes wiring in a
building, plumbing systems, central heating or air conditioning systems,
pipes or ducts, elevators, escalators installed in a building, paved parking
areas, roads, wharves and docks, bridges, and sewage lines.
(6) Reasonable Retainage shall mean an amount, not to exceed five
percent of (i) Available Construction Proceeds as of the end of the two
year expenditure schedule (in the case of the two year exception to the
Rebate Requirement) or (ii) Net Sale Proceeds as of the end of the 18
month expenditure schedule (in the case of the 18 month exception to the
Rebate Requirement), that is retained for reasonable business purposes
relating to the property financed.with the issue. For example, a Reasonable
Retainage may include a retention to ensure or promote compliance with a
construction contract in circumstances in which the retained amount is not
yet payable, or in which the issuer reasonably determines-that a dispute
exists regarding completion or payment.
(7) Specially Developed Computer Software shall mean any
programs or routines used to cause a computer to perform a desired task or
set of tasks, and the documentation required to describe and maintain
those programs, provided that the software is specially developed and is
functionally related and subordinate to Real Property or other Constructed
Personal Property.
(8) Tangible Personal Property shall mean any tangible property
other than Real Property, including interests in tangible personal property.
For example, Tangible Personal Property includes machinery that is not a
structural component of a building, subway cars, fire trucks, automobiles,
office equipment, testing equipment, and furnishings.
D. Miscellaneous
1. There. are no other obligations of the City which (i) are issued at
substantially the same time as the Bonds; (ii) are sold pursuant to a common plan of financing
together with the Bonds; and (iii) will be paid out of substantially the same source of funds (or
will.have substantially the same claim to be paid out of substantially the same source of funds) as
the Bonds.
2. 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 costs of the Project or for the payment of Debt Service on
the Bonds, and which have been or will be invested in securities, obligations, annuity contracts
or other investment-type property having a yield in excess of the yield on the Bonds.
3. Except as specified herein, no funds 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 on the Bonds have been or will be pledged to
RVPUBTAB\669062. 1 15
16. The execution and delivery by the Landowner of the Continuing Disclosure
Agreement, the Financing and Construction Agreement, the Operating Agreement and the
Reciprocal Easement Agreement and the performance of its obligations thereunder do not and
will not result in violation of any provision of, or in default under, the Landowner's
organizational documents or any material agreement, lease, or other contract to which the
Landowner is a party or by which it or its properties are bound.
Dated: April 15, 2004
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a
Delaware limited liability company, its Manager
BZia
untington, LLC, a Delaware
licom y its Manager
zralow, Trustee of the Bryan
Ezralow 1994 Trust, its Manager
4
RVPUB\KAB\670110.1
EXHIBIT A
MATURITY SCHEDULE
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01 ,
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
Maturity Date
(September 1) Principal Amount Interest Rate Yield
. 2006 $440,000 2.65% 2.65%
2007 450,000 3.10 3.10
2008 465,000 3.55 3.55
2009 485,000 3.85 3.85
2010 500000 4.15 4.15
2011 . 520:000 4.35 4.35
2012 545,000 4.60 4.60
2013 570,000 4.80 4.80
2014 595,000 4.90 4.90
2015 625,000 5.00 5.00
2017 1,355,000 5.30 5.30
2023 . 5,060,000 5.80 5.80
2033 13,390,000 5.85 5.85
R VPUB\KAB\669062. 117
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
INSTRUCTIONS TO FISCAL AGENT
The undersigned hereby states and certifies to U.S. Bank National Association, as
fiscal agent (the "Fiscal Agent") under the Fiscal Agent Agreement (the "Fiscal Agent
Agreement") dated as of March 1, 2004, by and between the City of Huntington Beach (the
"City") for and on behalf of City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center), and the Fiscal Agent, that:
1. Pursuant to the authorization of the City, she is a duly elected
representative of the City with authority to instruct the Fiscal Agent regarding the disbursement
of the proceeds of the Bonds, as hereinafter defined.
2. Pursuant to the Fiscal Agent Agreement, the City has caused the Fiscal
Agent to authenticate and deliver $25,000,000 aggregate principal amount of City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds
(the "Bonds").
3. The Fiscal Agent is hereby instructed to apply the proceeds of the sale of
the Bonds as set forth in Exhibit A attached hereto and incorporated herein by reference.
4. The Fiscal Agent is hereby directed to authenticate and deliver the Bonds
at the request of UBS Financial Services Inc., in book-entry form and registered in the name of
Cede & Co., the nominee of The Depository Trust Company, the Securities Depository for the
Bonds.
Dated: April 15, 2004
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT
NO. 2003-1 (HUNTINGTON CENTER)
By:
ari L. F eide ' h
City Treas r
RV PUB\EMC\669067.1
EXHIBIT A
Sources
Principal Amount $ 25,000,000.00
Less Underwriter's Discount 298,000.00
TOTAL: $ 24,702,000.00
Uses
Improvement Fund $ 20,605,309.28
Costs of Issuance Fund 270,000.00
Reserve Fund 1,808,630.00
Capitalized Interest Sub-account 2,018,060.72
TOTAL: $ 24,702,000.00
RVPUB\EMC\669067. 12
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
REQUISITION NO. 1 PERTAINING TO DISBURSEMENTS
FROM COST OF ISSUANCE FUND FOR COSTS OF ISSUANCE
The undersigned hereby states and certifies:
(i) that she is the duly elected City Treasurer of the City of Huntington Beach
(the "City") and as such he is an Authorized Representative of the City within the meaning of the
Fiscal Agent Agreement hereinafter defined;
(ii) that, pursuant to Section 3.06 of the Fiscal Agent Agreement dated as of
March 1, 2004 (the "Fiscal Agent Agreement"), between U.S. Bank National Association, as
fiscal agent (the "Fiscal Agent") and the City, the undersigned hereby requests the Fiscal Agent
to disburse from the Costs of Issuance Fund established under the Fiscal Agent Agreement to
each of the payees designated on Exhibit A, attached hereto and incorporated herein by this
reference, the respective sums set forth opposite such designations, in payment or reimbursement
of previous payments of such costs, set forth in Exhibit A, attached hereto; and
(iii) . that the amounts to be disbursed are properly chargeable to the Cost of
Issuance Fund.
Dated: April 15, 2004
CITY OF HUNTINGTON BEACH, for and on
behalf of CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT
NO. 2003-1 (HUNTINGTON CENTER)
By:
L. geitenrich
City reasurer
RVPUB\KAB\669068.1
EXHIBIT A
DELIVERY COSTS
PAYEE AND ADDRESS DESCRIPTION AMOUNT
Best Best&Krieger LLP Bond Counsel Fee 73,500.00.
Quint&Thimmig Disclosure Counsel 32,000.00
U.S.Bank
National Association Fiscal Agent 4,150.00
City of Huntington Beach City Administration 10,000.00
City of Huntington Beach City Public Works Department 50,000.00
Psomas Special Tax Consultant 1,796.52
State Board of Equalization Formation.Filing 1,200.00
RPI Printer 5,264.00
Contingency 92,089.48
TOTAL: $270,000.00
RVPUB\KAB\669068. 12
J '
Form 8038-G Information Return for Tax-Exempt Governmental Obligations
► Under Internal Revenue Code section 149(e) OMB No.1545-0720
'Rev. November 2000) ► See separate Instructions.
Department of the Treasury
Internal Revenue Service Caution: If the issue price is under$100,000, use Form 8038-GC.
Re tin Authority If Amended Return, check here ► ❑
1 Issuer's name City of Huntington Beach 2 Issuer's employer identification number
Community Facilities District No. 2003-1 (Huntington Center 95 : 6000723'
3 Number and street(or P.O. box if mail is not delivered to street address) Room/suite 4 Report number
2000 Main Street 3 2004-1
5 City, town,or post office, state, and ZIP code 6 Date of issue
Huntington Beach, CA 92648 April 15, 2004
7 Name of issue 8 CUSIP number
2004 Special Tax Bonds 446188DF8
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative
Clay Martin, Director, Administrative Services ( 714 ) 536-5236
Trpe of Issue (check applicable box(es) and enter the issue rice) See instructions and attach schedule
11 ❑ Education . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 ❑ Health and hospital . . . . . . . . . . . . . . . . . . . . . 12
13 ❑ Transportation . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 ❑ Public safety. . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 El Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . 15
16 El . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 ❑ Utilities . . . 17
18 ® Other. Describe ► Various public works and public safety improvements 18 $25,000,000
19 If obligations are TANS or RANs, check box ► ❑ If obligations are BANs, check box ® ❑
20 If obligations are in the form of a lease or installment sale, check box maul
► ❑
Descri tion of Obligations. Com lete.for the entire issue for which this form is beinq filed.
(a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield
price at maturity average maturity
21 09/01/2033 $ 25,000,000 $ 25,000,000 19.219 years 5,662794 %
Uses of Proceeds of Bond Issue (including underwriters' discount)
22 Proceeds used for accrued interest . . . . . . . . . . . . . . 22 0
23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . 23 25,000,000
24 Proceeds used for bond.issuance costs (including underwriters' discount) 24 568,060
25 Proceeds used for credit enhancement . . . . . . . . 25
26 Proceeds allocated to reasonably required reserve or replacement fund 26 1,808,6301
27 Proceeds used to currently refund prior issues . . . . . 27
28 Proceeds used to advance refund prior issues . . . . . . . . . 28
29 Total (add lines 24 through 28) , . . . . . . . . . . . . . . . . . 2,376,630
30 Nonrefundinq proceeds of the issue (subtract line 29 from line 23 and enter amount here) 30 1 22 623 370
Descri tion of Refunded Bonds (Complete this part only for refunding bonds.)
31 Enter the remaining weighted average maturity of the bonds to be currently refunded ► years
32 Enter the remaining weighted average maturity of the bonds to be advance refunded ► years
33 Enter the last date on which the refunded bonds will be called , . ' . . . . . . . . .
34 Enter the date(s) the refunded.bonds were issued ►
Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract(see instructions) 36a
b Enter the final maturity date of the guaranteed investment contract
37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a
b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the
issuer ► and the date of the issue ►
38 If the issuer has designated the issue under'section 265(b)(3)(B)(i)(lll) (small issuer exception), check box . . . ► ❑
39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . ► ❑
40 If the issuer has identified a hedge, check box ► ❑
Under penalties of perjury,I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowledge
and belief,they are_pe,eer fect,and completp
,,Sign ' / '
Here � ,.�..-� �' '` Clay Martin, Director
Aril 15 2004 Administrative Services
Signature of er's-author ized representative Date Type or print name and title
For Paperwork Reduction Act Notice, see page 2 of the Instructions. cat.No.63773S Form 8038-G (Rev. 11-2000)
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents to UBS Financial Services Inc. (the
"Underwriter")that he is the Director of Economic Development of the City of Huntington Beach
(the "City"), and as such is authorized to execute and deliver this Certificate and further hereby
certifies and reconfirms on behalf of the City to the Underwriter as follows:
(1) This Certificate is delivered to enable the Underwriter to comply with
Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934(the
"Rule") in connection with the offering and sale of the City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds (the 'Bonds").
(2) In connection with the offering and sale of the Certificates, there has been
prepared a Preliminary Official Statement dated March 18, 2004, setting forth information
concerning the Certificates and the issuer of the Certificates(the "Preliminary Official Statement").
(3) As used herein, "Permitted Omissions" shall mean the offering price(s),
interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity,
delivery dates,ratings and other terms of the Bonds depending on such.matters and the identity of the
underwriter(s), all with respect to the Bonds.
(4) The Preliminary Official Statement is, except for the Permitted Omissions,
deemed final within the meaning of the Rule and has been, and the information therein is,accurate
and complete except for the Permitted Omissions.
(5) If,at any time prior to the execution of the final contract of purchase,any event
occurs as a result of which the Preliminary Official Statement might include an untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading,the City shall promptly notify the
Underwriter thereof; provided, however, that the City shall have such obligations with respect to
information in the Preliminary Official Statement concerning and supplied by the Underwriter only
to the extent the City has actual knowledge or notice of any such event.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of March, 2004.
CITY OF HUNTINGTON BEACH
By
David Biggs,
Director of Economic Development
RVPUB\KAB\669174.1
Quint&Thimmig LLP 4/5/04
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2003 SPECIAL TAX BONDS
CERTIFICATE REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:
(i) that he is the duly qualified and acting Trustee of the Bryan Ezralow 1994
Trust, which. is the Manager of BMLF/Huntington LLC, which is the Manager of
Huntington Management Ent., LLC, which is the Manager of Huntington Center Associates,
LLC, a Delaware limited liability company (the "Developer"), and as such, is familiar with
the facts herein certified and is authorized to certify the same on behalf of the Developer;
(ii) that there has been delivered to UBS Financial Services Inc., as underwriter
(the "Underwriter") of the captioned bonds (the 'Bonds"), a Preliminary Official Statement,
dated March 18, 2004, relating to the Bonds (including the cover page and all appendices
thereto, the "Preliminary Official Statement"), the portion of which under the heading
"THE PROJECT, THE LANDOWNER AND THE DEVELOPER" the Developer hereby
deems final for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of
1934; and
(iii) that the Developer hereby approves of the use and distribution by the
Underwriter of the Preliminary Official Statement.
Dated: March 18, 2004 HUNTINGTON CENTER ASSOCIATES,. LLC,
a Delaware limited liability company
By:Huntington Management Ent., LLC, a
Delaware limited liability company, its
Manager
By:BMLF/Huntington LLC, a Delaware
limited liability company, its Manager
By:
r n Ezralow, Trustee of the Bryan
Ezralow 1994 Trust, its Manager
08003.08:J7434
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-01
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
CERTIFICATE OF LANDOWNER
In connection with the issuance and sale of the above-captioned bonds, and pursuant to
the Bond Purchase Agreement, dated March 30, 2004, by and between the City of Huntington
Beach and the Underwriter named therein (the "Bond Purchase Agreement"), the undersigned
hereby certifies, represents, warrants and covenants, on behalf of Huntington Center Associates,
LLC, a Delaware limited liability company'(the "Landowner")that:
1. The undersigned is, and at all pertinent times mentioned herein has been, an
authorized representative of the Landowner and is authorized to make this certification on behalf
of the Landowner.
2. Capitalized terms that are not defined herein shall have the meanings ascribed to
them in the Bond Purchase Agreement.
3. The Landowner is a duly organized and validly'existing limited liability company
in good standing under the laws of the State of California.
4. The Landowner has full power and authority to execute, deliver, and perform its
obligations under the Landowner Continuing Disclosure Agreement, the Financing and
Construction Agreement, the Operating Agreement and the Reciprocal Easement Agreement;
and the Continuing Disclosure Agreement, the Financing and Construction Agreement, -the
Operating Agreement and the Reciprocal Easement Agreement have been duly authorized, .
executed, and delivered by the Landowner and, assuming due authorization, execution and
delivery by the other parties thereto, as applicable, constitute legal, valid, and binding
agreements of the Landowner, enforceable against the Landowner in accordance with their
respective terms, subject to laws relating to bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights generally and the application of equitable principles if equitable
remedies are sought.
5. The undersigned has reviewed the contents of the Preliminary Official Statement
and the contents of the Official Statement. The undersigned has reviewed the contents of this
Certificate and have conferred with counsel for the purpose of discussing the meaning of its
contents.
6. All information concerning the Landowner, the property owned by the
Landowner in the Community Facilities District, and the improvement of such property by the
Landowner submitted by, or on behalf of, the Landowner to the Underwriter, the City, or
Disclosure Counsel in connection with the preparation of the Preliminary Official Statement and
the Official Statement, to the Appraiser in connection with preparation of the Appraisal, and to
the Special Tax Administrator in connection with the Rate and Method of Apportionment was, to
the best of our knowledge, true,. complete, and correct in all material respects.
1
RVPUB\KA13\670110.1
7. The statements relating to the Landowner, its property ownership and its proposed
improvement of the property within the Community Facilities District contained in the Official "
Statement under the captions "THE COMMUNITY FACILITIES DISTRICT," "THE
PROJECT, THE LANDOWNER AND THE DEVELOPER," and ."SPECIAL RISK FACTORS"
do not.contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
8. No proceedings are pending or, to the best knowledge of the undersigned, after
due inquiry, threatened in which the Landowner or any of its members may be adjudicated as
bankrupt or discharged from any and all of its debts or obligations or granted an extension of
time to pay its debts or a reorganization or readjustment of the debts.
9. No action, suit, proceeding, inquiry, or investigation, at law or in equity, before or
by any court, regulatory agency, public board or body, is pending or, to the best knowledge of
the Landowner, threatened in any way seeking to restrain or to enjoin the improvement of the
property within the Community Facilities District.
10. None of the property owned by the Landowner within the Community Facilities
District is delinquent in the payment of any taxes or assessments.
11. The Landowner agrees to indemnify and hold harmless, to the extent permitted by
law, the City, the Underwriter and their officials, employees, and agents (each of the City, the
Underwriter and such entity and person being hereinafter called an "Indemnified Party"), against
any and all losses, claims, damages, or liabilities, joint or several, to which such Indemnified
Party may become subject under any statute or at law or in equity or otherwise, and shall
reimburse any such Indemnified Party for any legal or other expenses incurred by it in
connection with investigating any claims against it and defending any actions, insofar as such
losses, claims, damages, liabilities, or actions arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact or the omission or alleged omission to state a .
material fact necessary to make the statements in the Official Statement or in any amendment or
supplement to such information not misleading, but only to the extent that such material fact
relates to the Landowner, its property ownership and'its proposed improvement of the property
within the Community Facilities District under the captions "THE COMMUNITY FACILITIES
DISTRICT," "THE PROJECT, THE LANDOWNER AND THE DEVELOPER" and
"SPECIAL RISK FACTORS" in the Official Statement or in any amendment or supplement to
such information. This indemnity provision shall not be construed as a limitation on any.other
liability which the Landowner may otherwise have to any Indemnified Party, provided that in no
event shall the Landowner be obligated for double indemnification.
12. Promptly after receipt by-any Indemnified Party of notice of any complaint or the
commencement of any action or proceeding in connection with any matter for which the,
Landowner is obligated to indemnify an Indemnified Party as set forth in the preceding
paragraph, the Indemnified Party shall notify the Landowner in writing of such complaint or of
the commencement of such action or proceeding and, if the Landowner so elects or is requested
by the Indemnified Party, the Landowner shall assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
2
RVPUB\KAB\6701.10.1
p4yment of the fees and disbursements of such counsel, in which event the Landowner shall not
be obligated to pay the reasonable fees and disbursements of separate counsel for the
Indemnified Party in such action. In the event, however, that an Indemnified Party's legal
counsel has determined that defenses may be available to an.Indemnified Party-that are different
from or in addition to those available to the Landowner or that there is or could"reasonably be
expected to be a conflict of interest by reason of the Landowner and-an Indemnified Party having
common counsel in any action or proceeding, then the Indemnified Party may employ separate
counsel to represent or defend it in any such action or proceeding in which such Indemnified
Party may become involved or is named as defendant and the Landowner shall pay the
reasonable fees and disbursements of such separate"counsel.
13. The Landowner is fully 'qualified by all necessary permits, licenses, and
certifications, to conduct its,business as it is presently being conducted and, except as may be
required under blue sky or other securities laws of any state, and except for such licenses,
certificates, approvals, variances, and permits which may be necessary for the construction and
operation of the Landowner's project in the Community Facilities District (the "Project"), there
is no consent, approval, authorization, or other order of, or filing with, or certification by, any
regulatory authority having jurisdiction over the Landowner except as such have been obtained
and are in full force and effect, for the consummation by the Landowner of the actions
contemplated to be consummated by the Landowner with respect to the Project under the Official
Statement.
14. To the best knowledge of the undersigned, after due inquiry, the Landowner is not
in violation of any provision of, or in default under, its organizational documents or any material
agreement, lease, or other contract, the violation of or default under which would materially and
adversely affect the Landowner's ability to own and improve its project as described in the
Official Statement or to pay Special Taxes for which it is responsible.
15. The Landowner is not aware of any previous material failures to comply with any
previous undertaking with respect to the Securities and Exchange Commission Rule 15c2-12 to
provide annual reports or notices of material events.
3
RVPUB\KAB\670110.1
16. The execution and delivery by the Landowner of the Continuing Disclosure
Agreement, the Financing and Construction Agreement, the Operating Agreement,and the
Reciprocal Easement Agreement and the performance of its obligations thereunder do not and
will not result in violation of any provision of, or in default under, the Landowner's
organizational documents or any material agreement, lease, or other contract to which the
Landowner is a party or by which it or its properties are bound.
Dated: April 15, 2004
HUNTINGTON CENTER ASSOCIATES, LLC, a
Delaware limited liability company
By: Huntington Management Ent., LLC, a
Delaware limited liability company, its Manager
By: BMLF/Huntington, LLC, a Delaware
limited 'abil' comply, its Manager
Bye
Y AlAyan Ezralow, Trustee of the Bryan
Ezralow 1994 Trust, its Manager
4
RVPUB\KAB\670110.1
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS
CERTIFICATE OF BANK ONE, NA
The undersigned hereby certifies and represents to UBS Financial Services Inc. (the
"Underwriter") in connection with its purchase of the above-captioned bonds that he is a Vice
President of Bank One, NA, a national banking association("Bank One"), and is authorized to
execute and deliver this Certificate and further hereby certifies and represents to the Underwriter on
behalf of Bank One as follows:
(1) Individually and as administrative agent for the financial institutions which from time
to time become parties thereto, Bank.One has entered into a Construction Loan Agreement by and
among the lenders named therein(collectively the"Lenders"),.Huntington Center Associates, LLC, a
Delaware limited liability company(the`Borrower"), and Banc One Capital Markets, Inc., a
Delaware corporation, as Lead Arranger.and Sole Bookrunner(the"Construction Loan Agreement").
(2) Pursuant to the Construction Loan Agreement and subject to the terms and conditions
set forth therein, each of the Lenders has agreed severally(and not jointly) to make a loan to the
Borrower(collectively, the "Loan") for the purposes of(i) refinancing a loan(the"Prior Loan")
secured by property which is generally known as "Huntington Center" (the"Property") (ii) paying
certain fees, expenses and interest in connection with the Loan and(iii) funding, in part, the
development of the Property into an open air retail entertainment center with retail, restaurant,
cinema theatre facilities and on-site parkin
g.
(3) The aggregate amount potentially available to the Borrower pursuant to the Loan is
$105,006,00.
(4) As of the date hereof, the Lenders have funded not less than $40,500,000 of the Loan
to enable the Borrower to refinance the Prior Loan and for other purposes.
(5) Future fundings of the Loan are subject to the Borrower's satisfaction of various
conditions set forth in the Construction Loan Agreement. While Bank One cannot, and does not by
the delivery of this Certificate, predict whether the Borrower will be able to satisfy these conditions,
as of the date hereof Bank One is not aware of any information that would lead it to believe that the
Borrower will be unable to do so.
Dated: April 15, 2004 BANK ONE, NA,
a national banking association
Edward E. Flanigan,
Vice President
DOCSOC/1036053 v3/22173-0089
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
.2004 SPECIAL TAX BONDS
CERTIFICATE OF THE FISCAL AGENT
The undersigned, as an authorized officer of U.S. Bank National Association, a
national banking association (the "Fiscal Agent"), acting in his or her official capacity, hereby
states and certifies that:
(a) the Fiscal Agent is duly organized and existing as a national banking
association under the laws of the United States of America having the full power and authority to
perform its duties under the Fiscal Agent Agreement, the CFD Disclosure Certificate and the
Developer Disclosure Certificate (collectively, the "Fiscal Agent Documents");
(b) the Fiscal Agent is duly authorized to accept the obligations created by the
Fiscal Agent Documents and to authenticate the Bonds pursuant to the terms of the Fiscal Agent
Agreement;
(c) no consent, approval, authorization or other action by any governmental or
regulatory authority having jurisdiction over the Fiscal Agent that has not been obtained is or
will be required for the authentication of the Bonds or the consummation by the Fiscal Agent of
the other transactions contemplated to be performed by the Fiscal Agent in connection with the
authentication of the Bonds and the acceptance and performance of the obligations created by the
Fiscal Agent Documents;
(d) to the best knowledge of the undersigned officer of the Fiscal Agent,
compliance with the terms of the Fiscal Agent Documents will not conflict with, or result in a
violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note,
resolution or any other agreement or instrument to which the Fiscal Agent is a party or by which
it is bound, or any law or any rule, regulation, order or decree of any court or governmental
agency or body having jurisdiction over the Fiscal Agent or any of its activities or properties; and
(e) to the best knowledge of the undersigned officer, there is no litigation
pending or threatened against or affecting the Fiscal Agent to restrain or enjoin the Fiscal
Agent's participation in, or in any way contesting the powers of the Fiscal Agent with respect to
the transactions contemplated by the Bonds and the Fiscal Agent Documents.
RVPUB\KAB\669071.1
Capitalized terms used herein and not otherwise defined shall have the meaning set forth
in the Bond Purchase Agreement dated March 30, 2004 by and between the City and UBS
Financial Services Inc.
Dated: April 15, 2004
U.S. BANK NATIONAL
ASSOCIATION, as Fiscal Agent
By: Authorized Signat r
RVPUB\KAB\669071. 12
U.S. BANK NATIONAL ASSOCIATION
AUTHORIZED SIGNER(S)
I hereby certify that the following is a true and exact extract of Article VI of the Bylaws presently
in effect for U.S. Bank National Association, an association organized and existing under the
laws of the United States:
ARTICLE VI.
CONVEYANCES,CONTRACTS,ETC.
All transfers and conveyances of real estate, mortgages, and transfers, endorsements or
assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or
personal property shall be signed by any elected or appointed officer.
All checks, drafts, certificates of deposit and all funds of the Association held in its own
or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or
facsimile signature of any elected or appointed officer of the Association.
All mortgage satisfactions,releases, all types of loan agreements, all routine transactional
documents of the Association, and all other instruments not specifically provided for, whether to
be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by
any elected or appointed officer thereof.
The Secretary or any Assistant Secretary of the Association or other proper officer may
execute and certify that required action or authority has been given or has taken place by
resolution of the Board under this Bylaw without the necessity of further action by the Board.
I further certify that Martin Meza of U.S. Bank National Association, has been duly elected and
qualified and now holds the office listed herein, and that the signature of such officer is authentic:
Martin Meza —
Trust Officer WILL SIGN:
IN WITNESS WHEREOF, I have hereunto set my hand to be affixed hereto this 15th day of
April,2004.
U.S.Bank National Association
By: Sheri Ball
ice President
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
FISCAL AGENT'S RECEIPT OF PURCHASE PRICE
The undersigned hereby states and certifies that, on behalf of U.S. Bank National
Association, as fiscal agent (the "Fiscal Agent").under the Fiscal Agent Agreement dated as of
March 1, 2004 between the Fiscal Agent and the City of Huntington Beach, the Fiscal Agent
received on the date hereof from UBS Financial Services Inc., as Underwriter (the
"Underwriter"), the amount of$24,702,000.00 (which the Underwriter has represented to be the
principal amount of the Bonds, less the Underwriters' discount of$298,000.00) in immediately
available funds.
Dated: April 15, 2004
U.S. BANK NATIONAL
ASSOCIATION, as Fiscal Agent
By: �--
Authorized Officer
RVPUB\KAB\669072.1
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
RECEIPT FOR BONDS
The undersigned hereby states and certifies that, on behalf of UBS Financial
Services Inc., as Underwriter (the "Underwriter"), the Underwriter has received on this date from
U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), under the Fiscal Agent
Agreement dated as of March 1, 2004, by and between the Fiscal Agent and the City (the "Fiscal
Agent Agreement"), City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) 2004 Special Tax Bonds in the aggregate principal amount of$25,000,000,
executed and delivered by the City of the Huntington Beach and authenticated by the Fiscal
Agent pursuant to the Fiscal Agent Agreement.
The Underwriter further acknowledges the receipt of each opinion, document or
certificate contemplated by Section 3 of the Bond Purchase Agreement dated March 30, 2004,
between the Underwriter and the City of Huntington Beach.
Dated: April 15, 2004
UBS FINANCIAL SERVICES INC.
By: —N--?,�N d:�—�
Daniel Gangwish, Man ng Director
RVPUB\KAB\669074.1
$25,000,000
CITY OF HUNTINGTON BEACH
COMMUNITY FACILITIES DISTRICT NO. 2003-1
(HUNTINGTON CENTER)
2004 SPECIAL TAX BONDS
CERTIFICATE OF UNDERWRITER
The undersigned, on behalf of UBS Financial Services Inc. (the "Underwriter"),
hereby certifies to the City of Huntington Beach (the "City") with respect to the $25,000,000
City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 2004
Special Tax Bonds (the"Bonds")that:
(i) the initial offering price at which a substantial amount (greater than ten
percent) of the Bonds, as set forth on the cover page of the Official Statement dated March 30,
2004 relating to the Bonds, was reasonably expected to be sold to the general public as of the
date the Bond Purchase Agreement was entered into (i.e., March 30, 2004) was par of each
maturity;
(ii) in connection with the offering of the Bonds for sale to the general
public, the City has funded a Reserve Fund relating to the Bonds by depositing Bond proceeds in
the amount of$1,808,630.00 into the Reserve Fund. The Reserve Fund, funded at the Reserve
Requirement (as defined in the Fiscal Agent Agreement), is reasonably required for the purposes
for which the Reserve Fund has been established, is a vital factor in marketing the Bonds, and
facilitates the marketing of the Bonds at interest rates comparable to those of other bonds of a
similar type;
(iii) The issue price of the Bonds was not greater than $25,000,000; and
The Underwriter understands that. Bond Counsel will rely upon this certificate,
among other things, in reaching its conclusion that the Bonds do not constitute"arbitrage bonds"
within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.
Dated: April 15, 2004 UBS FINANCIAL RVICES INC.
By:
Jo Feery,
anaging Director
By:
Peter Wruhot
Corporate Vice President
RVPUB\KAB\669075.1
NTEGRARealty Resources
ORANGE COUNTY
April 15, 2004
City of Huntington Beach
2900 Main Street
Huntington Beach, CA 92648
UBS Financial Services Inc.
777 South Figuera Street, 50th Floor
Los Angeles, CA 90017
Re: $25,000,000 City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
(a) Pursuant to Section 3(c)(12) of the Bond Purchase Agreement dated
March 30, 2004 (the "Bond Purchase Agreement") providing for the purchase by UBS Financial
Services Inc. (the "Underwriter") from the City of Huntington Beach (the "City") of the above-
captioned bonds (the "Bonds"), we hereby advise you that the Appraisal Report, regarding
certain property within Community Facilities District No. 2003-1 (Huntington Center) of the
City of Huntington Beach dated November 17, 2003 (the "Appraisal"), in the form set forth in
Appendix C to the Official Statement, may be included in the Preliminary Official Statement and
the Official Statement;
(b) Neither the Appraisal nor the information in the Official Statement
referring to the Appraisal contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(c) No events or occurrences have been ascertained by us or have come to our
attention that would materially change the opinions set forth in the Appraisal.
Capitalized terms used herein and not otherwise defined shall have the meaning set forth
in the Bond Purchase Agreement.
Sincerely,
INTEGRA REALTY RESOURCES—ORANGE COUNTY
By:
Au ri Wignatory
LOCAL EXPERTISE. . . NATIONALLY
29811 Santa Margarita Parkway • Suite 300 ■ Rancho Santa Margarita, CA 92688-3612
RvruB\KAB\66911PAone: 949-709-7200 ■ Fax: 949-709-7201 ■ Email: orangecounty®irr.com
■
■ ■
■
ROBERT CHARLES LESSER&CO.,LLC.
REAL ESTATE ADVISORS- -
April 15, 2004
City of Huntington Beach
2900 Main Street
Huntington Beach, California 92648
UBS Financial Services Inc.
725 South Figueroa Street, 41 n Floor
Los Angeles, California 90017
SUBJECT: $25,000,000 City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center)
2004 Special Tax Bonds
Ladies and Gentlemen:
(a) Pursuant to Section 3(c)(13) of the Bond Purchase Agreement dated
March 30, 2004 (the "Bond Purchase Agreement") providing for the purchase by UBS
Financial Services Inc. (the "Underwriter") from the City of Huntington Beach (the "City") of
the above-captioned bonds (the "Bonds"), we hereby advise you that the Market Feasibility
Analysis dated October, 2003 in the form included in the Official Statement, may be
included in the Preliminary Official Statement and the Official Statement;
(b) Neither the Market Feasibility Analysis nor the information in the
Official Statement referring to the Market Feasibility Analysis contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading; and
(c) No events or occurrences have been ascertained by us or have come
to our attention that would materially change the opinions set forth in the Market.Feasibility
Analysis.
1880 CENTURY PARR EAST,SurrE 215,Los ANGELES,CA 90067 7 EL 310 914 1800 FAX 310 914 1810
Los ANGELES•ATLANTA•WASHINGTON,D.C.
Capitalized terms used herein and not otherwise defined shall have the meaning set
forth in the Bond Purchase Agreement.
Sincerely,
ROBERT CHARLES LESSER & CO., LLC
Auth rized Signatory
ROBERT CHARLES LESSER&CO.,LLC Page 2
01-9214.01
April 15, 2004
BEST BEST & KRIEGER LLP
A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
INDIAN WELLS LAWYERS SAN DIEGO
(760) 558-261 1 3750 UNIVERSITY AVENUE (619) 525-1300
- POST OFFICE BOX 1 028 -
ONTARIO RIVERSIDE, CALIFORNIA 92502-1 028 ORANGE COUNTY
(909)989-8584 (909) 686-1450 (949) 253-2500
(909) 686-3083 FAX -
BBKLAW.COM SACRAMENTO
(91 6)325-4000
April 15, 2004
City of Huntington Beach
2900 Main Street
Huntington Beach, CA 92648
Re: $25,000,000 City of Huntington Beach Community Facilities District
No. 2003-1 (Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of
California (the "District"), of $25,000,000 aggregate principal amount of City of Huntington
Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds,
(the "Bonds"). The Bonds are issued pursuant to the provisions of Chapter 3.56 of the Municipal
Code of the City of Huntington Beach (the "Municipal Code"), the Mello-Roos Community
Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part
1 of Division 2 of Title 5 of the Government Code of the State of California (the "Act"), a
resolution adopted by the City of Huntington Beach on January 5, 2004 (the "Resolution"), and a
Fiscal Agent Agreement, dated as of March 1, 2004 (the "Agreement"), between the City of
Huntington Beach and U.S. Bank National Association, as fiscal agent(the "Fiscal Agent").
We have examined the Municipal Code, the Act, the Resolution, the Agreement and
certified copies of the proceedings taken for the issuance and sale of the Bonds. As to questions
of fact which are material to our opinions, we have relied upon the representations of the City
contained in the Agreement and in certificates of its authorized officers which have been
delivered to us for the purpose of supplying such facts, without having undertaken to verify the
accuracy of any such representations by independent investigation.
Based upon such examination, we are of the opinion, as of the date hereof, that the
proceedings referred to above have been taken in accordance with the laws and the Constitution
of the State of California, and that the Bonds, having been issued in duly authorized form and
executed by the proper officials and delivered to and paid for by the purchaser thereof, and the
Agreement constitute the legally valid and binding obligations of the District enforceable in
accordance with their terms subject to the qualifications specified below and the Bonds, except
where funds are otherwise available, as may be permitted by law, are payable, as to both
RVPUB\KAB\669091.1
LAW OFFICES OF
BEST BEST & KRIEGER LLP
City of Huntington Beach
April 15, 2004
Page 2
principal and interest, solely from certain special taxes to be levied and collected within the
District and other funds available therefor held under the Agreement.
The Internal Revenue Code of 1986, as amended (the "Code"), sets forth certain
investment, rebate and related requirements which must be met subsequent to the issuance and
delivery of the Bonds for the interest on the Bonds to be and remain exempt from federal income
taxation. Noncompliance with such requirements could cause the interest on the Bonds to be
subject to federal income taxation retroactive to the date of issuance of the Bonds. Pursuant to
the Agreement, the City has covenanted to comply with the requirements of the Code and
applicable regulations promulgated thereunder.
We are of the opinion that, under existing statutes, regulations, rulings and court
decisions, and assuming compliance by the City with the aforementioned covenants, the interest
on the Bonds is excluded from gross income for purposes of federal income taxation and is
exempt from personal income taxation imposed by the State of California.
We are 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 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 tax consequences will depend on the
recipient's particular tax status or other items of income or deduction. We express no opinion
regarding any such consequences.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Agreement may be subject to bankruptcy, insolvency, moratorium and other similar laws
affecting creditors' rights heretofore or hereafter enacted, and their enforcement may be subject
to the exercise of judicial discretion in accordance with general principles of equity.
Respectfully submitted,
RVPUB\KAB\669091.1
BEST BEST & KRIEGER LLP
A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
INDIAN WELLS LAWYERS SAN DIEGO
(760) 568-251 I 3750 UNIVERSITY AVENUE (619) 525-1300
- POST OFFICE BOX 1 028 -
ONTARIO RIVERSIDE, CALIFORNIA 92502-1 028 ORANGE COUNT'
(909)989-8584 (909) 585-1 450 (949) 263-2500
(909) 585-3083 FAX -
BBKLAW.COM SACRAMENTO
(9 1 6)325-4000
April 15, 2004
UBS Financial Services Inc.
777 South Figuera Street, 50th Floor
Los Angeles, CA 90017
U.S. Bank National Association
633 West Fifth Street, 241h Floor
Los Angeles, California 90071
Re: $25,000,000 City of Huntington Beach Community Facilities District No.
2003-1 (Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
As Bond Counsel for the City of Huntington Beach (the "City") in connection
with the issuance of the above-referenced Bonds (the 'Bonds"), we have issued an opinion dated
April 15, 2004, to the City to the effect that, subject to certain qualifications specified therein,the
Bonds and the Fiscal Agent Agreement dated as of March 1, 2004, between the City and U. S.
Bank National Association, are legal, valid and binding obligations of City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) and that the interest on the Bonds
is excluded from gross income for purposes of federal income taxation and exempt from personal
income taxation imposed by the State of California. You are authorized to rely upon that opinion
with the same effect and to the same extent as if it had been issued to you.
Sincerely,
RVPUB\KAB\669092.1
BEST BEST Sr. KRIEGER LLP
A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFE55IONAL CORPORATIONS
INDIAN WELLS LAWYERS SAN DIEGO
(760) 568-26I I 3750 UNIVERSITY AVENUE (6I9) 525-1300
- POST OFFICE BOX 1028 -
ONTARIO RIVERSIDE. CALIFORNIA 92502-1 028 ORANGE COUNTY
(909)989-8584 (909)685-1450 (949) 263-2600
(909)686-3083 FAX -
BBKLAW.COM SACRAMENTO
(9 16) 325-4000
April 15, 2004
UBS Financial Services Inc.
777 South Figueroa Street, 50th Floor
Los Angeles, CA 90017
Re: SUPPLEMENTAL OPINION: $25,000,000 City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax
Bonds
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the City of Huntington
Beach (the "City") of its $25,000,000 aggregate principal amount of City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of
California (the "District") 2004 Special Tax Bonds (the "Bonds"), pursuant to the City of
Huntington Beach Special Tax Financing Improvement Code (constituting Chapter 3.56 of the
City's Municipal Code), and, where applicable, the Mello-Roos Community Facilities Act of
1982, as amended (Section 53311 et seq., of the California Government Code) (collectively, the
"Law"), a Fiscal Agent Agreement, dated as of March 1, 2004 (the "Fiscal Agent Agreement"),
by and between the City and U.S. Bank National Association, as Fiscal Agent, and Resolution
No. 2004-1, adopted by the City Council of the City of Huntington Beach (the "City"), acting as
the legislative body of the District, on January 5, 2004.
In that connection, we have examined the executed Fiscal Agent Agreement; the Bond
Purchase Agreement, dated March 30, 2004 (the "Bond Purchase Agreement"), by and between
you, as underwriter, and the City; the Official Statement, dated March 30, 2004, relating to the
Bonds (the "Official Statement"); the Funding and Construction Agreement, dated as of
March 1, 2004 (the "Funding Agreement"), between the City and Huntington Center Associates,
the City Continuing Disclosure Agreement, dated as o March 1, 2004 (the "Disclosure
Certificate") of the City; the Operating Agreement for Huntington Center Parking Structure
dated as of March 1, 2004 (the "Operating Agreement"), and the Parking and Reciprocal
Easement Agreement dated as of March 1, 2003 (the "Parking Agreement") the law and such
other certified proceedings and other papers as we deem necessary to render this opinion.
Together the Bond Purchase Agreement, the Fiscal Agent Agreement, the Funding Agreement,
the Operating Agreement, the Parking Agreement and the Disclosure Certificate are referred to
as the "City Agreements."
RVPUB\KAB\669095.1
LAW OFFICES OF
BEST BEST & KRIEGER LLP
April 15, 2004
Page 2
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 representatives of the City furnished to us, without undertaking to verify such
facts by independent investigation.
Based upon our examination, we are of the opinion, under existing law, as follows:
1. The City Agreements have been duly authorized, executed and delivered by, and,
assuming due authorization, execution and delivery by the other parties thereto, constitute legal,
valid and binding agreements of the City, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights in general and to the application of equitable principles if
equitable remedies are sought.
2. The Bonds are not subject to registration requirements of the Securities Act of
1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust
Indenture Act of 1939, as amended.
3. The information contained in the Official Statement under the captions
"INTRODUCTION," "THE FINANCING PLAN," "THE 2004 BONDS," "SECURITY FOR
THE 2004 BONDS," "THE COMMUNITY FACILITIES DISTRICT," "CONCLUDING
INFORMATION — Continuing Disclosure" and "CONCLUDING INFORMATION — Tax
Matters" and in Appendices A and G, are accurate insofar as such statements expressly
summarize certain provisions of the Bonds, the Fiscal Agent Agreement, the other City
Agreements and our final legal opinion with respect to the Bonds delivered on the date of this
opinion
Respectfully submitted,
RVPUB\KAB\669095.1
OFFICE OF
y CITY ATTORNEY
�o ciJ
P.O.Box 190 Paul D'Alessandro,Assistant City Attorney
�ouBTI t 2000 Main Street Scott Field,Assistant City Attorney
Neal Moore,Sr.Deputy City Attorney
Huntington Beach,California 92648 Lee Burke,Deputy City Attorney
Jennifer McGrath Telephone: (714)536-5555 John Fujii,Deputy City Attorney
City Attorney Facsimile: (714)374-1590 Leonie Mulvihill,Deputy City Attorney
Sarah Sutton,Deputy City Attorney
April 15, 2004
UBS Financial Services Inc.
777 South Figueroa Street, 50th Floor
Los Angeles, CA 90017
Re: $25,000,000 City of Huntington Beach Community Facilities
District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
I am the City Attorney of the City of Huntington Beach (the "City") and have
acted as such in connection with the issuance of its $25,000,000 City of Huntington Beach
Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds (the
"Bonds"). The Bonds are being issued pursuant to Resolution No. 2004-1 adopted by the City
Council of the City of Huntington Beach on January 5, 2004 (the "Bond Resolution") and the
Fiscal Agent Agreement dated as of March 1, 2004 between the City and U.S. Bank National
Association, as fiscal agent (the "Fiscal Agent Agreement"). We have reviewed the Bond
Purchase Agreement, dated March 30, 2004 ("Purchase Agreement"), the Bond Resolution, the
Fiscal Agent Agreement and each of the other agreements, resolutions and documents which are
hereinafter referred to, and which are identified by the designations given them in the Purchase
Agreement, and such certified proceedings and other papers and materials as we deem necessary
to render this opinion. As to questions of fact material to our opinion, we have relied upon the
certified proceedings and other certifications of public officials furnished to us without
undertaking to verify the same by independent investigation.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Purchase Agreement.
In rendering the opinion set forth herein, I have made no search, inquiry,
investigation or other examination concerning the records or files of any court,public board or
body, or other public records, other than the City, and my opinion as expressed herein does not
extend to any matter which might be disclosed as a result of any further search, inquiry,
investigation or other examination.
Whenever a statement herein is qualified"to the best of my knowledge," it is
intended to indicate that, during the course of my representation of the City in connection with
this transaction, no information that would give me actual knowledge of the inaccuracy of such
statement has come to my attention. I have not undertaken any independent investigation to
SF-2004 Letters: UBS Financial Services
UBS Financial Services Inc.
April 15, 2004
Page 2
determine the accuracy of such statements, and any limited inquiry undertaken by me during the
preparation of this opinion letter should not be regarded as such investigation. No inference as to
my knowledge of any matters bearing on the accuracy of any such statements should be drawn
from the fact of my representation of the City.
My opinion set forth herein does not extend to, and I express no opinion herein
with respect to, (a) any laws of any jurisdictions (including any federal law), other than the laws
of the State of California, and (b) any matters covered by the securities, usury or tax laws,
decisions,rules or regulations of any jurisdiction.
Based on the foregoing, we hereby advise you that, as of the date hereof, we are
of the opinion that:
(A) The City is a municipal corporation duly organized and validly
existing as a public body corporate and politic under the Constitution and laws of the State of
California and the Huntington Beach City Charter,
(B) The City has full right, power and authority to execute and deliver
the Funding and Construction Agreement, the Operating Agreement and the Reciprocal
Easement Agreement,
(C) The Funding and Construction Agreement, the Operating
Agreement and the Reciprocal Easement Agreement have been duly authorized, executed and
delivered by the City and, assuming due authorization and execution thereof by the Landowner,
they constitute a valid and binding obligation of the City, enforceable in accordance with their
terms, subject to laws relating to bankruptcy, insolvency, or other laws affecting the enforcement
of creditors' rights generally and the application of equitable principles if equitable remedies are
sought,
(D) The Resolutions and the Ordinance have been duly adopted at
meetings of the City Council of the City which were called and held pursuant to law and with all
public notices required by law at which a quorum was present and acting throughout, and
(E) To the best of my knowledge, there are no actions, suits,
proceedings, inquiries or investigations, at law or in equity, before or by any court, governmental
agency, public board, or body, pending or threatened against the City, for which the City has
been served, to restrain or enjoin the issuance of the Bonds, the collection or application of the
Special Tax, the payment of principal of and interest on the Bonds, or in any way contesting the
validity of the Bonds or the City Documents.
Respectfully submitted,
JENNIFER McGRATH
City Attorney
SF-2004 Letters: UBS Financial Services
R
uid & ThiMMi LLr One Embarcadero Center,Suite 2420
San Francisco,CA 94111-3737
Attorneys at Law Telephone:415/765-1550
Telecopier:415/765-1555
bquint@gtllp.com
pthimmig@gtllp.com
April 15,2004
City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
UBS Financial Services Inc.
777 South Figueroa Street,50'Floor
Los Angeles,California 90017
Re: $25,000,000 City of Huntington Beach Community Facilities District.No. 2003-1
(Huntington Center)2004 Special Tax Bonds
Dear Ladies and Gentlemen:
We have acted as Disclosure Counsel to the City of Huntington Beach, California (the
"City"), in connection with the City of Huntington Beach Community Facilities District No.
2003-1 (Huntington Center), County of Orange, State of California (the "District") 2004 Special
Tax Bonds, in the aggregate principal amount of $25,000,000 (the 'Bonds"), sold by the City
pursuant to the Bond Purchase Agreement dated March 30, 2004 (the "Purchase Contract")
between the City and UBS Financial Services Inc. The Bonds are issued pursuant to the Fiscal
Agent Agreement, dated as March 1, 2004 (the "Fiscal Agent Agreement")between the City, for
and on behalf of the District, and U.S. Bank National Association, as fiscal agent (the "Fiscal
Agent"). Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Purchase Contract.
In that connection,we have reviewed the Fiscal Agent Agreement, the Official Statement
of the City, dated March 30, 2004 with respect to the Bonds (the "Official Statement"), the
Purchase Contract, certificates of the City, the Fiscal Agent, the Landowner, the Appraiser, the
Special Tax Consultant, the Absorption Consultant, Bank One, N.A. and others, the opinions
referred to in Section 3(c) of the Purchase Contract and such other records, opinions and
documents, and we have made such investigations of law, as we have deemed appropriate as a
basis for the conclusions hereinafter expressed.
In arriving at the conclusions hereinafter expressed, we are not expressing any opinion
or view on, and with your permission are assuming and relying on, the validity, accuracy and
sufficiency of the records, documents, certificates and opinions referred to above (including the
accuracy of all factual matters represented and legal conclusions contained therein, including
(without limitation) representations and legal conclusions regarding the due authorization,
issuance, delivery, validity and enforceability of the Bonds and the exclusion of interest thereon
from gross income for federal income tax purposes). We have assumed that all records,
City of Huntington Beach
UBS Financial Services Inc.
April 15,2004
Page 2
documents, certificates and opinions that we have reviewed, and the signatures thereto, are
genuine.
We are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of any of the statements contained in the Official Statement and make
no representation that we have independently verified the accuracy, completeness or fairness of
any such statements. However, in our capacity as Disclosure Counsel, we met in conferences
with representatives of the City, the Landowner, the Special Tax Consultant, Bond Counsel, the
Underwriter and others, during which conferences the contents of the Official Statement and
related matters were discussed. Based on our participation in the above-mentioned
conferences, and in reliance thereon and on the records, documents, certificates and opinions
herein mentioned (as set forth above), we advise you that, during the course of our assistance in
the preparation of the Official Statement for this matter, no information came to the attention of
the attorney in our firm rendering legal services in connection with such representation which
caused us to believe that the Official Statement as of its date and as of the date of this opinion
(except for any financial, statistical or engineering data or forecasts, numbers, charts, estimates,
projections, assumptions, or expressions of opinion, any information about valuation,
appraisals or environmental matters, or the Appendices, or any information about book-entry
or DTC included therein, as to which we express no opinion or view) contained or contains any
untrue statement of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances
under which they were made,not misleading.
We are furnishing this letter to you pursuant to Section 3(c)(5) of the Purchase Contract
solely for your benefit. Our engagement with respect to this matter has terminated as of the
date hereof, and we disclaim any obligation to update this letter. This letter is not to be used,
quoted or otherwise referred to or relied upon for any other purpose or by any other person.
This letter is not intended to,and may not,be relied upon by owners of Bonds.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
A PROFESSIONAL CORPORATION SAN FRANCISCO OFFICE
ATTORNEYS AT LAW 44 MONTGOMERY STREET,SUITE 2950
SAN FRANCISCO.CALIFORNIA 94104
660 NEWPORT CENTER DRIVE,SUITE 1600 TELEPHONE (415)283-2240
FACSIMILE (415)283.2255
NEWPORT BEACH,CA 92660-6422
ARB O
TELEPHONE(949)725-4000 SAN 30 OLIVE S REETFILE
FACSIMILE 949 725 SANTA BARBARA.CALIFORNIA 93101
( 1 4100 TELEPHONE (805)564-0065
FACSIMILE (805)564-1044
April 15,2004
UBS Financial Services Inc.
777 South Figueroa Street, 50th Floor
Los Angeles, California 90017
Re: $25,000,000 City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
We have acted as legal counsel for you in connection with your purchase of the
above-referenced bonds (the "Bonds")pursuant to a Bond Purchase Agreement, dated as of
March 30, 2004,by and between you and the City of Huntington Beach(the "City"). The Bonds are
being issued pursuant to the Fiscal Agent Agreement, dated as March 1,2004 (the "Fiscal Agent
Agreement"),between the City, for and on behalf of the City of Huntington Beach Community
Facilities District No. 2003-1 (Huntington Center),and U.S. Bank National Association,as fiscal
agent.
In rendering our opinion,we have examined originals or copies certified or otherwise
identified to our satisfaction of(i)the Bond Purchase Agreement, (ii)the Fiscal Agent Agreement,
(iii) the letters,certificates and opinions delivered to you pursuant to the provisions of Section 3(c)
of the Bond Purchase Agreement,and(iv) such other documents, certificates, instructions and
records as we have considered necessary or appropriate as a basis for our opinion.
We have assumed,but not independently verified,that the signatures on all documents,
letters, opinions and certificates which we have examined are genuine,that all documents submitted
to us are authentic and were duly and properly executed by the parties thereto and that all
representations made in the documents that we have reviewed are true and accurate.
Based upon and subject to the foregoing,we are of the opinion that 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 under the Trust Indenture Act of 1939, as amended.
The scope of our engagement does not include providing you with an opinion addressing the
contents of the City's Official Statement concerning the Bonds. You have relied with respect thereto
on a letter addressed to you and the City, dated the date hereof, from Quint&Thimmig LLP, the
disclosure counsel with respect to the Bonds. Similarly,we express no opinion with respect to the
DOCSOC/1038065 v 1/22173-0089
UBS Financial Services Inc.
April 15, 2004
Page Two
validity of the Bonds,the tax treatment of the interest thereon or the compliance with, or applicability
of, any"blue sky" laws of any state as they relate to the offer or sale of the Bonds.
This opinion is being rendered to you solely for your benefit in connection with your
purchase of the Bonds and is not to be used,circulated, quoted or otherwise referred to for any other
purpose without our prior written consent.
We have not undertaken any duty, and expressly disclaim any responsibility,to advise you as
to events occurring after the date hereof with respect to the Bonds.
Respectfully submitted,
DOCSOC/1038065 v 1/22173-0089
OORSEY
DORSEY & WHITNEY LLP
April 15, 2004
City of Huntington Beach
Huntington Beach, California
UBS Financial Services Inc.
Los Angeles, California
Re: City of Huntington Beach Community Facilities District No. 2003-1
(Huntington Center) 2004 Special Tax Bonds
Ladies and Gentlemen:
We are counsel for U.S. Bank National Association, a national banking
association(the"Fiscal Agent") in connection with the execution by the Fiscal Agent of the
Fiscal Agent Agreement, dated as of March 1, 2004 (the"Agreement"), by and between the City
of Huntington Beach and the Fiscal Agent, as Fiscal Agent, relating to the above-captioned
Bonds, and are generally familiar with the Articles of Association and the Bylaws of the Fiscal
Agent and are also familiar with the corporate proceedings of the Fiscal Agent with regard to its
authorization, execution and delivery of: (i) the Agreement, (ii) the Continuing Disclosure
Agreement, and (iii) the Landowner Continuing Disclosure Agreement, dated as of March 1,
2004,by and between the Fiscal Agent and Huntington Center Associates, LLC (the "Developer
Disclosure Agreement"). Capitalized terms used herein shall have the respective meanings
ascribed to them in the Agreement, except as otherwise defined herein.
We have examined such documents and reviewed such questions of law as we
have considered necessary and appropriate for purposes of this opinion. In such review, we have
assumed the genuineness of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity with originals of all documents submitted to us as copies. Where
questions of fact material to our opinions expressed below were not established independently,
we have relied upon statements of officers of the Fiscal Agent as contained in their certificates.
References to the Fiscal Agent herein shall be deemed to include references to the Fiscal Agent
in its capacity as Dissemination Agent under the Continuing Disclosure Agreement and the
Developer Disclosure Agreement.
Based upon the foregoing, we are of the opinion that:
1. The Fiscal Agent is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
2. The Fiscal Agent has all requisite corporate power, authority and legal
right to execute and deliver the Agreement, the Continuing Disclosure Agreement and the
Developer Disclosure Agreement and to perform its obligations thereunder, and has taken all
necessary corporate action to authorize the execution and delivery thereof and the performance
of its obligations thereunder.
DORSEY & WHITNEY LLP • WWW.DORSEY.COM • T 949.932.3600 • F 949.932.3601
38 TECHNOLOGY DRIVE • IRVINE, CALIFORNIA 92618-5310
USA CANA0A EURORE ASIA
3. The Fiscal Agent has duly authorized, executed and delivered the
Agreement, the Continuing Disclosure Agreement and the Developer Disclosure Agreement.
Assuming the due authorization, execution and delivery thereof by the other parties thereto, the
Agreement, the Continuing Disclosure Agreement and the Developer Disclosure Agreement are
the legal, valid and binding agreements of the Fiscal Agent, enforceable in accordance with their
terms against the Fiscal Agent.
The opinions set forth above are subject to the following qualifications and
exceptions:
(a) The opinions are subject to the effect of any applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of
general application affecting creditors' rights; and
(b) The opinions are subject to the effect of general principles of equity,
including(without limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at law).
Our opinions expressed above are limited to the laws of the State of California
and the federal laws of the United States of America.
The foregoing opinions are being furnished to you solely for your benefit and may
not be relied upon by, nor may copies be delivered to, any other person without our prior written
consent.
Very truly yours, C
Allen Matkins Leck Gamble & Mallory LLP
attorneys at law
515 South Figueroa 7th Floor Los Angeles California 90071-3398
Allen Matkins
telephone. 213 622 5555 facsimile. 213 620 8816 www.allenmatkins.com
writer.Allen Matkins Lack Gamble&Mallory LLP
file number.H4564-0021LA636785.
April 15, 2004
City of Huntington Beach
City of Huntington Beach Community
Facilities District No. 2004-1
2000 Main Street
Huntington Beach, California 92648
Attention: Mr. David C. Biggs
Director of Economic Development
UBS Financial Services Inc.
Municipal Securities Group
777 South Figueroa Street
Los Angeles, California 90077
Re: $30,000,000 City of Huntington Beach Community Facilities District
No. 2004-01 (Huntington Center) Special Tax Bonds, Series 2004
Ladies and Gentlemen:
We have acted as special counsel to Huntington Center Associates, LLC., a
Delaware limited liability company(the "Developer"), in connection with the issuance of the
above-referenced bonds (the 'Bonds")by the City of Huntington Beach Community Facilities
District No. 2004-1 (Huntington Center) (the "District"). The Bonds are being sold to UBS
Financial Services, Inc., a Delaware corporation, as underwriter(the "Underwriter"). This
opinion is being delivered to you pursuant to Section 3(c)(10)of the Bond Purchase Agreement,
dated as of March 1, 2004 (the 'Bond Purchase Agreement"),between the City of Huntington
Beach(the "City"), acting for and on behalf of the District, and the Underwriter. The District,
the Underwriter and the City are collectively referred to as the "Addressees." Capitalized terms
used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase
Agreement.
A. Documents Reviewed and Factual Matters.
In reaching the conclusions expressed in this opinion, we have examined originals
or copies satisfactory to us of the following documents (collectively,the "Transaction
Documents"):
Allen Matkins Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 2
1. The Landowner Continuing Disclosure Agreement, dated as of March 1,
2004,executed by and between the Developer and U.S. Bank National Association, as Fiscal
Agent and as Dissemination Agent(the "Landowner Continuing Disclosure Agreement");
2. The final Official Statement, dated as of March 30, 2004, and prepared in
conjunction with the issuance and sale of the Bonds (the "Official Statement");
3. The Funding and Construction Agreement, dated as of March 1, 2004,
executed by and between the City and the Developer(the "Funding Agreement");
4. The Operating Agreement for Huntington Center Parking Structure, dated
as of March 1, 2004, executed by and between City and Developer("Operating Agreement");
5. The Parking and Reciprocal Easement Agreement and Option to Purchase,
dated as of March 1, 2004, by and between the Developer and the City("REA"); and
6. Certificate of Developer("Certificate") from Developer in favor of Allen
Matkins Leck Gamble & Mallory LLP.
In rendering this opinion, we have not undertaken examination of any public
records, including civil litigation action indices in any county or state wherein Developer or the
Addressees transact business, nor have we examined the financial books and records of
Developer or the Addressees with respect to the above-captioned transaction.
For the purpose of rendering this opinion,we have examined the Transaction
Documents and such other records,books, documents and matters as we have deemed necessary
or appropriate for purposes of this opinion. As to questions of fact material to such opinion,we
have relied, with your consent, solely upon representations of Developer made in the Transaction
Documents. Whenever our opinion herein is qualified by the phrase "to our actual knowledge,"
or similar phrases, it is intended only to indicate that the lawyers presently in our firm who have
performed services for the Developer in connection with this transaction have not during the
course of such representation received knowledge of any information which is contrary to the
matters set forth in such opinion, or that would give us reason to make inquiry regarding such
matters. Except as stated above, we have not undertaken any independent investigation to
determine the existence or absence of facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our representation of
Developer.
Allen Matkins Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 3
B. Assumptions.
For the purpose of rendering this opinion, we have made and relied, without
independent inquiry,upon the following assumptions:
l. The genuineness of all signatures and the authenticity of all documents
referenced in this opinion submitted to us as originals, and the conformity with the original
documents of all documents submitted to us as copies. We have no reason to believe that such
signatures and documents are not genuine, authentic and in conformity with the originals of such
documents.
2. That there are no documents or other information which we have not been
furnished which would materially alter, modify or amend the Transaction Documents.
3. That the Developer(a) is duly formed and validly existing under the laws
of the State of Delaware and is in good standing under the laws of the State of Delaware and the
State of California; (b)has the requisite organizational power and authority (i)to conduct its
business as now conducted, (ii)to own or hold under lease its assets, and (iii)to execute, deliver
and perform its obligations under the Transaction Documents to which it is a party, and(c)has
duly authorized, executed and delivered the Transaction Documents to which it is a party. We
understand that you will be receiving the opinion of Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP, counsel to Developer with respect to many of these matters and have,with
your permission, assumed without further verification, that the opinions set forth therein are true
and correct.
4. We have assumed (a)the due execution and delivery of the Landowner
Continuing Disclosure Agreement,the Funding Agreement,the REA and the Operating
Agreement by persons other than the Developer; (b)that each party to the Transaction
Documents, other than the Developer, is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization or formation; (c)that each party to the
Transaction Documents, as applicable, other than the Developer, has the power and authority to
execute and deliver such document and to perform its obligations thereunder and all such actions
have been duly and validly authorized by all necessary proceedings on its part; (d)that the
Transaction Documents, as applicable, constitute legal, valid and binding obligations of each
party thereto (other than the Developer) enforceable against such parties in accordance with its
terms; and (v) that there are no oral or written agreements,terms or conditions agreed to by the
City,the District,the Developer or any third party which would have an effect on the opinions
rendered herein.
Allen Matkiris Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 4
C. Qualifications.
The opinions expressed herein are specifically subject to and limited by the
following:
1. The effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application and by legal or equitable principles relating to, limiting or
affecting creditors' rights generally.
2. The effect of general principles of equity, including without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief, self help and other equitable remedies,
regardless of whether considered in a proceeding at equity or at law.
3. Any provisions which purport to waive the benefits of statutory provisions
or common law rights may be limited by California statutes or by a court's interpretation of
public policy.
4. Certain rights, remedies and waivers may be limited or rendered
ineffective by applicable California laws or judicial decisions governing such provisions, but
such laws or judicial decisions do not render the Landowner Continuing Disclosure Agreement
or the Funding Agreement invalid or unenforceable as a whole.
5. The unenforceability under certain circumstances of contractual provisions
respecting various summary remedies without notice or opportunity for hearing or correction,
especially if their operation would work a substantial forfeiture or impose a substantial penalty
upon the burdened party.
6. The unenforceability under certain circumstances, under California law or
court decisions, of provisions expressly or by implication waiving or releasing broadly or
vaguely defined rights, the benefits of statutory,regulatory, common law or constitutional rights,
unknown future rights, defenses to obligations or rights granted by law, where such waivers or
releases are against public policy or prohibited by law.
7. The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not exclusive,that every right or remedy is cumulative and may
be exercised in addition to or with any other right or remedy,that election of a particular remedy
or remedies does not preclude recourse to one or more other remedies,that any right or remedy
may be exercised without notice, or that failure to exercise or delay in exercising rights or
remedies will not operate as a waiver of any such right or remedy.
Allen Matkins Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 5
8. The effect of California law, which provides that a court may refuse to
enforce, or may limit the application of, a contract or any clause thereof which the court finds as
a matter of law to have been unconscionable at the time it was made or contrary to public policy.
9. California statutes and/or court decisions may prohibit the effectiveness of
provisions waiving/releasing or indemnifying a party against liability for its own wrongful or
negligent acts, or where the indemnification is contrary to public policy or prohibited by law.
10. The effect of decisions by courts admitting evidence extrinsic to a written
agreement between the parties thereto that the parties intended a meaning contrary to that
expressed by the parties in writing.
11. We express no opinion with respect to the validity or enforceability of any
documents other than the Landowner Continuing Disclosure Agreement and the Funding
Agreement,regardless of whether any other documents are incorporated by reference into the
Landowner Continuing Disclosure Agreement, the Funding Agreement or any other Transaction
Document.
12. We express no opinion as to (a) any rights of set-off(other than as
provided by Section 3054 of the California Civil Code, as interpreted by applicable judicial
decisions); or(ii)the enforceability of any provisions or agreement designating a party as an
agent or attorney-in-fact.
13. We express no opinion as to the legality, validity, binding nature or
enforceability (whether in accordance with its terms or otherwise)of any provision insofar as it
provides for the payment or reimbursement of costs and expenses in excess of a reasonable
amount determined by any court or other tribunal (further,we wish to bring to your attention that
to the extent any such provision provides for the payment of attorneys' fees in litigation, under
California law such attorneys' fees may be granted only to the prevailing party and such
provisions are deemed to extend to both parties, notwithstanding that,such provisions by their
express terms benefit only one party).
14. We express no opinion as to the exclusion from gross income for federal
income tax purposes of the interest on the Bonds, or the exemption of the interest on the Bonds
from the State of California personal income taxes, or any other matter relating to taxation, based
on income or otherwise. We understand that you will be receiving the opinion of Best Best&
Kreiger, LLP, counsel to the City with respect to certain of these matters and have,with your
permission, assumed without further verification, that the opinions set forth therein are true and
correct.
15. Except as provided in Paragraph D.6 below, we express no opinion with
respect to compliance with applicable federal and state securities statutes or other laws,rules or
regulations.
Allen Matkins Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 6
16. We have made no examination of, and express no opinion as to,title to, or
land use laws, rules, ordinances, codes, regulations or policies affecting,the properties within the
District.
D. Opinions of Counsel.
Based upon our examination of the Transaction Documents and subject to the
assumptions and qualifications set forth above, we are of the opinion that:
1. The Landowner Continuing Disclosure Agreement and the Funding
Agreement constitute the legal,valid and binding obligations of Developer, enforceable against
Developer in accordance with their terms.
3. The execution and delivery by Developer of the Landowner Continuing
Disclosure Agreement, the Operating Agreement, the REA and the Funding Agreement and the
performance of its obligations thereunder,to our actual knowledge, do not and will not result in
violation of any provision of or in default under, any agreement or instrument to which
Developer is a party,the violation or default of which would materially and adversely affect the
ability of Developer to complete its proposed development of the property, as described in the
Official Statement.
4. Except as described in the Official Statement and except for governmental
approvals and permits that are required to be obtained in the ordinary course of property
improvement, all actions necessary to be taken by the Developer have been taken, and to our
actual knowledge, no additional approval, authorization, consent, or other order of any public
agency is legally required to allow the Developer to enter into the Landowner Continuing
Disclosure Agreement, the Funding Agreement, the Operating Agreement or the REA.
5. Based solely upon a litigation search performed in California state and
federal courts (Orange and Los Angeles Counties)there are no lawsuits pending against
Developer, and to our actual knowledge, there are no legal or governmental actions,proceedings,
inquiries, or investigations pending or threatened by governmental authorities or to which
Developer is a party or of which any property of Developer is subject, which, if determined
adversely to the Developer,would individually or in the aggregate(a)have a material adverse
effect on the financial position or results or operations of the Developer or(b) otherwise
materially and adversely affect the ability of Developer to comply with its obligations under the
Landowner Continuing Disclosure Agreement, the Funding Agreement,the Operating
Agreement or the REA.
6. Without our having undertaken to determine independently the accuracy,
completeness or fairness of the statements contained in the Official Statement(or any of the
exhibits thereto),but based upon(a) our representation as special counsel to Developer, (b)our
review of, and our participation in drafting,the Official Statement(but expressly excluding any
Allen Matkins Leck Gamble & Mallory LLP
City of Huntington Beach attorneys at law
UBS Financial Services Inc.
April 15, 2004
Page 7
exhibits thereto) by participating in telephonic conferences with officers and other
representatives of Underwriter's counsel, City's counsel and other members of the financing
team and your representatives, at which conferences the contents of the Official Statement and
related matters were discussed,no facts have come to the attention of the lawyers presently in
our firm who have performed services for the Developer in connection with this transaction that
would cause us to believe that the statements contained therein relating to Developer,the
property owned by Developer or the Project contained in the Official Statement(excluding
therefrom (i) any financial,budgetary, economic, demographic, leasing, marketing, seismic,
environmental, statistical or engineering information, data or forecasts, numbers, charts,
estimates,projections, assumptions or expressions of opinion included or referenced therein or
the in the exhibits thereto, and(ii) any information about valuation, appraisals, absorption, or
environmental matters included or referenced therein or in the exhibits thereto, including,
without limitation, descriptions or summaries of all or any part of the Appraisal, as to which no
view need be expressed), contain any untrue statement of a material fact or omit any material
fact necessary in order to make such statements, in light of the circumstances under_which they
were made,not misleading.
Except for the opinions specifically set forth in Section D, no opinion is expressed
with respect to any aspect of this transaction.
E. Limitations.
Our opinions herein are based upon the existing laws of the State of California,
and we express no opinion as to the laws or regulations of other states or jurisdictions, or with
respect to the effect of noncompliance under any such laws or regulations. This opinion is
furnished to the Addressees solely for their benefit in connection with the Bond Purchase
Agreement and may not be relied upon, nor copies delivered to any other person or entity
without our prior written consent. The opinions expressed herein are based upon the laws of the
State of California as of this date, and we expressly decline any undertaking to advise you of any
legal developments or factual matters arising subsequent to the date hereof which would cause us
to amend any portion of the foregoing in part or in whole.
Very truly yours,
Am
Allen Matkms Leck Gamble &Mallory LLP
L�(�
ORDINANCE NO. 3417
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY.OF
HUNTINGTON BEACH PROVIDING FOR THE CITY OF
HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT
FINANCING LAW INCLUDING GENERAL PROVISIONS AND
DEFINITIONS, POWERS AND PROCEDURES TO ISSUE
COMMUNITY FACILITIES DISTRICT BONDS FOR THE
PURPOSE OF PROVIDING FINANCING FOR SPECIFIED
PURPOSES, AND CERTAIN OTHER SUPPLEMENTAL
PROVISIONS
THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DOES ORDAIN AS
FOLLOWS:
Section 1. Recitals. The City Council of the City of Huntington Beach does hereby find,
determine and declare that:
(a) the City of Huntington Beach (the "City") is a municipal corporation and
charter city duly organized and existing under a charter pursuant to which the City has the
right and power to make and enforce all laws and regulations in respect to municipal affairs
and certain other matters in accordance with and as more particularly provided in Sections
3, 5 and 7 of Article XI of the Constitution of the State of California and Section 500 of
Article V of the Charter of the City(the "Charter"); and
(b) the City Council of the City acting under and pursuant to the powers reserved
to the City under Sections 3, 5 and 7 of Article XI of the Constitution of the State of .
California and Section 500 of Article V of the Charter, finds that the public interest and
necessity require the establishment by this procedural ordinance of a procedure for the
authorization of the levy of special taxes and the issuance of special tax bonds by the City
for the purpose of providing financing or refinancing for certain purposes as specified herein.
Section 2. Procedural Ordinance. A procedural ordinance for the authorization of the levy
of special taxes and.the issuance of special tax bonds is hereby enacted to read as follows:
r
l ,
SF-990rdfnance:Bonds316
03/19/99 42
ZO 39dd A8370 tUIO LSSTtLEb1L 6T :tT T@0Z/5T/S9
Ord . 354/ 7
CHAPTER 3.56
CITY OF HUNTINGTON BEACH SPECIAL TAX FINANCING IMPROVEMENT CODE
ARTICLE 1
GENERAL PROVISIONS
Section 3.56.010 Short title.
This ordinance shall be known and may be cited as the"City of Huntington Beach Special
Tax Financing Improvement Code," and shall be referred to herein as the"Code".
Section 3.56,020 Municipal and State affairs; authority conferred by Code; applicability of
laws.
This Code is adopted pursuant to Section 500 of Article V of the Charter of the City of
Huntington Beach. In proceedings had pursuant to. this Code which are a municipal affair, any
general laws referred to in this Code are deemed a part of this Code.
In the event that any proceeding had pursuant to this Code shall be adjudged a state affair,
it is declared to be the intention that the proceedings were had pursuant to any applicable general law
or laws.
This Code provides an alternative method of financing certain public and private capital
facilities and municipal services. The provisions of this Code shall not affect or limit any other
provisions of law authorizing or providing for the furnishing-of facilities or services, or the raising
of revenue for these purposes. The City may use the provisions of this Code in conjunction with the
Mello-Roos Community Facilities Act of 1982, as amended(commencing with Section 53311 of the
California Government Code) (the "Act' , or any other method of financing part or all of the cost
of providing the authorized kinds of public and private capital facilities and municipal services.
Actions not otherwise addressed in this Code shall be otherwise governed by the provisions of the
Act.
This Code shall.be deemed to provide a complete, additional and alternative method for
actions authorized hereby and shall be regarded as a supplemental and additional to the powers
conferred by other laws, including the Act.
Section 3.56.030 Conflicting provisions; severability.
Any provision in this Code which conflicts with any general law or act shall prevail over the
other such provision in connection with any proceedings taken pursuant-to this Code.
In the event any portion of this Code shall be declared illegal, unenforceable or
unconstitutional, such provision shall be deemed severable from.the rest of the provisions of this
Code.
2
SF-99Qrdi nanccBonds316
03/19/99 42
E0 39Vd M3-1D AiM LSSTVLEt7TL 6T :bT TOK/S.T%S0
avc . . 35417
Section 3.56.040. Actions or determinations by local agency
The local agency may take any actions or make any determinations which it determines are
necessary or convenient to carry out the purposes of this Code and.which are not otherwise
prohibited by late.
Section 3.56.050. Liberal construction of chapter; error, irregularity, neglect or omission
This Code shall be liberally construed in order to effectuate its purposes. No error,
irregularity, informality, and no neglect or omission of any officer,in any procedure taken under this
Code,which does not directly affect the jurisdiction of the legislative body to order the installation
of the facility or the provision of service, shall void or invalidate such proceeding or any levy for the
costs of such facility or service.
Section 3.56.060. Failure to receive notice, resolution, order or other matter not affecting
proceedings
The failure of any person to receive.a notice,resolution,order, or other matter shall not affect
in any way whatsoever the validity of any proceedings taken under the Code, or prevent the
legislative body from proceeding with any hearing so noticed.
Section 3.56.070 Definitions
Unless the context otherwise requires, the definitions contained in this article shall govern
the construction of this Code.
(a) "Act"means the Mello-Roos Community Facilities Act of 1982, as amended
(commencing with Section 53311 of the California Government Code).
(b) "City"means the City of Huntington Beach.
(c) "City Council"means the City Council of the City of Huntington Beach.
(d) "City Clerk" or "Clerk" means the City Clerk of the City of Huntington
Beach.
(e) "Community facilities district" or "district" means a legally constituted
governmental entity established pursuant to this Code and the Act for the sole purpose of financing
facilities and services.
(f) "Cost"means the expense of constructing, installing or purchasing the public
facility and of related land,.right-of-way, easements, including incidental expenses, and the cost of
providing authorized services, including incidental expenses.
3
S F-990rdinance:Bonds316
031 19/99 42
t7O 39Vd: A11370 AiIO LSSTVLEPTL 6T :VT T90Z/9TrSO
UDC. 3�4/ 7
(g) "Debt" means any binding obligation to pay or repay a sum of money,
including obligations in the form of bonds, certificates of participation, long-term leases, loans from
government agencies, or loans from banks, other financial institutions, private businesses, or
individuals, or long-term contracts.
(h) "Incidental expense"includes all of the following:
(1)The cost of planning and designing public facilities to be financed pursuant
to this Code, including the cost of environmental evaluations of those facilities.
(2) The costs associated with the creation of the district, issuance of bonds,
determination of the amount of taxes,collection of taxes, payment of taxes, or costs otherwise
incurred in order to carry out the authorized purposes of the district.
(3) Any other expenses incidental to the construction, completion, and
inspection of the authorized work-
(i) "Landowner," "owner" or"owner of land"means any person shown as the
owner of land on the last equalized assessment roll or otherwise known to be the owner of the land
by the city clerk. Notwithstanding the foregoing, "landowner, "owner" or"owner of land"means,
with respect to any land which is the subject of a condemnation action, the person entitled-to
possession of the land pursuant to such condemnation action, or with respect to land to which the
City or Redevelopment Agency has fee title, the person having a leasehold interest in the land for
a term exceeding 40 years. The legislative body has no obligation to obtain other information as to
the ownership of the land, and its determination of ownership shall be final and conclusive for the
purposes of this Code. A public agency is not a landowner owner or owner of land for purposes of
this Code, unless the land owned by a public agency-would be subject to a special tax pursuant to.
Section 3.56.040 or unless the public agency has acquired possession to the land through a
condemnation and has made the certification required in Section 3.56.300..
(j) "Legislative body"means the legislative body or governing board.of any local
agency, and with respect to the City means the City Council.
(k) "Local agency"means any city or county, whether general law or chartered, .
special district, school district,joint powers entity created pursuant to Chapter 5 (commencing with
Section 6500) of Division 7 of Title 1, or any other municipal corporation, district, or political
subdivision of the state.
(1) "Rate means a single rate of tax or a schedule of rates.
(m) "Redevelopment Agency"means the Redevelopment Agency of the City of
Huntington Beach.
(n) "Services" means the provision of categories.of services identified in Section
3.56.110. "Services"includes the performance by employees of functions,operations, maintenance,
4
SF-990rdinancv.2cnds316
03/0,,99 42
SO 3E1ad :d6373 l,lI� LSStt'LEt'ZL ET t'i T00�/5T/S�
Oro(. .3 5z/7
and repair activities. "Services" does not include activities or facilities identified in Section
3.56.120.
ARTICLE 2
PURPOSE OF DISTRICT
Section 3.56.100 Initiation of proceedings to establish district upon adoption of certain
local goals and policies.
(a). The City may initiate proceedings to establish a district pursuant to this Code only
if it has first considered and adopted local goals and policies concerning the use of this Code, except
in the case of districts being formed pursuant to a development agreement between the City and a
qualified developer and or the Redevelopment Agency and a qualified developer. The policies shall
include at least the following:
(1) A statement of the priority that various kinds of public facilities shall have for
financing through the use of this Code, including public facilities to be owned
and operated by other public agencies, including school districts.
(2) A statement concerning the credit quality to be required of bond issues,
including criteria to be used in evaluating the credit quality.
(3) A statement concerning steps to be taken to ensure that prospective property
purchasers are fully informed about their taxpaying obligations imposed
under this Code.
(4) A statement concerning cnitetia for evaluating the equity of tax allocation
formulas, and concerning desirable and maximum amounts of special tax to
be levied against any parcel pursuant to this Code.
Section 3.56.110. Establishment of community facilities district to finance certain services
A community facilities district may be established under this Code to finance any one or
more of the following types of services within an area:
(a) Police protection services, including, but not limited to, criminal justice services.
However, criminal justice services shall be limited to providing services for jails, detention facilities,
and juvenile halls.
(b) . Fire'protection and suppression services, and ambulance and paramedic services.
(c) Recreation program services, library services, maintenance services for elementary
and secondary school sites and structures, and the operation and maintenance of museums and,
cultural facilities. Bonds may not be issued pursuant to this Code to fund any of the services
specified in this subdivision. A special tax may be levied for any of the services specified in this
5
SF-990rdinance:9ond3316
03119199-42
90 39Vcl Na379 AiI9 LSSTVLEVIL 61 :VT T00Z/9_T/SCE
subdivision only upon approval of the voters as specified in subdivision(b)of Section 53328 of the
Act, However, the requirement contained in subdivision (b) of Section 53328 of the Act that a
certain number of persons have been registered to vote for each of the 90 days preceding the close
of the protest hearing does not apply to an election to enact a special tax for recreation program
services, library services, and the operation and maintenance of museums and cultural facilities
subject to subdivision (c) of Section 53326 of the Act.
(d) Maintenance of streets,landscaping, street lighting,parks,parkways, and open space.
(e) Flood and storm protection services, including,but not limited to, the operation and
maintenance of storm drainage systems, and sandstorrn protection systems.
(f) Services with respect to removal or remedial action for the cleanup of any hazardous
substance released or threatened to be released into the environment. As used in this subdivision,
the terms "remedial action" and"removal"shall have the meanings set forth in Sections 25322 and
25323, respectively, of the Health and Safety Code, and the term"hazardous substance" shall have
the meaning set forth.in Section 25281 of the Health and Safety Code. Community facilities districts
shall provide the State Department of Health Services and local health and building departments with
notification of any cleanup activity pursuant to this subdivision at least 30 days prior to
commencement of the activity.
Section 3.56.120. Additional financing powers of district; purchase, construction,
expansion, improvement, rehabilitation, or planning and design work of
real or tangible property
A community facilities district may also finance the purchase, construction, installation.
expansion,improvement, or rehabilitation of any real or other tangible property with an estimated
useful life of five years or longer or may finance planning and design work that is directly related
to the purchase, construction, expansion, or rehabilitation of any real-or tangible property. The
facilities need not be physically located within the district. A district may only:Finance the purchase
of facilities whose construction has been completed, as determined by the legislative body,before
the resolution of formation to establish the district is adopted pursuant to Section 53325.1 of the Act,
except that a district may finance the purchase of facilities completed after the adoption of the
resolution of formation if the facility was constructed as if it had been constructed under the direction
and supervision, or under the authority of, the local agency. For example, a community facilities
district may finance .facilities, including, but not limited to, the following:
(a) Local park, recreation,parkway, open-space facilities,beach maintenance facilities,
beach access facilities and parking facilities adjacent or accessible to such facilities.
(b) Elementary and secondary school sites and structures provided that the facilities meet
the building area and cost standards established by the State Allocation Board.
(c) Libraries.
6
Sf`Mrdinan=Bonds316
03/19/99 42
LO 39vd A1!379 AiI3 L99TVLEVTL 6T :riT TOO(19T/SO
o Id. 3Sz! 7
(d) Child care facilities, including costs of insuring the facilities against loss, liability
insurance in connection with the operation of the facility, and other insurance costs relating to the
operation of the facilities,but excluding all other operational costs. However, the proceeds of bonds
issued pursuant to this Code shall not be used to pay these insurance costs.
(e) The district may also finance the construction or undergrounding of water
transmission and distribution facilities, natural gas pipeline facilities, telephone lines, facilities for
the transmission or distribution of electrical energy;and cable television lines to provide access to
those services to customers who do not have access to those services or to mitigate existing visual
blight. The district may enter into an agreement with a public utility to utilize those facilities to
provide a particular service and for the conveyance of those facilities to the public utility. "Public
utility" shall include all utilities,whether public and regulated by the Public Utilities Commission,
or municipal. If the facilities are conveyed to the public utility, the agreement shall provide that the
cost or a portion of the cost of the facilities that are the responsibility of the utility shall be refunded
by the public utility to the district or improvement area thereof, to the extent.that refunds are
applicable pursuant to (1) the Public Utilities Code or rules of the Public'Utilities Commission, as
to utilities regulated by the commission, or (2) other laws regulating public utilities. Any
reimbursement made to the district shall be utilized to reduce or minimize the special tax levied
within the district or improvement area, or to construct or acquire additional facilities within the
district or improvetizent area, as specified in the resolution of formation.
(f) The district may also finance the acquisition, improvement, rehabilitation, or
maintenance of any real or other tangible property, whether privately or publicly owned, for the
purposes described in subdivision(e) of Section 3.56.110.
(g) The district may also pay in full all amounts necessary to eliminate any fixed special
assessment liens or to pay, repay,or defease any obligation to pay or any indebtedness secured by
any tax, fee, charge, or assessment levied within the area of a community facilities district or may
pay debt service on that indebtedness. In addition, tax revenues of a district may be used to make
lease or debt service payments on any lease, lease purchase contract, or certificate of participation
used to finance authorized district facilities.
(h) Any other governmental facilities which the legislative body creating the community
facilities district is authorized by law to contribute revenue to, or construct, own, or operate.
However,the district shall not operate or maintain or, except as otherwise provided in subdivisions
(e) and(f),have any ownership interest in any facilities for the transmission or distribution of natural
gas,telephone service, or electrical energy.
(i) (1) A district.may also pay for the following:
(A) Work deemed necessary to bring buildings or real property, including
privately owned buildings or real property, into compliance with seismic
safety standards or regulations. Only work certified as necessary to comply
with seismic safety standards or regulations by local building officials may
be financed. No project involving the dismantling of an existing building and
7
SF-990rdinanm B onds316
ORIW99.42
80 39�Jd A837D AiID LSSIVLEb1L 6T:bT 100'/5.
Ord
its replacement by a new building, nor the construction of a new or
substantially new building may be financed pursuant to this subparagraph.
Work on qualified historical buildings or structures shall be done in
accordance with the State Historical Building Code (Part 2.7 (commencing
with Section 18950) of Division 13 of the Health and Safety Code).
(B) In addition, within any county or area designated by the President of the
United States or by the Governor as a disaster area or for which the Governor
has proclaimed the existence of a state of emergency because of earthquake
damage,a district may also pay for any work deemed necessary to repair any
damage to real property directly or indirectly caused by the occurrence of an
earthquake cited in 'the President's or the Governor's designation or
proclamation, or by aftershocks associated with that earthquake, including
work to reconstruct, repair, shore up, or replace any building damaged or
destroyed by the earthquake. Work may be financed pursuant to this
subparagraph only on property or buildings identified in a resolution of
intention to establish a community facilities district adopted within seven
years of the date on which the county or area is designated as a disaster area
by the President or by the Governor or on which the Governor proclaims for
the area the existence of a state of emergency.
(2) Work on privately owned property, including reconstruction or
replacement of privately owned buildings pursuant to subparagraph(B) of paragraph
(1), may only be financed by a tax levy if all of the votes cast on the question of
levying the tax, vote in favor of levying the tax, or with the prior written consent to
the tax of the owners of all property which may be subject to the tax,in which case
the prior written consent shall be deemed to constitute a vote in favor of the tax and
any associated bond issue. Any district created to finance seismic safety work on
privately owned buildings, including repair, reconstruction, or replacement of
privately owned buildings pursuant to this subdivision,.shall consist only of lots or
parcels on which the legislative body finds that the buildings to be worked on,
repaired,reconstructed, or replaced,pursuant to this subdivision, are located or were
located before being damaged or destroyed by the earthquake cited pursuant to
subparagraph (B) of paragraph (1) or by the aftershocks of that earthquake.
(j) (1) A district may also pay for the following:
(A) Work deemed necessary to repair and abate damage caused to privately
owned buildings and structures by soil deterioration. "Soil deterioration"
means a chemical reaction by soils that causes structural damage or defects
in construction materials including concrete, steel, and ductile or cast iron.
Only work certified as necessary by local building officials may be financed.
No project involving the dismantling of an existing building or structure and
its replacement by a new building or structure,nor the construction of a new
8
SF'990rdinw)ce:Bonds316
03119199.42
60 39Vd A6373 LSSTbLEOTL 6T :bT T00Z/91/S0
Dear_ 3 ��7
or substantially new building or structure may be financed pursuant to this .
subparagraph.
(B) Work on privately owned buildings and structures pursuant to this
subdivision, including reconstruction, repair, and abatement of damage
caused by soil deterioration, may only be financed by a tax levy if all of the
votes cast on the question of levying the tax vote in favor of levying the tax.
Any district created to finance the work on privately owned buildings or
structures,including reconstruction, repair, and abatement of damage caused
by soil deterioration, shall consist only of lots or parcels on which the
legislative body finds that the buildings or structures to be worked on
pursuant to this subdivision suffer from soil deterioration.
Section 3.56.130. .Additional district financing powers
Pursuant to Section 3.56.120, a community facilities district may also finance the acquisition
improvement,rehabilitation,or maintenance of any real or other tangible property,whether privately
or publicly owned, for the purposes described in subdivision (f) of Section 3.56.11.0.
Section 3.56.140. Revolving fund for cleanup of hazardous substances; withdrawal of funds
(a) In connection with the financing of services and facilities pursuant to subdivision(f)
of Section 3.56.110 and Section 3.56.130,the legislative body may establish a revolving fund to be
kept in the treasury of the district. Except as provided in subdivision (b), moneys in the revolving
fund shall be expended solely for the payment of costs with respect to those services and facilities.
The revolving fund may be funded from time to time with moneys derived from any of the
following:
(1) Proceeds of the sale of bonds issued pursuant to Article 5 (commencing with
Section 5-1), notwithstanding any limitation contained in Section 3.56.410.
(2) Any taxes or charges authorized under this Code.
(3) Any other lawful source.
(b) Subject to the provisions of any resolution, trust agreement or indenture providing
for the issuance of district bonds for the purposes set forth in Section 3.56.130, the legislative body
may withdraw money from the revolving fund whenever and to the extent that it finds that the
amount of money therein exceeds the amount necessary to accomplish the purposes for which the
revolving fund was established. Any moneys withdrawn from the revolving fund shall be used to
redeem bonds of the district issued for the purposes set forth in Section 3.56.300 or shall be paid to
taxpayers in the district in amounts which the legislative body determines.
9
S F-990rdinancvB onds316
03/19/99-#Z
6T 39bd SI8310 AlID1 LSSTbLEPTL 6T :VT T00Z/9.T/SO
Dom. 3 SL/T
Section 3.56.150. Liability; removal or remedial action; hazardous substances released or
threatened to be released
(a) Any responsible party as defined by subdivision (a) of Section 25323.5 of the Health
and Safety Code shall be liable to the district for the costs incurred in the removal or remedial action
for the cleanup of any hazardous substance released or threatened to be released into the
environment. The amount of the costs shall include interest on the costs accrued from the date of
expenditure. The interest shall be calculated based on the average annual rate of return on the
district's investment of surplus funds for the fiscal year in which the district incurred the costs.
Recovery of costs by a community facilities district under this section shall be commenced before
or immediately upon completion of the removal or remedial action, and payments received hereunder
by the district shall be deposited in the revolving fund in accordance with Section 3.56.140.
(b) . To expedite cleanup, this section is intended to provide local jurisdictions an
alternative method of financing the cost of removal or remedial action.for the cleanup of any
hazardous.substance through the issuance of voter-approved limited obligation bonds. The
provisions of this section 'shall not affect or limit the provisions of any other law establishing the
liability of any person for, or otherwise regulating, the generation,transportation, storage,treatment,
ordisposal of hazardous substances. The scope and standard of liability for any costs recoverable
pursuant to Section 3.56.150 shall be the scope and standard of liability set forth in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended(42
U.S.C. Sec. 6901 et seq.), or any other provision of state or federal law establishing responsibility
for cleanup of hazardous waste sites.
Section 3.56.160. Ordinance; local agency contribution; purposes
At any time either before or after the formation of the district, the legislative body may.
provide, by.ordinanee, that for a period specified in the ordinance, the local agency may contribute,
from any source of revenue not otherwise prohibited by law, any specified amount, portion, or
percentage of the revenues for the purposes set forth in the ordinance, limited to the following: the
acquisition or construction of a facility, the acquisition of interest in real property, or the payment
of debt service with respect to the financing of either, the provision of authorized services, and the
payment of expenses incidental thereto. The contribution shall not constitute an indebtedness or
liability of the local agency.
Section 3.56.1.70 Joint community facilities agreement or joint exercise of powers
agreement
(a) A community facilities district may finance facilities to be owned or operated by an
entity other than the agency that created the district, or services to be provided by an entity other than
the agency that created the district, or-any combination, only pursuant to a joint community facilities
agreement or a joint exercise of powers agreement adopted pursuant to this section.
(b) At any time prior to the issuance of bonds by the district, the legislative bodies of two
or more local agencies may enter into a joint community facilities agreement pursuant to this section
10
SF-990rdinanee:Bonds316
03/1 U/99?tZ
TT 37ad A637D AiID LSSTbLEbTL 6T bT . TOOZ/91r50
31117
and Sections 53316.4 of the Act and 53316.6 of the Act or into a joint exercisc of powers agrecnient
pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the California
Government Code to exercise any power authorized by this Code with respect to the community
facilities district being created or changed if the legislative body of each entity adopts a resolution
declaring that such a joint agreement would be beneficial to the residents of that entity.
(e) Notwithstanding Chapter 5 (commencing with Section 6500) of Division 7 of Title
1 of the California Government Code, a contracting party may use the proceeds of any special tax
or charge levied pursuant to this Code or of any bonds or other indebtedness issued pursuant to this
Code to provide facilities or services which that contracting party is otherwise authorized by law to
provide, even though another contracting party does not have the power to provide those facilities
or services. .
(d) Notwithstanding subdivision (b),nothing in this section shall prevent entry into or
amendment of a joint community facilities agreement or a joint exercise of powers agreement, after
the issuance of bonds by the district,if the new agreement or amendment is necessary, as determined
by the legislative body, for either of the following reasons:
(1) To allow an orderly transition of governmental facilities and finances in the
case of any change in governmental organization approved pursuant to the
Cortese-�nox Local Government Reorganization Act of 1985 (Division l
(commencing with Section 56000) of Title 6).
(2) To allow participation in the agreement by a state or federal agency that could
or would not otherwise participate, including, but not limited to, the
California Department of Transportation.
(e) Notwithstanding any other provision of this Code,no local agency which is party to
a joint exercise of powers agreement or joint community facilities agreement shall have primary
responsibility for formation of a district or an improvement area within a district, or for an extension
of authorized facilities and services or a change in special taxes pursuant to Article 3,.unless that
local agency is one or more of the following:
(1) A city, a county, or a city and county.
(2) An agency created pursuant to a joint powers agreement that is separate from
the parties to the agreement, is responsible for the administration of the
agreement, and is subject to the notification requirement of Section 6503.5.
(3) An agency that is reasonably expected to have responsibility for providing
facilities or services to be financed by a larger share of the proceeds of special
taxes and bonds of the district or districts created or changed pursuant to the
joint exercise of powers agreement or the joint community facilities
agreement than any other local agency.
11
SF-990rdinancc:Bunds316
03/19/99-42
�T 3Cidd :163-10 i,lKi LSSTbLEbTL 6i :bT i00Z/5Tr'SO
Ong. s 7
Section 3.56.180. Special tax; property acquired by public entity through negotiated
transaction or by gift or devise
If property not otherwise exempt from a special tax levied pursuant to this Code is acquired
by a public entity through a negotiated transaction, or by gift or devise, the special tax shall,
notwithstanding Section 53340 of the Act, continue to be levied on the property acquired and shall
be enforceable against the public entity that acquired the property. However,even if the resolution
of formation that authorized creation of the district did not specify conditions under which the
obligation to pay a special tax may be prepaid and permanently satisfied, the legislative body of the
local agency that created the district may specify conditions under which the public agency that
acquires the property may prepay and satisfy the obligation to pay the tax. The conditions may be
specified only if the local agency that created the district finds and determines that the prepayment
arrangement will fully protect the interests of the owners of the district's bonds.
Notwithstanding any other provision of this Code, any public agency other than a city, county
or school district may subject property owned by it to the levy of special taxes, if it shall certify to
the City Council: (a)its agreement.to do so, (b) that it.intends to dispose of such property by transfer
to a non-governmental agency at some time in the future, and (c),that it agrees to cooperate in the
sale of property if necessary to obtain funds to pay any special taxes levied upon such property.
Section.3.56.190. Special tax; special assessment on property acquired by public entity
through eminent domain
If property subject to a special tax levied pursuant to this Code is acquired by a public entity
through eminent domain proceedings, the obligation to pay the special tax shall be treated,pursuant
to Section 1265.250 of the Code of Civil Procedure, as if it were a special annual assessment. For
this purpose,the present value of the obligation to pay a special tax to pay the principal and interest
on any indebtedness incurred by the district prior to the date of apportionment determined pursuant
to Section 5082 of the Revenue and Taxation Code shall be treated the same as a fixed lien special
assessment.
ARTICLE 3
PROCEEDINGS TO CREATE A COMtii 1UNITY FACILITIES DISTRICT
Section 3.56.200. Institution of proceeding; request; petition; fee
Proceedings for the establishment of a community facilities district may be instituted by the
Iegislative body on its own initiative and shall be instituted by the legislative body when any of the
following occurs:
(a) A written request for the establishment of a district, signed by two members of the
legislative body, describing the boundaries of the territory which is proposed for inclusion in the area
and specifying the type or types of facilities and services to be financed by the district, is filed with
the legislative body.
12
SF-990rdinance:Bonds316
03/19/99 42
ET 39hd AI 1370 AiI9 LSSTbGEbTL 6T bT TOOZ/9US10
117
(b) A petition requesting the institution of the proceedings signed by the requisitc number
of registered voters, as specified in subdivision(d)of Section 3.56.210, is filed with the clerk of the
legislative body. The petition may consist of any number of separate instruments, each of which
shall comply with all of the requirements of the petition, except as to the number of signatures.
(c) A petition requesting the institution of the proceedings signed by landowners owning
the requisite portion of the area of the proposed district, as specified in subdivision (d) of Section
3.56.210, is filed with the clerk of the legislative body.
(d) The written request filed pursuant to subdivision(a)and the petitions filed pursuant
to subdivisions (b) and (c) shall be accompanied by the payment of a fee in an amount which the
legislative body determines is sufficient to compensate the legislative body for all costs incurred in
conducting proceedings to create a district pursuant to this Code.
Section 3.56.210. Petition; contents; findings as to requisite number of signers
A'petition requesting the institution of proceedings for the establishment of a community
facilities district shall do all of the following:
(a) Request the legislative body to institute proceedings to establish a community
facilities district pursuant to this Code.
(b) Describe the boundaries of the territory which is proposed for inclusion in the district.
(c) State the type or types of facilities and services to be financed by the district.
(d) Be signed by not less than 10 percent of the registered voters residing within the.
territory proposed to be included.within the district or by owners of not less than 10 percent of the
area of land proposed to be included within the district. If the legislative body finds that the petition
is signed by the requisite number of registered voters residing within the territory proposed to be .
included within the district or by the requisite number of owners of land proposed to.be included
within the district,that finding shall be final and conclusive.
Section 3.56.220. Resolution of intention to establish district; time for adoption
Within 90 days after either a written request by two members of the legislative body or a
petition requesting the institution of proceedings for the establishment of a community facilities
district' is fled with the legislative body, it shall adopt a resolution of intention to establish a
community facilities district in the form specified in Section 53321 of the Act.
Section 3.56.230. Reports and estimate of costs by responsible officers; remedial action
plan for cleanup of hazardous substance; inclusion in record of hearing
At the time of the adoption of the resolution of intention to establish a community facilities
district, the legislative body shall direct each of its officers who is or will be responsible for
13
SF-990rdinance Bonds316
03/19/99-92
hT 39hd :863-10 AiIO L9ST17LEt7TL 61 :bT T00Z/9T/S0
J 7
providing one or more of the proposed types of public facilities or services to be financed by the
district,if it is established, to study the proposed district and, at or before the time of the hearing, file
a report with the legislative body containing a brief description of the public facilities and services
by type which will in his or her opinion be required to adequately meet the needs of the district and
his or her estimate of the cost of providing those public facilities and services. If the purchase of
completed public facilities or the payment of incidental expenses is proposed, the legislative body
shall direct its appropriate officer to estimate the fair and reasonable cost of those facilities or
incidental expenses.
If removal or remedial action for the cleanup of any hazardous substance is proposed, the
legislative body shall (a) direct its responsible officer to prepare or cause to be prepared, a remedial
action plan based upon factors comparable to those described in subdivision(c) of Section 25356.1
of the Health and Safety Code or.(b) determine, on the basis of the particular facts and
circumstances,which shall be comparable to those described in subdivision(g) of Section 25356.1
of the Health and Safety.Code,that the remedial action plan is not required or(c) condition financing
of the removal or remedial action upon approval of a remedial action plan pursuant to Section
25356.1 of the Health and Safety Code. All of those reports shall be made a part of the record of the
hearing on the resolution of intention to establish the district.
ARTICLE 4
PROCEDURES FOR LEVYING
Section 3.56.300 Lease or possessory Interest by exempt person or entity to nonexempt .
person or entity; lease provisions; collection
(a) If a public agency owning property, including property held in trust for any
beneficiary, which is exempt from a special tax pursuant to Section 53340 of the Act grants a
leasehold or other possessory interest in the property to a nonexempt person or entity,the special tax
shall, notwithstanding Section 53340 of the Act, be levied on the leasehold or possessory interest
and shall be payable by the owner of the leasehold or possessory interest.
(b) When entering into a lease or other written contract creating a possessory interest that
may be subject to.taxation,pursuant to subdivision (a), the public agency shall include, or cause to
be included, in the contract a statement that the property interest may be subject to special taxation
pursuant to this Code, and that the party in whom the possessory interest is vested may be subject
to the payment of special taxes levied on the interest. Failure to comply with the requirements of
this section shall not, however, invalidate the contract.
(c) If the special tax on any possessory interest levied pursuant to subdivision (a) is
unpaid when due,the tax collector may use those collection procedures which are available for the
collection of assessments on the unsecured roll.
14
SF-990rdinance.Bonds316
03/19/99-42
Si 39Vd A83-10 AiM LSSTbLEbTL Et bi t9acl5iiS�l
orc[. 31117
Section 3.56.310 Actions or proceedings against levy of special tax or increase in special
tax; time for commencement; time for perfection of appeal from final
judgment
Any action or proceeding to attack, review, set aside,void, or annul the levy of a special tax
or an increase in a special tax pursuant to this Code shall be commenced within 30 days after the
special tax.is approved by the voters. Any appeal from a final judgment in that action or proceeding
shall be perfected within 30 days after the entry of judgment.
Section 3.56.320. Reservation of rights; tender of full. or partial payment; special tax
installments or interest or penalties.due or delinquent
(a) The legislative body may provide in the resolution issuing bonds and in documents
setting forth the rights of the debtholders that it shall reserve to itself,the right and authority to allow
any interested owner of property within the district, subject to the provisions of this section and to
those conditions as it may impose, and any applicable prepayment penalties as prescribed in the bond
indenture or comparable instrument or document, to tender to the district treasurer in full payment
or part payment of any installment of the special taxes or the.interest or penalties thereon which may
be due or delinquent, but for which a bill has.been received, any bond or other obligation secured
thereby, the bond or other obligation to be taken at par and credit to be given for the accrued interest
shown thereby computed to the date of tender. The district treasurer shall thereupon-cancel the bond
debt and shall cause proper credit therefor to be entered on the records of the district and in the office
of the auditor and tax collector. If the legislative body agrees to allow bond tenders pursuant to this
section [or to Section 3.56.490] the legislative body may, at its discretion, agree to distribute or direct
its trustee or other agent to distribute by any means an offer to purchase bonds or other related
inquiry to the holders of the bonds of the district, at the expense of the person requesting the mailing.
Neither the legislative body,nor any of its officers, agents,or trustees shall be liable in any way for
that distribution.
(b) The provisions of this subdivision apply to any tender of bonds pursuant to this
section by an owner of property within the district who is delinquent in paying special.taxes levied
by this district when due. Bonds may be tendered pursuant to this subdivision only after all of the
following conditions have been satisfied:
(1) The delinquent lot or parcel, or possessory interest in such delinquent lot or
parcel, has been offered for sale as a result of a foreclosure judgment and the
minimum price required to be paid for the lot or parcel, or possessory interest
in such delinquent lot or parcel; was not received.
(2) The bonds to be tendered to the district were obtained by the property owner,
or holder of the possessory interest, only after their prior owner was presented
with a tender offer or solicitation as defined in this subdivision.
(A) For purposes of this subdivision, a"tender offer" or"solicitation" is
a solicitation by any person or that person's agent by offering circular,
15
S F.990rd inance;Bonds316
03/19i99 42
91 3E)Vd :`I6310 AiIO LSSTVLEPTL 61 :bT TOOZ/9T/SO
memoranda,tender,or solicitation, or any other document or written,
oral, or electronic communication forthe purchase of the bonds from
their then current owner. A person includes a natural person,
corporation,company,partnership, limited liability company, limited
liability partnership, association, or any other entity and a"tendering
party' includes any person making a tender offer for bonds.
(B) Any tender offer or solicitation shall include all material information
as required under federal and state securities laws and shall also
include the following information,to the extent applicable:
(i) The name of the tendering party.
(ii) An individual who can be contacted to provide further
information with respect to the tender.
(iii) The current holdings of bonds of the district by the tendering
party and its affiliates.
(iv) The total face amount of the bonds being solicited.
(v) The price or method of determining the price per one thousand
dollars ($1,000)in bonds being offered by the tendering party.
(vi) Whether the tendering party or any person affiliated with or
related to the tendering party, or any employee, agent, or
representative of the tendering party, is a property owner
within the district that issued the bonds.
(vii) Whether the present intentions of the tendering party are to
use the bonds for payment of special taxes or the-purchase of
property(or purchase of possessory interest) at a foreclosure
sale pursuant to this section or Section 3.56.490. This
statement of present intentions shall not be construed to be
binding on the tendering party.
(viii) The status of the bond redemption fund, construction fund,
reserve fund, and any other'funds of the district, and the
special tax delinquency rate of the district, all of which data
shall be the most recent available from the district and,in any
event, shall apply to the state of the funds after the most
recent payment of principal and interest on the bonds. The
district shall provide the necessary data to the property owner
within 10 days of receiving a written request and may charge
a reasonable fee not to exceed its actual costs of providing the
16
SF-990rdinance:Bonds316
03/19/99-92
LT 3Vdd Ai 1370 LSSTbLEtTL ET :VT T06Z/91/5O
data. The district shall simultaneously release the same
information to the general public. The property shall also
provide the percentage of the delinquency attributable to the
tendering party or any person affiliated with or related to the
tendering party, or any employee, agent, or representative of
the tendering party, for each of the three most recent fiscal
years.
(ix) If the tendering party owns or leases property in the district
that issued the bonds,the development plans for that property
and an update on the current status of development of that
property and of any zoning, planning, or other permits or
approvals needed for development of the property to proceed.
(x) Any other material information available to the tendering
party and not generally available to the public that would
significantly affect the market value of the bonds of the-
district.
(C) The tendering party shall notify the legislative body of his or her
intent to make a tender offer or solicitation at least simultaneously
with making any offer or solicitation.
()D) The tendering party shall provide a copy of the solicitation to the
Department of Corporations prior to five working days after notifying
the legislative body pursuant to subparagraph (C).
(3) The tendering property owner or tendering possessory interest holder provides
the legislative body with a negative assurance from counsel representing the
property owner or tendering possessory interest holder that no misleading or
other information has come to the opining party's attention after.reasonable
investigation, that would lead the party providing the negative assurance to
believe that the tender was in violation of federal or state securities laws.
(4) The tendering property owner delivers to the legislative body of the district
that issued the bonds subject to the tender, a certificate to the effect that the
tender information is accurate in all material respects and does not omit to
state a material fact necessary in order to make the statements included in the
tender information not'misleading, except that the certificate need not provide
any assurances as to the, accuracy of the information as to the bond fund
balances and tax payment information provided by the district.
(c) The provisions of this subdivision apply to any tender of bonds pursuant to this
section by any owner of property within the district who is not delinquent in paying special taxes on
any property within the district. A person subject to this subdivision shall be deemed to be a person
17
SF-990rdinancc:Bonds3l b
03/19/99.42
8T 3E)Vd A 13-10 AiI3 LSSTVLEVTL ET :tT TOOZ!4T!S9
1
whose relationship to the issuer may give him or her access, directly or indirectly, to material
information about the issuer not generally available to the public, and the provisions of Section
25402 of the Corporations.Code apply to any purchase or sale of securities by that person in
connection with the tender transaction. For purposes of this subdivision, the "issuer"includes the
district, the local agency that created the district, and any owner of property within the district. At
any time prior to tendering bonds to the district pursuant to this section, any person subject to this
subdivision shall deliver to the legislative body of the district a certificate that he or she has complied
with this subdivision and applicable federal and state securities laws.
ARTICLE 5
Section 3.56.400 Resolution to incur bonded indebtedness
Whenever the legislative body deems it necessary for the community facilities district to
incur a bonded indebtedness, it shall,by resolution, set forth all of the following:
(a) A declaration of the necessity for the indebtedness.
(b) The purpose for which the proposed debt is to be incurred.
(e) The amount of the proposed debt. The legislative body may provide for a reduction
in the amount of proposed debt in compliance with the provisions of Section 53313.9 of the Act.
(d) The time and place for a hearing by the legislative body on the proposed debt issue.
Section 3.56.410 Inclusion of certain costs and estimated costs in proposed bonded
indebtedness
The amount of the proposed bonded indebtedness may include all costs and estimated costs
incidental to,or connected with,the accomplishment of the purpose for which the proposed debt is
to be incurred, including, but not limited to, the estimated costs of construction, improvement or
acquisition of buildings, or both; acquisition of land, rights-of-way, water, sewer, wetlands
mitigation or other capacity or connection fees; lease payments for school facilities, satisfaction of
contractual obligations relating to expenses or the advancement of funds for expenses existing at the
time the bonds are issued pursuant to this Code; architectural, engineering, inspection, legal, fiscal-,
and financial consultant fees; bond and other reserve funds; discount fees;interest on any bonds of
the district estimated to be due and payable within two years of issuance of the bonds; election costs;
and all costs.of issuance of the bonds, including,but not limited to, fees for bond counsel, costs of
obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit
enhancement costs, and printing costs.
l.8
SF-990rdinancc:9onds316 -
03!19/99-2
ET 39Vd A63-10 AiM LSgtbLEOTL ET :t T TOK/9T/S0
Section 3.56.420 Sale of bonds; appraisal of real property subject to special tax for paying
debt service.on bond; determination of no-unusual credit risk; vote to
proceed for specified public policy reasons
(a) The legislative body may sell bonds pursuant to this Code only if it determines prior
to the award of sale of bonds that the value of the real property that would be subject to the special
tax to pay debt service on the bonds will be at least three times the principal amount of the bonds to
be sold and the principal amount of all other bonds outstanding that are secured by a special tax
levied pursuant to this Code on property within the community facilities district or a special
assessment levied on property within.the community facilities district. Any determination made
pursuant to this subdivision shall be based upon the full cash value as shown on the ad valorem
assessment roll or upon an appraisal of the subject property made in a manner consistent with the
policies adopted pursuant to paragraph(5)of subdivision(a) of Section 3.56.100 by a state certified
real estate appraiser, as defined in subdivision (c) of Section 11340 of the California Business and
Professions Code. The Treasurer may recommend definitions,standards, and assumptions.to be used
for these appraisals. These definitions, standards, and assumptions are advisory only, and the
definitions,standards, and assumptions to be applied to appraisals will be those adopted by the local
agency pursuant to paragraph (5) of subdivision (a) of Section 3.56.100.
(b) Notwithstanding the provisions of subdivision (a), if the legislative body selling the
bonds finds and determines that the proposed bonds do not present any unusual credit risk due to the
availability of credit enhancements or for other reasons specified by the legislative body, the
provisions of subdivision (a) maybe disregarded.
(c) Notwithstanding the provisions of subdivision (a), if the legislative body selling the
bonds finds.and determines by a vote of not less than four-fifths of all of its members that the
proposed bond issue should proceed for specified public policy reasons, the provisions of
subdivision (a) may be disregarded.
A finding and determination by the legislative body pursuant to this subdivision shall be final
and conclusive upon all persons in the absence of actual fraud, and neither the legislative body nor
the district shall have any liability of any kind whatsoever out of, or in connection with, any finding
and determination.
Section 3.56.430 Agreement to notify one or more parties in the event specified events
occur affecting the market value of outstanding bonds; events triggering
notice
The bond indenture or other bond documents may provide that the legislative body agrees
to notify one or more parties, including the underwriter or other first purchaser of the bonds, an
appropriate national repository for bond information approved by the Securities and Exchange
Commission,or the California Debt Advisory Commission, in the event that specified events occur
which may affect the market value of outstanding bonds. These events may include, but are not
limited to, the following, for example:
19
SF-990rd inance:Bond9316
03/19/99-2
6Z 39ad A63-10 AiI3 LSSTOLEVTL 61 :VT TOOZ/9T/5;O
(a) Withdrawal of funds from any reserve fund for the bonds, such that the balance in the
fund falls below a specified percentage of the amount required by bond documents.
(b) Draw upon a letter of credit or other credit enhancement for the bonds.
(c) Filing for bankruptcy by a developer or other owner of more than a specified
percentage of the area or property value within the district.
(d) Unforeseen discovery of toxic materials or raze and endangered plant or animal
species within areas of the district_proposed for development.
Section 3.56.440 Action to foreclose liens; cumulative remedy; resolution to diligently
pursue foreclosure action; collection of delinquent charges
(a) As a cumulative remedy, if debt is outstanding, the legislative body may, not later
than four years after the due date of the last installment of principal thereof, order that any.delinquent
special taxes levied.in whole or in part for payment of the debt,together with any.penalties, interest,
and costs, be collected by an action brought in the superior court to foreclose the lien of special tax.
(b) The legislative body may, by resolution, adopted prior to the issuance of debt under
this Code covenant for the benefit of debt holders to commence and diligently pursue any foreclosure
action regarding delinquent installments of any amount levied as a special tax for the payment of
interest or principal of any bonds that are issued, and, at any time may assign the causes of action
arising from the foreclosure .to a trustee or joint powers authority .to do so on .behalf of the
debtholders. The resolution may specify a deadline for commencement of the foreclosure action.and
any other terms and conditions the legislative body determines reasonable regarding the foreclosure
action.
(c) Except as provided in Section 3.56.470, all special taxes, interest, penalties, costs,
fees; and other charges that are delinquent at the time of the ordering of a foreclosure action sliall
be collected in the action. In the event that a lot or parcel of property or a possessory interest has not
been sold pursuant to judgment in the foreclosure action. at the time that subsequent special taxes
become delinquent, the court may include the subsequent special taxes, interest, penalties, costs,
fees, and other charges in the judgment or modified judgment.
(d) For purposes of financing-delinquent special taxes pursuant to Section 26220 of the
California Government Code, the legislative body may act as if it were a board of supervisors.
(e) Notwithstanding any other provision of this Code,no trustee or joint powers authority
shall be obligated to accept the tender of bonds in satisfaction of any obligation arising from a.
delinquent special tax, although either may do so if authorized to do so by the legislative body.
(f) An action to determine the validity of any bonds issued, any joint powers agreement
entered into,and any related agreements entered into, by a joint powers agency acting pursuant to
this section may be brought by the joint powers agency pursuant to Chapter 9 (commencing with
20
SF-990rdir anue:Bunds316
03/19'99 A"2
Iv 39hd A6370 AiM LSSTVLEVTL ET :bT T00Z/9 T/S0
Section 860) of Title 10 of Part 2 of the Code of Civil Procedure. Any appeal from a judgment in
the action shall be commenced within 30 days after entry of judgment.
Section 3.56.450 Complainants; time limitations; contents of complaint
The foreclosure action shall be brought in the name of the local agency or trustee on behalf
of the bondholders pursuant to Section 3.56.440, and may be brought within the time specified in
Section 3.56.440. The complaint may be brief and need only include the following allegations;
(a) That on a stated date, a certain sum of special taxes, levied against the subject
property or possessory interest(describing it) pursuant to this Code,became delinquent.
(b) On that date,bonds issued pursuant to this Code,payable in whole or in part by the
subject special taxes, were outstanding.
(c) That the legislative body or trustee has ordered the foreclosure.
Section 3.56.460 Judgment decree; contents; amount; attorneys' fees; application of
general foreclosure provisions
(a) Any judgment shall decree the amount of the continuing lien against each parcel or
possessory interest to be foreclosed, and shall order the parcel to be sold on execution as in other
.cases of the sale of real property or possessory interests by,process of the court except:
(1) Notwithstanding Section 701.545 of the Code of Civil Procedure, notice of
sale of any lot or parcel or possessory interest included in the judgment may
be given pursuant to Section 701.540 of the Code of Civil Procedure anytime
after the expiration of 20 days after the date notice of levy on the interest in.
real property was served on the judgment debtor or debtors,provided that the
lot or parcel to be sold is not a dwelling for not more than four families and
provided that all parties whose liens are extinguished by the.foreclosure
judgment were either defendants in the foreclosure action or,for those parties
who acquired an interest in a lien on the parcel after the recording of notice
of the pending foreclosure action, received constructive notice of the action.
(2) Whenever notice of sale may be given after the expiration of 20 days after the
date notice of levy was served as provided in paragraph (1), the 30-day time
period contained in subdivision (h) of Section 701.540 of the Code of Civil
Procedure shall be reduced to 10 days.
(3) Upon proof that the lot or parcel or possessory interest to be sold is not a
dwelling for not more than four families, and upon determining that all
parties whose liens are extinguished by the foreclosure judgment were either
defendants in the foreclosure action or, for those parties who acquired an
interest in a lien on the parcel after the recording of notice of the pending
21
SF 99ordin3nce:Sonds3lb
03/19!99-42
ZZ 3Dhd A6370 AiID LSSTVLEt TL ET:VT THUST/S6
and - .3�/7
foreclosure action, received constructive notice of the action, pursuant to
Section 716.020 of the Code of Civil Procedure, the court shall order that
paragraphs (1) and (2) apply to any judgment previously entered.
(4) The minimum bid amount provided in Section 3.56.470 shall apply instead
of subdivision (a) of Section 701.620 of the Code of Civil Procedure.
(5) The local agency may bid at the price provided in Section 3.56.470 by giving
the levying officer a written receipt crediting all or part of the amount
required to satisfy the judgment. If the local agency becomes the purchaser
pursuant to bid,the local agency shall pay the amount of its credit bid into the
redemption fund within 24 months of the date of the foreclosure sale.
(6) Notwithstanding subdivision (c) of Section 701.620 of the Code of Civil
Procedure, if the minimum price required to be paid for a lot or parcel
pursuant to Section 3.56.470- is not obtained at a foreclosure sale, upon
written request of the local agency,the levying officer shall retain the writ of
sale and, provided that the writ of sale has not been returned to the court
pursuant to paragraph(1) of subdivision (a) of Section 699.560 of the Code
of Civil Procedure, give notice of sale pursuant to Section 701.540 of the .
Code of Civil Procedure without relevying on the property.
(7) As provided elsewhere in this Code.
(b) The judgment amount shall include reasonable attorneys' fees to be fixed by the court,
together with interest, penalties, and other authorized charges and costs(all calculated up to date of
judgment).
(c) The foreclosure action shall be governed and regulated by the provisions of this Code,
and also where not in conflict with this Code, by other provisions of law generally applicable to
foreclosure actions.
Section 3.56.470 Price of property or possessory interests sold
Property or possessory interests sold hereunder may not be sold for less than the amount of
the judgment plus post-3 udgment interest and authorized costs without the consent of the owners
of 75 percent by value of the outstanding bonds.
Section 3.56.480 Computation errors;validity of special tax installment,interest or penalty
No special tax installment, interest or penalties thereon, or deed shall be held invalid for any
error in computation if the error is found to be comparatively negligible, or is found to be in favor
of the owner of the real property affected thereby.
22
SF-990rdinanceSonds316
03/19/99-42
E% 3917d A637) A-LID LSSTbLEPTL ET :VT T09Z/9T/SO
3//7
Section 3.56.490 Tender of bonds or debt; special taxes;penalties and interest; satisfaction
of bid amount
Provided the legislative body permits bonds or debt to be tendered for special taxes and the
penalties and interest thereon pursuant to Section 3.56.320, if the highest bid for a lot or parcel sold
pursuant to a.judgment of foreclosure and order of sale exceeds five thousand dollars ($5,000) and
the highest bidder elects to treat the sale as a credit transaction pursuant to subdivision(c) of Section
701.590 of the Code of Civil Procedure, the balance due as provided in that section may be paid in
full or in part by tender of bonds or debt,provided,however,that bonds or debt may not be tendered
for costs of.foreclosure,including attorney's fees, and administrative charges incurred by the local
agency with respect to removing the special taxes from the rolls of the treasurer or tax collector, or
other administrative charges.
(a) Tender of bonds or debt shall be made to the local agency within seven days of the
date of the sale. The local agency shall be charged with authenticating the tender and shall,within
10 days of the date of the sale, submit a written receipt to the levying officer who conducted the sale
for the amount of the bond or debt tender accepted by it.
(b) Tender of cash or certified check or cashier's check shall be made to the levying
officer within 10 days of the date of the sale.
(c) The levying officer shall total the cash, certified checks and cashiers checks, and any
agency written receipts for bonds or debt to determine if the amount of the bid, plus accruing costs
and interests,has been paid. In no event shall the tendering party be entitled to receive cash or other
compensation in return for all or any part of the value of a tendered bond or bonds, except.for
recognition of their value in satisfying the amount bid.
(d) The tendering party shall comply with the provisions of Section 3.56.320, as
applicable as if they were fully set out in this section..
:Section 3.56.500 Notice of proposed sale of bonds; contents
(a) The legislative body shall, no later than 30 days prior to the sale of any bonds
pursuant to this article, give written notice of the proposed sale to the California Debt and Investment
Advisory Commission by mail, postage prepaid, as required by Chapter 12 (commencing with
Section 8855) of Division 1 of Title 2 of the California Government Code.
(b) Each year after the sale of any bonds, including refunding bonds, pursuant to this
article, and until the final maturity of the bonds, the legislative body shall,not later than October 30
of each year, supply the following information to the California Debt and Investment Advisory
Commission by mail,postage prepaid:
(1) The principal amount of bonds outstanding.
(2) The balance in the bond reserve fund.
23
S F-990rdinancc:6ands316
03/19/99 42
PC" � 1370 Ai10 LSSTPLEVIL 6t :bT i00Z/4-t/S0
(3) The balance in the capitalized interest fund, if any.
(4) The number of parcels which are delinquent with respect to their special tax
payments, the amount that each parcel is delinquent, the length of time that
each has been delinquent, and when foreclosure was commenced for each
delinquent parcel.
(5) The balance in any construction funds.
(6) The assessed value of all parcels subject to special tax to repay the bonds as
shown on the most recent equalized roll.
(c) In addition,with respect to any bonds sold pursuant to this article, regardless when
sold, and until the final maturity of the bonds, the legislative body shall notify the California Debt
and investment Advisory Commission by mail, postage prepaid, within 10 days if any of the
following events occur:
(1) , The local agency or its trustee fails to pay principal and interest due on any
scheduled payment date.
(2) Funds are withdrawn from a reserve fund to pay principal and interest on the
bonds beyond .levels set by the California Debt and Investment Advisory
Commission.
(d) Neither the legislative body nor the Califomia Debt and Investment Advisory
Commission shall be liable for any inadvertent error in reporting the information required by this
section.
24
SF'99Ordinancc:Bond3316
03l19199 42
SZ 3=1dd A63-ID AiID LSSTbLEbTL 6i bT i�0�!SZ�SFi
31I-/7
Section 3. Effective Date of Ordinance. _This Ordinance shall be published and posted
in the mariner specified in Section 500 of Article V of the Charter, and shall become effective thirty
.(30) days from and after the date of its final passage. This Ordinance shall be subject to referendum
pursuant to and as provided in Section 703 of the Charter and the laws of the State of California.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular
meeting thereof held on the 3rd day of 1999.
\"'V-Z�T—h4
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney
REVIEWED AND APPROVED:
City�dministrator
25
SF-990rdinancc:Bonds316
03/19/99 402
9Z 39Vd A8370 AiI3 LSSTVLEVTL 6T :01 T00Z/91/60
Ord..No. 3417
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF RUNTINGTONr BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing ordinance was read to said City Council
at a r_egular meeting thereof held on the 19tb day of April, 1999, and was again read to
said City Council at a regular meeting thereof held on the 3rd day of May, 1999, and
was passed and adopted by the affirmative vote of at least a majority of all the members.
of said City Council.
AYES: Julien, Bauer, Garofalo, Green, Dettloff,Harman, Sullivan
NOES: None
ABSENT: None
ABSTAIN: None
1,Connie Brockway CITY CLERK of the City of
Huntington Beach and ex-officio Clerk of the City
Council,do hereby certify that a syrupsis of this
ordin3nncce has been published in the Independent on
43 19
In accordance vith the Ciry Charter of said City City Clerk and ex-officio Clerk
Connie Brockvvav City Clerk of the City Council of the City
Deputy City Clerk of Huntington Beach, California
G%ordinandordbk-pS
:i10199
Lc 3_ldd X�TIC) AiI3 LSSTbLEbTL ET :bT T00Z/9T/90
ORDINANCE NO. 3546
AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING THE CITY OF
HUNTINGTON BEACH SPECIAL TAX FINANCING IMPROVEMENT CODE
WHEREAS, on May 3, 1999, the City Council of the .City .of Huntington Beach (the
"City") adopted Ordinance No. 3417 providing for the City of Huntington Beach Special Tax
Financing Improvement Code (the "Code"), constituting Chapter 3.56 of the Municipal Code of
the City; and
WHEREAS, The City Council now desires to amend the Code in order to broaden those
services that may be financed under Section 3.56.110 of the Code and to add provisions to the
Code to allow the expedited formation of, and the annexation of property to, community
facilities districts under the provisions of the Code.
NOW,_THEREFORE, the City Council of the City of Huntington Beach ordains as
follows:
Section 1. Section-3.56.110 of the Municipal Code of the City of Huntington Beach is
hereby amended by adding thereto, as clause (g) thereof, the following:
"(g) Maintenance of, and the provision of repair and replacement reserves for,
any other public improvement not specifically listed in the preceding clauses (a).'
through (f), the construction, installation, expansion, improvement or rehabilitation of
which may be financed under Section 3.56.120 or Section 3.56.130 of this Code."
Section 2.- The Code is hereby further amended by adding thereto,as Section 3.56.240 of
the Code, the following:
"3.56.240 Expedited Hearing Procedure. If the owners of all of the land to be
subject to the levy of special taxes within a proposed district, or within the territory
proposed to be annexed to an existing district, file petitions with the City Clerk
requesting the formation of the district or the annexation of territory to an existing
district, respectively, the public hearing referred to in Section 53321(e) or 53339.3(f), as
applicable, of the California Government Code may occur not less than 14 days after
adoption of the resolution of intention to form or to annex territory to the district, as
applicable, rather than the minimum of 30 days otherwise specified in said Sections of
the California Government Code."
Section 3. This Ordinance shall be published and posted in the manner specified in
Section 500 of Article V of the City Charter, and shall become effective thirty (30) days from and
after the date of its final passage. This Ordinance shall be subject to referendum pursuant to
and as provided in Section 703 of the City Charter and the laws of the State of California.
ATTACHMENT 1
ie=
Ord. No. 3546
PASSED AND ADOPTED at the regular meeting of the-City Council of the City of
Huntington Beach,State of California, on the day of 2002.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk of . '-(g Z- City Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED:
Aetd c. -
C Administrator Director of Economic Development
08003.07:J6084
2/21/02
G -1
-2-
CITY OF HUNTINGTON BEACH Vl.S1L � M1�
MEETING DATE: March 4, 2002 DEPARTMENT ID NUMBER: CA-02-09
Council/Agency Meeting Held: 03-04-7 aZ
Deferred/Continued to:
Approved 0 Conditionally Approved 0 Denied
3 & City Gle Signature
3 tao eI �f �
Council�vleeting ate: March 4, 20 Department ID Number: CA-02-09
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY:(AAIL HUTTON, City Attorney
DAVID BIGGS, Director of Econo is Development a -
AY SILVER, City Administrato N
ti/r5•s''
PREPARED BY: AIL HUTTON, City Attorney
SUBJECT: Adoption of Ordinance No.36 Adding Section 3,56.q_10(g}end
Section 3.56.240 to the Huntington Beach Special Tax.Furring
Improvement Code.
Statement of issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Si;Pus,Attachments)
STATEMENT OF ISSUE: Whether the City should amend the Huntington Beach Special
Tax Financing Improvement Code to broaden the services that may be provided by a
Community Facilities District and allow the owners of the land subject to the levy of special
taxes to petition the City Clerk and request an expedited public hearing procedure.
FUNDING SOURCE: N/A 1,: A _,tI7;ee 0u(�:Ti a/✓ 315`l
RECOMMENDED ACTION: Adopt Ordinance No 3.3-5� An Ordinance of the City of
Huntington Beach Amending the City of Huntington Beach Special Tax Financing
Improvement Code.
ALTERNATIVE ACTION(S): Do not adopt Ordinance No. -3. (:�
ANALYSIS: In 1999, the City Council adopted the City of Huntington Beach Special Tax
Financing Improvement Code, constituting Chapter 3.56 of the City's Municipal Code,As
originally enacted, the types of services authorized to be financed pursuant to Chapter 3.56
do not include maintenance of, and the provision of repair and replacement reserves for, any
facilities-otherwise authorized by Section 3.56. The attached amendment broadens the
RCA-3.56 2/25102 2:46 PM
1 ��
REQUEST FOR COUNCIL ACTION
MEETING DATE: March 4, 2002 DEPARTMENT ID NUMBER: CA-02-09
services that may be provided by a Communities Facilities District to include contemplated
maintenance and provide for future replacement of facilities. The attached amendment
further allows, upon petition of the owners of the land to be subject to the levy of special
taxes within a proposed district, to file petitions with the City Clerk requesting that the public
hearings required by Government Code Sections 53321(e) or 53339.3(f) occur not less than
14 days after adoption of the resolution of intention to form or to annex territory to the district,
as applicable, rather than the minimum of 30 days otherwise specified in said Sections of the
California Government Code.
McDonnell Douglas Corporation and Boeing Realty Corporation have proposed that the City
form a Community Facilities District ("District") pursuant to the provisions of the Mello-Roos
Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of
Division 2 of the Title 5 of the California Government Code. The proposed District would
include approximately 307 acres of land owned by McDonnell Douglas Corporation in the
northwestern portion of the City. The purpose of the District is to provide financing for the
costs of forming the District, the costs of issuance and payment of bonds under the
proceedings and for the acquisition and/or construction of streets, roadway improvements,
including improvements to intersections and arterial highways, street lights, landscaping,
sanitary sewers, water supply, including sewer and water treatment facilities, and storm
drainage, school facilities, impact fees and other fees ("Facilities"). Included within the
Facilities is a sewer lift station that will require on-going maintenance, as well as replacement
within forty (40) years. The proposed amendment to Section 3.56.110 will authorize the
inclusion of the estimated costs of the contemplated maintenance and replacement of the
sewer lift station in the Special Tax Requirement for the proposed District.
The purpose of the expedited hearing procedure is to allow the public hearing on the
formation of the proposed District and the annexation of future territory to the District to
occur two weeks after the adoption of the respective resolution of intention to form the
District or to annex territory into the District. The current period is thirty days. The
proposed amendment would reduce this time period to fourteen days upon a request from
all the owners of the land to be subject to the levy of special taxes, or within the territory
proposed to be annexed to an existing district.
Environmental Status: N/A
Attachment(s):
DescriptionCity Clerk's
Page Number No.31 Ordinance No.`3J Amending HBMC Chapter 3.56
r ^ 2. Legislative Draft of HBMC Chapter 3.56
RCA Author: LM \—
RCA-3.56 2/25102 2:49 PM
a2...
ATTACHMENT 2
ORDINANCE NO.
LEGISLATIVE DRAFT
CHAPTER 3.56
(3417-6/99)
CITY OF HUNTINGTON BEACH SPECIAL TAX FINANCING IMPROVEMENT CODE
Article 1 —Index
General Provisions
Sections:
3.56.010 Short title
3.56.020 Municipal and State affairs; authority conferred by Code; applicability of laws
3.56.030 Conflicting provisions; severability
3.56.040 Actions or determinations by local agency
3.56.050 Liberal construction of chapter; error, irregularity,neglect or omission
3.56.060 Failure to receive notice, resolution, order or other matter not affecting proceedings
3.56.070 Definitions
Article 2 - Index
Purpose of District
Sections:
3.56.100 Initiation of proceedings to establish district upon adoption of certain local goals and
policies
3.56.110 Establishment of community facilities district to finance certain services
3.56.120 Additional financing powers of district; purchase, construction, expansion,
improvement,rehabilitation,or planning and design work of real or tangible property
3.56.130 Additional district financing powers
3.56.140 Revolving fund for cleanup of hazardous substances; withdrawal of funds
3.56.150 Liability; removal or remedial action; hazardous substances released or threatened to
be released
3.56.160 Ordinance; local agency contribution;purposes
3.56.170 Joint community facilities agreement or joint exercise of powers agreement
3.56.180 Special tax;property acquired by public entity through negotiated transaction or by gift
or devise
3.56.190 Special tax;special assessment on property acquired by public entity through eminent
domain
Article 3 - Index
Proceedings To Create A Community Facilities District
Sections:
3.56.200 Institution of proceeding; request; petition; fee
3.56.210 Petition; contents; findings as to requisite number of signers
3.56.220 Resolution of intention to establish district; time for adoption
�`�I�dr11mc0356 LD/225/02 - 1
3.56.230 Reports and estimate of costs by responsible officers;remedial action plan for cleanup
of hazardous substance; inclusion in record of hearing
3.56.240 Expedited Hearing Procedure.
Article 4 Index
Procedures For Lev ing
Sections:
3.56.300 Lease or possessory interest by exempt person or entity to nonexempt person or entity;
lease provisions; collection
3.56.310 Actions or proceedings against levy of special tax or increase in special tax; time for
commencement; time for perfection of appeal from final judgment
3.56.320 Reservation of rights; tender of full or partial payment; special tax installments or
interest or penalties due or delinquent
Article 5 - Index
Sections:
3.56.400 Resolution to incur bonded indebtedness
3.56.410 Inclusion of certain costs and estimated costs in proposed bonded indebtedness
3.56.420 Sale of bonds; appraisal of real property subject to special tax for paying debt service
on bond; determination of no unusual credit risk;vote to proceed for specified public
policy reasons
3.56.430 Agreement to notify one or more parties in the event specified events occur affecting
the market value of outstanding bonds; events triggering notice
3.56.440 Action to foreclose liens; cumulative remedy; resolution to diligently pursue
foreclosure action; collection of delinquent charges
3.56.450 Complainants; time limitations; contents of complaint
3.56.460 Judgment decree;contents; amount;attorneys' fees;application of general foreclosure
provisions
3.56.470 Price of property or possessory interests sold
3.56.480 Computation errors; validity of special tax installment, interest or penalty
3.56.490 Tender of bonds or debt; special taxes; penalties and interest; satisfaction of bid
amount
3.56.500 Notice of proposed sale of bonds; contents
Article 1
General Provisions
3.56.010 Short title. This ordinance shall be known and maybe cited as the"City of Huntington
Beach Special Tax Financing Improvement Code," and shall be referred to herein as the"Code".
3.56.020 Municipal and State affairs: authority conferred by Code; applicability of laws.
This Code is adopted pursuant to Section 500 of Article V of the Charter of the City of
Huntington Beach. In proceedings had pursuant to this Code which are a municipal affair, any_
general laws referred to in this Code are deemed a part of this Code.
1cgisdrtVmc0356 LD/2/25:02 2
In the event that any proceeding had pursuant to this Code shall be adjudged a state affair, it is
declared to be the intention that the proceedings were had pursuant to any applicable general la:w
or laws.
This Code provides an alternative method of financing certain public and private capital facilities
and municipal services. The provisions of this Code shall not affect or limit any other provisions
of law authorizing or providing for the furnishing of facilities or services, or the raising of
revenue for these purposes. The City may use the provisions of this Code in conjunction with the
Mello-Roos Community Facilities Act of 1982, as amended (commencing with Section 53311 of
the California Government Code) (the "Act"), or any other method of financing part or all of the
cost of providing the authorized kinds of public and private capital facilities and municipal
services. Actions not otherwise addressed in this Code shall be otherwise governed by the
provisions of the Act.
This Code shall be deemed to provide a complete, additional and alternative method for actions
authorized hereby and shall be regarded as a supplemental and additional to the powers conferred
by other laws, including the Act.
3.56.030 Conflicting provisions; severability. Any provision in this Code which conflicts with
any general law or act shall prevail over the other such provision in connection with any proceedings
taken pursuant to this Code.
In the event any portion of this Code shall be declared illegal, unenforceable or unconstitutional,
such provision shall be deemed severable from the rest of the provisions of this Code.
3.56.040 Actions or determinations by local agency. The local agency may take any actions or
make any determinations which it determines are necessary or convenient to carry out the purposes
of this Code and which are not otherwise prohibited by law.
3.56.050 Liberal construction of chapter; error, irregularity, neglect or omission.
This Code shall be liberally construed in order to effectuate its purposes. No error, irregularity,
informality, and no neglect or omission of any officer, in any procedure taken under this Code,
which does not directly affect the jurisdiction of the legislative body to order the installation of
the facility or the provision of service, shall void or invalidate such proceeding or any levy for the
costs of such facility or service.
3.56.060 Failure to receive notice, resolution, order or other matter not affecting
proceedings. The failure of any person to receive a notice, resolution, order, or other matter
shall not affect in any way whatsoever the validity of any proceedings taken under the Code, or
prevent the legislative body from proceeding with any hearing so noticed.
3.56.070 Definitions. Unless the context otherwise requires, the definitions contained in this
article shall govern the construction of this Code.
(a) "Act" means the Mello-Roos Community Facilities Act of 1982, as amended (commencing
I�gisdrft/=0356 LD/2/25/02 3
with Section 53311 of the California Government Code).
(b) "City"means the City of Huntington Beach.
(c) "City Council"means•the City Council of the City of Huntington Beach.
(d) "City Clerk" or"Clerk"means the City Clerk of the City of.Huntington Beach.
(e) `.`Community facilities district" or"district",means a legally constituted governmental entity
established pursuant to this Code and the Act for the sole purpose of financing facilities and
services.
(f). "Cost"means the expense of constructing, installing or purchasing the public facility and of
related land,right-of-way,easements,including incidental expenses,and the cost of providing
authorized services, including incidental expenses.
(g) "Debt"means any binding obligation to pay or repay a sum of money,including obligations in
the form of bonds, certificates of participation, long-term leases, loans from government
agencies,or loans from banks,other financial institutions,private businesses,or individuals,or
long-term contracts.
(h) "Incidental expense"includes all of the following:
(1) The cost of planning and designing public facilities to be financed pursuant to this
Code, including the cost of environmental evaluations of those facilities.
(2) The costs associated with the creation of the district, issuance of bonds,determination
of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise
incurred in order to carry out the authorized purposes of the district.
(3) Any other expenses incidental to the construction, completion, and inspection of the
authorized work.
(i) "Landowner,"`owner"or"owner of land"means any person shown as the owner of land on
the last equalized assessment roll or otherwise known to be the owner of the land by the city
clerk. Notwithstanding the foregoing,"landowner","owner"or"owner of land"means,with
respect to any land which is the subject of a condemnation action, the person entitled to
possession of the land pursuant to such condemnation action,or with respect to land to which
the City or Redevelopment Agency has fee title, the person having a leasehold interest in the
land for a term exceeding 40 years. The legislative body has no obligation to obtain other
information as to the ownership of the land,and its determination of ownership shall be final
and conclusive for the purposes of this Code. A public agency is not a landowner owner or
owner of land for purposes of this Code, unless the land owned by a•public agency would be
subject to a special tax pursuant to Section 3.56.040 or unless the public agency has acquired
possession to the land through a condemnation and has made the certification required in
Section 3.56.300.
� l
1e,,isdrfL1mc0356 LD/2/25102 4 —t `
(j) "Legislative body" means the legislative body or governing board of any local agency, and
with respect to the City means the City Council.
(k) "Local agency"means any city or county, whether general law or chartered, special district,
school district,joint powers entity created pursuant to Chapter 5 (commencing with Section
6500) of Division 7 of Title 1, or any other municipal corporation, district, or political
subdivision of the state.
(1) "Rate"means a single rate of tax or a schedule of rates.
(m) "Redevelopment Agency"means the Redevelopment Agency of the City of Huntington Beach.
(n) "Services" means the provision of categories of services identified in Section 3.56.110.
"Services"includes the performance by employees of functions,operations,maintenance,and
repair activities. "Services" does not include activities or facilities identified in Section
3.56.120.
Article 2
Purpose Of District
3.56.100 Initiation of proceedings to establish district upon adoption of certain local f?oals
and policies.
(a) The City may initiate proceedings to establish a district pursuant to this Code only if it has
first considered and adopted local goals and policies concerning the use of this Code,
except in the case of districts being formed pursuant to a development agreement between
the City and a qualified developer and or the Redevelopment Agency and a qualified
developer. The policies shall include at least the following:
(1) A statement of the priority that various kinds of public facilities shall have for
financing through the use of this Code, including public facilities to be owned and
operated by other public agencies, including school districts.
(2) A statement concerning the credit quality to be required of bond issues; including
criteria to be used in evaluating the credit quality.
(3) A statement concerning steps to be taken to ensure that prospective property
purchasers are fully informed about their taxpaying obligations imposed under this
Code.
(4) A statement concerning criteria for evaluating the equity of tax allocation formulas,
and concerning desirable and maximum amounts of special tax to be levied against
any parcel pursuant to this Code.
3.56.110 Establishment of community facilities district to finance certain services. A
community facilities district may be established under this Code to finance any one or more of
the following types of services within an area:
`\le-isdrfUmc0356 LD/2/25r02 5
A\O
(a) Police protection services, including, but not limited to, criminal justice services. However,
criminal justice services shall be limited to providing services for jails,detention facilities,and
juvenile halls.
(b) Fire protection and suppression services, and ambulance and paramedic services.
(c) Recreation program services, library services, maintenance services for elementary and
secondary school sites and structures, and the operation and maintenance of museums and
cultural facilities. Bonds may not be issued pursuant to this Code to fund any of the services
specified in this subdivision. A special tax may be levied for any of the services specified in
this subdivision only upon approval of the voters as specified in subdivision (b) of Section
53328 of the Act. However,the requirement contained in subdivision(b)of Section 53328 of
the Act that a certain number of persons have been registered to vote for each of the 90 days
preceding the close of the protest hearing does not apply to an election to enact a special tax for
recreation program services, library services,and the operation and maintenance of museums
and cultural facilities subject to subdivision (c)of Section 53326 of the Act.
(d) Maintenance of streets, landscaping, street lighting,parks, parkways, and open space.
(e) Flood and storm protection services; including, but not limited to, the operation and
maintenance of storm drainage systems, and sandstorm protection systems.
(f) Services with respect to removal or remedial action for the cleanup of any hazardous
substance released or threatened to be released into the environment. As used in this
subdivision, the terms"remedial action" and"removal' shall have the meanings set forth in
Sections 25322 and 25323,respectively, of the Health and Safety Code, and the term
"hazardous substance" shall have the meaning set forth in Section 25281 of the Health and
Safety.Code. Community facilities districts shall provide the State Department of Health
Services and local health and building departments with notification of any cleanup activity
pursuant to this subdivision at least 30 days prior to commencement of the activity.
(g) Maintenance of, and the provision of repair and replacement reserves for,
any other public improvement not specifically listed in preceding clauses
(a) through (f), the construction, installation, expansion, improvement or
rehabilitation.of which may be financed under Section 3.56.120 or Section
3.56.130 of the Code.
3.56.120 Additional financing powers of district; purchase, construction, expansion,
improvement, rehabilitation, or planning and design work of real or tangible property. A
community facilities district may also finance the purchase,construction, installation expansion,
improvement, or rehabilitation of any real or other tangible property with an estimated useful life
of five years or longer or may finance planning and design-work that is directly related to the `
purchase, construction, expansion, or rehabilitation of any real or tangible property. The
facilities need not be physically located within the district. A district may only finance the
Iegisdril/mc0356 LD/2/25/02 6 l��
purchase of facilities whose construction has been completed, as determined by the legislative
body, before the resolution of formation to establish the district is adopted pursuant to Section
53325.1 of the Act, except that a district may finance the purchase of facilities completed after
the adoption of the resolution of formation if the facility was constructed as if it had been
constructed under the direction and supervision, or under the authority of, the local agency. For
example, a community facilities district may finance facilities, including, but not limited to, the
following:
(a) Local park, recreation, parkway, open-space facilities, beach maintenance facilities, beach
access facilities and parking facilities adjacent or accessible to such facilities.
(b) Elementary and secondary school sites and structures provided that the facilities meet the
building area and cost standards established by the State Allocation Board.
(c) Libraries.
(d) Child care facilities,including costs of insuring the facilities against loss,liability insurance in
connection with the operation of the facility,and other insurance costs relating to the operation
of the facilities, but excluding all other operational costs. However, the proceeds of bonds
issued pursuant to this Code shall not be used to pay these insurance costs.
(e) The district may also finance the construction or undergrounding of water transmission and
distribution facilities, natural gas pipeline facilities, telephone lines, facilities for the
transmission or distribution of electrical energy,and cable television lines to provide access to
those services to customers who do not have access to those services or to mitigate existing
visual blight. The district may enter into an agreement with a public utility to utilize those
facilities to provide a particular service and for the conveyance of those facilities to the public
utility. "Public utility" shall include all utilities, whether public and regulated by the Public
Utilities Commission, or municipal. If the facilities are conveyed to the public utility, the
agreement shall provide that the cost or a portion of the cost of the facilities that are the
responsibility of the utility shall be refunded by the public utility to the district or improvement
area thereof, to the extent that refunds are applicable pursuant to(1)the Public Utilities Code
or rules of the Public Utilities Commission, as to utilities regulated by the commission,or(2)
other laws regulating public utilities. Any reimbursement made to the district shall be utilized
to reduce or minimize the special tax levied within the district or improvement area, or to
construct or acquire additional facilities within the district or improvement area,as specified in
the resolution of formation.
(f) The district may also finance the acquisition,improvement,rehabilitation,or maintenance of
any real or other tangible property, whether privately or publicly owned, for the purposes
described in subdivision(e) of Section 3.56.110.
(g) The district may also pay in full all amounts necessary to eliminate any fixed special
assessment liens or to pay, repay, or defease any obligation to pay or any indebtedness
secured by any tax, fee, charge, or assessment levied within the area of a community
`-3 facilities district or may pay debt service on that indebtedness. In addition, tax revenues of
��� 1e.-isdrfUmc0356 LD/2;25/02 7
a district may be used to make lease or debt service payments on any,lease, lease purchase
contract, or certificate of participation used to finance authorized district facilities.
1
(h) Any other governmental facilities which the legislative body creating the community facilities
district is authorized by.law.to contribute revenue to,or construct,own,or operate. However,
the district shall not operate or maintain or,except as otherwise provided in subdivisions(e)
and (f), have any ownership interest in any facilities for the transmission or distribution of
natural gas, telephone service, or electrical energy.
(i) (1) A district may also pay for the following:
(A) Work deemed necessary to bring buildings or real property, including privately
owned buildings or real property, into compliance with seismic safety standards or
regulations. Only work. certified .as necessary to comply with seismic safety
standards-or regulations by local building officials may be financed. No project
involving the dismantling of an existing building and its replacement by a new
building, nor the construction of a new or substantially new building may be
financed pursuant to this subparagraph. Work on qualified historical buildings or .
structures shall be done in accordance with the State Historical Building Code(Part
2.7 (commencing with Section 18950) of Division 13 of the Health and Safety
Code).
(B) In addition, within any county or area designated by the President of the United
States or by the Governor as a disaster area or for which the Governor has
proclaimed the existence of a state of emergency because of earthquake damage,a
district may also pay for any work deemed necessary to repair any damage to real
property directly or indirectly caused by the occurrence of an earthquake cited in
the President's or the Governor's designation or proclamation, or by aftershocks
associated with that earthquake,including work to reconstruct,repair,shore up,or
replace any building damaged or destroyed.by the earthquake. Work may be
financed pursuant to this subparagraph only on property or buildings identified in a
6
resolution.of intention to establish a community facilities district adopted within
seven years of the date on which the county or area is designated as a disaster area
by the President or by the Governor or on which the Governor proclaims for the
area the existence of a state of emergency.
(2) Work on privately owned property,including reconstruction or replacement of privately
owned buildings pursuant to subparagraph(B)of paragraph(1),may only be financed by
a tax levy if all of the votes cast on the question of levying the tax, vote in favor of
levying the tax, or with the prior written consent to the tax of the owners of all property
which may be subject to the tax,in which case the prior written consent shall be deemed
to constitute a vote in favor of the tax and any associated bond issue. Any district
createdlto finance seismic safety work on privately owned buildings, including repair,
reconstruction,or replacement of privately owned buildings pursuant to this subdivision,`
shall consist only of lots or parcels on which the legislative body finds that the buildings
to be worked on, repaired, reconstructed, or replaced, pursuant to this subdivision, are a
lesisddi'MC4!356 LD225/02 8
located or were located before being damaged or destroyed by the earthquake cited
pursuant to subparagraph (B) of paragraph(1) or by the aftershocks.of that earthquake.
(j) (1) A district may also pay for the following: '
(A) Work deemed necessary to repair and abate damage caused to privately owned
buildings and structures by soil deterioration. "Soil deterioration" means a
chemical reaction by soils that causes structural damage or defects in construction
materials including concrete,steel,and ductile or cast iron. Only work certified as
necessary by local building officials may be financed. No project involving the
dismantling of an existing building or structure and its replacement by a new
building or structure,nor the construction of a new or substantially new building or
structure may be financed pursuant to this subparagraph.
(B) Work on privately owned buildings and structures pursuant to this subdivision,
including reconstruction, repair, and abatement of damage caused by soil
deterioration, may only be financed by a tax levy if all of the votes cast on the
question of levying the tax vote in favor of levying the tax. Any district created to
finance the work on privately owned buildings or structures, including
reconstruction,repair, and abatement of damage caused by soil deterioration,shall
consist only of lots or parcels on which the legislative body finds that the buildings
or structures to be worked on pursuant to this subdivision suffer from soil
deterioration.
3.56.130 Additional district financing powers. Pursuant to Section 3.56.120, a community
facilities district may also finance the acquisition improvement, rehabilitation, or maintenance of
any real or other tangible property,whether privately or publicly owned, for the purposes
described in subdivision(f) of Section 3.56.110.
3.56.140 Revolving Fund for cleanup of hazardous substances; withdrawal of funds.
(a) In connection with the financing of services and facilities pursuant to subdivision (f) of
Section 3.56.110 and Section 3.56.130,the legislative body may establish a revolving fund to
be kept in the treasury of the district. Except as provided in subdivision (b), moneys in the
revolving fund shall be expended solely for the payment of costs with respect to those services
and facilities. The revolving fund may be funded from time to time with moneys derived from
any of the following:
(1) Proceeds of the sale of bonds issued pursuant to Article 5 (commencing with Section 5-
1), notwithstanding any limitation contained in Section 3.56.410.
(2) Any taxes or charges authorized under this Code.
(3) Any other lawful source.
5 ��� legisdrWmc0356 LD/2/25,102 9
(b) Subject to the provisions of any resolution; trust agreement or indenture providing for the
issuance of district bonds for the purposes set forth in Section 3.56.130, the legislative body
may withdraw money from the revolving fund whenever and to the extent that it finds that the
amount of money therein exceeds the amount necessary to accomplish the purposes for which
the revolving fund was established. Any moneys withdrawn from the revolving fund shall be
used to redeem bonds of the district issued for the purposes set forth in Section 3.56.300 or
shall be paid to taxpayers in the district in amounts which the legislative body determines.
3.56.150 Liability; removal or remedial action; hazardous substances released or
threatened to be released.
(a) Any responsible party as defined by subdivision (a) of Section 25323.5 of the Health and
Safety Code shall be liable to the district for the costs incurred in the removal or remedial
action for the cleanup of any hazardous substance released or threatened to be released into the
environment. The amount of the costs shall include interest on the costs accrued from the date
of expenditure. The interest shall be calculated based on the average annual rate of return on
the district's investment of surplus funds for the fiscal year in which the district incurred the
costs. Recovery of costs by a community facilities district under this section shall be
commenced before or immediately upon completion of the removal or remedial action, and
payments received hereunder by the district shall be deposited in the revolving fund in
accordance with Section 3.56.140.
(b) To expedite cleanup, this section is intended to provide local jurisdictions an alternative
method of financing the cost of removal or remedial action for the cleanup of any hazardous
substance through the issuance of voter-approved limited obligation bonds. The provisions of
this section shall not affect or limit the provisions of any other law establishing the liability of
any person for, or otherwise regulating, the generation, transportation, storage, treatment, or
disposal of hazardous substances. The scope and standard of liability for any costs recoverable
pursuant to Section 3.56.150 shall be the scope and standard of liability set forth in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Sec. 6901 et seq.), or any other provision of state or federal law
establishing responsibility for cleanup of hazardous waste sites.
3.56.160 Ordinance; local aeencv contribution; purposes. At any time either before or after
the formation of the district, the legislative body may provide, by ordinance, that for a period
specified in the ordinance, the local agency may contribute, from any source of revenue not
otherwise prohibited by law, any specified amount,portion, or percentage of the revenues for the
purposes set forth in the ordinance, limited to the following: the acquisition or construction of a
facility, the acquisition of interest in real property, or the payment of debt service with respect to
the financing of either, the provision of authorized services, and the payment of expenses
incidental thereto. The contribution shall not constitute an indebtedness or liability of the local
agency.
3.56.170 Joint community facilities agreement or joint exercise of powers agreement.
(a) A community facilities district may finance facilities to be owned or operated by an entity \
legisdrtUmc0356 LD/2/23%02 10 —1� .
other than the agency that created the district,or services to be provided by an entity other than
the agency that created the district, or any combination, only pursuant to a joint community
facilities agreement or a joint exercise of powers agreement adopted pursuant to this section.
(b) At any time prior to the issuance of bonds by the district,the legislative bodies of two or more
local. agencies may enter into a joint community facilities agreement pursuant to this section
and Sections 53316.4 of the Act and 53316.6 of the Act or into a joint exercise of powers
agreement pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of
the California Government Code to exercise any power authorized by this Code with respect to
the community facilities district being created or changed if the legislative body of each entity
adopts a resolution declaring that such a joint agreement would be beneficial to the residents of
that entity.
(c) Notwithstanding Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the
California Government Code, a contracting party may use the proceeds of any special tax or
charge levied pursuant to this Code or of any bonds or other indebtedness issued pursuant to
this Code to provide facilities or services which that contracting party is otherwise authorized
by law to provide, even though another contracting party does not have the power to provide
those facilities or services.
(d) Notwithstanding subdivision(b),nothing in this section shall prevent entry into or amendment
of a joint community facilities agreement or a joint exercise of powers agreement, after the
issuance of bonds by the district, if the new agreement or amendment is necessary, as
determined by the legislative body, for either of the following reasons:
(1) To allow an orderly transition of governmental facilities and finances in the case of any
change in governmental organization approved pursuant to the Cortese-Knox Local
Government Reorganization Act of 1985 (Division 1 (commencing with Section 56000)
of Title 6).
(2) To allow participation in the agreement by a state or federal agency that could or would
not otherwise participate, including, but not limited to, the California Department of
Transportation.
(e) Notwithstanding any other provision of this Code, no local agency which is party to a joint
exercise of powers agreement or joint community facilities agreement shall have primary
responsibility for formation of a district or an improvement area within a district, or for an
extension of authorized facilities and services or a change in special taxes pursuant to
Article 3, unless that local agency is one or more of the following:
(1) A city, a county, or a city and county.
(2) An agency created pursuant to a joint powers agreement that is separate from the parties
to the agreement,is responsible for the administration of the agreement,and is subject to.
the notification requirement of Section 6503.5.
\�' legisdrtVmc0356 LD/2/2i/02 11
(3) An agency that is reasonably expected to have responsibility for providing facilities or
services to be financed by a larger share of the proceeds of special taxes and bonds of the
district or districts created or changed pursuant to the joint exercise of powers agreement
or the joint community facilities agreement than any other local agency.
3.56.180 Special tax; property acquired by public entitv through negotiated transaction or by
gift or devise. If property not otherwise exempt from a special tax levied pursuant to this Code is
acquired by a public entity through a negotiated transaction,or by gift or devise,the special tax shall,
notwithstanding Section 53340 of the Act,continue to be levied on the property acquired and shall
be enforceable against the public entity that acquired the property. However,even if the resolution .
of formation that authorized creation of the district did not specify conditions under which the
obligation to pay a special tax may be prepaid and permanently satisfied,the legislative body of the
local agency that created the district may specify conditions under which the public agency that
acquires the property may prepay and satisfy the obligation to pay the tax. The conditions may be
specified only if the local agency that created the district finds and determines that the prepayment
arrangement will fully protect the interests of the owners of the district's bonds.
Notwithstanding any other provision of this Code, any public agency other than a city, county or
school district may subject property owned by it to the levy of special taxes, if it shall certify to
the City Council: (a) its agreement to do so, (b) that it intends to dispose of such property by
transfer to a non-governmental agency at some time in the future, and (c) that it agrees to
cooperate in the sale of property if necessary to obtain funds to pay any special taxes levied upon
such property.
3.56.190 Special tax; special assessment on property acquired by public entity through
eminent domain. If property subject to a special tax levied pursuant to this Code is acquired by a .
public entity through eminent domain proceedings, the obligation to pay the special tax shall be
treated, pursuant to Section 1265.250 of the Code of Civil Procedure, as if it were a special
annual assessment. For this purpose, the present value of the obligation to pay a special tax to
pay the principal and interest on any indebtedness incurred by the district prior to the date of
apportionment determined pursuant to Section 5082 of the Revenue and Taxation Code shall be
treated the same as a fixed lien special assessment.
Article 3
Proceedings To Create A Community Facilities District .
3.56.200 Institution.of proceeding; request; petition; fee. Proceedings for the establishment
of a community facilities district may be instituted by the legislative body on its own initiative
and shall be instituted by the legislative body when any of the following occurs:
(a) A written request for the establishment of a district,signed by two members of the legislative
body,describing the boundaries of the territory which is proposed for inclusion in the area and
specifying the type or types of facilities and services to be financed by the district,is filed with
the legislative body.
(b) A petition requesting the institution of the proceedings signed by the requisite number of `o
legisdrft/mc0356 LD2'25:02 12
registered voters,as specified in subdivision(d)of Section 3.56.210,is filed with the clerk of
the legislative body. The petition may consist of any number of separate instruments,each of
which shall comply with all of the requirements of the petition, except as to the number of
signatures.
(c) A petition requesting the institution of the proceedings signed by landowners owning the
requisite portion of the area of the proposed district, as specified in subdivision(d)of Section
3.56.210, is filed with the clerk of the legislative body.
(d) The written request filed pursuant to subdivision (a) and the petitions filed pursuant to
subdivisions(b) and(c)shall be accompanied by the payment of a fee in an amount which the
legislative body determines is sufficient to compensate the legislative body for all costs
incurred in conducting proceedings to create a district pursuant to this Code.
3.56.210 Petition; contents; findings as to requisite number of signers. A petition requesting
the institution of proceedings for the establishment of a community facilities district shall do all
of the following:
(a) Request the legislative body to institute proceedings to establish a community facilities district
pursuant to this Code.
(b) Describe the boundaries of the territory which is proposed for inclusion in the district.
(c) State the type or types of facilities and services to be financed by the district.
(d) Be signed by not less than 10 percent of the registered voters residing within the territory
proposed to be included within the district or by owners of not less than 10 percent of the area
of land proposed to be included within the district. If the legislative body finds that the
petition is signed by the requisite number of registered voters residing within the territory
proposed to be included within the district or by the requisite number of owners of land
proposed to be included within the district, that finding shall be final and conclusive.
3.56.220 Resolution of intention to establish district; time for adoption. Within 90 days after
either a written request by two members of the legislative body or a petition requesting the institution
of proceedings for the establishment of a community facilities district is filed with the legislative
body, it shall adopt a resolution of intention to establish a community facilities district in the form
specified in Section 53321 of the Act.
3.56.230 Reports and estimate of costs by responsible officers; remedial action plan for
cleanup of hazardous substance; inclusion in record of hearing. At the time of the adoption
of the resolution of intention to establish a community facilities district, the legislative body shall
direct each of its officerswho is or will be responsible for providing one or more of the proposed
types of public facilities or services to be financed by the district, if it is established, to study the
proposed district and, at or before the time of the hearing, file a report with the legislative body
containing a brief description of the public facilities and services by type which will in his or her
(o�lpinion be required to adequately meet the needs of the district and his or her estimate of the cost
S- 1evisdrfCmc03i6 LD/2/25/02 13
of providing those public facilities and services. If the purchase of completed public facilities or
the payment of incidental expenses is proposed, the legislative body shall direct its appropriate'
officer to estimate the fair and reasonable cost of those facilities or incidental expenses.
If removal or remedial.action for the cleanup of any hazardous substance is proposed,the .
legislative body shall (a) direct its responsible officer to prepare or cause to be prepared, a
remedial action plan based upon factors comparable to those described in subdivision (c)of
Section 25356.1 of the Health and Safety Code or(b) determine, on the basis of the particular
facts and circumstances,which shall be comparable to those described in subdivision(g) of
Section 25356.1 of the Health and Safety Code, that the remedial action plan is not required or
(c) condition financing of the removal or remedial action upon approval of a remedial action plan
pursuant to Section 25356.1 of the Health and Safety Code. All of those reports shall be made a
part of the record of the hearing on the resolution of intention to establish the district.
3.56.240 Expedited Hearing Procedure. If the owners of all of the land to be
subject to the levy of special taxes within a proposed district, or within the
territory proposed to be annexed to an existing district, file petitions with the
City Clerk requesting the formation of the district or the annexation of
territory to an existing district respectively, the public hearing referred to in
Section 53321(e) or 53339.3(f), as applicable, of the California Government
Code may occur not less than 14 days after adoption of the resolution of
intention to form or to annex territory to the district, as applicable, rather
than the minimum of 30 days otherwise specified in said sections of the
California Government Code.
Article 4
Procedures For Levvin2
3.56.300 Lease or possessory interest by exempt person or entity to nonexempt person or
entity; lease provisions; collection
(a) If a public agency owning property,including property held in trust for any beneficiary,which
is exempt from a special tax pursuant to Section 53340 of the Act grants a leasehold or other
possessory interest in the property to a nonexempt person or entity, the special tax shall,
notwithstanding Section 53340 of the Act,be levied on the leasehold or possessory interest and
shall be payable by the owner of the leasehold or possessory interest.
(b) When entering into a lease or other written contract creating a possessory interest that may be
subject to taxation,pursuant to subdivision(a),the public agency shall include,or cause to be
included, in the contract a statement that the property interest may be subject to special
taxation pursuant to this Code, and that the party in whom the possessory interest is vested may
be subject to the payment of special taxes Ievied on the interest. Failure to comply with the
requirements of this section shall not, however, invalidate the contract.
(c) If the special tax on any possessory interest levied pursuant to subdivision(a)is unpaid when
le2isdrW=0356 LD/2/25/02 14 ��
due, the tax collector may use those collection procedures which are available for the
collection of assessments on the unsecured roll.
3.56.310 Actions or proceedings against levy of special tax or increase in special tax; time
for commencement; time for perfection of appeal from final judgment. Any action or
proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a
special tax pursuant to this Code shall be commenced within 30 days after the special tax is
approved by the voters. Any appeal from a final judgment in that action or proceeding shall be
perfected within 30 days after the entry of judgment.
3.56.320 Reservation of rights; tender of full or partial payment; special tax installments
or interest or penalties due or delinquent.
(a) The legislative body may provide in the resolution issuing bonds and in documents setting
forth the rights of the debtholders that it shall reserve to itself, the right and authority to
allow any interested owner of property within the district, subject to the provisions of this
section and to those conditions as it may impose, and any applicable prepayment penalties
as prescribed in the bond indenture or comparable instrument or document, to tender to the
district treasurer in full payment or part payment of any installment of the special taxes or
the interest or penalties thereon which may be due or delinquent, but for which a bill has
been received, any bond or other obligation secured thereby, the bond or other obligation to
be taken at par and credit to be given for the accrued interest shown thereby computed to
the date of tender. The district treasurer shall thereupon cancel the bond debt and shall
cause proper credit therefor to be entered on the records of the district and in the office of
the auditor and tax collector. If the legislative body agrees to allow.bond tenders pursuant
to this section [or to Section 3.56.490] the legislative body may, at its discretion, agree to
distribute or direct its trustee or other agent to distribute by any means an offer to purchase
bonds or other related inquiry to the holders of the bonds of the district, at the expense of
the person requesting the mailing. Neither the legislative body, nor any of its officers,
agents, or trustees shall be liable in any way for that distribution.
(b) The provisions of this subdivision apply to any tender of bonds pursuant to this section by
an owner of property within the district who is delinquent in paying special taxes levied by
this district when due. Bonds may be tendered pursuant to this subdivision only after all of
the following conditions have been satisfied:
(1) The delinquent lot or parcel, or possessory interest in such delinquent lot or parcel, has
been offered for sale as a result of a foreclosure judgment and the minimum price
required to be paid for the lot or parcel, or possessory interest in such delinquent lot or
parcel, was not received.
(2) The bonds to be tendered to the district were obtained by the property owner,or holder of
the possessory interest,only after their prior owner was presented with a tender offer or
solicitation as defined in this subdivision.
(A) For purposes of this subdivision, a"tender offer"or"solicitation"is a
solicitation by any person or that person's agent by offering circular,
A\0
legisdrW=0356 LD/2/25/02 15
memoranda, tender, or solicitation, or any other document or written, oral, or
electronic communication for the purchase of the bonds from their then current
owner. A person includes a natural person, corporation, company, partnership,
limited.liability company, limited liability partnership, association, or any other
entity and a"tendering party.'includes any person making a tender offer for bonds.
(B) Any tender offer or solicitation shall include all material information as required
under federal and state securities laws and shall also include the following
information, to the extent applicable:
(i) The name of the tendering party.
(ii) An individual who can be contacted to provide further information with
respect to the tender.
(iii) The current holdings of bonds of the district by the tendering party and its
affiliates.
(iv) The total face amount of the bonds being solicited.
(v) The price or method of determining the price per one thousand dollars
($1,000) in bonds being offered by the tendering party.
(vi) Whether the tendering party or any person affiliated with or related to the
tendering party, or any employee, agent, or representative of the tendering
party, is a property owner within the district that issued the bonds.
(vii) Whether the present intentions of the tendering party are to use the bonds
for payment of special takes or the purchase of property (or purchase of
possessory interest)at a foreclosure sale pursuant to this section or Section
3.56.490. This statement of present intentions shall not t be construed to be
binding on the tendering party.
(viii) The status of the bond redemption fund, construction fund, reserve fund,
and any other funds of the district and the special tax delinquency rate of
the district, all of which data shall be the most recent available from the
district and,in any event,shall apply to the state of the funds after the most
recent payment of principal and interest on the bonds. The district shall
provide the necessary data to the property owner within 10 days of
receiving a written request and may charge a reasonable fee not to exceed
,its actual costs of providing the data. The district shall simultaneously
release the same information to the general public. The property shall also
provide the percentage of the delinquency attributable to the tendering party
or any person affiliated with or related to the tendering party, or any
employee, agent, or representative of the tendering party, for each of the
three most recent fiscal years. a�
legisdrNmc0356 LDt2/25102 16 ,�
(ix) If the tendering party owns or leases property in the district that issued the
bonds,the development plans for that property and an update on the current
status of development of that property and of any zoning,planning,or other
permits or approvals needed for development of the'property to proceed..
(x) Any other material information available to the tendering party and not
generally available to the public that would significantly affect the.market
value of the bonds of the district.
(C) The tendering party shall notify the legislative body of his or her intent to make a
tender offer or solicitation at least simultaneously with making any offer or
solicitation.
(D) The tendering party shall provide a copy of the solicitation to the Department of
Corporations prior to five working days after notifying the legislative body
pursuant to subparagraph (C).
(3) The tendering property owner or tendering possessory interest holder provides the
legislative body with a negative assurance from counsel representing the property owner
or tendering possessory interest holder that no misleading or other information has come
to the opining party's attention after reasonable investigation,that would lead the party
providing the negative assurance to believe that the tender was in violation of federal or
state securities laws.
(4) The tendering property owner delivers to the legislative body of the district that issued
the bonds subject to the tender, a certificate to the effect that the tender information is
accurate in all material respects and does not omit to state a material fact necessary in
order to make the statements included in the tender information not misleading, except
that the certificate need not provide any assurances as to the accuracy of the information
as to the bond fund balances and tax payment information provided by the district.
(c) The provisions of this subdivision apply to any tender of bonds pursuant to this section by any
owner of property within the district who is not delinquent in paying special taxes on any
property within the district. A person subject to this subdivision shall be deemed to be a
person whose relationship to the issuer may give him or her access, directly or indirectly, to
material information about the issuer not generally available to the public, and the provisions
of Section 25402 of the Corporations Code apply to any purchase or sale of securities by that
person in connection with the tender transaction. For purposes of this subdivision,the"issuer"
includes the district,the local agency that created the district,and any owner of property within
the district. At any time prior to tendering bonds to the district pursuant to this section, any
person subject to this subdivision shall deliver to the legislative body of the district a certificate
that he or she has complied with this subdivision and applicable federal and state securities
laws.
A �3
—Iegisdrfb'=0356 LD/2/25/02 17
Article 5.
3.56.400 Resolution to incur bonded indebtedness. Whenever the legislative body deems it
necessary for the community facilities district to incur a bonded indebtedness, it shall,by-
resolution, set forth all of the following: '
(a) A declaration of the necessity for the indebtedness.
(b) The purpose for which the proposed debt is to be incurred.
(c) The amount of the proposed debt. The legislative body may provide for a reduction in the
amount of proposed debt in compliance with the provisions of Section 53313.9 of the Act.
(d) The time and place for a hearing by the legislative body on the proposed debt issue.
3.56.410 Inclusion of certain costs and estimated costs in proposed bonded indebtedness.
The amount of the proposed bonded indebtedness may include all costs and estimated costs
incidental to, or connected with, the accomplishment of the purpose for which the proposed debt
is to be incurred, including, but not limited to, the estimated costs of construction, improvement
or acquisition of buildings, or both; acquisition of land, rights-of-way, water, sewer, wetlands
mitigation or other capacity or connection fees;-lease payments for school facilities, satisfaction
of contractual obligations relating to expenses or the advancement of funds for expenses existing
at the time the bonds are issued pursuant to this Code; architectural, engineering, inspection,
legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest
on any bonds of the district estimated to be due and payable within two.years of issuance of the
bonds; election costs; and all costs. of issuance of the bonds, including,but not limited to, fees for
bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of
credit, and other credit enhancement costs, and printing costs.
3.56.420 Sale of bonds; appraisal of real property subiect.to special tar for paving debt
service on bond; determination of no unusual credit risk; vote to proceed for specified
public policy reasons.
(a) The legislative body may sell bonds pursuant to this Code only if it determines prior to the
award of sale of bonds that the value of the real property that would be subject to the special
tax to pay debt service on the bonds will be at least three times the principal amount of the
bonds to be sold and the principal amount of all other bonds outstanding that are secured by a
special tax levied pursuant to this Code on property within the community facilities district or
a special assessment levied on property within the community facilities district. Any
determination made pursuant to this subdivision shall be based upon the full cash value as
shown on the ad valorem assessment roll or upon an appraisal of the subject property made in a
manner consistent with the policies adopted pursuant to paragraph(5) of subdivision (a) of
Section 3.56.100 by a state certified real estate appraiser, as defined in subdivision (c) of
Section 11340 of the California Business and Professions Code. The Treasurer may
recommend definitions, standards, and assumptions to be used for these appraisals. These
definitions, standards, and assumptions are advisory only, and the definitions,standards,and
Iegisdrft'=0356 LDR/25/02 18 Gto .
assumptions to be applied to appraisals will be those adopted by the local agency pursuant to
paragraph (5) of subdivision (a) of Section 3.56.100.
(b) Notwithstanding the provisions of subdivision (a), if the legislative body selling the bonds
finds and determines that the proposed bonds do not present any unusual credit risk due to the
availability of credit enhancements or for other reasons specified by the legislative body,the
provisions of subdivision (a) maybe disregarded.
(c) Notwithstanding the provisions of subdivision (a), if the legislative body selling the bonds
finds and determines by a vote of not less than four-fifths of all of its members that the
proposed bond issue should proceed for specified public policy reasons, the provisions of
subdivision (a) may be disregarded.
A finding and determination by the legislative body pursuant to this subdivision shall be final
and conclusive upon all persons in the absence of actual fraud,and neither the legislative body
nor the district shall have any liability of any kind whatsoever out of, or in connection with,
any finding and determination.
3.56.430 Agreement to notifv one or more parties in the event specified events occur
affecting the market value of outstandinn bonds; events triggering notice. The bond
indenture or other bond documents may provide that the legislative body agrees to notify one or
more parties, including the underwriter or other first purchaser of the bonds, an appropriate
national repository for bond information approved by the Securities and Exchange Commission,
or the California Debt Advisory Commission, in the event that specified events occur which may
affect the market value of outstanding bonds. These events may include, but are not limited to,
the following, for example:
(a) Withdrawal of funds from any reserve fund for the bonds, such that the balance in the fund
falls below a specified percentage of the amount required by bond documents.
(b) Draw upon a letter of credit or other credit enhancement for the bonds.
(c) Filing for bankruptcy by a developer or other owner of more than a specified percentage of the
area or property value within the district.
(d) Unforeseen discovery of toxic materials or rare and endangered plant or animal species within
areas of the district proposed for development.
3.56.440 Action to foreclose liens; cumulative remedv; resolution to diligently pursue
foreclosure action; collection of delinquent charges.
(a) As a cumulative remedy, if debt is outstanding, the legislative body may, not later than four
years after the due date of the last installment of principal thereof, order that any delinquent
special taxes levied in whole or in part for payment of the debt, together with any penalties, _
interest, and costs,be collected by an action brought in the superior court to foreclose the lien
a.S of special tax.
���,legisdrt'V=03�6 LDi2/25/02 19
(b) The legislative body may,by resolution,adopted prior to the issuance of debt under this Code
covenant for the benefit of debt holders to commence and diligently pursue any foreclosure
action regarding delinquent installments of any amount levied as a special tax for the payment
of interest or principal of any bonds that are issued, and, at any time may assign the causes of
action arising from the foreclosure to a trustee or joint powers authority to do so on behalf of
the debtholders. The resolution may specify a deadline for commencement of the foreclosure
action and any other terms and conditions the legislative body determines reasonable regarding
the foreclosure action.
(c) Except as provided in Section 3.56.470, all special taxes, interest, penalties, costs, fees, and
other charges that are delinquent at the time of the ordering of a foreclosure action shall be
collected in the action. In the event that a lot or parcel of property or a possessory interest has
not been sold pursuant to judgment in the foreclosure action at the time that subsequent special
taxes become delinquent, the court may include the subsequent special taxes, interest,
penalties, costs, fees, and other charges in the judgment or modified judgment.
(d) For purposes of financing delinquent special taxes pursuant to•Section 26220 of the California.
Government Code, the legislative body may act as if it were a board of supervisors.
(e) Notwithstanding any other provision of this Code,no trustee or j oint powers authority shall be
obligated to accept the tender of bonds in satisfaction of any obligation arising from a
delinquent special tax,although either may do so if authorized to do so by the legislative body.
(f) An action to determine the validity of any bonds issued, any joint powers agreement entered
into, and any related agreements entered into,by a joint powers agency acting pursuant to this
section may be brought by the joint powers agency pursuant to Chapter 9 (commencing with.
Section 860)of Title.10 of Part 2 of the Code of Civil Procedure. Any appeal from a judgment
in the action shall be commenced within 30 days after entry of judgment_
3.56.450 Complainants; time limitations; contents of complaint. The foreclosure action shall be
brought in the name of the local agency or trustee on behalf of the bondholders pursuant to Section
3.56.440, and maybe brought within the time specified in Section 3.56.440. The complaint maybe
brief and need only include the following allegations:
(a) That on a stated date, a certain sum of special taxes, levied against the subject property or
possessory interest (describing it)pursuant to this Code,became delinquent.
(b) On that date,bonds issued pursuant to this Code,payable in whole or in part by the subject
special taxes,were outstanding.
(c) That the legislative body or trustee has ordered the foreclosure.
aLo
le.-isdrft1=0356 LD/2/25 02 20
3.56.460 Judgment decree; contents; amount; attorneys' fees; application of general
foreclosure provisions.
(a) Any judgment shall decree the amount of the continuing lien against each parcel or possessory
interest to be foreclosed,and shall order the parcel to be sold on execution as in other cases of
the sale of real property or possessory interests by process of the court except:
(1) Notwithstanding Section 701.545 of the Code of Civil Procedure,notice of sale of any
lot or parcel or possessory interest included in the judgment may be given pursuant to
Section 701.540 of the Code of Civil Procedure any time after the expiration of 20 days
after the date notice of levy on the interest in real property was served on the judgment
debtor or debtors,provided that the lot or parcel to be sold is not a dwelling for not more
than four families and provided that all parties whose liens are extinguished by the
foreclosure judgment were either defendants in the foreclosure action or,for those parties
who acquired an interest in a lien on the parcel after the recording of notice of the
pending foreclosure action, received constructive notice of the action.
(2) Whenever notice of sale may be given after the expiration of 20 days after the date notice
of levy was served as provided in paragraph (1), the 30-day time period contained in
subdivision(h)of Section 701.540 of the Code of Civil Procedure shall be reduced to 10
days.
(3) Upon proof that the lot or parcel or possessory interest to be sold is not a dwelling for not
more than four families, and upon determining that all parties whose liens are
extinguished by the foreclosure j udgment were either defendants in the foreclosure action
or, for those parties who acquired an interest in a lien on the parcel after the recording of
notice of the pending foreclosure action, received constructive notice of the action,
pursuant to Section 716.020 of the Code of Civil Procedure, the court shall order that
paragraphs (1) and (2) apply to any judgment previously entered.
(4) The minimum bid amount provided in Section 3.56.470 shall apply instead of
subdivision (a) of Section 701.620 of the Code of Civil Procedure.
(5) The local agency may bid at the price provided in Section 3.56.470 by giving the levying
officer a written receipt crediting all or part of the amount required to satisfy the
judgment. If the local agency becomes the purchaser pursuant to bid, the local agency
shall pay the amount of its credit bid into the redemption fund within 24 months of the
date of the foreclosure sale.
(6) Notwithstanding subdivision (c) of Section 701.620 of the Code of Civil Procedure, if
the minimum price required to be paid for a lot of parcel pursuant to Section 3.56.470 is
not obtained at a foreclosure sale, upon written request of the local agency,the levying
officer shall retain the writ of sale and, provided that the writ of sale has not been
returned to the court pursuant to paragraph(1)of subdivision(a)of Section 699.560 of
the Code of Civil Procedure,give notice of sale pursuant to Section 701.540 of the Code
Iegisdrfti=0356 LD/2/23/02 21
of Civil Procedure without relevying on the property.
(7) As provided elsewhere in this Code.
(b) The judgment amount shall include reasonable attorneys' fees to be.fixed by the court,
together with interest, penalties, and other authorized charges and costs (all calculated up.to
date of judgment).
r (c) The foreclosure action shall be governed and regulated by the provisions of this Code, and
also where not in conflict with this Code,by other provisions of law generally applicable to.
foreclosure actions.
3.56.470 Price of property or possessory interests sold. Property or possessory interests sold
hereunder may not be sold for less than the amount of the judgment plus post judgment interest
and authorized costs without the consent of the owners of 75 percent by value of the outstanding
bonds.
3.56.480 Computation errors; validity of special tax installment, interest or penaltv.•No
special tax installment, interest or penalties thereon, or deed.shall be held invalid for any error in
computation if the error is found to be comparatively negligible, or is found to be in favor of the
owner of the real property affected thereby.
3.56.490 Tender of bonds or debt; special taxes; penalties and interest; satisfaction of bid
amount. Provided the legislative body permits bonds or debt to be tendered for special taxes and
the penalties and interest thereon pursuant to Section 3.56.320, if the highest bid for a lot or
parcel sold pursuant to a judgment of foreclosure and order of sale exceeds five thousand dollars
($5,000) and the highest bidder elects to treat the sale as a credit transaction•pursuant to
subdivision (c) of Section 701.590 of the Code of Civil Procedure,the balance due as provided in
that section may be paid in full or in part by tender of bonds or debt, provided, however, that
bonds or debt may not be tendered for costs of foreclosure, including attorney's fees, and
administrative charges incurred by the.local agency with respect to removing the special taxes
from the rolls of the treasurer or tax collector, or other administrative charges.
(a) Tender of bonds or debt shall be made to the local agency within seven days of the date of the
sale. The local agency shall be charged with authenticating the tender and shall, within 10
days of the date of the sale, submit a written receipt to the levying officer who conducted the
sale for the amount of the bond or debt tender accepted by it.
(b) Tender of cash or certified check or cashier's check shall be made to the-levying officer within
10 days of the date of the sale.
(c) The levying officer shall total the cash, certified checks and cashier's checks,and any agency
written receipts for bonds or debt to determine if the amount of the bid,plus accruing costs and
interests, has been paid. In no event shall the tendering party be entitled to receive cash or
other compensation in return for all or any part of the value of a tendered bond or bonds,
except for recognition of their value in satisfying the amount bid.
IcSisdrfdmc0_56 LD/2/25/02 22 G`1
(d) The tendering party shall comply with the provisions of Section 3.56.320, as applicable as if
they were fully set out in this section.
3.56.500 Notice of proposed sale of bonds; contents.
(a) The legislative body shall,no later than 30 days prior to the sale of any bonds pursuant to this
article,give written notice of the proposed sale to the California Debt and Investment Advisory
Commission by mail, postage prepaid, as required by Chapter 12 (commencing with Section
8855) of Division 1 of Title 2 of the California Government Code
(b) Each year after the sale of any bonds, including refunding bonds,pursuant to this article, and
until the final maturity of the bonds, the legislative body shall, not later than October 30 of
each year, supply the following information to the California Debt and Investment Advisory
Commission by mail,postage prepaid:
(1) The principal amount of bonds outstanding.
(2) The balance in the bond reserve fund.
(3) The balance in the capitalized interest fund, if any.
(4) The number of parcels which are delinquent with respect to their special tax payments,
the amount that each parcel is delinquent, the length of time that each has been
delinquent, and when foreclosure was commenced for each delinquent parcel.
(5) The balance in any construction funds.
(6) The assessed value of all parcels subject to special tax to repay the bonds as shown on
the most recent equalized roll.
(c) In addition, with respect to any bonds sold pursuant to this article, regardless when sold, and
until the final maturity of the bonds, the legislative body shall notify the California Debt and
Investment Advisory Commission by mail, postage prepaid, within 10 days if any of the
following events occur:
(1) The local agency or its trustee fails to pay principal and interest due on any scheduled
payment date.
(2) Funds are withdrawn from a reserve fund to pay principal and interest on the bonds
beyond levels set by the California Debt and Investment Advisory Commission.
(d) Neither the legislative body nor the California Debt and Investment Advisory Commission
shall be liable for any inadvertent error in reporting the information required by this section.
1e.-isdrft'mc0356 LD/2:'25/02 23
The Depository Trust Company
A subsidiary of The Depository Trust&Clearing Corporation
BLANKET ISSUER LETTER OF REPRESENTATIONS
[To be Completed by Issuer]
CM OF HUNTINGTON BEACH C0111 = FACILITIES
DISTRICT NO. 2003-1 (HUNTINGTON CEDTM)
[Name of Issue]]
April 5. 2004
[llatcl
[For Municipal-Issues:
Underwriting Department—Eligibility; 50th Floor]
[For Corporate Issues:
General Counsel's Office;49th Floorl
The Depository Trust Company
55 Water Street
New York, NY 10041-0099
Ladies and Gentlemen:
This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer
shall request be made eligible for deposit by The Depository Trust Coinpany("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance
with DTC's Rules with respect to the Securities, Issuer represents to DTC that Issuer.will comply
vAth the requirements stated in DTC's Operational Arrangements, as they may be amender] from
time to tune.
Note: Very truly vows,
Schedule A contains statements that DTC believes accu- CITY crfv' HUNTINGTON BEACH
rately describe DTC, the method of effecting book-entry CQIKWV FACILITIES DISTRICT
transfers of securities dismbuted through DTC,and c•er- NO. 2003-1 (HUNTINGTON CENTER)
twin related matters.
(Issuer)
By:
Received and Accepted: (. .]rho .ed fflcurs Sigmatnre)
01TtN1 EPOSITORY T MPANY Shari T. Frei cienrid, Treasurer
,o
2000 Main Street
(Street Address)
Huntington Beach, CA 92648
(01-1 (State)(Count]1') (Zip Code)
DTCC ( 714 ) 536-5200
(Phone Number)
The Depository Trust&
Clearing Corporation (E-mail Address)
[2/021
SCHEDULE A
(To Blanket Issuer Letter of Representations)
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC—bracketed material may be applicable only to certain issues)
1. The Depositony Trust Company ("DTC"), New York, NY, will act as securities depository for the
securities (the"Securities"). The Securities will be issued as fully-registered securities registered in the
name of Cede&Co. (DTC's partnership nominee)or such other name as may be requested by an author-
ized representative of DTC. One fully-registered Security certificate will be issued for[each issue of] the
Securities, [each] in the aggregate principal amount of such issue,and«rill be deposited with DTC. [If,
however,the aggregate principal amount of[any]issue exceeds$500 million,one certificate will be issued
with.respect to each $500 million of principal amount, and an additional certificate vrill be issued -,;pith
respect to any remaining principal amount of such issue.]
2. DTC, the world's largest depository, is a limited-purpose trust company organized under the New
York Banking Law,a"banking organization",vitin the meaning of the New York Banking Law,a member
of the Federal Reserve System, a "clearing corporation" v rithin the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S.
and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from
over 85 countries that DTCS participants ("Direct Participants-) deposit with DTC. DTC also facilitates
the post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities, through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct
Participants include both U.S.and non-U.S. securities brokers and dealers,banks, trust companies,clear-
ing corporations, and certain other organizations. DTC is a wholly-mviied subsidiary of The Depository
Trust&Clearing Corporation ("DTCC"). DTCC,in turn,is owned by a number of Direct Participants of
DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing
Corporation, NIBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC,
MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the
American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodian relationship
with a Direct Participant,either directly or indirectly("Indirect Participants").DTC has Standard&Poor's
highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at Vvw"v.dtce.com.
3. Purchases of Securities under the DTC systerrr must be made by or through Direct Participants,
which will receive a credit for the Securities on DTC:s records..The ownership interest of each actual pur-
chaser of each Security ("Beneficial Owner")is in turn to be recorded on the Direct and Indirect
Participants'records.Beneficial Owners-rill not receive written confirmation from DTC of their purchase.
Beneficial Owners are,however,expected to receive written confirmations prmdding details of the transac-
tion,as well as periodic statements of their holdings,from the Direct or Indirect Participant through ,vhich
the Beneficial Owner entered into the transaction.Transfers of ownership interests in the Securities are to
be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in
Securities,except in the event that use of the book-entry.systen for the Securities is discontinued.
4.To facilitate subsequent transfers,all Securities deposited by Direct Participants with DTC are regis-
tered in the nacre of DTC's partnership nominee, Cede &Co.,or such other name as may be requested
by an authorized representative of DTC.The deposit of Securities with DTC and their registration in the
name of Cede&Co.or such other DTC nominee do not effect any change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the Securities;DTC's records reflect only the identity
CITY
OF
HUNTINGTON
BEACH
$25,000,000
COMMUNITY
FACILITIES
DISTRICT
NO. 2003-1 "
(HUNTINGTON CENTER)
2004
SPECIAL
TAX BONDS
Best Best&Krieger LLP
Riverside, California
of the Direct Participants to whose accounts such Securities are credited,which may or may not be the
Beneficial Owners. The Direct and Indirect Participants xvill remain responsible for keeping account of
their holdings on behalf of thew customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory require-
ments as may be in effect from time to time. [Beneficial O«mers of Securities may«ish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Securities,
such as redemptions,tenders,defaults,and proposed amendments to the Security documents. For exam-
ple, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for
their benefit has agreed reed to obtain and transmit notices to Beneficial Owners.In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.]
[G. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being
redeemed, DTCs practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to he redeemed.]
7. Neither DTC nor Cede & Co.' (nor any other DTC nominee) will consent or vote with respect to
Securities unless authorized by a Direct Participant ui-accordance with DTC:s Procedures.Under its usual
procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Securities are credited on the record date(identified in a listing attached to the Omnibus Proxy).
8.Redemption proceeds,distributions,and dixidend payinents on the Securities will be made to Cede
&Co.,or such other nominee as may he requested by an authorized representative of DTC. DTC:s prac-
tice is to credit Direct Participants'accounts upon DTC's receipt of funds and corresponding detail infor-
rnation from Issuer or Agent, on payable elate in accordance with their respective holdings shown on
DTC's records.Payments by Participants to Beneficial Ov.mers will be governed by standing instructions
and customary practices,as is the case xvith securities held for the accounts of customers in bearer form or
registered in"street name,"and will be the responsibility of such Participant and not of DTC [nor its nom-
inee],Agent,or Issuer,subject to any statutory or regulatory requirements,as may be in effect from time to
time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC)is tie responsibility of Issuer
or Agent,disbursement of such payments to-Direct Participants will be tie responsibility of DTC,and dis-
bursement of suich payments to the Beneficial Owners will he the responsibility of Direct and Indirect
Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through
its Participant, to'[Tender/Remarketing] Agent,and shall effect delivery of such Securities by causing the
Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in die
Securities are transferred by Direct Participants on DTC's records and followed by a book-e'ntni-credit of
tendered Securities to [Tender/Remarketing]Agents DTC account.]
10.DTC may discontinue providing its services as depository with respect to the Securities at aunt'time
by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor
depository is not obtained,Security certificates are required to be printed and delivered.
11.Issuer may decide to discontinue use of die system of book-entn.transfers through DTC(or,a sue-
cessor securities depository).In that event,Security certificates will be printed and delivered.
r
12.The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that Issuer believes to be reliable,but Issuer tikes no responsibility for the accuracy thereof.